ASSETCO PLC
YEAR ENDED 30 SEPTEMBER 2022
2022
ANNUAL
REPORT AND
FINANCIAL
STATEMENTS
[SECTION HEADING] TO BUILD A 21ST
CENTURY ASSET
AND WEALTH
MANAGEMENT
BUSINESS THAT
WILL DELIVER FOR
INVESTORS AND
SHAREHOLDERS
CONTENTS
STRATEGIC REPORT
1. CHAIRMAN’S STATEMENT
2. BUSINESS REVIEW
3. STRATEGIC REPORT
4. BOARD OF DIRECTORS
GOVERNANCE REPORT
5. DIRECTORS’ REPORT
6. CORPORATE GOVERNANCE STATEMENT
7.
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC
FINANCIAL STATEMENTS
8. CONSOLIDATED INCOME STATEMENT
9. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
10. CONSOLIDATED AND COMPANY’S STATEMENT OF FINANCIAL POSITION
11. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
12. COMPANY STATEMENT OF CHANGES IN EQUITY
13. CONSOLIDATED AND COMPANY’S STATEMENT OF CASH FLOWS
14. NOTES TO THE FINANCIAL STATEMENTS
15. NOTICE OF ANNUAL GENERAL MEETING
16. GLOSSARY
17. COMPANY INFORMATION
2
4
10
18
24
28
34
48
49
50
51
52
53
54
101
107
108
1. 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 21st 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.
£40M
INVESTED IN
GROWTH
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 £2m 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.
2
AssetCo plc | Report and Financial Statements 2022 1. CHAIRMAN’S STATEMENT
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 £22.4m 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 £6.9m 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
15 February 2023
Our mission to improve and grow otherwise attractive
asset management businesses began with tackling an
initial cost base of £32m of annualised costs at the point
of announcing our acquisition in January 2022. This
was cut aggressively to £22.5m 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 £9m 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 £40m in growing the business through the
acquisitions of River and Mercantile and Revera. Those
acquisitions take revenues from less than £0.5m last
year to over £8m during the course of the year, with
a run rate of £17m 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.
AssetCo plc | Report and Financial Statements 2022
3
2. 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 £2,291m
by September 2022 year end. SVM, acquired during
October 2022, had assets under management of £528m
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:
ACTIVE EQUITIES AUM WALK:
30 SEP 22 TO 31 DEC 22 (£M)
£2,819m
681
369
147
225
(£222m)
£2,822m
567
2,074
2,188
Opening
AUM
Redemptions
Gross
inflows
Market/Perf
Closing
AUM
Fund/Wholesale
Mandate/Institutional
Investment Trust
From zero to £13.2bn - an asset
and wealth management business
fit for the 21st century
Proven and experienced
management team
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.
4
AssetCo plc | Report and Financial Statements 2022
2. BUSINESS REVIEW
MUTUAL FUND AUM BREAKDOWN BY IA SECTOR QUARTILE RANKINGS
Since inc.
10 year
5 year
3 year
1 year
6 month
3 month
1 month
21%
7%
59%
73%
20%
27%
4%
49%
16%
61%
44%
16%
11%
2%
54%
62%
1 month
3 month
6 month
1 year
3 year
5 year
10 year Since inc.
4th quartile
3rd quartile
2nd quartile
1st quartile
16%
20%
2%
62%
6%
30%
11%
54%
21%
19%
44%
16%
16%
8%
16%
61%
37%
9%
4%
49%
44%
10%
20%
27%
9%
11%
7%
73%
0%
20%
21%
59%
Source: R&M Performance data produced by R&M data and risk systems. Saracen, Revera and SVM performance data sourced from FE Analytics
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.
Active equities
Thematic ETFs
Digital distribution
Active equities/
private markets
April 2021
AssetCo
created
July 2021
Acquired
Saracen
Fund
Managers
July 2021
October 2021
June 2022
Future
Acquired 67% of
RIZE ETFS
Acquired 30% of
Parmenion
Growth and
profitability
Acquired
River & Mercantile
Group
Revera
Proposed acquisition
SVM Asset
Management
5
AssetCo plc | Report and Financial Statements 2022 2. BUSINESS REVIEW CONTINUED
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, and its
US Solutions offerings 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
£11.2m. 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 £700m.
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.
6
AssetCo plc | Report and Financial Statements 2022 2. BUSINESS REVIEW CONTINUED
INFRASTRUCTURE
During the year, the River and Mercantile Infrastructure
Income Fund was launched with a first series of
shares to the value of £115m in committed capital
(representing £0.8m 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 £326m
with attaching annualised revenues of £1.5m 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.
The combined revenue of invested
businesses, including announced
transactions, is c. £17 million
Building critical scale and
broader capabilities in attractive
market segments
Announced a proposed
1.3p dividend
Robust balance sheet, with £40 million
improvement year on year
7
AssetCo plc | Report and Financial Statements 2022 2. BUSINESS REVIEW CONTINUED
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 £1.9bn 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 £40.4m and EBITDA more than doubled
to £15m. Assets under management increased to
£10.3bn, 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 20221)
Business type
Wholesale (active equities)
Institutional (active equities)
Investment Trust (active equities)
Infrastructure
ETFs
Total
AuM (£m) Weighted average fee rate,
net of rebates (bp)
Gross annualised revenue
net of rebates (£000s)
2,074
681
64
35
326
3,180
54
35
73
68
47
11,228
2,374
471
237
1,520
15,830
1 Although 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 £10.3bn, generating
revenues of £40.4m 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.
•
•
8
AssetCo plc | Report and Financial Statements 2022 2. BUSINESS REVIEW CONTINUED
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
(inc SVM)
End Sept
2022
End Sept
2021
Movement Sept 2021to
Sept 2022 (Sept 21to Dec 22)
Active Equities Assets
under Management
Total assets
£2,822m
£2,291m
£113m
£96.5m
£102.1m
£59.6m
Annualised revenue1
£17.3m
£12.9m
£2.5m
Profit for the year (to 30 Sept)
-£9.3m
£14.7m
Investment performance2 (1 year)
Investment performance2 (3 year)
77%
53%
46%
53%
100%3
13%3
+£2,178m
(+£2,709m)
+£42.5m
(+£36.9m)
+£10.4m
(+£14.8m)
-£24m
-54% points
(-23% points)
+40% points
(+40% points)
1 Monthly recurring revenue at date shown, annualised (i.e. x 12)
2 % active equity mutual fund AuM in 1st or 2nd quartile when compared to competitor funds in relevant Investment Association sectors.
3 Saracen only
Campbell Fleming
Chief Executive Officer
Peter McKellar
Deputy Chairman
15 February 2023
9
AssetCo plc | Report and Financial Statements 2022 3. 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 2 and 3 and in the Business Review
on pages 4 to 9 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
Active Equities Assets under Management
Total assets
Annualised revenue1
Profit for the year (to 30 Sept)
Investment performance2 (1 year)
Investment performance2 (3 years)
2022
£2,291m
£102.1m
£12.9m
-£9.3m
46%
53%
2021
£113m
£59.6m
£2.5m
£14.7m
100%3
13%3
Movement
+£2,178m
+£42.5m
+£10.4m
-£24m
-54% points
+40% points
1 Monthly revenue at date shown, annualised (i.e. x 12)
2 % active equity mutual fund AuM in 1st or 2nd 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.
10
AssetCo plc | Report and Financial Statements 2022 3. STRATEGIC REPORT
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
Costs incurred in the
month concerned,
annualised by
multiplying by 12
Annualised
revenue
Revenues incurred in
the month concerned,
annualised by
multiplying by 12
Given that AssetCo has acquired and/or integrated businesses at different
points during the financial year, 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.
Given that AssetCo has acquired and/or integrated businesses at different
points during the financial year, 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.
11
AssetCo plc | Report and Financial Statements 2022 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.
•
3. STRATEGIC REPORT CONTINUED
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.
12
AssetCo plc | Report and Financial Statements 2022 3. STRATEGIC REPORT CONTINUED
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
Profitability remains a key focus for the Group. Delays
in achieving profitability in the longer term could impact
the Board’s ability to pay a progressive dividend as
well as the Group’s ability to fund acquisitions.
Board/Executive Team
Plans are being actively implemented to cut costs
and focus distribution efforts thereby increasing
new business. The Group is focused on achieving
run-rate profitability at the earliest possible date.
The Board monitors cash management carefully.
Distribution
Corporate actions such as acquisitions and
business re-structuring risk disturbing existing
clients and discouraging new ones.
Loss of Key People
The Group has managed most departures on a
planned basis but going forwards will need to ensure
continued retention of key staff if it is to manage
client, consultant and regulatory expectations.
Economic Conditions
Adverse markets were a significant drag on performance
in the last year. As an equity specialist the business
remains vulnerable to any material fall in equity markets.
Systems and Controls
Operating multiple systems across multiple
subsidiary and associate companies increases
the risk of control failure. Managing multiple
service providers also generates challenges.
Board/Distribution
The Group continually monitors and develops its product
suite to ensure that it remains competitive 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.
Board/Remuneration Committee
The Board regularly reviews succession
planning for all senior executives.
All senior executives are subject to extended notice
periods (between 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.
Board/Executive Team
The Group seeks to manage an appropriate
balance of fixed and variable costs. In the event of
sustained economic downturn, the Group would
seek to take early action to cut fixed costs.
Board/Operations
The Group has developed a detailed controls framework
which is being rolled out across operating subsidiaries
to create a consistent, 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.
13
AssetCo plc | Report and Financial Statements 2022 3. STRATEGIC REPORT CONTINUED
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.
14
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 key 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 on 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.
AssetCo plc | Report and Financial Statements 2022 3. STRATEGIC REPORT CONTINUED
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.
15
AssetCo plc | Report and Financial Statements 2022 3. STRATEGIC REPORT CONTINUED
Our key stakeholders
How we engage with them
Clients
The Company through its
subsidiaries aims to provide
investment products that
meet the needs of clients and
put those needs first.
Our distribution teams have a busy client engagement schedule and maintain
contact with our clients through regular meetings, reporting and written
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.
Our key stakeholders
How we engage with them
Shareholders
The ongoing support of our
shareholders is vital in helping
us deliver our long-term
strategic objectives.
Employees
The Company’s key
employees are senior
experienced professionals. It
is of the utmost importance
to the Board that we have
a culture that attracts and
retains talented employees.
The Board engages with the Company’s shareholders in a number of ways which
include the AGM and one-to-one meetings and telephone conversations. Our
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.
The senior management team engage regularly with employees through
face-to-face meetings where open discussion is encouraged. Our
subsidiaries have strong management teams and engage with 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 of our
employees through study loans and paid study leave. Supported
qualifications include CFA and accountancy qualifications.
16
AssetCo plc | Report and Financial Statements 2022 3. STRATEGIC REPORT CONTINUED
Our key stakeholders
How we engage with them
Suppliers and service providers
The Company places
reliance on external third
party suppliers and service
providers for certain activities
and services.
The Company is committed to the highest standards of business conduct.
The selection process and engagement with these parties 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 10 to 17 constitute the strategic report which was approved by the Board on 15 February 2023 and signed
on its behalf by:
Gary Marshall
CFOO
15 February 2023
Company Registration Number: 04966347
17
AssetCo plc | Report and Financial Statements 2022 4. BOARD OF DIRECTORS
CHIEF EXECUTIVE OFFICER –
CAMPBELL FLEMING
Campbell was appointed to the Board on 2 October
2021 as the Company’s Chief Executive Officer.
Campbell has worked within the investment
industry since the 1990s. He was Global Head of
Distribution & Marketing at Standard Life Aberdeen
until September 2020. Before joining Aberdeen
Asset Management in August 2016, Campbell was
Chief Executive - EMEA and Global Chief Operating
Officer at Columbia Threadneedle Investments,
having joined that firm as Global Head of Distribution
in November 2009. Prior to this, Campbell was
Head of UK for JPMorgan Asset Management. He
trained as a barrister in Australia before moving to
the UK in 1995. He also chairs The Big Exchange
and is the Deputy Chairman of Ruffer LLP.
SKILLS AND COMPETENCIES
Campbell has extensive asset management
experience, having held senior positions in well-
known asset managers. He is a skilled leader and
draws on the knowledge acquired in his previous
roles to lead the Group as its CEO. Campbell’s
significant distribution experience is critical for
the delivery of the Group’s growth strategy.
CHAIRMAN –
MARTIN GILBERT
Martin was appointed to the Board on 25
January 2021 as the Company’s Chairman.
Martin Gilbert has a long history in asset and wealth
management. He co-founded Aberdeen Asset
Management PLC in 1983 and was chief executive
officer from 1991 to 2017. During that period Aberdeen
Asset Management PLC grew, through a combination
of organic growth and strategic acquisition, to
become one of the world’s leading independent
asset managers with £308 billion of AUM. In 2017
Aberdeen Asset Management PLC merged with
Standard Life plc, to become Standard Life Aberdeen
plc. On merging, Standard Life Aberdeen plc was the
biggest UK-based asset management company and
the second biggest in Europe. Martin was co-chief
executive officer and subsequently vice chairman
until he retired from Standard Life Aberdeen plc in
September 2020. Martin is chairman of Revolut Ltd,
Toscafund and senior independent director of Glencore
plc, alongside a number of other directorships.
SKILLS AND COMPETENCIES
Martin brings substantial experience and knowledge
of the financial services and asset management
sector. He is an experienced leader, having been the
CEO of Aberdeen Asset Management plc. Martin’s
breadth of experience in the financial services
sector, understanding of the diverse issues faced
when building an asset management group through
acquisitions and his strong leadership style allow
him to lead an effective Board and are vital to the
Company’s long-term sustainable success.
18
AssetCo plc | Report and Financial Statements 2022 3. BOARD OF DIRECTORS
DEPUTY CHAIRMAN AND
EXECUTIVE DIRECTOR – PETER MCKELLAR
Peter was appointed to the Board on 25 January
2021 and is the Company’s Deputy Chairman.
Peter McKellar has spent nearly all of his working
career in private markets, in particular private
equity and infrastructure investment management
and direct operating management. He retired in
September 2020 as executive chairman and global
head of private markets for Standard Life Aberdeen
plc, where he oversaw investment management
activities across private equity, infrastructure, real
estate, natural resources, and certain private credit
capabilities, totalling £55 billion of AUM. Peter is
a non-executive director of 3i Group plc and a
non-executive member of Scottish Enterprise.
SKILLS AND COMPETENCIES
Peter brings significant financial services experience
to the Board. Peter’s valuable experience combined
with his financial acumen enables him to effectively
contribute to the delivery of the Company’s
strategy, advise on cost reduction and is key to
the Company’s long-term sustainable success.
CHIEF FINANCIAL AND OPERATING OFFICER –
GARY MARSHALL
Gary was appointed to the Board on 11
October 2022 as the Company’s Chief
Financial and Operating Officer.
Gary has worked in the financial services industry
since 1983, initially in life assurance but for almost
30 years in asset management. He joined Aberdeen
Asset Management PLC in 1997 following Aberdeen’s
acquisition of Prolific Financial Management and held a
variety of roles leading up to his being Head of EMEA
and UK Regions for Standard Life Aberdeen before
retiring from that company in 2021. In his capacity
as regional head, Gary served as Chief Executive for
regulated operating subsidiaries based in UK and
in Europe; he also served as Chief Executive and
Head of Americas for Aberdeen from 2010 to 2014,
based in Philadelphia. Gary brought a strong finance
perspective to his previous roles and developed a
deep understanding of the operational complexities
of running a multinational asset management
business from years spent managing and integrating
acquired businesses. Gary is a qualified actuary.
SKILLS AND COMPETENCIES
Gary has extensive asset management experience
having held a number of senior roles in a large
well regarded asset management group. He has
in-depth expertise in finance, operations and
regulatory compliance. Gary’s operational expertise
and his experience of integrating businesses
is vital to the Group’s strategy and the long-
term sustainable success of the Company.
19
AssetCo plc | Report and Financial Statements 2022 3. BOARD OF DIRECTORS CONTINUED
SENIOR INDEPENDENT DIRECTOR –
JONATHAN DAWSON
NON-EXECUTIVE DIRECTOR –
TUDOR DAVIES
Jonathan joined the Board as senior independent
director on 15 June 2022 on completion of the
acquisition of River and Mercantile Group PLC, where
he had been chairman for a number of years.
He is a graduate of the universities of St Andrews
and Cambridge and started his career in the Ministry
of Defence before joining Lazard, the investment
bank, where he spent over 20 years. He left Lazard
in 2005 and co-founded Penfida Limited, the leading
independent corporate finance adviser to pension
fund trustees which is now part of the XPS Group.
Jonathan previously served as a non-executive
director and chair of the remuneration committee
of National Grid plc until July 2022. Other previous
appointments include non-executive directorships
of Galliford Try plc, National Australia Group Europe
Limited and Standard Life Investments (Holdings)
Limited. He also served as senior independent director
of Next plc and Jardine Lloyd Thompson Group plc.
SKILLS AND COMPETENCIES
Jonathan has significant financial services, pensions
and non-executive experience. He brings innovative
perspective and independent oversight to the Board.
Jonathan’s breadth of experience, knowledge of
the business of River and Mercantile and strong
corporate governance expertise contribute to
the effective operation of the Board and long-
term sustainable success of the Company.
Chairman of the Audit Committee
Tudor was appointed to the Board on 23 March 2011
and was Chair of AssetCo until the re-admission and
change in April 2021 when Martin Gilbert took over the
role. After standing down as Chair of the Board, Tudor
took over the role of Chair of the Audit Committee.
Tudor has over 20 years experience in the repositioning
of several Plc’s, as Chair, Chief executive and Non-
Executive Director, and was formerly a partner with
Arthur Young (a predecessor firm of Ernst & Toung
Llp) specialising in corporate finance and recovery.
SKILLS AND COMPETENCIES
Tudor brings substantial experience to the
Board and his knowledge of the turnaround of
businesses allow him to bring a financial and
strategic perspective to a broad range of subjects
in support of the Board and its Committees.
NON-EXECUTIVE DIRECTOR –
CHRISTOPHER MILLS
Chairman of the Remuneration Committee
Christopher was appointed to the
Board on 23 March 2011.
Christopher is chief executive officer of Harwood
Capital Management Limited and chief executive
and investment manager of North Atlantic Smaller
Companies Investment Trust plc. He relinquished his
role as Chairman of the Audit Committee to Tudor
Davies when the latter became non-executive.
SKILLS AND COMPETENCIES
Christopher has significant asset management
experience, having established a successful asset
management business, Harwood Capital. He
is a highly regarded investor and draws on this
experience in support of the Board. Christopher
brings in-depth understanding of remuneration
matters in the asset management industry to his
role as Chair of the Remuneration Committee.
.
20
AssetCo plc | Report and Financial Statements 2022 [SECTION HEADING]
INDEPENDENT NON-EXECUTIVE
DIRECTOR – MARK BUTCHER
Chairman of the Nomination Committee
Mark was appointed to the Board
on 24 October 2012.
Mark was previously an executive director
of GPG (UK) Holdings plc which was
the UK investment arm of Guinness
Peat Group plc. He currently sits on the
boards of Redde Northgate plc, Zytronic
plc and National Milk Records plc.
SKILLS AND COMPETENCIES
Mark has over 20 years’ experience working
in the City, he was an executive director of
GPG (UK) Holdings plc as well as a non-
executive director of a number of public and
private companies. He has wide experience
in international accounting, corporate finance
and banking transactions. Mark qualified
as a Chartered Accountant in South Africa.
Mark brings constructive challenge and
independent oversight to the Board.
AssetCo plc | Report and Financial Statements 2022
21
GOVERNANCE REPORT
5. DIRECTORS’ REPORT
RESULTS
The financial statements are set out on pages 48 to
100.
DIVIDEND
The Directors have declared an interim dividend of 1.3p
per share this year (2021: £nil) in respect of the financial
year ended 30 September 2022. This was paid on 23
December 2022 to shareholders on the register on 2
December 2022.
CAPITAL STRUCTURE
The primary objective of the Company’s capital
management is to ensure that capital is available to
allocate to the business that maximises shareholder
value.
Full details of the authorised and issued capital, together
with details of the movements in the Company’s issued
share capital during the year, are shown in note 31.
FINANCIAL RISK MANAGEMENT
See note 3 to the financial statements.
RESEARCH AND DEVELOPMENT
No expenditure has been incurred during the year in
respect of the Group’s own research and development
activities.
FUTURE DEVELOPMENTS
The outlook for the Group is set out in the Chairman’s
Statement.
INTRODUCTION
The Directors present their annual report and the
audited consolidated financial statements of the
Company and the Group for the year ended 30
September 2022.
PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
The Company’s principal activity is to act as a holding
company for a group of wealth and asset management
companies. AssetCo plc is a public limited company
registered and domiciled in England and Wales with
the registered number 4966347. The Company is listed
on AIM and is subject to the AIM Rules. The Group
operates principally in the United Kingdom and has a
trading subsidiary in the USA. A review of the business
is set out in the Strategic Report on pages 10 to 17,
which is incorporated by reference into this report.
DIRECTORS
The Directors who were in office during the year, and
up to the date of signing the financial statements, were
as follows:
Martin Gilbert (Chairman)
Campbell Fleming (CEO)
Peter McKellar (Executive)
Gary Marshall (CFOO) – appointed 11 October 2022
Jonathan Dawson (Senior Independent Director) –
appointed 15 June 2022
Christopher Mills (Non-Executive)
Tudor Davies (Non-Executive)
Mark Butcher (Non-Executive)
The company secretary up until 1 July 2022 was
Stephen Murphy. The company secretary from that
date until the date of signing this report, was Sally
Buckmaster.
In accordance with best practice, all Directors will
offer themselves for re-election at the AGM, with the
exception of Jonathan Dawson and Gary Marshall who
will stand for election at the AGM and Mark Butcher
who, given his period of service, has decided not to
stand for re-election.
24
AssetCo plc | Report and Financial Statements 2022 5. DIRECTORS’ REPORT
DIRECTORS’ SHAREHOLDINGS AND INTERESTS
The beneficial interests of the Directors in the shares of the Company were as follows:
Martin Gilbert
Campbell Fleming
Peter McKellar
Gary Marshall1
Jonathan Dawson
Tudor Davies2
Christopher Mills3
Mark Butcher4
At 30 September 2022
No.
At 30 September 2021
(Prior to sub-division
of shares)
No.
7,283,300
2,354,104
3,938,410
–
347,810
2,073,920
20,788,420
88,540
720,000
150,000
259,482
–
–
200,000
1,803,800
6,896
1 Gary Marshall joined the Board on 11 October 2022 and holds 414,592 shares as at 31 December 2022.
2 Tudor Davies is deemed to have an interest in 2,073,920 shares held by Cadoc Limited, a company controlled by his family.
3 Christopher Mills, as chief executive and a member of Harwood Capital LLP, is deemed to have an interest in the 20,788,420 shares owned by various funds
associated with Harwood Capital LLP.
4 Mark Butcher purchased 45,000 shares on 21 October 2022 and accordingly holds 133,540 shares as at 31 December 2022.
No Director had a material interest in any significant contract (other than a service contract) with the Company or
any subsidiary company at any time during the year.
CONFLICTS OF INTEREST
A director has a statutory duty to avoid a situation in which they have or could have a conflict of interest or possible
conflict with the interests of the Company.
The Company has adopted a policy relating to the handling by the Company of matters that represent conflicts of
interest or possible conflicts of interest involving the directors. Where a conflict of interest or potential conflict of
interest is identified, only directors that are not involved in the conflict or potential conflict may participate in any
discussions or authorisation process.
SUBSTANTIAL SHAREHOLDINGS
At 7 February 2023 the company secretary has been notified, in accordance with Chapter 5 of the Disclosure
Guidance and Transparency Rules sourcebook as issued by the Financial Conduct Authority, of the following interest
in 3% or more in the ordinary share capital of the Company:
Harwood Capital LLP
Psigma Investment Management Limited
Martin Gilbert
ICM Limited
Hargreaves Lansdown Asset Mgt
Lombard Odier Asset Management (Europe) Limited
Charles Stanley
No. of shares
20,788,420
12,746,800
7,283,300
7,170,960
6,147,840
5,710,017
5,524,159
% of issued
share capital
13.90%
8.50%
4.9%
4.80%
4.10%
3.8%
3.70%
25
AssetCo plc | Report and Financial Statements 2022 5. DIRECTORS’ REPORT CONTINUED
SHARE SUB-DIVISION AND CANCELLATION OF
THE SHARE PREMIUM ACCOUNT
At a general meeting on 10 August 2022, shareholders
approved the sub-division of the Company’s shares
on the basis of ten new shares for each existing share
and a resolution required for the cancellation of the
Company’s share premium account. The share premium
account was cancelled following approval of by the
Court, creating a distributable special reserve.
SHARE BUY-BACK
At a general meeting on 28 September 2022, the
Company was granted the authority by its shareholders
to buy back its own shares up to a maximum of
14,929,297. Following this, the Company bought back
72,941 shares by the financial year end which are
held in treasury and as at 31 January 2023 a further
11,100,574 shares had been bought back, making
11,173,515 shares in total, held in treasury.
POLITICAL DONATIONS
The Group made no political donations or contributions
during the year.
BUSINESS COMBINATIONS AND DISPOSALS
Business combinations during the year are discussed in
note 22.
POST BALANCE SHEET EVENTS
There were three post balance sheet events. These are
set out in more detail in note 37 Post Balance Sheet
Events.
GOING CONCERN
The Directors have considered the going
concern assumption of the Company and the
Group by assessing the operational and funding
requirements of the Company and 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 operating for a period of at least 12 months
from the date of signing of the financial statements.
Therefore the Directors continue to adopt the
Going Concern basis of accounting in preparing the
consolidated and Company financial statements.
26
STATEMENT OF DIRECTORS’
RESPONSIBILITIES IN RESPECT OF THE
FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual
report and the financial statements in accordance with
applicable law and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the group and the company
financial statements in accordance with UK-adopted
international accounting standards.
Under company law, directors must not approve the
financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of
the group and company and of the profit or loss of
the group for that period. In preparing the financial
statements, the Directors are required to:
•
•
select suitable accounting policies and
then apply them consistently;
state whether applicable UK-adopted international
accounting standards have been followed,
subject to any material departures disclosed
and explained in the financial statements;
• make judgements and accounting estimates
that are reasonable and prudent; and
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the group
and company will continue in business.
The Directors are responsible for safeguarding the
assets of the group and company and hence for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are also responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group’s and Company’s transactions and
disclose with reasonable accuracy at any time the
financial position of the group and company and enable
them to ensure that the financial statements comply
with the Companies Act 2006.
The Directors are responsible for the maintenance
and integrity of the company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
AssetCo plc | Report and Financial Statements 2022 DIRECTORS’ CONFIRMATIONS
In the case of each Director in office at the date the
directors’ report is approved:
•
•
so far as the Director is aware, there is no relevant
audit information of which the Group’s and
Company’s auditors are unaware; and
they have taken all the steps that they ought to have
taken as a director in order to make themselves
aware of any relevant audit information and to
establish that the Group’s and Company’s auditors
are aware of that information.
DIRECTORS’ LIABILITY INSURANCE
The Company has entered into deeds of indemnity for
the benefit of each Director of the Company in respect
of liabilities to which they may become liable in their
capacity as director of the Company and any company
in the Group. Those indemnities are qualifying third
party indemnity provisions for the purposes of S. 234
of Companies Act 2006 and have been in force from
15 April 2022 (or, if later, the date of the Director’s
appointment) up to the date of approval of the financial
statements and will continue to be in force.
INDEPENDENT AUDITORS
In accordance with section 489(4) of the
Companies Act 2006, a resolution to reappoint
PricewaterhouseCoopers LLP will be proposed at the
annual general meeting.
CORPORATE GOVERNANCE
The Company’s statement of corporate governance
can be found on pages 28 to 33 of these financial
statements. The Corporate Governance Statement
forms part of this Report of the Directors and
is incorporated by cross-reference. The Board
confirms that it has complied with the requirements
of the Quoted Company Alliance Corporate
Governance Code for small and medium sized
companies, save as disclosed below.
5. DIRECTORS’ REPORT CONTINUED
ANNUAL GENERAL MEETING
The resolutions to be proposed at the forthcoming
Annual General Meeting are set out in the formal notice
of the meeting as set out on pages 101 to 106.
RECOMMENDATION
The Board considers the resolutions to be proposed
at the Annual General Meeting are in the best interests
of Company and it is unanimously recommended that
shareholders support these proposals as the Board
intends to do in respect of their own holdings.
APPROVAL OF ANNUAL REPORT
The Corporate Governance Report, the Strategic Report
and the Directors’ Report were approved by the Board
on 15 February 2023.
By order of the Board
Gary Marshall
CFOO
15 February 2023
Company Registration Number: 04966347
27
AssetCo plc | Report and Financial Statements 2022 6. CORPORATE GOVERNANCE REPORT
Dear Shareholder,
2. Seek to understand and meet Shareholders’
The Board recognises the key value of good corporate
governance in ensuring the long term sustainable
success of the Company. In accordance with AIM Rule
26, the Company chooses to report against the Quoted
Company Alliance Corporate Governance Code for
small and medium sized companies (the “QCA Code”).
The following Report sets out the Company’s
governance arrangements and describes how the ten
principles of the QCA Code have been addressed and
provides the disclosures indicated by the QCA Code.
The Board has reviewed the Corporate Governance
disclosures and believes that the Group complies with
the principles and disclosures required by the QCA
Code, except as otherwise disclosed below.
Martin Gilbert
Chairman
15 February 2023
QCA CODE COMPLIANCE
The Company has adopted the QCA Code. The
disclosures below describe in detail how we have
applied the principles of the QCA Code and where our
practices differ from the expectations of the QCA Code.
A formal statement on our compliance with the QCA
Code is set out in the Directors’ Report at page 27.
1. Establish a strategy and business model which
promote the long term value for Shareholders
The Business Review set out on page 4 and
Strategic Report set out on page 10 describe
the business model and business objectives
which when read with the Chairman’s Statement
describe the past year’s activity and the desired
future prospects of the Group. Further detail of the
strategy is included in the Directors’ Report. The
principal risks and uncertainties which may impact
the Group’s ability to achieve its strategy are set out
on pages 13.
needs and expectations
The Company, through its Chairman, has regular
contact with its institutional Shareholders to
understand their needs and expectations.
Christopher Mills is the CEO of the company’s
largest shareholder and where appropriate provides
feedback to the Board on that shareholder’s view of
the Company’s performance. The Board supports
the principle that the Annual General Meeting will be
used to communicate with private Shareholders and
will encourage them to participate.
Shareholders can access corporate, regulatory,
news, share capital information on the Company’s
website at www.assetco.com. Enquiries can be
directed to the Board using the corporate email
address: info@assetco.com
3. Take into account wider stakeholder and social
responsibilities and their implications for long
term success
Details of the Board’s consideration of its
stakeholders is set out on page 15 (S172 Report).
4. Embed effective risk management, considering
both opportunities and threats, throughout the
organisation
The Board considers regularly the risks relating to
the Company’s activities. Details of the principal
risks facing the Company were set out in Part II
of the readmission document published by the
Company on 26 March 2022 (the “Readmission
Document”) under the heading “Risk Factors”. A
copy of the Readmission Document is available on
the Company’s website at www.assetco.com.
Further details of the risks and uncertainties facing
the Company are set out in the Strategic Report on
page 13 of this document.
Details of the approach to internal controls and risk
management are set out in the Strategic Report.
The Company does not currently have an internal
assurance function and has appointed a third party
to undertake this work on a case by case basis. The
Board will continue to review the risk management
framework and assess its effectiveness during 2023.
28
AssetCo plc | Report and Financial Statements 2022
5. Maintain the Board as a well-functioning
balanced team led by the Chair
The composition of the Board is considered
to be appropriate in terms of the current
development of the Company’s business
strategy. There is an appropriate balance
between executive and non-executive directors,
two of whom were considered by the Board
to be independent during the accounting
period. There are four Board Committees. The
terms of reference for each is available on the
Company’s website at www.assetco.com.
Details of meeting frequency and attendance are
set out below. All Board members are expected to
attend the Company’s quarterly board meetings and
relevant Board Committee meetings and to ensure
that they have sufficient time to allocate to their role.
Each board member has confirmed that he has
sufficient time to perform the role effectively.
6. Ensure that between them the Directors have
the necessary up-to-date skills and capabilities
The Directors (biographical details in respect
of whom are set out on pages 18 to 21 of this
document) have a wide range of qualifications and
expertise which is to be considered appropriate
in terms of the implementation of the Company’s
strategy. The Board fosters an attitude of
independence of character and judgement. The
Company Secretary advises the Board on all
governance matters. All Directors have access to
the Company Secretary and the General Counsel’s
services and advice. While the Board is satisfied
that its Directors have the appropriate skills and
expertise, no disclosure is provided detailing the
steps Directors take to keep their skills up to date.
The Board values diversity and expects to improve
its gender balance in the current year.
6. CORPORATE GOVERNANCE REPORT
7. Evaluate Board performance based on clear
and relevant objectives, seeking continuous
improvement
The Board has been focussed on the
implementation of the Company’s new strategy and
the completion of several corporate transactions.
The Board has not undertaken a formal evaluation
process of its effectiveness during the period. It is
the intention of the Board to put in place a formal
evaluation process for all Directors in line with our
strategic focus in 2023.
8. Promote a corporate culture that is based on
ethical values and behaviours
The Board, in developing the Company through
the implementation of its new strategy, will promote
a positive corporate culture and desired ethical
behaviours within the Company, and communicate
these across the Group. Integrity is key to the
Group’s success and is fundamental to the
development of a conduct led culture across the
Group. The Group has a suite of policies which
underpin the Board’s expectations of ethical
values and behaviours. Work is ongoing on the
development of a common set of policies across
the Group’s operating businesses.
29
AssetCo plc | Report and Financial Statements 2022
6. CORPORATE GOVERNANCE REPORT CONTINUED
9. Maintain governance structures and processes
that are fit for purpose and support good
decision-making by the Board
The Board is responsible for the Company’s system
of internal controls and reviewing its effectiveness.
The procedures for planning and monitoring the
operation and performance of the Company, as
well as its compliance with applicable law and
regulations, are set out below under “Corporate
Governance”. The Board has not formally approved
a schedule of matters reserved for the Board but
requires various matters to be escalated from its
operating subsidiaries. The roles of Chairman,
CEO and Senior Independent Director are clearly
understood and are operating satisfactorily.
10. Communicate how the Company is governed
and is performing by maintaining a dialogue with
Shareholders and other relevant stakeholders
The principal method of communicating the
Company’s corporate governance process and
principles is the Annual Report which is being
sent directly to Shareholders and is available
on the Company’s website at www.assetco.
com. The Annual General Meeting also provides
an opportunity for Shareholders to address
corporate governance matters. Details of the role
of the Board’s committees and work undertaken
is described below. Consideration will be given
to increased disclosure and a more detailed
Remuneration Committee Report when a new long
term incentive plan is put in place.
30
CORPORATE GOVERNANCE
LEADERSHIP AND STRATEGY
The Board is responsible for matters of strategy,
performance, budgeting and resources as well as
setting standards of conduct and accountability. The
Board has delegated authority for the day to day running
of the business to the Chief Executive Officer.
The Board has provided the Group with entrepreneurial
leadership and is responsible for the long-term
sustainable success of the Company for the benefit
of its shareholders. The Board has regard for its other
stakeholders, including employees, clients, supplier and
regulatory authorities. Further detail of this is set out in
the Section 172 Statement on page 15.
During the period, the Board has focussed on the
development and execution of the Company’s
new strategy. A significant focus has been on the
development of, and execution of, acquisition
opportunities, the integration of those businesses and
the reduction of costs in those businesses.
The Board has reviewed and challenged the annual
budget during the period. The Board receives regular
reports on the progress of the implementation of cost
reduction strategies and the integration of the active
equity businesses onto a single operating model. The
Board also considered the resources required for the
Group’s size and complexity.
BOARD COMPOSITION
The Board comprises four Executive Directors and four
Non-Executive Directors.
No individual or group of individuals dominate the Board
or its decision making.
The Board considers Jonathan Dawson and Mark
Butcher to be independent directors for the purposes of
the QCA Code during the reporting period. The Board
considered Mark Butcher’s tenure and notes that it is
not concurrent with current management and did not
hinder his ability to be objective. Jonathan Dawson is
the Senior Independent Director.
Details of the skills and competencies brought by
each Director are set out on pages 18 to 21 in their
respective biographies.
AssetCo plc | Report and Financial Statements 2022
6. CORPORATE GOVERNANCE REPORT CONTINUED
All Directors are required to stand for re-election on an annual basis at the Company’s annual general
meeting in accordance with the Company’s Articles of Association. Mark Butcher confirmed he will not be
standing for re-election.
The Board, through the Nominations Committee, will continue to review the Board’s composition to ensure
that the skills and experience of Directors support the growth of the Company and the achievement of its
strategic objectives. In doing so, Board diversity will be actively considered.
The Board has determined that it has the appropriate balance of skills and experience to enable it to
effectively lead the Company.
BOARD AND COMMITTEE ATTENDANCE
During the year, the Board held 11 scheduled meetings, which included meetings to approve specific
transactions as well as meetings to approve the Company’s full and half year results. Board and Committee
Member attendance at meetings is set out below:
BOARD ATTENDANCE
Director
Martin Gilbert1
Campbell Fleming
Christopher Mills
Jonathan Dawson2
Peter McKellar
Mark Butcher
Tudor Davies
Board
8/11
11/11
8/11
2/2
11/11
11/11
10/11
Audit
Remuneration
Nominations
n/a
n/a
0/2
n/a
n/a
2/2
2/2
n/a
n/a
1/1
n/a
n/a
1/1
1/1
n/a
n/a
2/2
2/2
n/a
2/2
2/2
1 Martin Gilbert was the Deputy Chairman of River and Mercantile Group PLC and accordingly recused himself where conflicted. This is reflected in the attendance
table above.
2 Jonathan Dawson was appointed on 15 June 2022
COMMITMENT
The Board requires all Directors to devote sufficient time to their duties and use their best endeavours to attend
all meetings. The Directors’ appointment letters or service contracts (as applicable) set out a minimum time
commitment, which for a non-executive director includes attendance at six board meetings per annum, attendance
at the AGM and additional meetings as required. The Board is satisfied that each Director has sufficient time to
undertake their duties effectively.
31
AssetCo plc | Report and Financial Statements 2022 6. CORPORATE GOVERNANCE REPORT CONTINUED
GOVERNANCE FRAMEWORK
The Company, consistent with the early stages of
the implementation of its business strategy, has a flat
management structure.
The terms of reference of each Board Committee has
been reviewed, updated and approved.
The Board continues to review the governance
arrangements across the Group which are evolving as
part of the consolidation and integration work following
the completion of acquisitions.
OPERATION OF THE BOARD
The Board meets on a scheduled quarterly basis
and on an ad-hoc basis to consider specific items
of business as the need arises. During the period,
the Board has met to consider several acquisitions,
including Revera Asset Management, River and
Mercantile and SVM, the sub-division of the
Company’s shares and cancellation of share premium
account and matters relating to the integration of
acquired businesses and the reduction of costs.
The Chairman, in conjunction with the Executive Directors
and Company Secretary, sets the agenda for each Board
meeting. Management information is delivered ahead of
each Board meeting and a comprehensive set of papers
is circulated before Board meetings. The decisions of the
Board are formally minuted.
All Directors have access to the Company Secretary’s
services and advice.
On certain matters in the year, the Board has sought
external advice.
CONFLICTS OF INTEREST
The Board takes action to identify and manage conflicts
of interest. Where conflicts of interest arise, the relevant
Director would declare his interest in the matter and recuse
himself from the discussion and any related decision.
DELEGATION OF AUTHORITY
The Board is responsible for setting strategy, purpose
and the direction of the Company. The Board has
delegated to the Chief Executive Officer authority for the
day to day running of the business and specific authority
(as set out in the terms of reference of each committee)
to the Audit, Remuneration, Nominations and Disclosure
Committees (the “Committees”). The Committees have
the remits described below.
32
AUDIT COMMITTEE
COMMITTEE COMPOSITION
The Audit Committee comprises all the Non-Executive
Directors and is chaired by Tudor Davies (Chair). The
Committee members have a mix of financial and sector
experience. The Committee received information and
support from the Executive Directors as well as the
Company Secretary in performing its duties.
THE COMMITTEE’S RESPONSIBILITIES
The Audit Committee is focused on the key areas of
financial integrity, internal controls and risk management.
This includes:
•
review of the financial statements
and Annual Report;
• consideration of the external audit report
and management representation letter;
• going concern review;
•
review of the 2022 audit plan and
audit engagement letter;
• Review of the auditor’s fees and non-audit services
•
review of the risk management and
internal control systems;
•
review of the interim results; and
• meetings with the auditors with and
without management present
The Audit Committee monitors the relationship with
the auditors, PwC LLP, to ensure that the auditors’
independence and objectivity are maintained. As part of
its review the Committee monitors the provision of non-
audit services by the external auditors.
The auditors prepare an audit plan for the full-year
financial statements. The audit plan sets out the
scope of the audit, areas of special focus and audit
timetable. This plan is reviewed and agreed in advance
by the Audit Committee. Following the audit of the
annual financial statements, the auditors present their
findings to the Audit Committee for discussion. Areas
of significant risk and matters of audit judgement are
regularly discussed, and are detailed in note 4; ‘Critical
accounting estimates and judgements’. External
experts were engaged for key areas of focus; such
as the identification and valuation of intangible assets
on acquisition in the preparation of the 2022 financial
statements.
AssetCo plc | Report and Financial Statements 2022 6. CORPORATE GOVERNANCE REPORT CONTINUED
REVIEW OF ACTIVITIES DURING THE YEAR
During the year ended 30 September 2022 the Audit
Committee met twice. The Committee considered:
• The auditor’s year-end audit plan
• The annual report and financial statements for the
year-ended 30 September 2021 and the interim
results for the current period to ensure they were
fair, balanced and understandable
• Significant accounting judgments and estimates
• Going concern
•
Impairments and
• Acquisition accounting.
REMUNERATION COMMITTEE
COMMITTEE COMPOSITION
The Remuneration Committee comprises all the Non-
Executive Directors and is chaired by Christopher Mills.
As the Company is not listed on the Main Market, it
is not subject to the requirements of the Large and
Medium Sized Companies and Groups (Accounts and
Reports) (amendment) Regulations 2013.
THE COMMITTEE’S RESPONSIBILITIES
The Remuneration Committee is tasked with ensuring
that Directors and senior employees are provided with
an appropriate package of incentives and rewards that
align personal reward with increased shareholder value
over both the short and longer term. This includes:
• Determining the framework or policy for
remuneration for the Company’s Executive
Directors and senior management;
• Setting targets for any performance
related pay schemes;
• Overseeing any long term incentive
share schemes; and
• Overseeing major changes in
employee benefit structures
REVIEW OF ACTIVITIES DURING THE YEAR
During the year ended 30 September 2022 the
Remuneration Committee met twice. The Committee
considered matters related to the discontinuance of
the Company’s Long Term Incentive Plan and the
acceleration of the issue of shares under that plan.
NOMINATIONS COMMITTEE
COMMITTEE COMPOSITION
The Nominations Committee comprises all the Non-
Executive Directors and is chaired by Mark Butcher.
THE COMMITTEE’S RESPONSIBILITIES
The Nominations Committee is responsible for reviewing
the structure, size and composition of the Board and
identifying and nominating, for the approval of the
Board, candidates to fill vacancies on the Board as and
when they arise. This includes:
• Responsibility for identifying and nominating for
approval of the Board candidates to fill Board
vacancies
• Evaluating the balance of skills, knowledge and
experience on the Board;
• Considering succession planning for directors and
senior executives; and
• Reviewing the time requirements for Board
positions.
REVIEW OF ACTIVITIES DURING THE YEAR
The Nomination Committee met twice during the year
and considered the appointment of Gary Marshall
as Chief Financial and Operating Officer and the
appointment of the company secretary.
DISCLOSURE COMMITTEE
The Disclosure Committee is responsible for determining
whether information concerning the Company or its
shares constitutes inside information which should be
disclosed to the market and includes the timing of such
disclosures and the approval of the content of such
disclosures. The Disclosure Committee is comprised of
Martin Gilbert, Campbell Fleming and Gordon Brough,
the Company’s General Counsel. The Disclosure
Committee meets on an ad-hoc basis as required.
The terms of reference for each Committee is available
on the Company’s website at www.assetco.com.
The Committees are provided with sufficient resources
to discharge their duties, including access to external
advisers where required.
33
AssetCo plc | Report and Financial Statements 2022 7. INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF ASSETCO PLC
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
BASIS FOR OPINION
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs (UK)”)
and applicable law. Our responsibilities under ISAs (UK)
are further described in the Auditors’ responsibilities
for the audit of the financial statements section of our
report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis
for our opinion.
INDEPENDENCE
We remained independent of the Group in accordance
with the ethical requirements that are relevant to our
audit of the financial statements in the UK, which
includes the FRC’s Ethical Standard, as applicable to
listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
OPINION
In our opinion, AssetCo plc’s Group
financial statements and Company financial
statements (the “financial statements”):
• give a true and fair view of the state of the Group’s
and of the Company’s affairs as at 30 September
2022 and of the Group’s loss and the Group’s and
Company’s cash flows for the year then ended;
• have been properly prepared in accordance with
UK-adopted international accounting standards as
applied in accordance with the provisions of the
Companies Act 2006; and
• have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements, included
within the Annual report and financial statements (the
“Annual Report”), which comprise: Consolidated and
Company’s Statement of Financial Position as at 30
September 2022; Consolidated Income Statement,
Consolidated Statement of Comprehensive Income,
Consolidated and Company’s Statements of Cash
Flows, and Consolidated and Company Statements
of Changes in Equity for the year then ended; and
the notes to the financial statements, which include a
description of the significant accounting policies.
34
AssetCo plc | Report and Financial Statements 2022
7. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC
OUR AUDIT APPROACH
CONTEXT
AssetCo plc is an asset and wealth management
business, which listed on the Alternative Investment
Market in 2021, and in the last two years made
acquisitions of Saracen Fund Managers Limited
(‘Saracen’), Rize ETF Limited (‘Rize’), River and
Mercantile Group PLC (‘River’) and Revera Asset
Management Limited (‘Revera’). The Group’s main
operations are in the United Kingdom and it offers
products across various segments of the market
through the businesses it has acquired. In planning
for our audit of the Group, we met with the Audit
Committee and members of management to discuss
and understand significant changes to the business
during the year, and to understand their perspectives
on associated business risks. We used this insight
when forming our views regarding the business, as part
of developing our audit plan and when scoping and
performing our audit procedures.
OVERVIEW
Audit scope
• We conducted a full scope audit over
the financial information of AssetCo plc,
Saracen and Rize. Our audit work over these
components accounted for 31% of Group
revenue and 53% of Group total assets.
• We scoped in material consolidation adjustments,
including those for goodwill and intangible assets,
and performed audit testing over these.
• A significant proportion of the Group’s trading
comes from River. We instructed BDO UK LLP
(‘BDO’), the existing statutory auditors of this group,
to perform a full scope audit of this component,
for the period from acquisition by the Group to the
period end. Their testing covered a further 68% of
Group revenue and 43% of Group total assets.
In addition to BDO’s audit over River’s
financial information, we also independently
performed testing procedures over 42% of
this revenue. This increased our coverage
of Group revenue from 31% to 60%.
•
• We received reporting from BDO with respect to
their audit and performed appropriate oversight of
their audit work, including review of their working
papers. Our combined audit work accounted for
99% of both Group revenue and Group total assets.
Key audit matters
• Revenue recognition (Group)
• Valuation of goodwill and intangible assets (Group)
•
•
• Estimation of current income tax liability in relation
to an uncertain tax position (Group and Company)
Impairment of goodwill and intangible assets (Group)
Impairment of investment in subsidiaries (Company)
• Recoverability of drawings made
in advance of profit (Group)
Materiality
• Overall Group materiality: £1,020,920 (2021:
£596,000) based on 1% of total assets.
• Overall Company materiality: £992,000 (2021:
£566,000) based on 1% of total assets.
• Performance materiality: £765,690 (2021: £447,000)
(Group) and £744,000 (2021: £424,000) (Company).
THE SCOPE OF OUR AUDIT
As part of designing our audit, we determined materiality
and assessed the risks of material misstatement in the
financial statements.
KEY AUDIT MATTERS
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance
in the audit of the financial statements of the current
period and include the most significant assessed risks
of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had
the greatest effect on: the overall audit strategy; the
allocation of resources in the audit; and directing the
efforts of the engagement team. These matters, and any
comments we make on the results of our procedures
thereon, were addressed in the context of our audit
of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate
opinion on these matters.
This is not a complete list of all risks identified by our
audit.
35
AssetCo plc | Report and Financial Statements 2022 7. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
Revenue recognition and recoverability of drawings made in advance of profit are new key audit matters this year as
this is the first year the Group has generated revenue from operating subsidiaries and the first period the partnership
with these advanced drawings is being consolidated within the Group. Valuation of the long-term incentive plan,
which was a key audit matter last year, is no longer included because the plan has been discontinued during the
period. Otherwise, the key audit matters below are consistent with prior year.
Key audit matter
How our audit addressed the key audit matter
Revenue recognition (Group)
Refer to Note 2.3 Revenue recognition and
Note 5 Segmental reporting
Revenue in the Group comprises
management and marketing fees of £8.2m.
The recognition of management and
marketing fees is dependent on the terms
of the underlying prospectus or investment
management agreements (‘IMAs’) between
the Group and its clients and/or the funds
it manages. Management and marketing
fees are calculated as a percentage of
Assets Under Management (‘AUM’) and the
percentage applied varies across different
funds and products.
The calculations are non-complex, however
there are a number of inherent risks
including the input of correct fee rates and
the existence and valuation of AUM, which
could result in errors.
For all material revenue streams, the design and
implementation of key controls were evaluated, including
outsourced activities at the outsourced providers.
To obtain audit comfort over the key controls supporting the
existence and valuation of AUM as an input into the calculation
of revenue, we have performed the following procedures:
• The control environment in place at outsourced service providers
was assessed to the extent that it was relevant to our audit. The
control reports undertaken in accordance with generally accepted
assurance standards, were obtained and read, paying particular
attention to the nature of any exceptions in the testing identified by
the independent service auditor of the outsourced providers.
• The key controls on which we could place reliance to provide audit
evidence were identified and relevant complementary user entity
controls in place at the Group were tested, where applicable. Where
the control reports had not been prepared for the year ended
30 September 2022, we assessed the gap period and obtained
bridging letters where necessary.
Substantive audit evidence was also obtained as set out below:
• 100% of management and marketing fees were recalculated in
respect of River, Saracen and Rize using AUM information obtained
from the outsourced service providers or obtained directly from
the client and fee rates obtained from prospectuses/Investment
Management Agreements, using the calculation methodology
stated in the agreement. These amounts were reconciled to
amounts included in the Group financial statements and 100% of
management and marketing fees per the financial statements were
agreed to bank statements for subsequent receipt.
Based on the audit procedures performed and evidence obtained,
our testing did not identify any evidence of material misstatement.
36
AssetCo plc | Report and Financial Statements 2022 7. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
Key audit matter
How our audit addressed the key audit matter
Valuation of goodwill and intangible assets (Group)
Refer to Note 22 Business combinations
During the period, the Group has made the
following two transactions:
• On 15 June 2022, AssetCo plc
acquired 94.15% of the ordinary shares
of River and Mercantile Group plc
(‘River’) that it did not already own for
£41.9m. This acquisition was wholly
settled by the issue of new ordinary
shares in AssetCo plc.
• On 5 August 2022, AssetCo plc
acquired the entire share capital of
Revera Asset Management Limited
(‘Revera’). Consideration consisted
of initial cash payable of £1m, with
a deferred consideration of £100k
payable 12 months after completion.
Both transactions were accounted for
as a business combination. Assets and
liabilities existing on the date of acquisition
were recorded on the Consolidated
Statement of Financial Position, including
the identification of intangible assets.
Intangible assets in relation to institutional
client contracts (£2.4m), brand (£450k) and
software (£1.25m) were identified in relation
to River. No intangible assets were identified
in relation to Revera.
The difference between the fair value of
assets and liabilities acquired and fair value
of consideration paid was recorded as
goodwill on the Revera acquisition of £650k
and a gain on bargain purchase in relation
to the acquisition of River of £3.2m.
These business combinations are
considered key audit matters due to the
high level of judgement and estimate around
identification and valuation of goodwill and
intangible assets.
• We assessed whether the classification as a business combination
and treatment of the various aspects of the transactions were in
accordance with IFRS 3 ‘Business Combinations’.
• In respect of the fair value of consideration paid, we reviewed the
purchase agreements, recalculated the issue of shares in respect
of River and understood the terms of the deferred consideration in
respect of Revera.
• We performed procedures to confirm the valuation and existence
of material assets and the completeness and accuracy of material
liabilities on the acquisition balance sheets on a sample basis.
• We reviewed management’s assessment of the identification of
intangible assets in accordance with the requirements with IFRS 3
‘Business Combinations’.
We engaged our valuations experts to assess the appropriateness
of the methodology used and the reasonableness of the key
assumptions within the models for the intangible assets recognised
on the River acquisition by:
• Corroborating key inputs to the models to relevant supporting
documentation, including assets under management, revenues and
costs;
• Assessing key assumptions used, including the AUM growth rates,
attrition rates, discount rate, royalty rates and useful economic life;
• Testing the mechanics and mathematical accuracy of the models.
• We ensured the deferred tax liability was calculated accurately in
relation to the recognised intangible assets.
• We recalculated goodwill and the gain on bargain purchase as the
difference between the fair value of assets and liabilities acquired
and the fair value of the consideration paid.
• We assessed the appropriateness of the accounting and
disclosures in relation to the acquisitions within the Group financial
statements.
We are satisfied that based on the work performed, the acquisitions
have been accounted for appropriately with adequate disclosures
made in the Group financial statements.
37
AssetCo plc | Report and Financial Statements 2022 7. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
Key audit matter
How our audit addressed the key audit matter
Impairment of goodwill and intangible assets (Group)
Refer to Note 20 Goodwill
and intangible assets
We obtained management’s impairment review and performed the
following procedures:
Goodwill and intangible assets of £20.1m
are recognised on the Group’s Statement of
Financial Position following the acquisition
of Saracen and Rize during 2021.
• Tested management’s goodwill and intangible asset impairment
assessment for compliance with IAS 36 including validating
inputs to the calculation and assessing and challenging the
reasonableness of the assumptions.
• Challenged management’s projected cash flows used in
discounted cash flow models to determine whether they are
reasonable and supportable given the current macroeconomic
climate and expected future performance of the CGU.
• Compared the discount rates used by management in the
discounted cash flow models to PwC internally developed
benchmarks, using our valuation experts.
• Tested the mathematical accuracy of the models.
• Performed sensitivity analysis on key assumptions and assessed
the impact and likelihood of these changes on the level of
headroom in the models to evaluate the impact on the carrying
value of the goodwill.
• Assessed the disclosures made in the Group financial statements.
Based on the audit procedures performed and evidence obtained, our
testing did not identify any evidence of material misstatement.
Goodwill in the Group is significant, and
the estimated recoverable amount of
these balances is subjective due to the
inherent uncertainty involved in forecasting
and discounting future cash flows.
Management is required by IAS 36
‘Impairment of assets’ to perform an
annual impairment review and consider
if there are any impairment indicators in
respect of the carrying value of goodwill
and intangible assets. Management
performed their annual impairment
review which demonstrated that no
impairment was required for the goodwill
and the intangible assets recognised on
acquisition of both Saracen and Rize.
Each of these entities are considered
a separate cash generating unit (CGU)
and separate impairment assessments
have been performed for each.
The impairment reviews used discounted
cash flow models to calculate the net
value of the CGUs future earnings. The
model involved a number of estimates
and assumptions made by management
including those related to long-term
growth rates and discount rate. The
sensitivity of these key assumptions are
detailed in note 16, Intangible assets.
38
AssetCo plc | Report and Financial Statements 2022 7. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
Key audit matter
How our audit addressed the key audit matter
Impairment of investment in subsidiaries (Company)
Refer to Note 21 Investment in subsidiaries
The investment in subsidiaries included in
the Company statement of financial position
as at 30 September 2022 is £69.9m.
The impairment assessment of the
investment in subsidiaries balance is a
key audit matter due to the magnitude
of the balance in the context of the
net assets of the Company.
Impairment triggers were identified
for the investment in subsidiaries
in Saracen, Rize and Revera and
therefore impairment assessments were
undertaken for these subsidiaries.
We performed the following procedures in relation to the impairment
assessment of investment in subsidiaries in Saracen, Rize and Revera:
• Compared the carrying value of the subsidiaries to management’s
projected cash flows used in discounted cash flow models
generated by the Company’s subsidiaries.
• Challenged management’s projected cash flows used in the models.
• Assessed the appropriateness of the discount rates and long-term
growth rate assumptions compared to PwC internally developed
benchmarks, using our valuation experts.
• Assessed the disclosures made in the Company financial
statements.
Based on the audit procedures performed we identified an impairment
in relation to the investment in Revera of £0.5m which management
have adjusted for.
Estimation of current income tax liability in relation to an uncertain tax position (Group and Company)
Refer to Note 4 Critical accounting
estimates and judgements
In the prior year, we undertook procedures to assess the uncertain
tax position in accordance with IFRIC 23.
The Group and Company’s current tax
provision of £1.4m relates to the Directors’
assessment in the prior year, of the amount
of tax payable on open positions where
the liabilities remain to be agreed with the
relevant tax authorities. The uncertain tax
items relate to the Directors’ interpretation
of tax legislation applicable to key
transactions that occurred in prior years,
specifically the award in the settlement
of the case against Grant Thornton on
2 October 2020 for £30.515m. The
related expense of £1.4m was included
in the consolidated income statement
in the prior year financial statements.
The Directors’ recognise that due to the
uncertainty associated with such tax items,
it is possible that, on conclusion of open tax
matters at a future date, the final outcome
may differ significantly. A range of outcomes
for additional or reduction in tax liabilities
are further disclosed in note 4, Critical
accounting estimates and judgements
• We obtained management’s tax paper, and challenged the key
judgements and application of tax legislation, supported by our
internal tax specialists.
• We reviewed the analysis prepared in the assessment and
confirmed the accuracy of the calculations.
• We have assessed the effect of the uncertainty reflected in the
calculated current tax using the ‘most likely amount’ method.
We understand that the tax matter remains open as at the Statement
of Financial Statement date. Our tax specialists have discussed
the matter with management to confirm that there is no further
information to reassess the value of the current income tax liability
held in relation to this matter.
We reviewed the disclosures to ensure the appropriate risks and
estimation uncertainty are adequately described in note 4, Critical
accounting estimates and judgements.
Based on the audit procedures performed and evidence obtained, our
testing did not identify any evidence of material misstatement.
39
AssetCo plc | Report and Financial Statements 2022 7. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
Key audit matter
How our audit addressed the key audit matter
Recoverability of drawings made in advance of profit (Group)
Refer to Note 24 Long term receivables
The following procedures were undertaken:
A partnership within the Group is still
in the very early stages of its life cycle
and has not generated any profit during
its first accounting period (ended 30
June 2022). The partnership agreement
permits individual members to make
drawings from the partnership ahead of
profit being generated. The advanced
drawings to members have therefore
been held on the Statement of Financial
Position as receivables to the Group.
Judgement is required to assess the
likelihood of recoverability of these
receivables. As at 30 September 2022,
the Group had recognised £1.2m
in relation to these amounts on the
Statement of Financial Position.
• Available forecasts and budgets were obtained, together with an
understanding of management’s assessment that profitability is
achievable to support the recoverability of drawings.
• The inputs and assumptions to the forecasts and budgets were
challenged to ensure there is no management bias.
• Partner drawings were tested to payroll reports and bank statements
to ensure existence and accuracy.
• Independent confirmations were obtained from the individual
partners confirming the value of drawings made in advance of profit.
• The LLP agreement was reviewed, to ensure the drawings are in line
with this.
Based on the audit procedures performed and evidence obtained, our
testing did not identify any evidence of material misstatement.
HOW WE TAILORED THE AUDIT SCOPE
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the Group and the Company, the accounting
processes and controls, and the industry in which they operate.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the Group and the Company, the accounting
processes and controls and the use of different statutory auditors across the Group.
In planning our audit, we have considered the potential impact of climate change on the Group’s business and
its financial statements, including going concern. The Group is at an early stage in developing its assessment
of the potential impacts and opportunities of ESG and climate change. As a part of our audit, we have obtained
management’s climate-related risk assessment and held discussions with management to understand the process
of identifying climate-related risks, the determination of mitigating actions and management’s conclusion that there is
no material impact on the Group’s financial statements.
We received reporting from BDO with respect to their audit over River and performed appropriate oversight of their
audit work, including review of their working papers. Our combined audit work accounted for 99% of both Group
revenue and Group total assets. Our audit scope provided sufficient appropriate audit evidence as a basis for our
opinion on the Group financial statements as a whole.
40
AssetCo plc | Report and Financial Statements 2022 7. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
MATERIALITY
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and
in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Financial statements – Group
Overall materiality £1,020,920 (2021: £596,000)
Financial statements – Company
£992,000 (2021: £566,000)
How we
determined it
Rationale for
benchmark
applied
1% of total assets
1% of total assets
As a holding Company which is not profit
oriented, we deem total assets to be the most
appropriate benchmark for the Company.
We have considered the fact the Group is
in its second period of operations following
the change in strategy to asset and wealth
management, with their largest acquisition
to date having taken place just three months
prior to the period end, and with further
acquisitions expected in the future, we
concluded that the primary focus of users of
financial statements would be cash and the
value of investments, including goodwill.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group
materiality. For certain components the allocation of Group materiality was their local statutory audit materiality or
lower. The range of materiality allocated across components was £25,000 to £931,000.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality
in determining the scope of our audit and the nature and extent of our testing of account balances, classes of
transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75%
(2021: 75%) of overall materiality, amounting to £789,570 (2021: £447,000) for the Group financial statements and
£748,000 (2021: £424,000) for the Company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper
end of our normal range was appropriate.
We agreed with those charged with governance that we would report to them misstatements identified during
our audit above £53,000 (Group audit) (2021: £27,000) and £50,000 (Company audit) (2021: £27,000) as well as
misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.
41
AssetCo plc | Report and Financial Statements 2022 7. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
“ We continue to seek out potential
opportunities for further inorganic expansion”
Martin Gilbert
Chairman
42
AssetCo plc | Report and Financial Statements 2022 7. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
CONCLUSIONS RELATING TO GOING CONCERN
Our evaluation of the directors’ assessment of the
Group’s and the Company’s ability to continue to adopt
the going concern basis of accounting included:
• Checking the arithmetical accuracy of
management’s forecasts.
• Evaluating management’s base case forecast
and downside scenarios, challenging the
appropriateness of the underlying assumptions
used to make the assessment, and evaluating the
directors’ plans for future actions in relation to their
going concern assessment.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Group’s and the Company’s
ability to continue as a going concern for a period of at
least twelve months from when the financial statements
are authorised for issue.
In auditing the financial statements, we have concluded
that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements
is appropriate.
REPORTING ON OTHER INFORMATION
The other information comprises all of the information
in the Annual Report other than the financial statements
and our auditors’ report thereon. The directors are
responsible for the other information. Our opinion
on the financial statements does not cover the other
information and, accordingly, we do not express an
audit opinion or, except to the extent otherwise explicitly
stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information
is materially inconsistent with the financial statements
or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. If we identify
an apparent material inconsistency or material
misstatement, we are required to perform procedures
to conclude whether there is a material misstatement
of the financial statements or a material misstatement
of the other information. If, based on the work we
have performed, we conclude that there is a material
misstatement of this other information, we are required
to report that fact. We have nothing to report based on
these responsibilities.
However, because not all future events or conditions
can be predicted, this conclusion is not a guarantee as
to the Group’s and the Company’s ability to continue as
a going concern.
With respect to the Strategic report and
Directors’ Report, we also considered
whether the disclosures required by the UK
Companies Act 2006 have been included.
Our responsibilities and the responsibilities of the
directors with respect to going concern are described in
the relevant sections of this report.
Based on our work undertaken in the course of the
audit, the Companies Act 2006 requires us also to
report certain opinions and matters as described below.
STRATEGIC REPORT AND DIRECTORS’ REPORT
In our opinion, based on the work undertaken in
the course of the audit, the information given in
the Strategic Report and Directors’ Report for the
year ended 30 September 2022 is consistent with
the financial statements and has been prepared in
accordance with applicable legal requirements.
In light of the knowledge and understanding of
the Group and Company and their environment
obtained in the course of the audit, we did
not identify any material misstatements in the
Strategic report and Directors’ Report.
43
AssetCo plc | Report and Financial Statements 2022 7. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
RESPONSIBILITIES FOR THE FINANCIAL
STATEMENTS AND THE AUDIT
RESPONSIBILITIES OF THE DIRECTORS FOR THE
FINANCIAL STATEMENTS
As explained more fully in the Statement of directors’
responsibilities, the directors are responsible for the
preparation of the financial statements in accordance
with the applicable framework and for being satisfied
that they give a true and fair view. The directors are also
responsible for such internal control as they determine
is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors
are responsible for assessing the Group’s and the
Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of
accounting unless the directors either intend to liquidate
the Group or the Company or to cease operations, or
have no realistic alternative but to do so.
AUDITORS’ RESPONSIBILITIES FOR THE AUDIT OF THE
FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due to
fraud or error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken
on the basis of these financial statements.
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect
of irregularities, including fraud. The extent to
which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry,
we identified that the principal risks of non-compliance
with laws and regulations related to breaches of the UK
regulatory principles, such as those governed by the
Financial Conduct Authority, and we considered the
extent to which non-compliance might have a material
effect on the financial statements. We also considered
those laws and regulations that have a direct impact
on the financial statements such as the Companies
Act 2006. We evaluated management’s incentives and
opportunities for fraudulent manipulation of the financial
statements (including the risk of override of controls),
and determined that the principal risks were related
to posting of inappropriate journal entries to increase
revenue and potential management bias in accounting
estimates, in particular in relation to the valuation and
impairment of intangible assets and goodwill. The
Group engagement team shared this risk assessment
with the component auditors so that they could include
appropriate audit procedures in response to such risks
in their work. Audit procedures performed by the Group
engagement team and/or component auditors included:
• Discussions with management, and review
of relevant meeting minutes (including those
of the Board of Directors and the Audit
Committee), including consideration of known
or suspected instances of non-compliance
with laws and regulations and fraud;
• Reviewing regulatory correspondence
from the Financial Conduct Authority;
• Designing audit procedures to incorporate
unpredictability around the nature,
timing or extent of our testing;
• Challenging assumptions made by management
•
in their significant accounting estimates,
in particular in relation to the valuation and
impairment of intangible assets and goodwill
(see related key audit matters); and
Identifying and testing journal entries, in particular
any journal entries posted with unusual account
combinations against revenue accounts and entries
posted containing unusual account descriptions,
where any such journals were identified.
44
AssetCo plc | Report and Financial Statements 2022 7. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
OTHER REQUIRED REPORTING
COMPANIES ACT 2006 EXCEPTION REPORTING
Under the Companies Act 2006 we are required to
report to you if, in our opinion:
• we have not obtained all the information and
explanations we require for our audit; or
• adequate accounting records have not been kept
by the Company, or returns adequate for our audit
have not been received from branches not visited
by us; or
• certain disclosures of directors’ remuneration
•
specified by law are not made; or
the Company financial statements are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Natasha McMillan
Senior Statutory Auditor
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
15 February 2023
There are inherent limitations in the audit procedures
described above. We are less likely to become
aware of instances of non-compliance with laws and
regulations that are not closely related to events and
transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement
due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion.
Our audit testing might include testing complete
populations of certain transactions and balances,
possibly using data auditing techniques. However, it
typically involves selecting a limited number of items for
testing, rather than testing complete populations. We will
often seek to target particular items for testing based on
their size or risk characteristics. In other cases, we will
use audit sampling to enable us to draw a conclusion
about the population from which the sample is selected.
A further description of our responsibilities for the audit
of the financial statements is located on the FRC’s
website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditors’ report.
USE OF THIS REPORT
This report, including the opinions, has been prepared
for and only for the Company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies
Act 2006 and for no other purpose. We do not, in giving
these opinions, accept or assume responsibility for any
other purpose or to any other person to whom this
report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
45
AssetCo plc | Report and Financial Statements 2022 FINANCIAL STATEMENTS
8.
CONSOLIDATED
INCOME STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2022
Revenue
Cost of sales
Gross profit/(loss)
Other income
Administrative expenses
Other losses/gains
Operating (loss)/profit
Gain on bargain purchase
Finance income
Finance costs
Finance income (net)
Share of results of associate
(Loss)/profit before tax
Income tax credit/(expense)
(Loss)/profit for the year
(Loss)/profit attributable to:
Owners of the parent
Non-controlling interest
(Loss)/earnings per ordinary share attributable to the owners
of the parent during the year
Basic – pence (restated)1
Diluted – pence (restated)1
1 Details of the restatements are set out in Note 17.
Note
5
6
7
8
9
12
13
14
23
16
2022
£000
8,175
–
8,175
1,977
(25,565)
(9,732)
2021
£000
408
(536)
(128)
22,388
(7,967)
–
(25,145)
14,293
3,227
12,433
(10)
12,423
181
(9,314)
59
(9,255)
–
1,844
(8)
1,836
–
16,129
(1,442)
14,687
(8,440)
14,796
(815)
(109)
(9,255)
14,687
17
17
(8.19)
(8.19)
18.06
16.10
48
AssetCo plc | Report and Financial Statements 2022
9.
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2022
(Loss)/profit for the year
Other comprehensive (expense)
Items that may be reclassified to profit or loss
Exchange differences on translating foreign operations
Other comprehensive (expense), net of tax
Total comprehensive (loss)/income for the year
Attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive (loss)/income for the year
Note
2022
£000
2021
£000
5
(9,255)
14,687
–
–
(7)
(7)
(9,255)
14,680
(8,440)
14,789
(815)
(109)
(9,255)
14,680
49
AssetCo plc | Report and Financial Statements 2022
10. CONSOLIDATED AND COMPANY’S
STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2022
Assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Goodwill and intangible assets
Investments in subsidiaries
Investment in associates
Long-term receivables
Total non-current assets
Current assets
Trade and other receivables
Financial assets at fair value through profit and loss
Current income tax receivable
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Non-current liabilities
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Trade and other payables
Lease liabilities
Current income tax liabilities
Total current liabilities
Total liabilities
Shareholders’ equity
Issued share capital
Share premium
Capital redemption reserve
Merger reserve
Other reserve
Retained earnings
Non-controlling interest
Total equity
Total equity and liabilities
Group
2022
£000
Group
2021
£000
Company
2022
£000
Company
2021
£000
Note
18
19
20
21
23
24
25
26
29
27
32
28
19
29
31
31
31
31
31
32
224
24,600
–
22,052
1,208
48,116
9,700
37
1,173
43,066
53,976
102,092
1,070
1,070
12,750
294
1,437
14,481
15,551
1,493
–
653
43,063
–
42,426
87,635
(1,094)
86,541
102,092
16
–
20,067
–
–
–
20,083
607
12,000
3
26,902
39,512
59,595
49
49
1,972
–
1,437
3,409
3,458
843
27,770
653
2,762
5,496
18,892
56,416
(279)
56,137
59,595
–
–
–
69,921
21,871
–
91,792
34
–
–
7,394
7,428
99,220
–
–
5,853
–
1,437
7,290
7,290
1,493
–
653
43,063
–
46,721
91,930
–
91,930
99,220
–
–
–
25,194
–
–
25,194
108
12,000
–
22,226
34,334
59,528
–
–
1,466
–
1,437
2,903
2,903
843
27,770
653
2,762
5,496
19,101
56,625
–
56,625
59,528
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the
Company income statement. The loss of the Company for the year was £4,354,000 (2021: profit £15,005,000).
The notes on pages 54 to 100 are an integral part of these consolidated financial statements. The financial
statements were authorised for issue by the board of directors on 15 February 2023 and were signed on its behalf
by Gary Marshall.
AssetCo plc
Registered number: 04966347
50
AssetCo plc | Report and Financial Statements 2022
11. CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2022
Share
premium
£000
Capital
redemption
reserve
£000
Merger
reserve
£000
Other
reserve
£000
Retained
earnings
£000
Non-
controlling
interest
£000
Total
£000
Total
equity
£000
Balance at 1 October 2020
Profit for the year
Other comprehensive expense:
Exchange differences on translation
Total comprehensive income for
the year
Shares issued for cash (note 31)
Costs of share issue (note 31)
Share buy-back (note 31)
Costs of share buy-back
(note 31)
Shares issued on acquisition
(note 31)
Reserve for share-based
payments
– LTIP (note 31)
– Success fee (note 6)
Non-controlling interest acquired
Balance at 30 September 2021
Loss for the year
Other comprehensive expense:
Exchange differences on translation
Total comprehensive income for
the year
Shares issued on acquisition
(note 31)
Costs of share issue (note 31)
Share-based payments – LTIP
(note 31)
Share premium cancellation
(note 31)
Shares bought for treasury
Share
capital
£000
1,221
–
–
–
–
–
–
173
–
(653)
–
24,840
(515)
–
–
17
–
85
–
843
–
–
–
598
–
–
–
–
3,445
–
27,770
–
–
–
–
–
52
4,255
–
–
(32,025)
–
–
–
–
–
–
–
653
–
–
–
–
–
–
–
–
–
–
–
–
–
2,762
–
–
–
653
–
2,762
–
–
–
–
–
– 41,301
(1,000)
–
–
–
–
–
–
–
Balance at 30 September 2022
1,493
–
653 43,063
–
–
–
–
–
–
–
–
–
5,496
–
–
5,496
–
–
–
–
–
(5,496)
–
–
–
31,124
14,796
32,345
14,796
–
32,345
(109) 14,687
(7)
(7)
–
(7)
14,789
–
–
(26,850)
14,789
25,013
(515)
(26,850)
(171)
(171)
–
–
–
–
2,779
5,496
3,530
–
18,892
(8,440)
56,416
(8,440)
(109) 14,680
25,013
(515)
(26,850)
–
–
–
–
–
(171)
2,779
–
–
(170)
5,496
3,530
(170)
(279) 56,137
(9,255)
(815)
–
–
–
–
(8,440)
(8,440)
(815)
(9,255)
–
–
–
41,899
(1,000)
(1,189)
32,025
(51)
–
(51)
–
–
–
–
–
41,899
(1,000)
(1,189)
–
(51)
42,426
87,635
(1,094) 86,541
51
AssetCo plc | Report and Financial Statements 2022
12. COMPANY STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2022
Balance at 1 October 2020
Profit for the year
Other comprehensive expense:
Exchange differences on translation
Total comprehensive income
for the year
Shares issued for cash (note 31)
Costs of share issue (note 31)
Share buy-back (note 31)
Costs of share buy-back (note 31)
Shares issued on acquisition (note 31)
Share-based payments
– LTIP (note 31)
– Success fee (note 6)
Share
Premium
£000
Capital
redemption
reserve
£000
Merger
reserve
£000
Other
reserve
£000
Share
capital
£000
1,221
–
–
–
–
–
–
–
173
24,840
–
(515)
(653)
–
17
–
85
–
–
–
–
3,445
Profit
and loss
account
£000
Total
Equity
£000
31,124
32,345
15,005
15,005
(7)
(7)
14,998
14,998
–
–
25,013
(515)
(26,850)
(26,850)
(171)
–
–
–
(171)
2,779
5,496
3,530
–
–
–
–
–
–
653
–
–
–
–
–
–
–
–
–
–
–
–
2,762
–
–
–
–
–
–
–
–
–
–
–
5,496
–
Balance at 30 September 2021
843
27,770
653
2,762
5,496
19,101
56,625
Loss for the year
Other comprehensive expense:
Exchange differences on translation
Total comprehensive income
for the year
Shares issued on acquisition (note 31)
Costs of share issue (note 31)
Share-based payments
– LTIP (note 31)
–
–
–
598
–
–
–
–
–
–
52
4,255
Share premium cancellation (note 31)
Shares bought for treasury
–
–
Balance at 30 September 2022
1,493
(32,025)
–
–
–
–
–
–
–
–
– 41,301
–
–
–
–
(1,000)
–
–
–
653 43,063
–
–
–
–
–
(5,496)
–
–
–
(4,354)
(4,354)
–
–
(4,354)
(4,354)
–
–
–
32,025
(51)
41,899
(1,000)
(1,189)
–
(51)
46,721
91,930
52
AssetCo plc | Report and Financial Statements 2022
13. CONSOLIDATED AND COMPANY’S
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2022
Group
2022
£000
Group
2021
£000
Company
2022
£000
Company
2021
£000
Notes
Cash flows from operating activities
Cash (outflow)/inflow from operations
Cash released in respect of bonds
Corporation tax paid
Finance costs
Net cash (outflow)/inflow from operating activities
Cash flows from investing activities
Net cash received from acquisitions
Payments for acquisition of associates
Interest on loan notes held in associate
Dividends received from financial assets held
at fair value
Finance income
Proceeds from sale of investment at fair value
through profit and loss
Purchase of property, plant and equipment
Purchase of intangibles
Net cash (outflow)/inflow from investing activities
Cash flows from financing activities
Shares issued for cash
Costs of share issue
Payments for shares bought back
Buy-back transaction costs
Lease payments
Loan from group company
Payments for treasury shares
14
22
23
6
13
13
18
20
31
31
31
31
34
(18,317)
16,755
1,104
–
(8)
(9,345)
–
–
–
18,025
1,104
–
(8)
–
(31)
(10)
(18,358)
17,851
(9,345)
19,121
42,148
(21,871)
1,977
11,459
974
1,017
(15)
(12)
(16,460)
(1,001)
(22,415)
–
–
(21,871)
1,977
–
–
194
11,459
194
–
–
(8)
(1)
–
–
–
–
–
–
–
–
35,677
(16,275)
(9,436)
(22,221)
–
25,013
–
25,013
(1,000)
(515)
(1,000)
–
–
(104)
–
(51)
(26,850)
(171)
–
–
–
–
–
–
5,000
(51)
3,949
(515)
(26,850)
(171)
–
–
–
(2,523)
(5,623)
Net cash (outflow)/inflow from financing activities
(1,155)
(2,523)
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange differences on translation
16,164
26,902
–
(947)
(14,832)
27,860
22,226
27,860
(11)
–
(11)
Cash and cash equivalents at end of year
27
43,066
26,902
7,394
22,226
53
AssetCo plc | Report and Financial Statements 2022
14. NOTES TO THE FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2022
1. LEGAL STATUS AND ACTIVITIES
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 financial statements have been presented in sterling to the nearest thousand pounds (£000) except where
otherwise indicated.
These financial statements were authorised for issue by the Board of Directors on 15 February 2023.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements, which have
been applied consistently with those applied in the previous year, are set out below.
2.1 BASIS OF PREPARATION
The financial statements comply with AIM Rules and have been prepared in accordance with UK-adopted
International Accounting Standards and with the requirements of the Companies Act 2006 as applicable to
companies reporting under those standards. The financial statements are prepared using the historical cost
convention modified by revaluation of financial assets and financial liabilities held at fair value through profit and loss.
The accounting policies which follow set out those policies which apply in preparing the financial statements for the
year ended 30 September 2022.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires management to make estimates and assumptions that affect the
amounts reported for assets and liabilities as at the balance sheet date and the amounts reported for revenue
and expenses during the year. The nature of estimation means the actual outcomes may differ from the estimates.
Further details on the critical accounting estimates used and judgements made in preparing these financial
statements can be found in note 4.
NEW AND AMENDED STANDARDS ADOPTED BY THE COMPANY AND GROUP
The Group has applied the following standards and amendments for the first time for their annual reporting period
commencing 1 October 2021:
• Amendments to IFRS 16 “Leases” – Covid-19 related rent concessions
The amendments listed above did not have any material impact on the amounts recognised in prior periods and are
not expected to significantly affect the current or future periods.
NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
Certain new accounting standards and interpretations have been published that are not mandatory for 30 September
2022 reporting periods and have not been early adopted by the Company or the Group. These standards are not
expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future
transactions.
GOING CONCERN
The directors have considered the going concern assumption of the Company and the Group, AssetCo plc,
by assessing the operational and funding requirements of the Company and 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 operating for a period of at least 12 months from the date of signing of the financial
statements. Therefore the Directors continue to adopt the Going Concern basis of accounting in preparing the
consolidated and Company financial statements.
54
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2.2 PRINCIPLES OF CONSOLIDATION AND EQUITY ACCOUNTING
SUBSIDIARIES
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls
an entity where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that
control ceases.
The acquisition method of accounting is used to account for business combinations by the Group (note 22).
Inter-company transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated, unless the transaction provides evidence of an impairment of the
transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
statement of profit or loss, statement of comprehensive income, statement of changes in equity and balance sheet
respectively.
CHANGES IN OWNERSHIP INTERESTS
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions
with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying
amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any
difference between the amount of the adjustment to non-controlling interests and any consideration paid or received
is recognised in a separate reserve within equity attributable to owners of AssetCo plc.
INVESTMENT IN ASSOCIATED COMPANIES
Associates are all entities over which the Group has significant influence but not control or joint control. This is
generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates
are accounted for using the equity method of accounting where the investments are initially recognised at cost and
adjusted thereafter to recognise the Group’s share of post-acquisition profits or losses of the investee in profit or
loss, and the Group’s share of movements in other comprehensive income of the investee in other comprehensive
income. Dividends received from associates are recognised as a reduction in the carrying value of the investment.
The Company recognises the holding in associates at cost.
The Company and Group recognises interest received on loan instruments held in the investee company as other
income. The Group holds loan notes in the corporate owner of its associate, Parmenion. These loan notes carry a
coupon of 10% but have no agreed schedules for payment of interest which is recognised on receipt only. There are
no repayment dates for the loan notes and the Group carries the loans at amortised cost.
ACCOUNTING POLICY CHOICE FOR NON-CONTROLLING INTERESTS
The Group recognises non-controlling interests in an acquired entity either at fair value or at the non-controlling
interest’s proportionate share of the acquired entity’s net identifiable assets. This decision is made on an
acquisition-by-acquisition basis. For the non-controlling interests in Rize ETF Limited, the Group elected to
recognise the non-controlling interests at the proportionate basis of the acquired net identifiable assets. See note
2.14 for the Group’s accounting policies for business combinations.
55
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2.3 REVENUE RECOGNITION
IFRS 15 specifies the requirements that an entity must apply in order to measure and recognise revenue and its
related cash flows. The core principle of the standard is that an entity should recognise revenue at an amount that
reflects the consideration to which the entity expects to be entitled in exchange for transferring promised goods or
services to a customer.
The standard includes a five-step model for recognising revenue as follows: Identifying the contract with the
customer; identifying the relevant performance obligations of the contract; determining the amount of consideration
to be received under the contract; allocating the consideration to the relevant performance obligation; and
accounting for the revenue as the performance obligations are satisfied.
The Group’s primary source of income is made up as follows:
MANAGEMENT FEES
Gross management fees from investment management activities. These fees are generally based on an agreed
percentage, as per the management contract, of the AuM and are recognised in the same period in which it is
provided. Under the requirements of IFRS 15 revenue is presented net of rebates.
MARKETING FEES
Marketing fees are from marketing thematic ETFs. These marketing fees are generally based on an agreed
percentage, as per the contract, of the AuM and are recognised in the same period in which it is provided.
For all revenue streams, the Group acts as principal and therefore recognises revenue gross with any related
expenses presented in Administrative expenses.
The Group currently has four segments, Active Equities, Infrastructure Asset Management, Exchange Traded Funds
and Digital Platform. Whilst revenue is generated in each of the first three segments, with regard to AuM in the
Active Equities and Infrastructure Asset Management segments, the assets are managed by the Group. In Exchange
Traded Funds we do not take part in the management as our focus is on providing clients with access to the funds
in particular themed sectors. The Digital Platform is operated via an associated company.
2.4 OTHER ITEMS IN THE INCOME STATEMENT
COST OF SALES
Cost of sales in the prior year income statement included those costs directly related to creating and maintaining
Exchange Traded Funds which were principally staff costs and marketing costs. In the current year income
statement these costs have been included within administrative expenses to align with the classification of similar
costs within the Group.
OTHER INCOME
Other income consists primarily of interest on loan notes held in associate but in the prior year also included the
proceeds of the Grant Thornton claim.
OTHER LOSSES OR GAINS
The Group includes in this heading those items such as movement on fair value investments.
EXCEPTIONAL ITEMS
Exceptional items are those items which are outside the normal course of business, whether income or cost, which
are material by nature or amount and which are not expected to recur.
56
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2.5 FOREIGN CURRENCY TRANSLATION
a) Functional and presentation currency
Items included in the financial statements of each of the Company’s businesses are measured using the currency of
the primary economic environment in which the entity operates (“the functional currency”). The financial statements
are presented in sterling (£), which is the Company’s and the Group’s functional and presentation currency.
There has been no change in the Company’s functional or presentation currency during the year under review.
b) Foreign operations translation
The financial statements are prepared in sterling. Income statements of foreign operations are translated into sterling
at the average exchange rates for the year and balance sheets are translated into sterling at the exchange rate
ruling on the balance sheet date. Foreign exchange gains or losses resulting from such translation are recognised
through equity.
c) Other transactions and balances
Other foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies, other than those held in foreign operations, are recognised in the income statement.
2.6 SEGMENT REPORTING
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the board of directors.
2.7 PROPERTY, PLANT AND EQUIPMENT
All property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the company and the
cost of the item can be measured reliably. The carrying amount of any replaced parts is derecognised. All other
repairs and maintenance are charged to the income statement during the financial year in which they are incurred.
Depreciation on assets is calculated using the straight-line method to write down their cost to their residual values
over their estimated useful lives as follows:
Leasehold improvements
Fixtures and fittings
Computer equipment
Remaining life of the lease
3 – 5 years
5 years
The residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are
recognised within operating profit in the income statement.
57
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2.8 INTANGIBLE ASSETS
(i) Goodwill
Goodwill is measured as described in note 2.14 Business Combinations. Goodwill arising on acquisition of
subsidiaries is not amortised but it is tested for impairment annually, or more frequently if events or changes in
circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses. Gains
on the bargain purchase of an entity, where the purchase consideration is less than the fair value of net assets
acquired, is taken to the income statement at the time of acquisition. Gains and losses on the disposal of an entity
include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to
those cash-generating units or groups of cash-generating units that are expected to benefit from the business
combination in which the goodwill arose. The units or groups of units are identified at the lowest level at which
goodwill is monitored for internal management purposes, being the legal entity (note 20).
(i) Brands
Separately acquired brands are shown at historical cost. Brands acquired in a business combination are recognised
at fair value at the acquisition date. They have a finite useful life and are subsequently carried at cost less
accumulated amortisation and impairment losses.
Amortisation on assets is calculated using the straight-line method to write down their cost to their residual values
over their estimated useful lives over 5 – 10 years.
(ii) Software
Costs incurred on internally developed computer software are initially recognised at cost, and when the software
is available for use, the costs are amortised on a straight-line basis over an estimated useful life of between two
and five years. Initial research costs and planning prior to a decision to proceed with development of software are
recognised in the Consolidated statement of comprehensive income when incurred on acquisition.
(iii) Customer relationships
Intangible assets are recognised where client relationship contracts are either separately acquired or acquired with
investment managers who are employed by the Group. These are initially recognised at cost and are subsequently
amortised on a straight-line basis over their estimated useful economic life. Separately acquired client relationship
contracts are amortised over 11 years.
(iv) Website development
Development costs payable to third parties that are directly attributable to the design and testing of new features
of websites used by Group companies are capitalised. No internal costs in relation to website development are
capitalised
Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is
ready for use.
Amortisation on website development costs is calculated using the straight-line method to write down their cost to
their residual values over their estimated useful lives over a maximum of 10 years.
Costs associated with maintaining software programmes are recognised as an expense as incurred.
58
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2.9 FINANCIAL INSTRUMENTS
a) Financial assets
Investments and other financial assets
(i) Classification
The Group classifies its financial assets in the following measurement categories:
•
those to be measured subsequently at fair value (either through other comprehensive income or through profit
or loss); and
those to be measured at amortised cost.
•
The classification depends on the Company’s business model for managing the financial assets and the contractual
terms of the cash flows.
For assets measured at fair value, gains and losses will be recorded either in profit or loss or in other comprehensive
income.
For investments in equity instruments that are not held for trading, this will depend on whether the Group has made
an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other
comprehensive income (FVOCI).
(ii) Recognition and de-recognition
Regular way purchases and sales of financial assets are recognised on trade date being the date on which the
Group commits to purchase or sell the asset). Financial assets are derecognised when the rights to receive cash
flows from the financial assets have expired or have been transferred and the Group has transferred substantially all
the risks and rewards of ownership.
(iii) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the
financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the group’s management has elected
to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of
fair value gains and losses to profit or loss following the de-recognition of the investment. Dividends from such
investments continue to be recognised in profit or loss as investment income when the group’s right to receive
payments is established.
Changes in the fair value of financial assets at FVPL are recognised in investment income in the statement of profit
or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at
FVOCI are not reported separately from other changes in fair value.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method.
The Group has applied the IFRS 9 simplified approach to measuring expected credit losses for trade receivables.
Under this approach a provision is made for lifetime expected credit losses for the trade receivable. For calculation
of expected credit losses the trade receivables are grouped based on the number of days past due. Expected credit
losses on trade receivables that are not past due are primarily based on actual credit losses from recent years.
59
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and bank overdrafts. Bank
overdrafts are shown within borrowings in current liabilities on the balance sheet.
b) Financial liabilities
A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another
entity or to exchange financial assets or financial liabilities with another entity under conditions that are potentially
unfavourable to the Company.
An equity instrument is a contract that evidences a residual interest in the assets of an entity after deducting all of
its liabilities. Financial liabilities and equity instruments are classified according to the substance of the contractual
arrangements entered into. Financial liabilities are classified as such in the balance sheet.
Finance costs and gains or losses relating to financial liabilities are included in the income statement. Finance costs
are calculated so as to produce a constant rate of return on the outstanding liability. Where the contractual terms
of share capital do not have any terms meeting the definition of a financial liability then this is classed as an equity
instrument. Dividends and distributions relating to equity instruments are debited direct to equity.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method. Trade payables represent amounts owed to suppliers for professional services, utilities, office
supplies and any other goods provided to the Group.
2.10 EQUITY
Issued share capital
Ordinary shares are classified as equity.
Costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from
the proceeds.
Share premium
The share premium account represents the excess over nominal value of the fair value of consideration received for
equity shares, net of expenses of the share issue.
Purchase of own shares
Where the Company purchases the Company’s equity instruments (for example, as the result of a share buy-
back), and the shares are cancelled, the consideration paid, including any directly attributable incremental costs
(net of income taxes), is deducted from equity attributable to the owners of AssetCo plc and the relevant amount
transferred to a capital redemption reserve.
Where the Company purchases the Company’s equity instruments for the purpose of holding them as treasury
shares then the amount is transferred to retained earnings. Any incidental costs arising on purchase of Treasury
shares are recognised in the profit and loss account immediately.
On 28 September 2022 the Company was granted authority by shareholders to purchase up to 10% of the
outstanding ordinary shares in the Company. By 30 September 2022 the Company has purchased 72,941 shares
with a nominal value of £729 for an aggregate consideration of £50,968.
Merger Reserve
A merger reserve arises when the Company issues equity in respect of acquiring substantially all the equity in
another entity. As required by the Companies Act 2006 the excess over the par value of the shares is credited to
Merger Reserve rather than Share Premium.
60
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Other Reserves
Other reserves represent the amount of share capital which may become issuable when shares vest under the
Company’s LTIP (see note 36). This reserve is no longer required now that the LTIP has been discontinued.
2.11 DIVIDENDS
Dividends payable are recognised as a liability in the year in which they are authorised. An interim dividend
is recognised when it is approved and paid and a final dividend is recognised when it has been approved by
shareholders at the annual general meeting.
Dividends receivable are recognised on the date given by the investee company as the ex- dividend date.
2.12 EARNINGS PER SHARE
(i) Basic earnings per share
Basic earnings per share is calculated by dividing:
•
the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary
shares;
• by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus
elements in ordinary shares issued during the year and excluding treasury shares
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account:
•
•
the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares;
and
the weighted average number of additional ordinary shares that would have been outstanding, assuming the
conversion of all dilutive potential ordinary shares.
2.13 LEASES
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
• Fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• Variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the
commencement date;
• Amounts expected to be payable by the Company under residual value guarantees;
• The exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
• Payments of penalties for terminating the lease, if the lease term reflects the Company exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of
the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to
pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic
environment with similar terms, security and conditions.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Right-of-use assets are measured at cost comprising the following:
• The amount of the initial measurement of lease liability;
• Any lease payments made at or before the commencement date less any lease incentives received;
• Any initial direct costs; and
• Restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a
straight-line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are
recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of
12 months or less.
The main leasing activities undertaken by the Company are rental of office buildings in UK.
2.14 BUSINESS COMBINATIONS
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity
instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:
fair values of the assets transferred;
liabilities incurred to the former owners of the acquired business;
fair value of any asset or liability resulting from a contingent consideration arrangement; and
fair value of any pre-existing equity interest in the subsidiary.
•
•
• equity interests issued by the Group;
•
•
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are,
with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises any
non-controlling interest in the acquired entity, on an acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the:
• consideration transferred;
• amount of any non-controlling interest in the acquired entity; and
• acquisition date fair value of any previous equity interest in the acquired entity over the fair value of the net
identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net
identifiable assets of the business acquired, the difference is recognised directly in profit or loss as a bargain
purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted
to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate,
being the rate at which a similar borrowing could be obtained from an independent financier under comparable
terms and conditions.
Contingent consideration is classified either as equity or as a financial liability. Amounts classified as a financial
liability are subsequently re-measured to fair value, with changes in fair value recognised in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held
equity interest in the acquiree is re-measured to fair value at the acquisition date. Any gains or losses arising from
such re-measurement are recognised in profit or loss.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
2.15 INCOME TAXES
The income tax expense or credit for the period is the tax payable on the current period’s taxable income, based
on the applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the Company and its subsidiaries and associates operate and
generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation
authority will accept an uncertain tax treatment. The Group measures its tax balances either based on the most
likely amount or the expected value, depending on which method provides a better prediction of the resolution of
the uncertainty. As mentioned in note 4 Critical accounting estimates the position in respect of the Company’s 2021
tax liability is uncertain and could result in a liability up to £2,000,000 or as little as nil.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is
also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that, at the time of the transaction, affects neither accounting nor taxable profit nor loss. Deferred
income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end
of the reporting period and are expected to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise those
temporary differences and losses.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and
liabilities and where the deferred tax balances relate to the same taxation authority.
Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends
either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current tax assets include
£1,159,000 in respect of group relief receivable arising from the disposal of the UK Solutions business by RMG.
There is also £14,000 receivable in respect of usage of previous losses.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive
income or directly in equity respectively, that future taxable profit will be available against which the temporary
differences can be utilised.
2.16 EMPLOYEE BENEFITS
Long Term Incentive Plan (“LTIP”)
The Group operated an LTIP until 5 July 2022 at which date it was cancelled, full details of which are set out in Note
36. Discussions between the Remuneration Committee, shareholders and advisers on a replacement incentive
scheme continue.
Pension contributions – defined contribution scheme
For defined contribution schemes, the Group pays contributions to publicly or privately administered pension
insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once
the contributions have been paid. Contributions to defined contribution schemes are recognised in the income
statement during the year in which they become payable.
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AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Termination benefits
Termination benefits are payable when an employment is terminated by the Group before the normal retirement
date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group
recognises termination benefits when it is demonstrably committed to either terminating the employment of current
employees according to a detailed formal plan without possibility of withdrawal or providing termination benefits as
a result of acceptance of an offer of voluntary redundancy. Benefits falling due more than twelve months after the
balance sheet date are discounted to their present value.
2.17 ACCRUED INCOME
Material income earned from, but not yet invoiced to, customers in the financial year is included within prepayments
and accrued income where receipt of such income is virtually certain.
2.18 DEFERRED INCOME
Deferred income arises when cash from customers is received in advance of the year in which the Company is
contractually obliged to provide its service. Such income is held within accruals and deferred income and only
released to the income statement when the Company has met its related obligations.
3. FINANCIAL RISK MANAGEMENT
3.1 FINANCIAL RISK FACTORS
The risks of the business are measured and monitored continuously by the Board which has in place procedures
and policies covering specific areas namely credit, market and liquidity risk. We set out below how we approach
each area.
a) Credit risk
Credit risk is the risk that a counterparty defaults on their contractual obligations which may result in financial loss
to the Group. The carrying amount of financial assets at fair value recorded in the financial statements represents
the Group’s maximum exposure to credit risk. The Group holds no collateral as security against any financial asset.
Credit risk arises principally from the Group’s fee receivables, other receivables, loan notes and cash balances.
The banks with whom the Group deposits cash and cash equivalent balances are monitored, including their credit
ratings. The credit risk is limited as balances are held with reputable banks with credit ratings of triple B and above,
as disclosed in note 27.
The Group manages its credit risk through monitoring the aging of receivables and the credit quality of the
counterparties with which it does business. The ageing of these is provided in note 25.
The Group has two main types of receivables: revenue related and loan notes in respect of its investment in
associate. For revenue receivables, the Group proactively manages the invoicing process to ensure that invoices
are sent out on a timely basis and has procedures in place to chase for payment at pre-determined times after the
dispatch of the invoice to ensure timely settlement. For receivables due from loan notes in respect of its investment
in associate, the Group has rigorous procedures for monitoring its investment which included regular review of
monthly management accounts from the associated entity and regular dialogue with that entity’s management.
There is no schedule of repayment in place. In all cases, detailed escalation procedures are in place to ensure that
senior management are aware of any problems at an early stage.
b) Market risk
Pricing risk
Pricing risk arises where the fair value or future cash flows of financial instruments will fluctuate because of changes
in market prices other than those from interest rate risk or currency risk. The Group is at an early stage in its
development of an Asset and Wealth Management business and the current exposure to pricing risk is immaterial.
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AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
3. FINANCIAL RISK MANAGEMENT CONTINUED
Currency risk
The Company and Group transacts principally in sterling. The Company’s and Group’s exposure to currency risk is
detailed in note 30.
In relation to translation risk, the Group’s current policy is not to hedge the net asset values of the overseas
investments although, where appropriate and cost-effective facilities are available, local borrowings are utilised to
reduce the translation risk.
Cash flow interest rate risk
The Group’s policy on managing interest rate risk is subject to regular monitoring of the effect of potential changes
in interest rates on its interest cost and income with a view to taking suitable actions should exposure reach certain
levels. The Group may seek to limit its exposure to fluctuating interest rates by keeping a significant proportion of the
Group’s cash or borrowings at fixed interest rates.
The Group’s only external borrowing is the lease on its properties where the interest rate is fixed for the life of the
agreement so there is no sensitivity to interest rate rises. As regards interest income the Group is able to invest
surplus funds and any interest rate increase will be beneficial.
Financial assets
The Company holds its surplus funds in short-term bank deposits.
Financial liabilities
The Group has no material cash flow interest rate risk as it has no material financial liabilities that attract interest.
Should this situation change then the Group may manage the risk by using floating or fixed interest rate swaps.
c) Liquidity risk
Prudent liquidity management implies maintaining sufficient cash and the availability of funding through an adequate
amount of committed credit facilities. The Group maintains adequate bank balances to fund its operations. See note
30 for analysis of the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the
year-end date to the contractual maturity date.
3.2 CAPITAL RISK MANAGEMENT
The Group considers its capital to comprise:
Issued share capital
Share premium account
Capital redemption reserve
Merger reserve
Share-based payments reserve
Retained earnings
Non-controlling interest
Total equity
Cash and cash equivalents
Total capital
2022
£000
1,493
–
653
43,063
–
42,426
87,635
(1,094)
86,541
2021
£000
843
27,770
653
2,762
5,496
18,892
56,416
(279)
56,137
(43,066)
(26,902)
(43,066)
(26,902)
43,475
29,235
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AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
3. FINANCIAL RISK MANAGEMENT CONTINUED
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern
in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital
structure to reduce the cost of capital. The Group is not subject to externally impaired capital requirements.
The Group owns subsidiary companies which are regulated by the Financial Conduct Authority (“FCA”) and these
businesses are subject to regulatory capital thresholds. Internal compliance departments in these businesses
regularly monitor and report to FCA to ensure they comply with capital thresholds which apply to them.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. This note
provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are
more likely to be materially adjusted due to estimates and assumptions turning out to be wrong.
a) Significant estimates
Valuation of goodwill and other intangible assets
Having considered the guidance under the relevant accounting standards and all aspects of the acquisition of RMG
and Revera, the Directors have concluded that these are acquisitions of a business and the assets acquired have
been recognised within the Group Consolidated Financial Statements in accordance with IFRS 3. Refer to note 22
Business Combinations.
Determining the valuation of goodwill and intangible assets arising from a business combination under IFRS
3 contains elements of judgement
The Group has acquired customer relationships, acquired brands and computer software included within intangible
assets as part of the business combinations. The valuation methodology and key assumptions in respect of the
valuation of these intangible assets can be found in Note 22.
Impairment of goodwill and other intangible assets and recoverability of Company’s investment in subsidiaries
The recognition of goodwill and other intangible assets arising on acquisitions and the impairment assessments
contain significant accounting estimates. Goodwill is carried at cost less provision for impairment, the carrying value
is tested annually for impairment, or more frequently if any indicators arise. Other intangible assets are amortised
over their useful economic life and are assessed for impairment when there is an indication that the asset might
be impaired. The impairment test of goodwill and other intangible assets includes key assumptions underlying the
recoverable amounts, the growth rates applied to the future cash flows and the Group’s discount rate. Note 20 sets
out the estimates used and the sensitivity changes in the key assumptions.
Estimation of current tax payable and current tax expense in relation to an uncertain tax position
The Group’s corporation tax provision for the prior year of £1,442,000 relates to management’s assessment of
the amount of tax payable on open positions where the liabilities remain to be agreed with relevant tax authorities.
Uncertain tax items for which a provision of £1,437,000 is made relates principally to the interpretation applicable
to arrangements entered into by the Group. Due to uncertainty associated with such tax items, it is possible that,
on conclusion of open tax matters at a future date, the final outcome may differ significantly. Whilst a range of
outcomes is possible, the extent of the maximum reasonable possible range is from additional tax liabilities of up to
£2,000,000 to a reduction in liabilities of up to £1,437,000.
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AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS CONTINUED
b) Significant judgements
Accounting for subsidiaries
AssetCo has acquired 68% of the equity of Rize ETF Limited. Whilst the founders of the business have a material
stake (which could be increased by 5% percentage points in the event of a sales “trigger” being met) there is in
place a comprehensive shareholder agreement which confers considerable control to the Group via the appointment
of Board representation and the way in which key matters have to be agreed including the ability to block resolutions
as well as voting patterns and economic dependency. Accordingly we believe it is appropriate to account for Rize as
a subsidiary entity.
Recoverability of receivables
Advanced drawings in relation to members of a partnership within the Group are held on the balance sheet as
receivables until there are accumulated profits to distribute to the members. Judgement is required to assess the
likelihood of recoverability of these receivables. At 30 September 2022 the Group had £1,208,000 in relation to
these amounts on the balance sheet.
The Board do not consider that any other critical judgements have been made in preparing the financial statements
which have a significant risk of causing a material adjustment to be made to the carrying amounts of assets and
liabilities within the next financial year.
5. 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 Group’s commercial competencies, Active equities, Infrastructure asset management, Exchange
Traded Funds and its investment in Digital Platforms.
Active equities comprise RMG, Saracen and Revera; Infrastructure Asset Management is the non-equities
investment arm of RMG; Exchange Traded Funds is Rize ETF and Digital Platforms represents the Group’s
investment in the associated company, Parmenion.
Substantially all revenues are earned in the UK with an amount generated in the US. We have included a table
below to show the split. By 30 September 2022 the US business has been sold. There was also a presence in the
UAE,which was discontinued before the end of the current financial year. During the 2022 financial year the UAE did
not generate any revenue and only incurred administrative costs.
The Directors consider that the chief operating decision maker is the Board. Head Office segment comprises
the Group Board’s management and associated costs and consolidation adjustments and for 2021 includes the
UAE business.
The only changes in the presentation of segmental information from the prior year are the inclusion of Infrastructure
asset management which arises from the acquisition of RMG in June 2022 and the inclusion of Digital Platform
which arises from the acquisition of the 30% stake in the associated entity, Parmenion.
Intra-segment transactions are disclosed on the face of the segmental report.
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.
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AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
5. SEGMENTAL REPORTING CONTINUED
ANALYSIS OF REVENUE AND RESULTS BY COMMERCIAL ACTIVITY
Year ended 30 September 2022
Revenue
Management fees
Marketing fees
6,372
–
79
–
79
–
1,724
1,724
Total revenue to external customers
6,372
Segment result
Operating (loss)/profit
Gain on bargain purchase
Finance income
Finance costs
Share of result of associate
(Loss)/profit before tax
Income tax
(Loss)/profit for the year
Segment assets and liabilities
Total assets
Total liabilities
Total net assets
Other segment information
Depreciation
Amortisation of intangible assets
Amortisation of right-of-use assets
Total capital expenditure
(7,124)
(151)
(2,794)
–
974
(10)
–
(6,160)
59
(6,101)
56,826
(12,157)
44,669
9
187
187
1
–
–
–
–
–
–
–
–
(151)
(2,794)
–
–
(151)
(2,794)
1,706
(678)
1,028
19,324
(461)
18,863
–
–
–
–
5
40
–
26
68
Active
equities
£000
Infrastructure
asset
management
£000
Exchange
traded
funds
£000
Digital
Platform
£000
Head
office
£000
Total
£000
6,451
1,724
8,175
–
–
–
(15,076)
(25,145)
3,227
11,459
–
–
3,227
12,433
(10)
181
(390)
(9,314)
–
59
(390)
(9,255)
24,236
102,092
(2,255)
(15,551)
21,981
86,541
–
–
–
14
227
187
27
–
–
–
–
–
–
–
181
181
–
181
–
–
–
–
–
–
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
5. SEGMENTAL REPORTING CONTINUED
Active
equities
£000
Infrastructure
asset
management
£000
Exchange
traded
funds
£000
Digital
Platform
£000
Head
office
£000
Year ended 30 September 2021
Revenue
Management fees
Marketing fees
Total revenue to external customers
Segment result
Operating profit/(loss)
Finance income
Finance costs
Profit/(loss) before tax
Income tax
Profit/(loss) for the year
Segment assets and liabilities
Total assets
Total liabilities
Total net assets
Other segment information
Depreciation
Amortisation of intangible assets
Total capital expenditure
135
–
135
32
–
–
32
(6)
26
3,518
(85)
3,433
–
1
3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
273
273
(347)
–
–
(347)
1
(346)
21,742
(471)
21,271
2
7
5
Geographical analysis of revenues is as follows:
UK
US
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14,608
1,844
(8)
16,444
(1,437)
15,007
34,335
(2,902)
31,433
–
–
–
2022
£000
6,905
1,270
8,175
Total
£000
135
273
408
14,293
1,844
(8)
16,129
(1,442)
14,687
59,595
(3,458)
56,137
2
8
8
2021
£000
408
–
408
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AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
6. OTHER INCOME
Interest on loan notes held in associate
Grant Thornton litigation
Less: success fee
Total other income
2022
£000
1,977
–
–
1,977
2021
£000
–
25,918
(3,530)
22,388
Interest on loan notes held in associate
As set out in note 23 the Group has acquired a 30% equity interest in Parmenion Capital Partners LLP via 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 £1,977,000 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
£30,515,000 of which £4,597,000 was reflected in the 2020 full year financial statements, as it had been awarded
by the Court irrespective of the outcome of any appeal. Other income shown in these financial statements for 2021
represents the balance of the Court’s award amounting to £25,918,000, 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.
7. ADMINISTRATIVE EXPENSES AND EXCEPTIONAL ITEMS
Included with administrative expenses are exceptional items as shown below:
Restructuring costs
Costs of re-admission to AIM
Exceptional items
Acquisition costs
Share-based payments
Other administrative expenses
Total administrative expenses
2022
£000
3,196
671
3,867
1,116
3,250
17,332
25,565
2021
£000
–
360
360
219
6,273
1,115
7,967
RMG sold its UK Solutions business for £230 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 this process the Group has incurred
one-off exceptional restructuring costs including termination payments of £1,140,000 and other charges.
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AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
7. ADMINISTRATIVE EXPENSES AND EXCEPTIONAL ITEMS CONTINUED
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 at a scale where re-admission in order to complete an acquisition is less likely so the Directors consider
that costs such as this are not likely to recur.
8. OTHER GAINS AND LOSSES
Reduction in fair value of asset held for resale
Gain on disposal of fair value investments
2022
£000
9,750
(18)
9,732
2021
£000
–
–
–
As referred to in note 22 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% and this investment was carried on the 2021
balance sheet at a fair value of £12,000,000. 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 £2,250,000 leading to a reduction in fair value of £9,750,000.
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 £1,017,000 realising a gain on disposal
of £18,000.
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AssetCo plc | Report and Financial Statements 2022
14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
9. OPERATING (LOSS)/PROFIT
Operating (loss)/profit is stated after charging the following:
Depreciation of property plant and equipment (note 18)
Depreciation of right-of-use assets (note 19)
Amortisation of intangible assets (note 20)
Loss on foreign exchange differences
Fees payable to the Company’s auditors:
– For the audit of the parent Company and the consolidated financial statements
– audit fees re: subsidiaries
– audit-related assurance services
– tax advisory services
– other non-audit services
Staff costs (note 11)
Expense relating to short-term and low-value leases
2022
£000
14
187
227
25
262
90
10
86
471
15,160
66
10. DIRECTORS’ EMOLUMENTS
Director
Martin Gilbert
Peter McKellar
Campbell Fleming
Jonathan Dawson
Tudor Davies
Christopher Mills
Mark Butcher
Aggregate fees and emoluments
Salary and fees
Long term incentive plan
Total
2022
£000
138
110
165
23
70
39
39
584
2021
£000
63
75
–
–
70
27
27
2022
£000
784
653
313
–
–
–
–
262
1,750
2021
£000
1,649
1,374
–
–
–
–
–
3,023
2022
£000
922
763
478
23
70
39
39
2,334
2021
£000
2
–
8
89
132
–
–
–
–
7,014
36
2021
£000
1,712
1,449
–
–
70
27
27
3,285
As referred to in note 36 the LTIP Scheme was discontinued on 5 July 2022 and all shares due under the scheme
have been released immediately subject to adjustments for the settlement of PAYE liabilities and subject to lock-in
restrictions as set out in the note.
Three directors have received awards under the Company’s LTIP during the financial year 2022. The amounts
in respect of the LTIP in the table above include the fair value of shares awarded and the national insurance
contribution and Pay as you Earn obligations which the Company has paid on behalf of the Participants. The awards
have now been fully vested and expensed in the income statement, with a charge of £1,750,000 recognised in 2022
(2021: £3,023,000). As the Scheme has closed no further charges will come through the income statement.
There are no retirement benefits accruing to current directors (2021: none) under a defined benefit or defined
contribution scheme. The highest paid director received aggregate emoluments, including awards under the share-
based payments charge, of £922,000 (2021: £1,712,000).
72
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
11. STAFF COSTS
The monthly average number of staff employed by the Group and Company (including executive directors) was:
Active equities
Infrastructure asset management
Exchange Traded Funds
Head office
The costs incurred in respect of these employees were:
Wages and salaries
Social security costs
Share-based payments
Other pension costs
Group
2022
No.
Group
2021
No.
Company
2022
No.
Company
2021
No.
36
5
13
14
68
Group
2022
£000
11,251
965
2,749
195
15,160
1
–
2
8
11
Group
2021
£000
660
852
5,496
6
7,014
–
–
–
14
14
–
–
–
8
8
Company
2022
£000
Company
2021
£000
1,073
171
2,749
12
4,005
450
827
5,496
–
6,773
Wages and salaries include termination payments of £1,140,000 in relation to the acquisition of RMG. These
amounts are reflected in the total RMG exceptional restructuring costs set out in Note 7.
Employee benefit obligations
The Group’s subsidiaries have defined contribution pension schemes in place. The pension contribution charge in
2022 amounted to £195,000 (2021: £6,000).
12. GAIN ON BARGAIN PURCHASE
Arising on acquisition of RMG
2022
£000
3,227
2021
£000
–
The calculation of the difference arising on acquisition of River and Mercantile between the purchase consideration
and the value of net assets acquired (see note 22) 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
£3,227,000 is treated as a credit to the income statement.
73
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
13. FINANCE INCOME
Dividend income
Gain on foreign exchange
Fair value gains on financial instruments classified as fair value through profit
and loss account
Interest income
14. FINANCE COSTS
Lease liability finance charge
Finance costs on bonds and letters of credit
2022
£000
11,459
927
–
47
12,433
2022
£000
(10)
–
(10)
2021
£000
194
–
1,650
–
1,844
2021
£000
–
(8)
(8)
15. GROUP AND COMPANY DIVIDENDS
An interim dividend of 1.3p per share in respect of the financial year to 30 September 2022 was paid in December
2022 and amounted to £1,798,000 (2021: £nil). The dividend was not recognised as a liability at 30 September
2022 as it was not approved and paid until after the period end.
16. INCOME TAX (CREDIT)/EXPENSE
Current tax
Current tax on (loss)/profits for the year
Total current tax (credit)/expense
Deferred tax
Increase in deferred tax assets (note 32)
Increase in deferred tax liabilities (note 32)
Total deferred tax (credit)/expense
Income tax (credit)/expense
74
2022
£000
2021
£000
(13)
(13)
16
(62)
(46)
(59)
1,437
1,437
(307)
312
5
1,442
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
16. INCOME TAX (CREDIT)/EXPENSE CONTINUED
The tax on the Group’s (loss)/profit before tax differs from the theoretical amount that would arise using the standard
tax rate applicable to the profits of the consolidated entities as follows:
(Loss)/profit before tax
Tax at a standard rate of 19% (2021: 19%)
Factors affecting tax charge for the year:
Expenses not deductible for tax purposes
Income not taxable for tax purposes
Difference between depreciation and capital allowances
Other short-term timing differences
Tax losses used
Movement in unrecognised deferred tax on losses
2022
£000
(9,314)
(1,770)
404
(2,868)
(5)
753
–
3,427
(59)
2021
£000
16,129
3,065
805
(105)
–
–
(2,394)
71
1,442
A change to the main UK corporation tax rate was included in the Finance Bill 2021, which had its third reading
on 24 May 2021, and is now considered substantively enacted. The rate applicable from 1 April 2022 to 31 March
2023 remains at 19% but the rate from 1 April 2023 will increase to 25%. Deferred taxes at the reporting date have
been measured using these enacted tax rates and reflected in these financial statements.
17. (LOSS)/EARNINGS PER SHARE
(a) Basic
Basic 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. The weighted average number of shares is
calculated by reference to the length of time shares are in issue taking into account the issue date of new shares
and any buy-backs (see note 31).
(Loss)/profit attributable to owners of the parent – £000
Weighted average number of ordinary shares in issue before share split as
reported – no.
Basic earnings per share as reported – pence
2022
20211
(8,440)
14,796
–
–
8,194,031
180.57
Weighted average number of ordinary shares in issue post share split – no.
103,017,624
81,940,310
Basic (loss)/earnings per share restated – pence
(8.19)
18.06
75
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
17. (LOSS)/EARNINGS PER SHARE CONTINUED
(b) Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of Ordinary Shares in issue
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 was
discontinued therefore there were no dilutive potential ordinary shares
(Loss)/profit attributable to owners of the parent – £000
Weighted average number of ordinary shares including potentially dilutive share in
issue before share split as reported – no.
Diluted earnings per share as reported – pence
Weighted average number of ordinary shares including potentially dilutive shares in
issue post share split – no.
Diluted (loss)/earnings per share – pence
2022
20211
(8,440)
14,796
–
–
9,187,346
161.05
103,017,624
91,873,460
(8.19)
16.10
2022
No.
20211
No.
Weighted average number of ordinary shares in issue
103,017,624
81,940,310
Adjustment for:
– assumed vesting of all ordinary shares in LTIP pool
–
9,933,150
Weighted average number of ordinary shares including potentially dilutive shares
103,017,624
91,873,460
1 In August 2022 the Company effected a 10 for 1 share split (see Note 31). The prior year share numbers and EPS have been adjusted for this.
76
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
18. PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 October 2020
Acquisition of subsidiary
Additions
At 30 September 2021
Acquisition of subsidiary
Additions
Disposals
At 30 September 2022
Accumulated depreciation
At 1 October 2020
Acquisition of subsidiary
Charge for the year
At 30 September 2021
Charge for the year
Disposals
At 30 September 2022
Net book value at 30 September 2022
Net book value at 30 September 2021
Company
Cost
At 1 October 2020 and 30 September 2021
Disposals
At 30 September 2022
Accumulated depreciation
At 1 October 2020 and 30 September 2021
Disposals
At 30 September 2022
Net book value at 30 September 2022
Net book value at 30 September 2021
Leasehold
improvements
£000
Fixtures and
fittings
£000
Computer
equipment
£000
Total
£000
–
–
–
–
2
–
–
2
–
–
–
–
1
–
1
1
–
26
8
–
34
–
–
(26)
8
26
8
–
34
–
(26)
8
–
–
–
32
8
40
13
15
–
68
–
22
2
24
13
–
37
31
16
26
40
8
74
15
15
(26)
78
26
30
2
58
14
(26)
46
32
16
Fixtures and
fittings
£000
Total
£000
26
(26)
–
26
(26)
–
–
–
26
(26)
–
26
(26)
–
–
–
Security
As at 30 September 2022 neither the Group nor the Company provided security in respect of property, plant and
equipment (2021: £nil).
77
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
19. RIGHT OF USE ASSETS AND LEASE LIABILITY
Group
Cost:
At 1 October 2020 and 30 September 2021
Acquisition of subsidiary
At 30 September 2022
Accumulated depreciation:
At 1 October 2020 and 30 September 2021
Charge for the year
At 30 September 2022
Net book value at 30 September 2022
Net book value at 30 September 2021
Group
Lease liability:
At 1 October 2020 and 30 September 2021
Acquisition of subsidiary
Payments made
Interest charge
At 30 September 2022
Of which:
Current lease liabilities
Non-current liabilities
At 30 September 2022
Right of
use asset
£000
–
411
411
–
187
187
224
–
Lease
liability
£000
–
398
(114)
10
294
294
–
294
The Group’s leases relating to office accommodation with terms of more than one year are recognised as a right of
use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. The
weighted average incremental borrowing rate applied to the leases was 4 %.
The Company has no leases.
78
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
20. GOODWILL AND INTANGIBLE ASSETS
Goodwill
£000
Customer
relationships
£000
Software
£000
Website
development
£000
Brand
£000
Group
Cost
At 1 October 2020
Acquisition of business
Additions
At 30 September 2021
Acquisition of business
Additions
–
19,787
–
19,787
648
–
–
–
–
–
–
–
–
–
2,400
1,250
–
–
At 30 September 2022
20,435
2,400
1,250
Accumulated amortisation
At 1 October 2020
Acquisition of business
Charge for the year
At 30 September 2021
Acquisition of business
Charge for the year
At 30 September 2022
Net book value at
30 September 2022
Net book value at
30 September 2021
–
–
–
–
–
–
–
–
–
–
–
–
64
64
–
–
–
–
–
98
98
20,435
2,336
1,152
19,787
–
Total
£000
–
20,086
1
20,087
4,748
12
24,847
–
12
8
20
–
227
247
24,600
20,067
–
200
–
200
450
–
650
–
–
6
6
–
54
60
590
194
–
99
1
100
–
12
112
–
12
2
14
–
11
25
87
86
Software and website development are internally generated and have finite lives as set out in Note 2.8.
Amortisation of all intangible assets is included in administrative expenses in the income statement.
Goodwill is allocated to the Group’s cash-generating units (CGU’s) identified according to corporate entity and an
analysis is presented below:
Rize ETF Limited
Saracen Fund Managers Limited and Revera Asset Management Limited
Total
2022
£000
16,860
3,575
20,435
2021
£000
16,860
2,927
19,787
79
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
20. GOODWILL AND INTANGIBLE ASSETS CONTINUED
Impairment review
Goodwill is reviewed annually for impairment and its recoverability has been assessed at 30 September 2022 by
comparing the carrying amount of the CGUs to their expected recoverable amount, estimated on a value-in-use
basis. The value-in-use of each CGU has been calculated using pre-tax discounted cash flow projections based on
the most recent budgets and forecasts provided by the relevant subsidiary company board of directors. The most
recent budgets prepared are part of the annual planning process for the year ending 30 September 2022 and are
then extrapolated over the next four years so that the budgets and forecasts cover a period of five years. Cash flows
are then extrapolated beyond the five-year budget and forecast period using an expected long-term growth rate,
with the long-term growth rate considered reasonable compared with budget and forecast growth.
As at 30 September 2022 headroom exists in the calculations in respective recoverable amounts of these CGUs
over the carrying amounts of the goodwill allocated to them. On this basis the Directors have concluded that there is
no impairment required to the goodwill balances as at 30 September 2022.
Rize ETF Limited
The Rize ETF CGU recoverable amount was calculated as £40.4 million as at 30 September 2022 giving a surplus
over the Rize ETF carrying value of £23.3 million, indicating there is no impairment. The key underlying assumptions
of the calculation are the discount rate, the short-term growth in earnings and the long-term growth rate.
Revenue growth is forecast using planned fund launches, expected net funds flows and the estimated impact of
market performance on AuM, multiplied by estimated fee yields. Revenue growth reflects the fact that Rize ETF is at
an early stage in its development and revenue is expected to grow quite quickly from a low base, this is represented
by revenue growth CAGR of 82% over the assessment period. Expenditure growth reflects historical growth plus
management actions to support the launch of new funds as they are developed and are considered reasonable
in current market and industry conditions. This is represented by cost growth CAGR of 28% over the assessment
period. A pre-tax discount rate of 14.5% has been used (2021: 35%) based on the Group’s assessment of the
risk-free rate of interest and specific risks relating to Rize ETF As compared to 35% in the prior year that reflects
the specific risks arising on the purchase and integration of the business. The 2% long-term growth rate applied is
considered prudent in the context of the long-term growth rate for the funds and investment management industry
in which the CGU operates.
Sensitivity analysis was performed on the key inputs of the valuation, being the growth in revenue. A reduction
in targeted AUM growth rate by 20% each year results in a reduction in the valuation while still retaining a £3.9m
(23%) headroom over the current carrying value.
Saracen Fund Managers Limited
Following the year end the businesses of Saracen Fund Managers and Revera Asset Management were combined
to provide synergies and enhance growth prospects.
Accordingly the Directors view the CGU as the combined businesses and have approached the review of
impairment on the same basis. Based on a value-in-use calculation the amount of the Saracen/Revera CGU as at
30 September 2022 was £5.5 million giving a surplus over the carrying value of £2.1 million, indicating that there is
no impairment. The key underlying assumptions of the calculation are the discount rate, the short-term growth in
earnings & cost base and the long-term growth rate of the business.
A pre-tax discount rate of 14.5% (2021: 15.3%) has been used based on the Group’s assessment of the risk-free
rate of interest and specific risks relating to Saracen/Revera.
80
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
20. GOODWILL AND INTANGIBLE ASSETS CONTINUED
The key input in forecasting revenue is AuM, which is forecast to grow over the five-year period, based on new
business targets, expected net funds flows and estimated impact of market performance. This is represented by
revenue growth CAGR of 17% and cost growth CAGR of 5% from 2023, for the remainder of the assessment
period. Annual cash flow growth rates over the next five financial years, the period covered by the most recent
forecasts, reflect historic actual growth and planned management actions and are considered to be reasonable in
the current market and industry conditions.
The 2% long-term growth rate applied is considered prudent in the context of the long-term average growth rate for
the funds and investment management industries in which the CGU operates.
Sensitivity analysis was performed on the key inputs of the valuation, being the growth in revenue and cost base.
A reduction in planned AUM growth of 75% from 2024 for 4 years, coupled with appropriate and identified cost
savings representing an average of 20% of budgeted costs from 2024 onwards, resulted in in a reduction in the
valuation of the CGU while still retaining a £500,000 (15%) headroom over the current carrying value.
21. INVESTMENTS IN SUBSIDIARIES
Company shares in group undertakings
At 1 October
Additions in the year
Impairment
At 30 September
2022
£000
25,194
45,249
(522)
2021
£000
–
25,194
–
69,921
25,194
Investments in Group undertakings are recorded at cost, which is the fair value of the consideration paid, less any
impairment.
The impairment charged in 2022 relates to the acquisition of Revera Asset Management Limited. Following the year
end the Revera business was combined into Saracen Fund Managers Limited. The Directors take the view that in
these circumstances the carrying value of the investment should be written down to the underlying net asset value
of Revera as at 30 September 2022 which has resulted in an impairment charge of £522,000.
81
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21. INVESTMENTS IN SUBSIDIARIES CONTINUED
The subsidiaries of AssetCo plc as at 30 September 2022 are as follows:
Proportion
held
Class of
shareholding
Note
Name of Company
River and Mercantile Group Limited
River and Mercantile Holdings Limited
River and Mercantile Group Services Limited
River and Mercantile Group Trustees Limited
River and Mercantile US Holdings Limited
River and Mercantile Asset Management LLP
River and Mercantile Infrastructure LLP
River and Mercantile Infrastructure GP S.a.r.l.
River and Mercantile Asset Management LLC
Revera Asset Management Limited
Saracen Fund Managers Limited
Rize ETF Limited
AAMCO Limited
AssetCo Asset Management Limited
AssetCo Asset Managers Limited
AssetCo Investment Management Limited
Notes:
1
1
1
1
1
1
1
1
4
2
2
3
1
1
1
1
100%
100%
100%
100%
100%
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
Ordinary
Nature of business
Investment management
Holding company
Service company
Dormant service company
Holding company for
the US business
Investment management
company
100%
100%
100%
100%
100%
68%
100%
100%
100%
100%
Ordinary
Investment advisor company
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
General partner company
Dormant service company
Investment management
Investment management
Marketing of thematic
exchange traded funds
Dormant
Dormant
Dormant
Dormant
1. Incorporated, registered and having their principal places of business in the United Kingdom with their registered
offices being 30 Coleman Street, London, EC2R 5AL.
2. Incorporated, registered and having their principal place of business in the United Kingdom with their registered
office being 7 Castle Street, Edinburgh EH2 3AH.
3. Incorporated, registered and having its principal place of business in the United Kingdom with its registered office
being 2 Glass Wharf, Bristol BS2 0FR
4. Incorporated, registered and having its principal place of business in the USA with its registered office being
1209 Orange Street, Wilmington, Delaware 19801.
All subsidiary undertakings are included in the consolidation of the Group.
82
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
22. BUSINESS COMBINATION
22 (a) Summary of acquisitions
On 15 June 2022 AssetCo plc announced the completion of the acquisition of 94.15% of the ordinary shares of
River and Mercantile Group plc (“RMG”) that it did not already own. RMG is an active equities fund management
Group based in London.
On 5 August 2022 AssetCo plc announced the completion of the acquisition of 100% of the ordinary shares of
Revera Asset Management Limited (“Revera”), a fund management company based in Edinburgh.
Details of the purchase consideration are as follows:
Cash paid
Deferred consideration (see note 26)
Ordinary shares issued
Shares in RMG purchased for cash in 2021
Total consideration
Total
£000
1,001
100
41,899
2,250
45,250
RMG
£000
1
–
41,899
2,250
44,150
Revera
£000
1,000
100
–
–
1,100
The fair value of the 5,985,541 shares issued as consideration paid for RMG (£41,899,000) was based on the
published share price on 14 June 2022 of £7 per share. Issue costs attributable to the shares amounted to
£1 million and were charged to the merger reserve arising on the issue as allowed by Companies Act 2006.
83
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
22. BUSINESS COMBINATION CONTINUED
The fair value of assets and liabilities recognised as a result of the acquisition are as follows:
Cash
Trade and other receivables
Assets held for resale
Plant and equipment
Right-of-use assets
Assets held at fair value
Corporation tax asset
Deferred tax asset
Trade payables
Other payables
Lease liability
Corporation tax liability
Total net assets recognised on acquisition
Fair value adjustments
Intangible assets: brand
Intangible assets: software
Intangible assets: customer relationships
Deferred tax liability
Net identifiable assets/(liabilities) acquired
Gain on bargain purchase taken to income statement
Goodwill
Net assets acquired
Total
£000
43,149
9,422
7,269
15
411
1,036
1,159
16
(16,921)
(312)
(398)
(33)
44,813
450
1,250
2,400
(1,084)
47,829
(3,227)
648
45,250
RMG
£000
42,419
9,356
7,269
14
411
1,036
1,159
16
(16,921)
–
(398)
–
44,361
450
1,250
2,400
(1,084)
47,377
(3,227)
–
44,150
Revera
£000
730
66
–
1
–
–
–
–
–
(312)
–
(33)
452
–
–
–
–
452
–
648
1,100
The goodwill is attributable to the inherent value of the Revera business and intangible assets that do not qualify for
separate recognition.
Acquired receivables
The fair value of acquired trade receivables is £813,000 and no loss allowance has been recognised on acquisition.
Acquired brands
The brands are recognised on acquisition at their fair values at the date of acquisition and subsequently amortised
on a straight-line basis, over their estimated useful lives. The estimated useful lives for the Saracen and RMG brands
are 10 years and for the Rize ETF brand is 5 years. The valuation methodology adopted by the Group for brands is
the “relief-from-royalty” approach. A royalty rate of 0.4% was adopted and applied to forecast cashflows assuming a
10-year life for RMG brands and a weighted average cost of capital of 16%.
84
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
22. BUSINESS COMBINATION CONTINUED
Computer Software
RMG has two internally developed computer programs which have been recognised at fair value at the date of
acquisition. They are being amortised on a straight-line basis over their estimated useful lives of between 2 and
5 years. The valuation approach for computer software was replacement-cost. We have estimated the total
development costs which would need to be incurred in developing the software from the date of acquisition. This
involved estimating the number of developers required for each system, their salary costs and time input. We added
estimates for overhead costs to support this development team and then applied a mark-up on total costs of 17.9%
to reflect the margin required to incentivise a third-party developer. No opportunity cost was applied.
Customer Relationships
RMG’s relationships with Institutional Investors has been recognised at cost which is the fair value at the date of
acquisition. Following initial recognition this is carried at cost less any accumulated amortisation and accumulated
impairment losses, with the related charge recognised in the consolidated income statement. The amortisation
is on a straight-line basis over an estimated useful life of 11 years. The valuation approach applied to Customer
Relationships is the Multi-period Excess Earnings Method (“MEEM”). Management developed a cash flow
forecast based on expectations for the year from acquisition as tempered by historical analysis of sales and then
extrapolated to give revenue growth of 2% in perpetuity. Other assumptions key to establishing the valuation are the
attrition rate of clients, estimated at a rate of 8%, and the operating margin of 26.2% for institutional relationships
which has been historically achieved. We have assumed a weighted average cost of capital of 17%, which is
a 1% premium to the overall WACC in the Group’s businesses and this is a reflection of the limited control and
marketability of relationship assets.
Intangible asset in relation to non-contracted relationships
If customer relationships are to be recognised IFRS 3 requires that they must stem from contractual or legal rights
or are capable of being separable. Despite being an important driver of value, customer relationships with end
investors and intermediaries are neither contractual nor separable.
Revenue and profit contribution
The acquired businesses contributed revenues of £5,620,000 and operating losses of £7,212,000 from the date of
acquisition to 30 September 2022.
22 (b) Purchase consideration – cash outflow
Outflow of cash to acquire subsidiaries, net of cash acquired
Cash consideration
Less: balances acquired
Net (inflow)/outflow of cash – investing activities
2022
£000
2021
£000
1,001
17,165
(43,149)
(42,148)
(705)
16,460
Acquisition-related costs
Acquisition-related costs of £1,116,000 (2021: £277,000) that were not directly attributable to the issue of shares
are included in administrative expenses in the statement of profit or loss.
85
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23.
GROUP INTEREST IN ASSOCIATES
Purchase of interest in Parmenion
Share of operating results
Closing balance at 30 September 2022
Total
£000
21,871
181
22,052
Equity
£000
Loan notes
£000
171
181
352
21,700
–
21,700
On 1 October 2021 AssetCo acquired an effective 30% interest in the equity of Parmenion Capital Partners LLP, via
a Guernsey-registered corporate structure. AssetCo is a shareholder in the holding company for this group, Shillay
TopCo Limited. Further details on Parmenion are set out in the Business Review.
The tables below provide summarised information of the associate. The information disclosed reflects the amounts
presented in the unaudited financial statements of the relevant associate and not the AssetCo plc share of those
amounts. They have been amended to reflect adjustments made by the entity when using the equity method,
including fair value adjustments and modifications for differences in accounting policy.
Unaudited summarised balance sheet
Total current assets
Non-current assets
Total current liabilities
Total non-current liabilities
Net assets
Unaudited summarised statement of comprehensive income
Revenue
Profit for the period
Other comprehensive income
Total comprehensive income
Shillay TopCo
Limited
30 September
2022
£000
36,203
87,241
(17,330)
(105,219)
895
Shillay TopCo
Limited
30 September
2022
£000
40,800
602
–
602
The Company holds the interest in associate at cost value of £21,871,000.
The Group and Company consider that the investment in Parmenion is a level 2 classified financial asset.
86
AssetCo plc | Report and Financial Statements 2022
14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
24. LONG TERM RECEIVABLES
Drawings in advance of profits
Group
2022
£000
1,208
Group
2021
£000
–
Company
2022
£000
Company
2021
£000
–
–
In the period, members of a partnership in the Group have received drawings and special drawings in advance of
future profits of £1,208,000. As profits are not forecast within the next 12 months the amounts have been treated as
long-term receivables.
25. TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Consideration receivable on sale of US and UK
Solutions businesses
Prepayments and accrued income
Group
2022
£000
1,441
3,993
3,018
1,248
9,700
Group
2021
£000
Company
2022
£000
Company
2021
£000
216
144
–
247
607
–
–
–
34
34
–
35
–
73
108
On 25 January 2022 RMG announced that it had agreed terms on the disposal of its US Solutions business, River
and Mercantile LLC. This US business was classified as held for sale on the acquisition of RMG by AssetCo in June
2022. The deal completed on 8 August 2022 for a consideration of £7,269,000. £5,462,000 had been received by
30 September 2022 leaving £1,807,000 outstanding. The sale of the RMG UK Solutions business, announced on
26 October 2021 was completed on 31 January 2022. £1,211,000 of the consideration remained outstanding at
30 September 2022. This is in relation to a Group relief receivable from Schroder International Holdings Limited.
Due to their short-term nature, the carrying value of trade and other receivables approximates to their fair value.
Trade and other receivables, including accrued income and the consideration due on the sale of the US Solutions
business, held in other currencies amounted to £2,639,000 (2021: £200,000).
The carrying value of trade receivables and accrued income forms part of the Group’s overall exposure to credit risk.
The Group does not hold any collateral as security.
As of 30 September 2022, trade and other receivables of £nil (2021: £nil) were impaired, and all trade receivables
were aged less than 30 days. The amount of the provision was immaterial (2021: immaterial). No trade receivables
were written off during the year (2021: £nil).
87
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
26. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
UK listed shares
Seeded funds
Group
2022
£000
–
37
37
Group
2021
£000
12,000
–
12,000
Company
2022
£000
–
–
–
Company
2021
£000
12,000
–
12,000
UK listed shares represents the 5,000,000 shares acquired in 2021 in RMG. The Company has now acquired
the entire share capital of RMG which is fully consolidated in the Group’s financial statements. The Company was
required to record the fair value of this existing stake when calculating the consideration for the purchase of RMG.
The remeasurement led to a reduction in fair value of £9,750,000 which has been expensed in Other losses/gains in
the income statement.
On acquiring RMG the Group obtained a number of seed investments; RMG uses capital to invest in its own
products as seed investments and they are recognised under the existing accounting policy as assets held at fair
value through profit and loss. The fair value of the Group’s investment in its funds is derived from the fair value of the
underlying investments some of which are not traded in an active market and therefore the investment is classified
as Level 2 under IFRS 13 Fair Value Measurement.
26 (a) Amounts recognised in profit or loss
Fair value (losses)/gains on equity investments
Dividends received recognised in finance income
Group
2022
£000
(9,750)
11,459
Group
2021
£000
1,650
194
Company
2022
£000
Company
2021
£000
(9,750)
11,459
1,650
194
26 (b) Risk exposure and fair value measurement
The financial instruments are exposed to equity market price risk. Fair value for the investments were determined by
reference to their published price quotation in an active market (classified as level 1 in the fair value hierarchy under
IFRS 13). As mentioned in note 26 (a) above the Group has a financial instrument classified at level 2 which is an
immaterial investment in a seed fund.
88
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
27. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Cash and cash equivalents
Cash and cash equivalents
UK sterling
UAE dirhams
US dollars
Euros
Australian dollars
New Zealand dollars
Group
2022
£000
43,066
43,066
Group
2021
£000
26,902
26,902
Company
2022
£000
Company
2021
£000
7,394
7,394
22,226
22,226
41,270
26,866
7,394
22,190
–
1,576
12
13
195
36
–
–
–
–
–
–
–
–
–
36
–
–
–
–
43,066
26,902
7,394
22,226
Cash and cash equivalents receive interest at the floating rate and are carried on the balance sheet at a value
approximate to their fair values. Balances are held with reputable banks with credit ratings of triple B and above.
28. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Other taxation and social security
Amounts due to Group undertakings
Deferred consideration
Accruals
Group
2022
£000
11,347
92
105
–
100
Group
2021
£000
300
33
62
–
–
1,106
12,750
1,577
1,972
Company
2022
£000
Company
2021
£000
84
2
68
5,100
100
499
5,853
104
2
45
–
–
1,315
1,466
Due to their short-term nature, the carrying value of trade and other payables approximates to their fair value. Trade
and other payables held in other currencies amounted to £810,000 (2021: £300,000).
Deferred consideration is in respect of the acquisition of Revera Asset Management Limited and is payable by
August 2023.
The amount due to Group undertakings recognised in the Company’s trade and other payables is due to River and
Mercantile Holdings Limited and is for the purpose of providing working capital. It is interest-free, unsecured and
repayable on demand.
89
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
29. CURRENT TAXATION
Corporation tax payable
Group
2022
£000
1,437
Group
2021
£000
1,437
Company
2022
£000
Company
2021
£000
1,437
1,437
There is no corporation tax charge arising in the current year so the balance above is in respect of AssetCo plc’s
prior year charge only. As referred to in note 4 there is some uncertainty around the treatment of certain items in the
tax return and the matter remains open.
There is also an amount of £1,173,000 included as income tax receivable in current assets. £1,159,000 of this is an
amount of tax receivable in relation to group relief claims related the disposal of the RMG UK Solutions business.
30. FINANCIAL ASSETS AND LIABILITIES
The following tables illustrate the categorisation and carrying value of financial assets and liabilities as at
30 September 2022. Credit risk is also discussed in note 3.1 (a).
Financial assets
Trade receivables
Other receivables
Consideration for US Solutions business
Cash and cash equivalents
Financial assets at amortised cost
Financial assets at fair value through profit and loss
Financial liabilities
Liabilities at amortised cost
Trade payables
Other payables
Lease liability
Group
2022
£000
1,441
6,395
1,807
43,066
52,709
37
52,746
Group
2022
£000
11,346
1,299
294
12,939
Group
2021
£000
Company
2022
£000
Company
2021
£000
216
144
–
26,902
27,262
12,000
39,262
Group
2021
£000
300
1,610
–
1,910
–
–
–
7,394
7,394
–
7,394
–
35
–
22,226
22,261
12,000
34,261
Company
2022
£000
Company
2021
£000
84
501
–
585
104
1,317
–
1,421
90
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30. FINANCIAL ASSETS AND LIABILITIES CONTINUED
Maturity analysis of financial liabilities
The following disclosures show the maturity profile of contractual undiscounted cash flows of financial liabilities as at
30 September 2022:
2022
In one year or less
2021
In one year or less
Other
payables
and
accruals
£000
Lease
liability
and
accruals
£000
Trade
payables
£000
Total
£000
11,346
1,299
294
12,939
300
1,610
–
1,910
Currency risk
The Company and Group has used a sensitivity technique that measures the estimated change to the fair value of the
Group and Company’s financial instruments of a 10% strengthening in sterling against all other currencies from the
closing rates as at 30 September 2022, with all other variables remaining constant. A 10% variation would have had an
impact on the balance sheet of £328,000. Of this charge, £328,000 would be taken to the income statement.
2022
Sterling
US dollar
Euro
Australian dollar
New Zealand dollar
Swiss franc
2021
Sterling
UAE dirham
Financial
assets
£000
Financial
liabilities
£000
48,311
3,901
142
13
379
–
(12,122)
(495)
(44)
(237)
–
(41)
Net
£000
36,189
3,406
98
(224)
379
(41)
52,746
(12,939)
39,807
39,209
(1,610)
37,599
53
(300)
(247)
39,262
(1,910)
37,352
Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions.
Nonetheless the analysis above is considered to be materially representative of the Group’s exposure to currency
risk during the year.
91
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
31. EQUITY
31 (a) Share capital and share premium
2022
Shares
2021
Shares
2022
£000
2021
£000
Ordinary shares of 1p each (2021:10p)
Fully paid
149,292,970
8,424,847
1,493
28,613
The ordinary shares entitle the holder to participate in dividends, and to share in the proceeds of winding up the
Company in proportion to the number of and amounts paid on the shares held.
(i) Movement in ordinary shares
Opening balance at 1 October 2020
Success fee settled in ordinary shares(i)
Share buy-back(ii)
Placing(iii)
Consideration shares re: Saracen(iv)
Less: transaction costs arising on shares issues
Balance at 30 September 2021
Consideration shares re: RMG(v)
Shares arising from LTIP(vi)
Share premium cancellation(vii)
Effect of 10 for 1 share split(vii)
Balance at 30 September 2022
Notes:
(i) Success fee
Number of
shares
12,211,163
854,722
(6,532,942)
1,725,000
166,904
8,424,847
–
8,424,847
5,985,541
518,909
–
Share
capital
£000
1,221
85
(653)
Share
premium
£000
–
3,445
–
Total
£000
1,221
3,530
(653)
173
17
843
–
843
598
52
–
24,840
25,013
–
17
28,285
29,128
(515)
(515)
27,770
28,613
–
4,255
598
4,307
(32,025)
(32,025)
–
–
–
1,493
–
1,493
14,929,297
1,493
134,363,673
–
149,292,970
1,493
Following the successful conclusion of the litigation against the Company’s former auditors, Grant Thornton,
in October 2020 a fee became payable to Cadoc Limited which was settled entirely in ordinary shares in
December 2020 at an issue price of £4.13 per share.
(ii) Share buy-back
Also arising out of the successful litigation, the Company returned approximately £26.9 million to shareholders
in a tender offer. A circular was sent to shareholders on 2 December 2020 and the resolution was approved at
a general meeting on 17 December 2020. The tender was over-subscribed and the full 50% of shares offered
were bought-back and cancelled amounting to 6,532,942 ordinary shares. The buy-back was completed
without reference to published financial statements but the Board carefully considered the material effects of the
receipt of cash from the Grant Thornton claim and satisfied themselves on the basis of up-to-date management
accounts and careful consideration of amounts available in the Company’s bank accounts.
The total cost of £27.021 million (including £171,000 of transactions costs) were deducted from equity. A
transfer of £653,000 was made from retained earnings to capital redemption reserve.
92
AssetCo plc | Report and Financial Statements 2022
14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
31. EQUITY CONTINUED
(iii) Placing
In July 2021 the Company raised £25,012,500 via a placing of 1,725,000 new ordinary shares at £14.50 per
share to fund the acquisition of Rize ETF Limited.
(iv) Consideration re: Saracen Fund Managers
On 30 July 2021 the Company completed the acquisition of Saracen Fund Managers Limited which was
settled in part by the issue to certain vendors of 166,904 new ordinary share. Under section 612 of the
Companies Act 2006 the excess over the par value of these shares is accounted for as a Merger Reserve
rather than as share premium.
(v) Consideration re: River and Mercantile
On 15 June 2022 the Company completed the acquisition of River and Mercantile Group Plc, the consideration
for which, amounting to £41,899,000, was wholly settled by the issue of new ordinary shares in AssetCo plc.
Under section 612 of the Companies Act 2006 the excess over the par value of these shares is accounted for
as a Merger Reserve rather than as share premium.
Where a company issues equity shares in consideration for securing a holding of at least 90% of the nominal
value of each class of equity in another company, the application of merger relief is compulsory. Merger relief is
a statutory relief from recognising any share premium on shares issued. Instead, a merger reserve is recorded
equal to the value of share premium which would have been recorded if the provisions of section 612 of the
Companies Act 2006 had not be applicable. As the consideration for the acquisition of River and Mercantile
met this criterion merger relief has been applied.
(vi) Shares arising from LTIP
As referred to in Note 36 on 5 July 2022 the Company discontinued its LTIP scheme which resulted in the issue
of 518,909 new ordinary shares at a price of £8.30.
(vii) 10 for 1 share split
On 10 August 2022 the Court sanctioned the sub-division of the Company’s shares such that one share of 10p
became 10 shares of 1p. Accordingly the number of shares in issue at that date was increased by 134,363,673
so that the total number of shares in issue became 149,292,970. There was no change to the nominal value of
shares in issue.
On the same date the Court also sanctioned the cancellation of the amount standing to the credit of the
Company’s share premium account. Accordingly, an amount of £32,025,000 was transferred to distributable
reserves.
93
AssetCo plc | Report and Financial Statements 2022
14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
31. EQUITY CONTINUED
31 (b) Other reserves
Opening balance at 1 October 2020
Arising on buy-back of shares
Arising on acquisition of Saracen
Share-based payments in relation to LTIP (see note 36)
Balance at 30 September 2021
Arising on acquisition of RMG
Costs of RMG acquisition
Share-based payments in relation to LTIP (see note 36)
Capital
redemption
reserve
£000
Merger
reserve
£000
Other
reserve
£000
–
653
–
–
653
–
–
–
–
–
2,762
–
2,762
41,301
(1,000)
–
–
–
5,496
5,496
–
–
–
(5,496)
Total
£000
–
653
2,762
5,496
8,911
41,301
(1,000)
(5,496)
Balance at 30 September 2022
653
43,063
–
43,716
As referred to in note 31 (a) the Company bought back and cancelled 6,532,942 ordinary shares in December 2020.
These shares have been credited to the Capital Redemption Reserve in the amount of £653,000.
Also as referred to in note 31 (a) a Merger Reserve arose on the issue of shares to vendors of Saracen Fund
Managers Limited rather than share premium.
During the year the Company terminated its Long-Term Incentive Plan (“LTIP”) and any shares due to the participants
under the terms of the LTIP have been issued although sale by participants is restricted by certain “lock-in” arrangements.
31 (c) Retained earnings
Opening balance as at 1 October
Net (loss)/profit for period
Cancellation of share premium
Share buy-back – see (iii) above
Costs associated with the buy-back
Shares purchased for Treasury
Exchange movement
Balance as at 30 September
94
2022
£000
18,892
(8,440)
32,025
–
–
(51)
–
2021
£000
31,124
14,796
–
(26,850)
(171)
–
(7)
42,426
18,892
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
32. DEFERRED TAXATION
An analysis of the Group’s deferred tax liabilities is shown below:
Deferred tax liabilities
Deferred tax liabilities to be settled after more than one year
Deferred tax liabilities to be settled within one year
Total deferred tax liabilities
The balance comprised temporary differences attributable to:
Deferred tax liability
Financial assets at fair value through profit and loss
Right-of-use assets
Intangible assets
Deferred tax liability
Less:
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax liability
Deferred tax movements
Group
2022
£000
861
209
1,070
Group
2022
£000
28
45
997
1,070
–
1,070
Group
2021
£000
Company
2022
£000
Company
2021
£000
40
9
49
–
–
–
–
–
–
Group
2021
£000
Company
2022
£000
Company
2021
£000
313
–
49
362
(313)
49
–
–
–
–
–
–
Group
At 1 October 2020
Acquisition of subsidiary
Credited/(charged) to profit and loss
Set-off of deferred tax liabilities pursuant to set-off provisions
At 30 September 2021
Acquisition of subsidiaries
Credited/(charged) to profit and loss
At 30 September 2022
Financial
assets at
fair value
through
profit and
loss
£000
–
–
313
(313)
–
28
–
28
Right-of-use
assets
£000
Intangible
assets
£000
–
–
–
–
–
45
–
45
–
50
(1)
–
49
1,011
(63)
997
313
–
–
313
(313)
–
Total
£000
–
50
312
(313)
49
1,084
(63)
1,070
95
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
32. DEFERRED TAXATION CONTINUED
The balance comprised temporary differences attributable to:
Deferred tax assets
Share-based payments
Less: amounts not recognised
Deferred tax asset
Less:
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax asset
Group
2022
£000
–
–
–
–
–
Group
2021
£000
1,044
(731)
313
(313)
–
Company
2022
£000
Company
2021
£000
–
–
–
–
–
1,044
(731)
313
(313)
–
Total
£000
–
6
307
(313)
–
16
(16)
–
Group
At 1 October 2020
Acquisition of subsidiaries
(Credited)/charged to profit and loss
Set-off of deferred tax liabilities pursuant to set-off provisions
At 30 September 2021
Acquisition of subsidiaries
(Credited)/charged to profit and loss
At 30 September 2022
Losses
£000
Share-based
payments
£000
–
6
(6)
–
–
–
–
–
–
313
(313)
–
16
(16)
–
The recognition of deferred tax assets is based upon whether it is more likely than not that sufficient and suitable
taxable profits will be available in the future against which the reversal of temporary differences can be deducted.
Where the temporary differences relate to losses, the availability of the losses to offset against future profitability
is also considered. The directors consider that there is no basis on which to recognise deferred tax assets at
30 September 2022 or 30 September 2021. The unrecognised asset in respect of tax losses is set out below.
Tax losses
Unused tax losses for which no deferred tax benefit has been recognised
Potential tax benefit at 25% (2021: 25%)
2022
£000
36,600
9,150
2021
£000
5,118
1,280
The unused tax losses were incurred by AssetCo plc, Rize ETF Limited, Revera Asset Management Limited and
River and Mercantile Group Limited.
96
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
32. DEFERRED TAXATION CONTINUED
Unrecognised temporary differences
Temporary differences for which no deferred tax benefit has been recognised
Potential tax benefit at 25% (2021: 19%)
2022
£000
–
–
2021
£000
3,847
731
In the prior year there were temporary differences of £731,000 arising as a result of the long-term incentive plan
however a deferred tax asset was recognised only to the extent that there are sufficient deferred tax liabilities that
can be offset by the deferred tax asset. As the long-term incentive plan has been discontinued no such temporary
timing differences arise in the current year.
33. FUTURE CAPITAL COMMITMENTS
There were no capital commitments contracted for but not provided in these financial statements at 30 September
2022 (2021: £nil).
34. RECONCILIATION OF (LOSS)/PROFIT BEFORE TAX TO NET CASH INFLOW FROM OPERATIONS
(Loss)/profit for the year before taxation
(9,314)
16,129
(4,355)
16,444
Group
2022
£000
Group
2021
£000
Company
2022
£000
Company
2021
£000
Share-based payments
– in respect of LTIP
– Success fee
Cash effect of LTIP
Share of profits of associate
Interest received from associate
Increase in investments
Reduction in fair value of investments
Gain on disposal of fair value investments
Impairment of investments
Proceeds of asset held for resale
Bargain purchase
Depreciation
Amortisation of intangible assets
Amortisation of right-of-use assets
Finance costs (note 14)
Finance income (note 13)
Dividends from investment held at fair value
Decrease in receivables
(Decrease)/increase in payables
2,749
–
(3,938)
(181)
(1,977)
5,496
3,530
–
–
–
2,749
–
(3,938)
–
(1,977)
5,496
3,530
–
–
–
–
(12,000)
–
(12,000)
9,750
(18)
–
5,462
(3,227)
14
227
187
10
(974)
(11,459)
928
(6,556)
–
–
–
–
–
2
8
–
8
–
9,750
–
522
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8
–
(194)
(11,459)
4,367
(591)
75
(712)
(194)
4,578
163
Cash (outflow)/inflow from operations
(18,317)
16,755
(9,345)
18,025
97
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
35. RELATED PARTY TRANSACTIONS
Related parties comprise the Company’s shareholders, subsidiaries, associated companies, joint ventures and other
entities over which the shareholders of the Company have the ability to control or exercise significant influence over
financial and operating decisions and key management personnel.
During the year, the Company entered into the following significant transactions with related parties at prices and on
terms agreed between the related parties:
Key management compensation
Salaries, fees and other employee benefits
Share-based payments
2022
£000
584
1,750
2,334
2021
£000
262
3,023
3,285
Key management includes the directors of the Company only.
Further details on directors’ emoluments can be found in note 10.
On 15 June 2022 AssetCo completed the acquisition of River and Mercantile Group Plc. At the time of completion
the AssetCo chairman, Martin Gilbert, was also a director and shareholder in RMG. Also upon completion the
chairman of RMG, Jonathan Dawson, became a non-executive director of AssetCo.
Toscafund Asset Management LLP was a substantial shareholder for part of the year and had an agreement with
AssetCo plc under which the LLP acted as Appointed Representative for regulatory purposes. This agreement was
terminated on 15 June 2022. Toscafund charged a monthly fee for this service and the amount recognised in these
financial statements is £42,500 (2021: £30,000). Toscafund’s shareholding at 30 September 2022 is below 3%.
Details of the Directors’ shareholdings in the Company can be found in the Directors’ Report.
36. 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 £8.30, 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.
98
AssetCo plc | Report and Financial Statements 2022 14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
36. LONG TERM INCENTIVE PLAN CANCELLATION CONTINUED
The details of how the shares issuable under the LTIP were settled are set out below:
Shares issued on 5 July 2022 at £8.30 each
Shares “retained” to fund cash payment of employees’ PAYE and NI liability
Shares issuable under the LTIP
Shares
No
518,909
474,406
993,315
2022
£000
4,307
3,938
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:
Shares issuable under LTIP
Employers’ national insurance
Total share-based payment charge
Total
£000
8,245
1,278
9,523
2022
£000
2,749
501
3,250
Of the 518,909 shares issued on 5 July 2022 under the LTIP the following were issued to Directors:
Martin Gilbert
Peter McKellar
Campbell Fleming
Shares
No
160,920
126,029
61,685
348,634
2022
£000
784
653
313
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.
99
2021
£000
5,496
777
6,273
2021
£000
1,649
1,374
–
AssetCo plc | Report and Financial Statements 2022
14. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
37. POST BALANCE SHEET EVENTS
On 1 November 2022 AssetCo completed the acquisition of SVM Asset Management Limited for an aggregate
consideration of £11.2 million satisfied by the issue of £9 million nominal of 1% fixed rate unsecured convertible loan
notes 2023 in AssetCo plus £2.2 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 £2 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 £1.45 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 a subsidiary of AssetCo, River and Mercantile Group 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 £323,000 due within one year and £1,122,000 due between one and three years, giving a total commitment
of £1,445,000.
On 24 November 2022 the Company announced that it would pay an interim dividend of 1.3p per share, amounting
to £1,798,000, on 23 December 2022.
There are no other post balance sheet events.
100
AssetCo plc | Report and Financial Statements 2022 15. NOTICE OF ANNUAL
GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General
Meeting of AssetCo plc (the “Company”) will be held at
30 Coleman Street, London EC2R 5AL at 10 a.m. on
Thursday 30 March 2023. The Annual General Meeting
is being held to consider and vote on the Resolutions
below. Resolutions 1 to 11 will be proposed as
ordinary resolutions and Resolutions 12, 13 and 14
will be proposed as special resolutions. Voting on all
Resolutions will be conducted by way of a show of
hands.
Please read carefully the notes (the “Notes”) to this
notice of Annual General Meeting (“Notice”). The
Notes include guidance as to the attendance at the
Annual General Meeting, how to vote by proxy and
gives explanations in respect of the Resolutions to be
proposed at the Annual General Meeting.
ORDINARY RESOLUTIONS
1. To receive the Company’s audited accounts for
the 12 month period ended 30 September 2022,
together with the Directors’ report, the strategic
report and the auditor’s report on those accounts.
2. To re-elect Martin Gilbert as a Director of
the Company.
3. To re-elect Peter McKellar as a Director of
the Company.
4. To re-elect Campbell Fleming as a Director of
the Company.
5. To re-elect Tudor Davies as a Director of the
Company.
6. To re-elect Christopher Mills as a Director of
the Company.
7. To elect Jonathan Dawson as a Director of
the Company.
8. To elect Gary Marshall as a Director of
the Company.
9. THAT PricewaterhouseCoopers LLP be re-appointed
as auditors of the Company to hold office from the
conclusion of this Annual General Meeting until the
conclusion of the next Annual General Meeting at
which the accounts are laid before the Company.
10. THAT the remuneration of PricewaterhouseCoopers
LLP as auditors of the Company be determined by
the Directors of the Company.
11. THAT the Directors of the Company be and are
hereby generally and unconditionally authorised
for the purposes of section 551 of the Companies
Act 2006 (“Act”) to allot ordinary shares in the
Company or to grant rights to subscribe for or to
convert any security into ordinary shares in the
Company (“Rights”) up to an aggregate nominal
amount of £690,494 such authority to expire
(unless sooner revoked or altered by the Company
in general meeting) at the conclusion of the next
Annual General Meeting of the Company and
provided further that the Company may before the
expiry of this authority make an offer or agreement
which would nor might require ordinary shares
to be allotted or Rights to be granted after the
expiry of this authority and the Directors may allot
ordinary shares or grant rights in pursuance of
any such offer or agreement as if the authority
conferred hereby had not expired.
SPECIAL RESOLUTIONS
12. THAT subject to Resolution 11 above being
passed, the Directors of the Company be and
they are empowered pursuant to section 570
of the Act to allot equity securities (within the
meaning of section 560 of the Act) wholly for cash
pursuant to the authority conferred by Resolution
11 as if subsection (1) of section 561 of the Act
did not apply to any such allotment, provided
that this power shall be limited to the allotment of
equity securities:
(a) in connection with an offer of such securities
by way of rights to holders of ordinary shares
in the Company in proportion (as nearly
as may be practicable) to their respective
holdings of such ordinary shares, but subject
to such exclusions or other arrangements
as the Directors may deem necessary or
expedient in relation to fractional entitlements
or any legal or practical problems under the
laws of any territory, or the requirements of any
regulatory body or stock exchange; and
(b) otherwise than pursuant to sub-paragraph (a)
above up to an aggregate nominal amount
of £690,494,
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AssetCo plc | Report and Financial Statements 2022
15. NOTICE OF ANNUAL GENERAL MEETING CONTINUED
(e) the Company may make a contract or
contracts to purchase ordinary shares under
the authority conferred prior to the expiry of
such authority which will or may be executed
wholly or partly after the expiry of such
authority and may make a purchase of ordinary
shares in pursuance of any such contract or
contracts, as if such authority had not expired.
14. THAT a general meeting of the Company (other
than an AGM) may be called on not less than
14 clear days’ notice.
2 March 2023
By order of the Board
Gordon Brough
Company Secretary
Registered Office:
30 Coleman Street
London
EC2R 5AL
Registered in England and Wales No. 04966347
and shall expire at the conclusion of the next
Annual General Meeting of the Company in 2024,
and provided further that the Company may
before the expiry of this authority make an offer or
agreement which would or might require relevant
securities to be allotted after the expiry of this
authority and the Directors of the Company may
allot equity securities in pursuance of any such
offer or agreement as if the authority conferred
hereby had not expired.
13. THAT the Company be and is generally and
unconditionally authorised for the purposes of
section 701 of the Act to make one or more
market purchases (within the meaning of section
693(4) of the Act) on the AIM market of the
London Stock Exchange of its ordinary shares
provided that:
(a) the maximum aggregate number of ordinary
shares authorised to be purchased is
13,809,873;
(b) the minimum price which may be paid for such
ordinary shares is £0.01 per ordinary share;
(c) the maximum price which may be paid for an
ordinary share shall not be more, at the time
of purchase, than the amount equal to 105
per cent. of the average of the middle market
quotations for an ordinary share as derived
from the London Stock Exchange for the
five business days immediately preceding the
date on which the ordinary share is purchased;
(d) unless previously renewed, varied or revoked,
the authority conferred shall expire at the
conclusion of the next Annual General Meeting
of the Company in 2024 or fifteen months after
the passing of this Resolution whichever is the
earlier; and
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AssetCo plc | Report and Financial Statements 2022
15. NOTICE OF ANNUAL GENERAL MEETING CONTINUED
NOTES:
ENTITLEMENT TO ATTEND AND VOTE
1. A shareholder who is entitled to attend and vote
at the meeting is entitled to appoint one or more
proxies to exercise all or any of his rights to attend,
speak and vote on his/her behalf. Such a proxy
need not also be a shareholder of the Company,
but must attend the meeting in person for the
shareholder’s vote to be counted. If a shareholder
appoints more than one proxy to attend the
meeting, each proxy must be appointed to exercise
the rights attached to a different share or shares
held by the shareholder.
2. Only those members registered on the Company’s
register of members at:
(a) 6.30 p.m. on 28 March 2023; or
(b) if the AGM is adjourned, at 6.30 p.m. on the
day two days prior to the adjourned meeting,
shall be entitled to vote at the AGM. Changes to
the register of members after the relevant deadline
shall be disregarded in determining the rights of any
person to vote at the AGM.
WEBSITE GIVING INFORMATION REGARDING THE AGM
3.
Information regarding the AGM, including a copy of
this Notice and the information required by section
311A of the Companies Act 2006, can be found at
the Company’s website, www.assetco.com.
APPOINTMENT OF PROXIES
4.
If you are a member of the Company at the time set
out in Note 3 above, you are entitled to appoint a
proxy to exercise all or any of your rights to attend,
speak and vote at the AGM and you should have
received a form of proxy with this Notice. You can
only appoint a proxy using the procedures set out in
these Notes and the notes to the form of proxy.
5. A proxy does not need to be a member of the
Company but must attend the AGM to represent
you. Details of how to appoint a proxy using the
form of proxy are set out in the notes to the form of
proxy.
6. You may appoint more than one proxy provided
each proxy is appointed to exercise rights attached
to different shares. You may not appoint more than
one proxy to exercise rights attached to any one
share. To appoint more than one proxy using a hard
copy proxy form, please contact the Company’s
registrars, Computershare Investor Services PLC,
on 0370 889 3198, to request additional forms
of proxy.
7. A vote withheld is not a vote in law, which means
that the vote will not be counted in the calculation
of votes for or against the Resolution. If no voting
indication is given, your proxy will vote or abstain
from voting at his or her discretion. Your proxy will
vote (or abstain from voting) as he or she thinks fit
in relation to any other matter which is put before
the AGM.
APPOINTMENT OF PROXY USING
HARD COPY PROXY FORM
8. The notes to the form of proxy explain how to direct
your proxy how to vote on each Resolution or
withhold their vote.
To appoint a proxy using the form of proxy, the form
must be:
–
–
completed and signed;
sent or delivered to Computershare Investor
Services PLC at The Pavilions, Bridgwater
Road, Bristol, BS99 6ZY; and
received by Computershare Investor Services
PLC no later than 10.00 a.m. on 28 March
2023.
–
In the case of a member which is a company, the
form of proxy must be executed under its common
seal or signed on its behalf by a duly authorised
officer of the company or a duly authorised attorney
for the company.
Any power of attorney or any other authority under
which the form of proxy is signed (or a duly certified
copy of such power or authority) must be included
with the form of proxy.
If you have not received a form of proxy and believe
that you should have one, or if you require additional
proxy forms, please contact Computershare
Investor Services PLC, The Pavilions, Bridgwater
Road, Bristol BS99 6ZY on 0370 889 3198.
APPOINTMENT OF PROXIES THROUGH CREST
9. CREST members who wish to appoint a proxy or
proxies by utilising the CREST electronic proxy
appointment service may do so for the AGM and
any adjournment(s) of it by using the procedures
described in the CREST Manual (available from
https://www.euroclear.com). CREST personal
members or other CREST sponsored members,
and those CREST members who have appointed.
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AssetCo plc | Report and Financial Statements 2022
15. NOTICE OF ANNUAL GENERAL MEETING CONTINUED
ELECTRONIC PROXY APPOINTMENT SYSTEM
12. You may appoint your proxy electronically. To use
this facility, please visit www.investorcentre.co.uk/
eproxy using the control number and PIN located on
your form of proxy, where details of the procedure
are shown. The appointment of a proxy electronically
will not be valid if it is received later than 48 hours
before the start of the meeting (or adjourned
meeting) or if it is sent to any other electronic
address. Please note, that the appointment of
multiple proxies cannot be completed via the eproxy
platform. Should you wish to appoint more than one
proxy, please do so by returning a hard copy proxy
for each appointment and submit to Computershare
as explained in Note 8.
APPOINTMENT OF PROXY BY JOINT MEMBERS
13. In the case of joint holders, where more than one of
the joint holders completes a proxy appointment,
only the appointment submitted by the most senior
holder will be accepted. Seniority is determined by
the order in which the names of the joint holders
appear in the Company’s register of members in
respect of the joint holding (the first-named being
the most senior).
CHANGING PROXY INSTRUCTIONS
14. To change your proxy instructions, simply submit a
new proxy appointment using the methods set out
above. This can be done at any time provided it is
received by Computershare Investor Services PLC
prior to 10.00 a.m. on 28 March 2023, the start of
the AGM, however, acceptance of any change to
your proxy instructions received by Computershare
Investor Services PLC after 10.00 a.m. on 28 March
2023, being the time that the proxy vote closes, will
be at the sole discretion of the Board.
Where you have appointed a proxy using the hard-
copy form of proxy and would like to change the
instructions using another hard-copy form of proxy,
please contact Computershare Investor Services
PLC, The Pavilions, Bridgwater Road, Bristol
BS99 6ZY on 0370 889 3198.
If you submit more than one valid proxy appointment,
the appointment received last before the latest time
for the receipt of proxies will take precedence.
(a) voting service provider(s), should refer to their
CREST sponsor or voting service provider(s),
who will be able to take the appropriate action on
their behalf.
In order for a proxy appointment made by means
of CREST to be valid, the appropriate CREST
message (a “CREST Proxy Instruction”) must be
properly authenticated in accordance with Euroclear
UK & Ireland Limited’s (“EUI”) specifications and
must contain the information required for such
instructions, as described in the CREST Manual.
The message must be transmitted so as to be
received by the issuer’s agent (ID number 3RA50)
by 10.00 a.m. on 28 March 2023 or, in the event
of an adjournment of the AGM, 48 hours before
the adjourned AGM. For this purpose, the time of
receipt will be taken to be the time (as determined
by the timestamp applied to the message by
the CREST Applications Host) from which the
issuer’s agent is able to retrieve the message by
enquiry to CREST in the manner prescribed by
CREST. After this time, any change of instructions
to proxies appointed through CREST should
be communicated to the appointee through
other means.
10. CREST members and, where applicable, their
CREST sponsors or voting service providers
should note that EUI does not make available
special procedures in CREST for any particular
message. Normal system timings and limitations
will therefore apply in relation to the input of CREST
Proxy Instructions. It is the responsibility of the
CREST member concerned to take (or, if the
CREST member is a CREST personal member or
sponsored member or has appointed (a) voting
service provider(s), to procure that his/her CREST
sponsor or voting service provider(s) take(s)) such
action as shall be necessary to ensure that a
message is transmitted by means of the CREST
system by any particular time. In this connection,
CREST members and, where applicable, their
CREST sponsors or voting service providers are
referred, in particular, to those sections of the
CREST Manual concerning practical limitations of
the CREST system and timings.
11. The Company may treat as invalid a CREST
Proxy Instruction in the circumstances set out in
Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001.
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AssetCo plc | Report and Financial Statements 2022
15. NOTICE OF ANNUAL GENERAL MEETING CONTINUED
TERMINATION OF PROXY APPOINTMENTS
15. In order to revoke a proxy instruction, you will need
to inform the Company by sending a signed hard
copy notice clearly stating your intention to revoke
your proxy appointment to Computershare Investor
Services PLC, The Pavilions, Bridgwater Road,
Bristol BS99 6ZY. In the case of a member which is
a company, the revocation notice must be executed
under its common seal or signed on its behalf by
a duly authorised officer of the company or a duly
authorised attorney for the company. Any power
of attorney or any other authority under which the
revocation notice is signed (or a duly certified copy
of such power or authority) must be included with
the revocation notice.
Such revocation notice must be received by
Computershare Investor Services PLC no later than
10.00 a.m. on 28 March 2023.
If you attempt to revoke your proxy appointment but
the revocation is received after the time specified
then your proxy appointment will remain valid.
CORPORATE REPRESENTATIVES
16. A corporation which is a member can appoint
one or more corporate representatives who
may exercise, on its behalf, all its powers as a
member provided that no more than one corporate
representative exercises powers over the same
share.
ISSUED ORDINARY SHARES AND TOTAL VOTING RIGHTS
17. As at 1 March 2023 (being the last business
day prior to the publication of this Notice), the
Company’s issued ordinary share capital comprised
149,292,970 ordinary shares of 1p each. The
Company holds 11,194,235 ordinary shares
in treasury which attract no voting rights. Each
ordinary share carries the right to one vote at a
general meeting of the Company and, therefore, the
total number of voting rights in the Company as at 1
March 2023 is 138,098,735.
VOTING
18. Voting on all Resolutions will be conducted by way
of a show of hands.
COMMUNICATION
19. Except as provided above, members who have
general queries about the AGM should use the
following means of communication (no other
methods of communication will be accepted):-
(a) e-mailing our investor relations team at
info@assetco.com; or
(b) calling the dedicated AssetCo plc shareholder
information line at Computershare on
0370 889 3198.
You may not use any electronic address provided
either:
(a) in this Notice; or
(b) any related documents (including the form
of proxy),
to communicate with the Company for any
purposes other than those expressly stated.
QUESTIONS AT THE AGM
20. Any member has the right to ask questions of the
Company. The Company must answer any question
you ask relating to the business being dealt with at
the AGM unless:
(a) answering the question would interfere unduly
with the preparation for the AGM or involve the
disclosure of confidential information; or
(b) the answer has already been given on a website
in the form of an answer to a question; or
(c) it is undesirable in the interest of the Company
or the good order of the AGM that the question
be answered.
THE RESOLUTIONS EXPLAINED
21. The following Notes explain the proposed Resolutions:
(a) Resolution 1. The Company is required
to present the accounts together with the
Directors report and the auditor’s report to the
AGM for approval.
(b) Resolutions 2 to 8. In accordance with the
Articles of Association of the Company and in
accordance with best corporate governance
practice all the Directors are standing for re-
election.
(c) Resolutions 9 and 10. The auditors must
be re-appointed at each meeting at which
the accounts are laid, to hold office until
the conclusion of the next such meeting.
Resolution 10 gives authority to the Directors
in accordance with standard practice to
determine the auditor’s remuneration.
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AssetCo plc | Report and Financial Statements 2022
15. NOTICE OF ANNUAL GENERAL MEETING CONTINUED
(d) Resolution 11. The Directors may only allot
ordinary shares or grant rights to subscribe for,
or convert any security into ordinary shares,
if authorised to do so by shareholders. The
existing authority to allot ordinary shares
conferred on the Directors at last year’s Annual
General Meeting under section 551 of the Act
expires on the date of the AGM.
Resolution 11 seeks to renew the existing authority
under section 551 of the Act which would otherwise
expire at the AGM, to give the Board authority to
allot ordinary shares and to grant rights to subscribe
for or convert any security into ordinary shares
up to an aggregate maximum nominal amount of
£690,494 representing 69,049,367 ordinary shares
of 1 pence each, which represents approximately
50 per cent. of the issued ordinary share capital of
the Company (excluding treasury shares) as at 1
March 2023 being the latest practicable date prior
to the date of this Notice).
The authority granted by this Resolution will expire
at the conclusion of the next Annual General
Meeting of the Company. As at 1 March 2023 being
the latest practicable date prior to publication of this
Notice, 11,194,235 ordinary shares are held by the
Company in treasury. The Company is proposing
this Resolution to give the Directors flexibility to allot
ordinary shares and to grant rights to subscribe for
or convert any security into ordinary shares.
(e) Resolution 12. Under section 561(1) of the Act,
if the Directors wish to allot ordinary shares,
or grant rights to subscribe for, or convert
securities into ordinary shares, or sell treasury
shares for cash (other than pursuant to an
employee share scheme) they must in the first
instance offer them to existing shareholders
in proportion to their holdings. There may be
occasions, however, when the Directors need
the flexibility to finance business opportunities
by the issue of new ordinary shares, for
cash, without a pre-emptive offer to existing
shareholders. This cannot be done under the
Act unless shareholders have first waived their
pre-emption rights. This Resolution 12 seeks to
review the authority given to the Board which
would otherwise expire at the forthcoming
AGM, to allot equity securities for cash on
a non-pre-emptive basis, (a) pursuant to a
rights issue, or (b) up to an aggregate nominal
106
amount of £690,494 representing 69,049,367
ordinary shares of 1 pence each (which
represents approximately 50 per cent. of the
issued ordinary share capital of the Company
(excluding treasury shares) as at 1 March 2023,
being the latest practicable date prior to the
publication of this Notice). The authority granted
by this Resolution will expire at the earlier of the
conclusion of the next Annual General Meeting
of the Company.
(f) Resolution 13. This Resolution will give the
Company the ability to purchase its own
ordinary shares up to a specified amount. The
authority will be limited to market purchases
of up to 13,809,873 ordinary shares, being 10
per cent. of the issued ordinary share capital
(excluding treasury shares) as at 1 March 2023,
being the latest practicable date prior to the
publication of this Notice.
This Resolution sets out the minimum and
maximum prices that the Company can pay for
the ordinary shares. The authority will be kept
under review and the Company will only exercise
the power to purchase after careful consideration
and when the Company is satisfied that to do
so is in the best interests of the Company and
its shareholders under the circumstances. The
authority granted by this Resolution will expire at
the earlier of the conclusion of the next Annual
General Meeting of the Company or fifteen
months after the passing of the Resolution,
whichever is the earlier. Any ordinary shares
purchased would be either held as treasury
shares or cancelled at the discretion of the
Directors.
(g) Resolution 14 enables the Company to call
general meetings other than an AGM on at
least 14 clear days’ notice. The approval will
be effective until the Company’s next AGM,
when it is intended that a similar resolution will
be proposed. Changes made to the Act by the
Companies (Shareholders’ Rights) Regulations
2009 increase the notice period required for
general meetings of the Company to at least
21 clear days unless shareholders approve a
shorter notice period, which cannot however be
less than 14 clear days (AGMs will continue to
be held on at least 21 clear days’ notice).
AssetCo plc | Report and Financial Statements 2022
16. GLOSSARY
AGM
Board
CEO
Company
Covid
Director
ETF
Group
Annual General Meeting
The board of directors of the Company
Chief Executive Officer
AssetCo plc
Coronavirus
A director of the Company
Exchange Traded Fund
AssetCo plc and its subsidiaries
Revera or Revera Asset Management
Revera Asset Management Limited
River and Mercantile or
River and Mercantile Group or RMG
River and Mercantile Group Limited and its subsidiaries
Rize
Saracen
Rize ETF Limited
Saracen Fund Managers Limited
SVM or SVM Asset Management
SVM Asset Management Limited or its holding company
SVM Asset Management Holdings Limited
107
AssetCo plc | Report and Financial Statements 2022 17. COMPANY INFORMATION
COMPANY REGISTRATION NUMBER
04966347
NOMINATED ADVISER
AND CORPORATE BROKER
REGISTERED OFFICE
30 Coleman Street
London
EC2R 5AL
DIRECTORS
Martin Gilbert (Chairman)
Mark Butcher
Tudor Davies
Jonathan Dawson
Campbell Fleming
Gary Marshall
Peter McKellar
Christopher Mills
COMPANY SECRETARY
Gordon Brough
INDEPENDENT AUDITOR
PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
7 More London Riverside
London
SE1 2RT
Numis Securities Limited
45 Gresham Street
London
EC2V 7BF
JOINT CORPORATE BROKER
Panmure Gordon (UK) Limited
One New Change
London
EC4M 9AF
REGISTRAR
Computershare Investor Services PLC
PO Box 82
The Pavilions
Bridgewater Road
Bristol
BS13 8AE
WEBSITE
www.assetco.com
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30 Coleman Street
London
EC2R 5AL
[SECTION HEADING]