ASSETCO PLC
YEAR ENDED 30 SEPTEMBER 2023
2023
ANNUAL
REPORT AND
FINANCIAL
STATEMENTS
ASSETCO IS PRIMARILY
INVOLVED IN ACQUIRING,
MANAGING AND
OPERATING ASSET AND
WEALTH MANAGEMENT
ACTIVITIES AND INTERESTS,
TOGETHER WITH OTHER
RELATED SERVICES.
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. REMUNERATION COMMITTEE REPORT
8.
INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC
FINANCIAL STATEMENTS
9. CONSOLIDATED INCOME STATEMENT
10. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
11. CONSOLIDATED AND COMPANY’S STATEMENT OF FINANCIAL POSITION
12. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
13. COMPANY STATEMENT OF CHANGES IN EQUITY
14. CONSOLIDATED AND COMPANY’S STATEMENT OF CASH FLOWS
15. NOTES TO THE FINANCIAL STATEMENTS
16. NOTICE OF ANNUAL GENERAL MEETING
17. GLOSSARY
18. COMPANY INFORMATION
2
6
12
20
26
30
36
38
50
51
52
53
54
55
56
110
116
117
1. CHAIRMAN’S STATEMENT
INTRODUCTION
The financial year ended 30 September 2023 has been
another eventful one for AssetCo. Substantial progress
was made in rationalising and transforming the business
despite considerable market headwinds. While retaining
our valuable interest in Parmenion we have focussed our
attention on rationalising and positioning our recently
rebranded River Global equities business for growth. I
have provided more detail on the year’s activities below.
A TURBULENT BACKDROP
Geopolitics continued to unsettle markets during the
financial year, with the Ukraine/Russia conflict showing
no signs of abating, now exacerbated by discord in the
Middle East. In addition to the impact of these conflicts,
the ongoing effects from Brexit, inflation and sluggish
economic recovery following the pandemic resulted in a
volatile environment for investment markets. Despite this
the FTSE 100 rallied by over 10%1 during the financial
year, following the lows of the Mini Budget in September
2022. All major economies narrowly avoided the type of
deep recession that characterised previous downturns
and the UK economy defied predictions having posted
moderate growth during the period. Still, UK investor
funds under management saw persistent net outflows
across the industry amounting to £34.8bn2 for FY22/23,
ending the period at £1.38trn, equating to outflows
of some 2.5% during the year. Rising interest rates,
inflation and the residual impact from the pandemic
have all contributed to large net retail outflows from
UK equities funds in particular, estimated at £13.6bn,
accounting for 39% of total net outflows across the
industry over the period.
CORPORATE ACTIVITY
Notwithstanding the challenging landscape there
are some reasons to be optimistic as the economic
uncertainty, coupled with significant discounts on
UK companies also generates opportunity. AssetCo
began the financial year with the completion of the
acquisition of SVM Asset Management in October
2022 which significantly expanded the Group’s
Scottish footprint and facilitated consolidation of
operating facilities in Edinburgh. The Revera and
Saracen businesses moved into the larger SVM offices
before the calendar year end, making an early start
to realising cost efficiencies across the Group.
More positive news followed in March, with the
announcement of the acquisition of Ocean Dial Asset
Management; that deal completed immediately after the
financial year end on 2 October 2023.
River and Mercantile’s loss-making US business was
sold, completing in May 2023, and allowing the core
business to focus equity management operations solely
in the UK, without the risk and cost of additionally
operating in the US for a very small part of its business.
1. Source: www.londonstockexchange.com/indices/FTSE100
2. Industry funds under management includes money invested in the underlying
funds in which funds of funds invest, but excludes money invested in funds of
funds themselves (other than funds of overseas funds) to avoid double-counting.
Data as at 30 Sept 2023. www.ia.org/industry-data/fund-statistics
2
AssetCo plc | Report and Financial Statements 2023 1. CHAIRMAN’S STATEMENT
EXITING EARLY STAGE BUSINESSES
In September 2023 we announced the disposal of our
70% equity interest in Rize, a thematic ETF specialist,
to ARK Invest LLC. That was followed, early in the new
financial year, on 6 October 2023, by the announcement
of an agreement in principle to dispose of our interest
in River and Mercantile Infrastructure LLP (“RMI”). While
that transaction has yet to complete, the business has
stabilised and is no longer loss making.
Rize and RMI had suffered significant adverse effects
from developments in the market: Rize from the reversal
in fortunes for thematic investment which followed the
war in Ukraine, and RMI additionally and particularly
from rising interest rates in the UK and the crisis in the
Liability Driven Investment (LDI) market sparked by the
Mini Budget of September 2022.
Both were early stage businesses which proved
slower and later to develop than had originally been
hoped, given the market conditions that prevailed at
a critical stage in their development. We undertook a
re-evaluation of their prospects and, in particular, the
potential further investment that would be required
to bring them to profitability. Each was a negative
contributor to the Group during the financial year ending
30 September 2023 and it was determined to be in
shareholders’ interests to exit the businesses, thereby
relieving the Group of on-going cash drag going forward.
“ While retaining our valuable
interest in Parmenion
we have focussed our
attention on rationalising
and positioning our
recently rebranded
River Global equities
business for growth”
Martin Gilbert
Although completion of the exit from RMI has not yet
taken place, management focus has otherwise turned
exclusively to the integration and management of the
various equity asset management businesses in the
Group. Under the refreshed brand, River Global, the
exclusively active equity asset management activities of
the Group are simpler and more immediately coherent.
An environment of risk aversion, limited new business
opportunities, and challenging cost pressures has now
persisted for several years. More recently higher interest
rates have been added to the mix and none of these
factors look set to soften imminently or quickly. It is
not an environment which typically favours early stage
businesses where timelines to realise opportunities
are pushed out substantially. Your Board has acted
decisively to focus resources on its more established
businesses in active equity asset management.
Here, progress is being made on cutting costs and
consolidating funds in order to weather the prevailing
climate more successfully and be able to rapidly
leverage an improvement when it comes.
The relatively difficult trading conditions for asset
management do create opportunities for AssetCo in
its mission to acquire, improve and grow otherwise
attractive businesses that are experiencing challenges.
While we must be particularly selective in current
circumstances, such businesses could benefit quickly
from the consolidated operating model of the Group and
we continue to look actively in this area.
In the Group’s equity asset management business, the
process of rationalising and simplifying the operating
model has continued during the financial year. Revera’s
business merged into Saracen in October 2022 and
Saracen’s business subsequently merged into SVM
in August 2023. All fund management activities were
consolidated into River Global Investors shortly after
the financial year end, while plans are well underway
to consolidate and centralise regulated authorised
corporate director (“ACD”) oversight and management
activities under SVM Asset Management which will also
rebrand as part of the River Global stable in due course.
The goal of a consolidated equity asset management
business with a centralised and simplified operating
model is therefore clearly within sight and this framework
makes the subsequent integration of Ocean Dial Asset
Management a quicker and easier task.
AssetCo plc | Report and Financial Statements 2023
3
1. CHAIRMAN’S STATEMENT CONTINUED
OPERATING MARGIN IMPROVING
Results for the year reflect the re-structuring referenced
above with some £4.4m incurred in exceptional
costs. Setting these to one side in order to focus on
the underlying continuing operations at year end,
we see operating losses of some £7.7m for the year
on revenues (plus other income) of £17.3m. The
comparable figures for last year, omitting the distorting
effect of the River and Mercantile acquisition, were
losses of £7.5m on revenues plus other income of
£9.0m demonstrating a substantial improvement in
operating margin, albeit still materially negative.
The infrastructure business (RMI) which we are exiting,
contributed an operating loss before exceptionals of
c.£1m whereas Ocean Dial, acquired on 2 October
2023, introduced additional revenues of £1.9m
together with a cost base of c.£1m. The run rate
for costs (i.e. monthly costs, adjusted for anomalies
and annualised) in the River Global business was
estimated to be c.£1m lower by year end than it had
averaged during the year as certain contractual and
other obligations fell away. In addition to that, further
pro-active action was taken before end September
2023 to exit a further £2.3m of costs thereby
rendering them non-recurring from that point.
The consolidation of asset management activities
and disposal of other businesses has facilitated
further initiatives on cost saving as less evident
overlaps and inefficiencies are flushed out by
teams coming together. We also plan further fund
mergers to merge (or close) smaller funds delivering
operational savings while realising economies of
scale for clients and more attractive propositions for
distributors. Our heritage acquisitions leave us with
unnecessary corporate structures which we now plan
to rationalise in order to take further costs out of the
business. These further initiatives, taken together,
have enabled us to identify between £2m and £3m
per annum of additional cost savings actionable over
the coming months, evidencing a potential path to
financial profitability, subject of course to reasonably
stable markets and assets under management.
PARMENION: A VALUABLE ASSET
In September, we responded to speculation
around the value of our 30% equity interest before
dilution in Parmenion (acquired, in combination
with a loan arrangement, for an initial consideration
of £21.9m in October 2021). Since acquiring
our interest, Parmenion has traded strongly in
terms of AUM, revenue and profitability.
Parmenion secured a top three ranking for adviser
service in each quarter of 2023 and, despite the
challenging markets, delivered strong EBITDA growth
in the year. Its acquisition of EBI last year has gone well
with assets under advice materially ahead of their level
at the time of acquisition.
WELL PLACED TO WEATHER THE STORM
The uncertain global economic and political backdrop
continues to weigh on financial markets, although
there are tentative signs that overall market activity
may finally be picking up. Whilst the UK continues to
languish in the doldrums, globally inflation continues
to surprise on the upside and with predicted rate
cuts ahead, the risk of recession is moderating. The
Company’s underlying businesses going forward
– River Global and Parmenion – have the financial
strength, support and agility to weather current
conditions but it is only fair to acknowledge the toll
that persistent outflows have had on River Global’s
business and the reduced resilience that results. We
are confident that the various options available to us
to deal with further adverse conditions are adequate
for the foreseeable future but acknowledge the
pressure that puts on the business over the longer
term. Our management teams have a wealth of
expertise and a range of products and capabilities
which enables them to capitalise on opportunities as
well as meeting the needs of our existing investors
and we continue to see the future potential.
Martin Gilbert
Chairman
15 March 2024
4
AssetCo plc | Report and Financial Statements 2023 “ Our management teams have a wealth of
expertise and a range of products and capabilities
which enables them to capitalise on opportunities”
Martin Gilbert
Chairman
5
AssetCo plc | Report and Financial Statements 2023 2. BUSINESS REVIEW
At the end of the financial year to September 2023, the AssetCo Group encompasses primarily an active equities
asset management business, together with a structured 30% equity interest in a digital platform business.
We estimate the addressable market for the enlarged
equity business3 to be in the region of £272bn4, being
64% of the active equities market and a very large
opportunity set. As noted earlier, UK equities have had
a very tough time over the financial year, along with
European equities, while in contrast Global equities have
seen moderate inflows. This has been reflected in our
own product suite, with our flagship Saracen Global
Income and Growth Fund growing from just under
£100m to £158m over the financial year.
Elsewhere, the Group saw outflows from almost all
its UK and European equity funds, in common with
industry experience. The loss of a £190m institutional
mandate in New Zealand in November set a negative
backdrop for that side of the business which
otherwise performed relatively well with an inflow of
over £40m to an American mandate in December
and modest growth across most other accounts.
3. Incorporating active, third party, Indian equity and climate change strategies
4. Broadridge, Data as at 30 Sept 23
1,760
ACTIVE EQUITIES
Active Equities assets under management were
£2,409m at September 2023 year end. From a starting
point of £2,291m as at 30 September 2022, SVM,
acquired during October 2022, contributed assets under
management of £528m. The analysis does not include
the assets managed by Ocean Dial Asset Management,
which completed immediately after year end.
Movement in assets under management from
end September 2022 to end September 2023 is
summarised in the following chart:
ACTIVE EQUITIES AUM WALK:
30 SEP 22 TO 30 SEP 23 (£M)
528
112
559
1,130
£172m
£2,291m
494
1,739
273
£2,409m
582
Opening
AUM
SVM
Acquisition
US
Sale
Redemptions
Gross
inflows
Market/
Perf
Closing
AUM
Pooled funds
Investment Trust
Other mandates
6
AssetCo plc | Report and Financial Statements 2023 2. BUSINESS REVIEW
PERFORMANCE
Investment performance of the Group’s equities open
end funds measured at the end of the financial year to
September 2023 was very positive over the important
3 year period with over 80% of funds (by assets
under management) outperforming peers. Over other
periods it was typically more mixed with roughly half
outperforming but, importantly, there were no periods
over which under-performance dominated the picture.
The Saracen Global Income and Growth Fund for
example, which has performed well, is focused on
high quality growth investments, but with a very
disciplined approach to the valuation we will pay.
It now has the most industrial and cyclical portfolio
since the fund launched in 2011. Corporates have
healthy cash balances and many are investing to
reduce costs, improve efficiencies and to automate.
We expect many of these businesses to be less
cyclical in the future, due to their changing business
mix and to generate higher service revenues. This
cluster of businesses should perform well once investor
sentiment improves and valuations remain attractive.
The performance picture overall is pleasing
in an environment where the value of active
management of equities is constantly under
challenge. It is also testament to the fact that the
on-going corporate integration activity and coming
together of the fund management teams has
been achieved without distraction from our core
deliverable, being investment returns to clients.
MUTUAL FUND AUM BREAKDOWN BY IA SECTOR QUARTILE RANKINGS
10 year
5 year
27%
26%
2%
45%
47%
27%
26%
3 year
11%
9%
21%
1 year
6 month
24%
25%
3 month
13%
14%
27%
25%
21%
60%
36%
41%
52%
13%
9%
1 month
13%
27%
50%
10%
4th quartile
3rd quartile
2nd quartile
1st quartile
1 month
3 month
6 month
1 year
3 year
5 year
10 year
13%
27%
50%
10%
13%
14%
21%
52%
25%
25%
41%
9%
24%
27%
36%
13%
11%
9%
21%
60%
47%
0%
27%
26%
27%
26%
2%
45%
Source: Performance data produced by RGI data and risk systems, also utilising data from Investment Association
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: FE Analytics for IA Sector Peer Group performance. B share
class (net of management fees) performance is used since share class launch for all funds. 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.
7
AssetCo plc | Report and Financial Statements 2023 2. BUSINESS REVIEW CONTINUED
RE-STRUCTURING AND INTEGRATION
A key focus throughout the financial year has been
integration of the active equities businesses and the
move to a lower cost operating model. At the beginning
of the year, the active equities business remained largely
fragmented into its legacy components of Saracen,
Revera and River and Mercantile, with SVM joining
the Group at end October 2022. By September 2023,
Saracen and Revera had ceased active operations as
they were absorbed into the on-going operating entities
and, shortly after year end, all investment management
activities and client contracts were consolidated into the
legacy River and Mercantile business. This has allowed
us to eliminate overlaps and secure economies of scale
on enlarged relationships. It also presents a clearer and
stronger team message which has been well received
by clients.
As we have progressed into the current financial
year as a more integrated business and with a single
team structure, further opportunities for savings have
emerged as ways of working have coalesced. This is
enabling us to eliminate or consolidate some further
contractual arrangements which were not immediately
evident, and to ensure that existing services are used
consistently to best effect.
Consolidation of the Group’s legacy fund range is well
advanced. We managed and marketed 25 open-ended
funds at the beginning of the financial year and by year
end that had been focused into 20 funds by winding
up or merging smaller, uneconomic funds. We have
reviewed the fund range further in context of the more
tightly integrated business and advanced plans to
reduce the fund range further to around 16 funds during
this financial year, with opportunities for going further
thereafter. The clearer focus that a narrower range of
larger funds brings us increases the effectiveness of
our marketing effort, delivers better value for clients
and reduces or eliminates our need to subsidise less
economic funds.
8
One legacy of integration is the various corporate
structures that remain from previous activities and
we have recently embarked on a focused exercise to
eliminate or consolidate a large number of these. These
structures currently absorb operational resource as
well as requiring audit, regulatory filings etc. It follows
that reducing their number and scope facilitates further
business savings.
Highlights of our move to a lower cost operating model
for the active equities business include:
• Headcount for the active equities business has
moved from 119 at end September 2022 (including
SVM on a pro forma basis) to 79 at end September
2023 – a 34% reduction.
• Equities trading platforms consolidated from 4 to 1
•
IT platform delivered under-budget and ahead of
schedule moving, inter alia, from 118 data servers
to 18, five internet service providers to one, and
delivering c.£1m in cost savings
Our simplified operating model enables greater and
more effective interaction across our various teams and
significantly simplifies the support requirements for our
business – as well as delivering explicit cost savings in
its own right.
RE-BRANDING
River and Mercantile re-branded on 4 December 2023
to “River Global” which brings together the Group’s
combined active equity investment talent under a single
fresh and modernised brand. Having strengthened
our business through a series of strategic acquisitions
and combined our talent under one brand identity, we
wanted a new name to signify the company’s future.
River Global now reflects this unifying strength and
alignment.
Alex Hoctor-Duncan, Chief Executive of River Global,
commented in the press that “We have simplified and
streamlined our business and product offering to better
meet the needs of our clients. Whilst it hasn’t been an
easy 18 months for our industry, we have used that
time to consolidate and leverage the capabilities our
acquisitions have brought us. I am confident that River
Global will go from strength to strength, providing top-
rated investment products and excellent service to its
clients, underpinned by the complementary talents of an
exceptional team of portfolio managers”.
AssetCo plc | Report and Financial Statements 2023 2. BUSINESS REVIEW CONTINUED
OCEAN DIAL ACQUISITION
We announced the acquisition of Ocean Dial Asset
Management in March 2023 and, having worked to
secure regulatory approvals in both UK and India,
completed the acquisition process on 2 October 2023.
Ocean Dial’s current business is the management of
the assets of the India Capital Growth Fund Limited,
which, as announced on acquisition at 2 October
2023, had an updated net asset value of c.£166m (at
22 September 2023) generating an annualised run rate
revenue for the Group of c.£1.92m. The announcement
of the acquisition in March (which used 28 February
2023 figures) noted the fund had net assets of c.£127m
generating an annualised run rate revenue of £1.4m.
The growth since March 2023 is illustrative of the
vibrancy of the Indian stock market and the attractions
of investing in this dynamic economy.
The acquisition brings with it an important capability
for investing in India, with a small but highly regarded
team based in Mumbai. It is an attractive potential
springboard for other emerging market investment
in due course. The India Capital Growth Fund is a
prestigious client which we welcome to our Group and
hope and expect to work with to build additional scale
over time.
The acquisition is earnings enhancing for the Group and
it is anticipated that further synergies will be achievable
as we integrate the business and capitalise on the
operating model we have established.
“ We have simplified and
streamlined our business
and product offering to
better meet the needs of
our clients.”
Alex Hoctor-Duncan
Chief Executive, River Global
CORPORATE RATIONALISATION
We reached agreement to sell the Group’s loss-making
US business, River and Mercantile LLC, in May 2023.
The deal eliminated net losses which amounted to
£0.4m in the half year to end March 2023. It allowed
us to focus equity management operations solely in the
UK, without the risk and cost of additionally operating in
the US for a very small part of our business.
On 20 September 2023 we announced the disposal
of our 70% equity interest in Rize, a thematic ETF
specialist, to ARK Invest LLC. The sale agreement
delivered consideration to AssetCo of an up-front
payment of £2.625m, a deferred payment of £2.625m
and an earn out provision, capped at £5.25m, which
will operate over five years and is subject to a minimum,
itself dependent upon certain conditions.
For the year ended 30 September 2023, Rize
contributed an operating loss before tax of £2.4m. The
value of goodwill attributed to Rize by AssetCo was
£12m as at 31 March 2023 and we decided to write
that value down, before accounting for sale proceeds.
Against this, any earn out from the sale agreement
(capped at £5.25m) will emerge as a positive cash flow
in future years.
The disposal of Rize was followed, early in the new
financial year, on 6 October 2023, by the announcement
of an agreement in principle to dispose of our interest
in River and Mercantile Infrastructure LLP (“RMI”). The
business generated a loss for the year to September
2023 of £1.0m before non-recurring items.
Together, disposal of these three businesses is expected
to eliminate losses of c.£4m p.a. going forward.
It is challenging and disappointing to pull out of
businesses which ultimately have potential, and the
financial consequences for the Group are evident in the
impact on carrying values which we have had to bear.
These were decisions which were not taken lightly, but
market conditions for both Rize and RMI had worsened
dramatically during the financial year and their prospects
deteriorated as a result. Recognising that the operating
environment had changed during the year, to become
less accommodating for the Group’s initial model of a
more diverse range of businesses with upside potential,
we therefore made the decision to find more supportive
homes for these loss-making fledgling businesses and
focus on a core of established, active equities asset
management business.
9
AssetCo plc | Report and Financial Statements 2023 DIGITAL PLATFORM
The development of Parmenion’s business
(30% of which was acquired by AssetCo in
October 2021) continued apace in 2023,
delivering strong financial results.
In line with overall industry experience, the year to 31
December 2023 was challenging for Parmenion in terms
of net flows with group AUA ending the year at £11.1bn.
Fund flows generally were muted as a consequence
of negative consumer confidence, rising cost of living
and a flight to cash products. However, Parmenion’s
acquisition of EBI, which completed towards the end of
2022, has bedded in well and ended the year with AUA
materially ahead of that at the time of the acquisition.
Operationally and financially, Parmenion remains in a
strong position with adviser service ratings restored to
Parmenion’s traditional industry leading position with a
top three ranking in each quarter of 2023 and, despite
the challenging markets, strong EBITDA growth in 2023.
Looking ahead, the pipeline of new business
opportunities for Parmenion is the healthiest it has
been for almost two years with active engagement
across a range of existing and potential new business
partners. This has undoubtedly been helped by a
number of important propositional enhancements
and platform service developments in response to
customer feedback. The propositional enhancements
include expanding the external Discretionary Fund
Manager range to better support partners’ centralised
investment proposition and also enhancing the
Advisory Models Pro to improve the efficiency of
the consent process. In relation to platform service
developments the introduction of a Platform Switch
Service in Q3 of 2023 will facilitate the movement of
clients in bulk from another provider to Parmenion
and this together with number of process efficiency
initiatives has added to the attraction of Parmenion
as a business partner of choice for IFAs.
2. BUSINESS REVIEW CONTINUED
ANNUALISED REVENUE BREAKDOWN BY BUSINESS TYPE (AS AT 30 SEPTEMBER 2023)
Business type
AuM (£m)
Wholesale
Institutional
Investment Trust
Infrastructure
Total
1,759
581
69
101
2,510
Year to end Sep 2023
Year to end Sep 2022
Gross annualised
revenue net of rebates
(£’000)
Weighted average fee
rate, net of rebates
(bp)
Weighted average fee
rate, net of rebates
(bp)
10,645
2,131
470
690
13,936
60
37
70
68
56
54
35
73
68
50
It is pleasing to note an overall increase in average fee rate of over 10% which is partly a reflection of the mix of
business (typically higher margin business being won and lower margin business being lost) and partly a result of
the rationalisation of smaller, uneconomic funds. Ocean Dial makes a particularly noteworthy positive addition to the
Group, operating as it does at a higher margin as appropriate for its focus on investment in India. The following table
includes Ocean Dial as if it were a part of the Group at 30 September 2023.
Business type
Wholesale
Institutional
Investment Trust
Infrastructure
Total
AuM (£m)
Gross annualised revenue
net of rebates (£’000)
Weighted average fee rate,
net of rebates (bp)
1,759
581
235
101
2,676
10,645
2,131
2,400
690
15,866
This table excludes the Group’s interest in Parmenion (including its ebi acquisition) which had assets under
management or advice of £11.1bn, generating revenues of £43.2m as at 31 December 2023 (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.
Gary Marshall
Chief Financial and Operating Officer
15 March 2024
60
37
103
68
59
11
AssetCo plc | Report and Financial Statements 2023 3. STRATEGIC REPORT
INTRODUCTION
The Directors present their Strategic Report on the
Group for the year ended 30 September 2023.
REVIEW OF THE BUSINESS
A review of the business is contained in the
Chairman’s statement on page 2 and in the
Business Review on page 6 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 2023 were as follows:
As at end September
Active Equities Assets under Management
Total assets (balance sheet)
Annualised revenue5
Profit/Loss for the year
(i.e. including exceptionals and discontinued business)
Operating profit/loss for continuing business
excluding exceptionals6 for the year
Investment performance7 (1 year)
Investment performance (3 years)
2023
£2,409m
£72.3m
£13.9m
-£26.7m
2022
£2,291m
£102.8m
£12.9m
-£8.5m
-£7.7m
-£7.5m
Movement
+£118m
-£30.5m
+£1.0m
-£18.2m
-£0.2m
49%
81%
46%
53%
+3% points
+28% points
5. Monthly revenue at date shown (which excludes Ocean Dial) annualised (i.e. x 12)
6. Operating profit/loss here is defined as revenue plus other income for continuing business less other administrative expenses but excluding exceptional and other
one-off costs and exceptional gains/losses – see Notes 8 & 9.
7. % active equity mutual fund AuM in 1st or 2nd quartile when compared to competitor funds in relevant Investment Association sectors.
12
AssetCo plc | Report and Financial Statements 2023 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.
The calculation of these APMs has been defined above; the reasons for their use are as follows:
APM
Reason for use
Active equities assets
under Management
This is a standard industry measure of the scale of our active equity business. Revenues
in that business are typically derived as a percentage of assets under management
making it key to the profitability of the business.
Annualised revenue
Operating profit/loss
for continuing business
excluding exceptionals
for the year
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.
Much as above, exceptional costs (such as those incurred in re-structuring or integrating
business after acquisition) obscure the “business as usual” picture. Excluding them from
operating profit/loss allows a better assessment of the underlying business profitability.
Investment performance Investment performance relative to competitor funds is a standard industry measure of
the competitiveness of the investment funds marketed by the Group. One and three year
measurement periods are considered representative.
13
AssetCo plc | Report and Financial Statements 2023 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 the Group, as well as 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 regular 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 controls and for reviewing the effectiveness of
the Company’s risk management framework.
During the reporting period, the Board has continued
to improve the Company’s risk management
framework. The Company has adopted a risk
management framework and maintains a risk
register which assesses risks facing the Group. The
Board regularly reviews the risk register and obtains
assurance from the Executive Directors as to the
effectiveness of the risk management framework.
The sale of loss-making businesses allows the
Group to focus on its active equities business and
has helped to strengthen the risk management
framework following the integration of the Group’s
operating businesses in line with a new target
operating model. The Group’s risk management
framework 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.
14
AssetCo plc | Report and Financial Statements 2023 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 profitability in the longer term could threaten the
Group’s ability to trade on a going concern basis,
impact the Board’s ability to fund growth and
acquisitions as well as the ability to pay dividends.
Distribution
Corporate actions such as acquisitions and business re-
structuring can disturb existing clients while discouraging
new ones. The reduction in the overall size of the market
for active equity asset management has also made
increasing assets under management more difficult.
Performance and Product
Sustained under-performance or investment style
drift could lead to client redemptions as could
situations where a fund is considered out-of-date
in its positioning or no longer fit for purpose.
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.
Board/Executive Team
The exit from Rize and the planned exit from RMI,
both loss making businesses, will help the Group to
focus its resources on its active equities business. The
Group continues to cut costs. The Group is focused on
achieving run-rate profitability and the Board monitors
costs and cash management carefully to this end.
Board/Distribution
Distributors and markets are carefully
targeted and client relationships monitored
to identify and mitigate the risk of loss.
Board/Product/Investment Team
The Group continually monitors and develops its
product suite to ensure that it remains competitive
and attractive. The Investment Team, in conjunction
with Investment Risk, continually monitor fund
performance against targets, including style,
taking corrective action where necessary.
Board/Remuneration Committee
The Board reviews succession planning for all
senior executives. 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. The
Group has introduced a new Restricted Share
Plan to help retain senior partners and key staff.
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.
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/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 has consolidated to a single operating model
as well as seeking to rationalise service providers.
15
AssetCo plc | Report and Financial Statements 2023 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 strive to reduce the impact of our business
activities on the environment. This includes
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 assess the effectiveness
of our policies and report to our stakeholders.
SOCIAL
We expect to be a responsible member of the
community and a force for positive change. We
endeavour to contribute to the community through
philanthropic partnerships, paid internships and
encouraging employee volunteering.
16
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 (“UNPRI”) by key
subsidiaries and by becoming signatories to the
UK Stewardship Code, to which both River Global
Investors and SVM Asset Management have
been accepted by the Financial Reporting Council
(“FRC”) as signatories. A number of the investment
products managed by River Global Investors have
a clear ESG focussed investment process.
We are continuing to evolve our ESG policies across
the Group with the operation of a Sustainability and
Stewardship Committee under an independent Chair to
oversee progress in this area.
ACQUISITIONS AND SERVICE PROVIDERS
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
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 2023 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 service providers, 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.
17
AssetCo plc | Report and Financial Statements 2023 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.
Employees
The Company’s 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.
Shareholders
The ongoing support of our
shareholders is vital in helping
us deliver our long-term
strategic objectives.
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 products
and services are fit for purpose and offer fair value in line with the UK regulator’s
consumer duty obligations.
The Group’s senior management team is engaged directly with its operating
subsidiaries and regularly participates in face-to-face meetings at management
level where open discussion is encouraged. Our subsidiaries have strong
leadership and management teams who engage with colleagues in a number
of ways, including all employee calls and colleague network groups.
We value our diverse workforce and seek inclusion at all levels, with a recent DEI
colleague survey providing actionable insights to how we can improve this.
The senior management team has focussed on withdrawing from loss
making businesses, the integration of newly acquired businesses into the
Group and the restructuring of certain group functions to better align with
business needs. During this process, due consideration has been given to
all stakeholders, including colleagues, shareholders and our clients.
The Group is proud to support the development of colleagues through
training, study leave and support as well as contributing to our community
through the support of charities, such as The Felix Project.
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 CFOO 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, its execution and the
generation of returns. The views of shareholders have been considered and
fed into the implementation of the cost reduction strategy across the Group.
18
AssetCo plc | Report and Financial Statements 2023 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.
Pages 12 to 19 constitute the strategic report which
was approved by the Board on 15 March 2024 and
signed on its behalf by:
Gary Marshall
Chief Financial and Operating Officer
15 March 2024
Company Registration Number: 04966347
REGULATORS
The Group operates in the UK and is subject to the
oversight of the Financial Conduct Authority. River
Global Investors is also registered with the US Securities
and Exchange Commission. 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. River Global and SVM are signatories to
UNPRI and 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, volunteering leave, and colleague-
selected charity partners. The Group have also
supported The Switch, an organisation providing Work
Experience placements for students in Tower Hamlets
for over 30 years to provide real life experiences of the
world of work and to broaden career aspirations.
19
AssetCo plc | Report and Financial Statements 2023 4. 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 Chairman of Princess
Private Equity Holding Limited, a non-executive
director of 3i Group plc, Investcorp Capital 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.
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 an 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.
20
AssetCo plc | Report and Financial Statements 2023 3. BOARD OF DIRECTORS
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.
SENIOR INDEPENDENT DIRECTOR
AND CHAIRMAN OF THE
REMUNERATION COMMITTEE –
JONATHAN DAWSON
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.
21
AssetCo plc | Report and Financial Statements 2023 3. BOARD OF DIRECTORS CONTINUED
NON-EXECUTIVE DIRECTOR
AND CHAIRMAN OF THE AUDIT COMMITTEE –
TUDOR DAVIES
Tudor was appointed to the Board on 23 March 2011
and was Chair of AssetCo until the re-admission and
change in April 2022 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 of 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 & Young
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
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.
22
“ 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”
GOVERNANCE REPORT
5. DIRECTORS’ REPORT
RESULTS
The financial statements are set out on pages 50 to
109.
DIVIDEND
Your Board decided against the payment of a dividend
this year in light of adverse trading conditions.
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 32.
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 2023.
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 registered number 04966347. The
Company is listed on AIM and is subject to the
AIM Rules. The Group operates principally in the
United Kingdom. A review of the business is set out
in the Strategic Report on pages 12 to 19, 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)
Peter McKellar (Deputy Chairman)
Campbell Fleming (CEO) – resigned 30 June 2023
Gary Marshall (CFOO) – appointed 11 October 2022
Mark Butcher (Non-Executive) – resigned 30 March
2023
Jonathan Dawson (Senior Independent Director)
Tudor Davies (Non-Executive)
Christopher Mills (Non-Executive)
The company secretary up until 23 February 2023
was Sally Buckmaster. From that date the company
secretary has been Gordon Brough.
In accordance with best practice, all Directors will offer
themselves for re-election at the AGM.
26
AssetCo plc | Report and Financial Statements 2023 5. DIRECTORS’ REPORT
DIRECTORS’ SHAREHOLDINGS AND INTERESTS
The beneficial interests of the Directors in the shares of the Company were as follows:
Martin Gilbert
Peter McKellar
Gary Marshall8
Jonathan Dawson
Tudor Davies9
Christopher Mills10
At 30 September 2023
No.
At 30 September 2022
No.
7,283,300
3,938,410
414,592
347,810
2,073,920
21,638,420
7,283,300
3,938,410
–
347,810
2,073,920
20,788,920
8. Joined October 2022
9. Tudor Davis has been treated as being interested in shares held by Cadoc Limited, a company of which he is a director, but which is controlled by other members
of his family.
10. Christopher Mills, as chief executive and a member of Harwood Capital LLP, is deemed to have an interest in the 21,638,420 shares owned by various funds
associated with Harwood Capital LLP.
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 29 February 2024 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
interests in 3% or more in the ordinary share capital of the Company:
Harwood Capital LLP
Psigma Investment Management Limited
Hargreaves Lansdown Asset Management Limited
Martin Gilbert
Somers Limited
Lombard Odier Asset Management (Europe) Limited
Charles Stanley
Richard Griffiths
No. of shares
20,818,420
12,745,800
7,686,912
7,283,300
7,170,960
5,769,174
5,339,873
4,850,402
% of issued
share capital
14.5%
8.8%
5.3%
5.1%
5.0%
4.0%
3.7%
3.4%
27
AssetCo plc | Report and Financial Statements 2023
5. DIRECTORS’ REPORT CONTINUED
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. As at 30 September 2023 the Company
had purchased 8,283,027 (2022: 72,941) shares with a
nominal value of £82,830 (2022: £729) for an aggregate
consideration of £4,887,995 (2022: 50,968).
POLITICAL DONATIONS
The Group made no political donations or contributions
during the year.
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.
BUSINESS COMBINATIONS AND DISPOSALS
Business combinations and disposals during the year
are discussed in note 23.
POST BALANCE SHEET EVENTS
As mentioned in the Chairman’s statement there were
two post balance sheet events. These are set out in
more detail in note 37 Post Balance Sheet Events.
GOING CONCERN
The Group is currently loss making, albeit with a
trajectory that evidences improving operational losses
over time and which affords a pathway to profitability.
Against this background, the Directors have given
careful consideration to the going concern assumption
on which the Group’s accounts have been prepared.
Having carefully considered the Group’s operational
and regulatory requirements, the Directors have
concluded that the Group has adequate financial
resources to continue operating for the 12 months
from the date of signing these financial statements.
On that basis the Directors have continued to adopt
the Going Concern basis of accounting in preparing
the consolidated Group and Company accounts.
Further detail is set out in note 2 to the accounts.
28
AssetCo plc | Report and Financial Statements 2023 5. DIRECTORS’ REPORT CONTINUED
CORPORATE GOVERNANCE
The Company’s statement of corporate governance
can be found on pages 30 to 35 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 Companies Alliance Corporate
Governance Code for small and mid- sized publicly
traded companies, save as disclosed below.
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 110 to 115.
RECOMMENDATION
The Board considers that 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 March 2024.
By order of the Board
Gary Marshall
Chief Financial and Operating Officer
15 March 2024
Company Registration Number: 04966347
The Directors are responsible for ensuring the annual
report and the financial statements are made available
on a website. Financial statements are published on
the company’s website in accordance with legislation
in the United Kingdom governing the preparation
and dissemination of financial statements, which
may vary from legislation in other jurisdictions. The
maintenance and integrity of the company’s website
is the responsibility of the Directors. The Directors
responsibility also extends to the ongoing integrity of the
financial statements contained therein.
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
During the year the incumbent auditors Price
Waterhouse Coopers LLP were replaced
by approval of the Board with BDO LLP. In
accordance with section 489(4) of the Companies
Act 2006, a resolution to reappoint BDO will be
proposed at the annual general meeting.
29
AssetCo plc | Report and Financial Statements 2023 6. CORPORATE GOVERNANCE REPORT
Dear Shareholder,
2. Seek to understand and meet Shareholders’
The Board recognises the 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
Companies Alliance Corporate Governance Code for
small and mid-sized publicly traded companies (the
“QCA Code 2018”). The QCA has recently announced
a number of enhancements to its Code which will apply
from next year and we expect to report on these in next
year’s Accounts.
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 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 March 2024
QCA CODE COMPLIANCE
The Company has adopted the QCA Code. The
disclosures below describe in detail how we have
applied 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 29.
1. Establish a strategy and business model which
promote the long term value for Shareholders
The Business Review set out on page 6 and
Strategic Report set out on page 12 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 page 15.
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 should
be used to communicate with private Shareholders
and encourages them to participate.
Shareholders can access corporate, regulatory,
news and share capital information on the
Company’s website at www.assetco.com. Enquiries
can be directed to the Board using the corporate
e-mail: 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 pages 17 to 19
(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 current risks and uncertainties facing
the Company are set out in the Strategic Report on
pages 12 to 19 of this document.
Details of the approach to internal controls and
risk management are also 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.
30
AssetCo plc | Report and Financial Statements 2023
6. CORPORATE GOVERNANCE REPORT
5. Maintain the Board as a well-functioning
8. Promote a corporate culture that is based on
balanced team led by the Chair
ethical values and behaviours
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,
three of which 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 which are set out on pages 20 to 22 of this
document) have a wide range of qualifications and
expertise which is 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 once
financial conditions improve.
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 strategy and the
completion of several corporate transactions. In the
circumstances, the Board has not undertaken a
formal evaluation process of its effectiveness during
the period but expects to do so in 2024.
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.
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
formally approved a schedule of matters reserved
for the Board and requires various matters to
be escalated from its operating subsidiaries.
The roles of Chairman and Senior Independent
Director are clearly understood and are operating
satisfactorily, further disclosure will be included
on the Company’s website in due course.
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.
31
AssetCo plc | Report and Financial Statements 2023
6. CORPORATE GOVERNANCE REPORT CONTINUED
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 Senior Executive Team.
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,
shareholders, suppliers and service providers and
regulatory authorities. Further detail of this is set out in
the Section 172 Statement on pages 17 to 19.
During the period, the Board has focussed on the
development and execution of the Company’s
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 regularly reviews the resources required for the
Group’s size and complexity.
BOARD COMPOSITION
The Board comprises three Executive Directors and
three Non-Executive Directors.
No individual or group of individuals dominate the Board
or its decision making.
The Board considers Jonathan Dawson to be an
independent director for the purposes of the QCA Code
during the reporting period. Jonathan Dawson is the
Senior Independent Director.
Details of the skills and competencies brought by each
Director are set out below their respective biographies.
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.
The Board, through the Nomination 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 seven 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 Gilbert
Christopher Mills
Jonathan Dawson
Peter McKellar
Gary Marshall
Tudor Davies
32
Board
Audit
Remuneration
Nominations
7/7
7/7
6/7
7/7
7/7
7/7
n/a
6/6
6/6
n/a
6/6
6/6
2/3
3/3
3/3
n/a
n/a
3/3
0/0
0/0
0/0
n/a
n/a
0/0
AssetCo plc | Report and Financial Statements 2023 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.
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 regularly: typically six times a year
and on an ad-hoc basis to consider specific items of
business as the need arises.
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.
6. CORPORATE GOVERNANCE REPORT CONTINUED
CONFLICTS OF INTEREST
The Board takes action to identify and manage conflicts
of interest. Where conflicts of interest arise, the relevant
Director would declare their interest in the matter and
recuse themselves 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 Senior Executive Team 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, Nomination and Disclosure
Committees (the “Committees”). The remit of each
Committee is described below.
33
AssetCo plc | Report and Financial Statements 2023 6. CORPORATE GOVERNANCE REPORT CONTINUED
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 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, BDO, 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.
Matters of material estimates and judgement are
regularly discussed and are detailed in note 4; ‘Critical
accounting estimates and judgements’.
REVIEW OF ACTIVITIES DURING THE YEAR
During the year ended 30 September 2023 the Audit
Committee met 6 times. The Committee considered:
• The auditor’s year-end audit plan;
• The annual report and financial statements for the
year-ended 30 September 2022 and the interim
results for the current period to ensure they were
fair, balanced and understandable;
• Significant accounting judgments and estimates;
• Going concern;
•
Impairments of investments, goodwill and other
assets; and
• Acquisition accounting for SVM Asset Management
Limited.
REMUNERATION COMMITTEE
COMMITTEE COMPOSITION
The Remuneration Committee comprises all the Non-
Executive Directors and is chaired by Jonathan Dawson.
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 2023 the
Remuneration Committee met 3 times. The Committee
considered matters related to the Restricted Share Plan.
34
AssetCo plc | Report and Financial Statements 2023 6. CORPORATE GOVERNANCE REPORT CONTINUED
NOMINATIONS COMMITTEE
COMMITTEE COMPOSITION
The Nomination Committee comprises all the Non-
Executive Directors and is chaired by Martin Gilbert.
THE COMMITTEE’S RESPONSIBILITIES
The Nomination 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 did not meet during the
year.
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, Peter McKeller, Gary Marshall 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
entity has taken the exemption from SECR disclosures
given the size, and has not reported on scope 1, 2 or 3
emissions.
The Committees are provided with sufficient
resources to discharge their duties, including
access to external advisers where required.
35
AssetCo plc | Report and Financial Statements 2023 7. REMUNERATION
COMMITTEE REPORT
The following represents the Directors’ Remuneration
Report for the year to 30 September 2023. As the
Company is listed on the Alternative Investment
Market (‘AIM’) we have a number of obligations
regarding disclosure which are covered in full in this
report and elsewhere. Our aim is to demonstrate that
our remuneration policy is aligned to the needs of
the business and attuned to shareholders’ interests
by promoting the long-term success of the firm and
delivery of its strategic plan.
COMMITTEE COMPOSITION
The Remuneration Committee comprises all the Non-
Executive Directors and is chaired by Jonathan Dawson.
THE COMMITTEE’S RESPONSIBILITIES
The Remuneration Committee is tasked with ensuring
that Executive 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.
COMPENSATION AND BENEFIT STRUCTURE
The Group’s main compensation and benefit
arrangements are broadly common across all
employees. The components are:
FIXED PAY
Basic Salary which is paid monthly in arrears.
BENEFITS
The Group provides access to a range of core and
flexible benefits. Whilst the intention is to harmonise
these across the Group we currently operate a small
number of pension arrangements: a contributory
pension scheme of 5% of basic salary with Company
matching, a non-contributory scheme of 10% of basic
salary, or an equivalent allowance. Insured benefits
consisting of Life Assurance (4x basic salary) and
Income Protection (66.67% of basic salary) are also part
of the core benefits offering. Employees have access to
30 days annual leave, in addition to public holidays, and
can opt in to private medical insurance for themselves
with the opportunity to add dependants at their own
cost.
DISCRETIONARY BONUS
A discretionary cash bonus is considered at financial
year end for most staff. Consideration includes the
Group’s overall performance along with delivery of
individual performance against objectives including
contribution to team and approach to risk management.
Partners and employees of River and Mercantile Asset
Management LLP (now River Global Investors LLP),
who comprise the portfolio management team of one of
the main equity asset management subsidiaries of the
Group, instead participate in a profit share arrangement
which allocates a fixed percentage of revenues from the
portfolios that they manage to a profit sharing pool from
which all salaries and any discretionary bonus is paid
once certain allocated costs have been deducted. A
somewhat similar revenue sharing arrangement applies
for certain other portfolio managers.
ANNUAL SALARY REVIEW
The Group has remained loss making throughout the
year and, accordingly, it was determined that there
would be no universal uplift in salaries. Targeted
increases were awarded to individuals who had taken
on additional responsibilities or had fallen notably behind
peer group comparators.
Recognising the challenging operating conditions, the
Chief Executive of River Global voluntarily reduced his
fixed pay by 50% during the year and all of the non-
executive Board Directors similarly agreed to substantial
reductions in their compensation as part of an exercise
to reduce costs across the Group.
36
AssetCo plc | Report and Financial Statements 2023 7. REMUNERATION COMMITTEE REPORT
DISCRETIONARY BONUS
Once again recognising the challenging operating conditions, discretionary bonuses were awarded only to a
targeted number of employees either in recognition of an exceptional contribution or to motivate and retain key
individuals.
RESTRICTED SHARE PLAN
The Company announced the adoption of a Restricted Share Plan at the beginning of November 2023, shortly
after the end of the financial year. The Plan is designed primarily with longer term retention of critical staff in mind
and recognises the fact that the challenging operating conditions provide limited scope for other more immediate
rewards. It is intended to be both simple and transparent, without pre-conditions that are either complex to measure
or monitor, or capable of becoming misaligned with a developing business. The simple incentive of alignment with a
rising share price was considered to be the most compelling performance incentive.
The Company awarded rights over up to 5,013,000 ordinary shares of 1p each ("Shares") in the Company (which
would represent approximately 3.4 per cent of the voting share capital of the Company on issue) to be satisfied out
of Shares currently held in Treasury. Vesting of Shares under the Scheme is due on 1 October 2026 and is subject to
usual provisions for malus, clawback and for apportionment or forfeiture in respect of good and bad leavers prior to
that date at the discretion of the Remuneration Committee.
The 14 recipients are required to serve a full term of three years with the Remuneration Committee having the power
to pro rate on earlier exit where considered appropriate. The typical award is 1 times salary with a range of 0.75 to 2
times. All shares have been allotted at a notional issue price of 50p.
DIRECTORS’ REMUNERATION FOR THE YEAR ENDED 30 SEPTEMBER 2023
Pension
£
Bonus
£
Total
£
LTIP/Share plan
£
Director
Martin Gilbert
Peter McKellar
Campbell Fleming11 (resigned
effective 30 June 2023)
Gary Marshall11
Jonathan Dawson
Tudor Davies
Christopher Mills
Mark Butcher (resigned
effective 31 March 2023)
11. Full time employee.
Salary
£
75,379
65,152
89,205
7,538
6,515
8,920
125,000
12,500
60,000
55,000
45,000
25,000
–
–
–
–
–
–
–
–
–
–
–
–
82,917
71,667
98,125
137,500
60,000
55,000
45,000
25,000
–
–
–
–
–
–
–
–
An IFRS 2 accounting charge of £9,000 was accrued in the year ended 30 September 2023 relating to the portion
of the Restricted Share Plan awarded in November 2023 to Gary Marshall.
37
AssetCo plc | Report and Financial Statements 2023 8. INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF ASSETCO PLC
OPINION ON THE
FINANCIAL STATEMENTS
In our opinion:
•
•
•
•
the financial statements give a true and fair view
of the state of the Group’s and of the Parent
Company’s affairs as at 30 September 2023 and of
the Group’s loss for the year then ended;
the Group financial statements have been
properly prepared in accordance with UK adopted
international accounting standards;
the Parent Company financial statements 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
the financial statements have been prepared
in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of AssetCo
Plc (the ‘Parent Company’) and its subsidiaries (the
‘Group’) for the year ended 30 September 2023 which
comprise of the Consolidated Income Statement, the
Consolidated Statement of Comprehensive Income, the
Consolidated and Company’s Statement of Financial
Position, the Consolidated Statement of Changes
in Equity, the Company Statement of Changes in
Equity, the Consolidated and Company’s Statements
of Cashflows and notes to the financial statements,
including a summary of significant accounting policies.
The financial reporting framework that has been
applied in the preparation of the financial statements is
applicable law and UK adopted international accounting
standards, and as regard the Parent Company financial
statements as applied in accordance with the provisions
of the Companies Act 2006.
BASIS FOR OPINION
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities
under those standards are further described in the
Auditor’s 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 remain independent of the Group and the
Parent Company in accordance with the ethical
requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and
we have fulfilled our other ethical responsibilities
in accordance with these requirements.
CONCLUSIONS RELATING TO GOING CONCERN
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.
Our evaluation of the directors’ assessment of the
Group and Parent Company’s ability to continue to
adopt the going concern basis of accounting is set
out in the Key Audit Matters section of the report.
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 and the Parent
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.
Our responsibilities and the responsibilities of
the Directors with respect to going concern are
described in the relevant sections of this report.
38
AssetCo plc | Report and Financial Statements 2023
8. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC
OVERVIEW
Coverage
99.8% of Group revenue
98.6% of Group total assets
2023
Key audit
matters (KAMs)
Revenue
recognition
Impairment of goodwill
and intangible assets
Going concern
Group financial statements
as a whole
£735,000 based on 1% of
Total Assets12
This is a first-year audit for
BDO LLP, therefore there is no
comparative materiality.
Materiality
12. Total assets were determined at the planning stage of the audit.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our Group audit was scoped by obtaining an
understanding of the Group and its environment,
including the Group’s system of internal control,
and assessing the risks of material misstatement
in the financial statements. We also addressed
the risk of management override of internal
controls, including assessing whether there was
evidence of bias by the Directors that may have
represented a risk of material misstatement.
We determined there to be six significant
components, including the Parent Company,
which were subject to full scope audits
performed by the Group engagement team.
For the non-significant components, the
Group engagement team performed desktop
reviews and specific procedures on financial
statement areas where there was considered
to be a risk of material misstatement.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our
professional judgement, were of most significance in our
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) that
we identified, 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 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.
39
AssetCo plc | Report and Financial Statements 2023 8. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
Key audit matter
Revenue Recognition
Refer to Note 2 C Revenue recognition and
Note 5 Segmental reporting.
The Group’s revenue is made up of distinct
revenue streams, primarily management fees
and marketing fees.
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 these reasons we determined revenue
recognition to be a significant audit risk and key
audit matter as it is also a key driver of return to
investors. This puts revenue at a greater risk of
manipulation, bias and misstatement.
How the scope of our audit addressed the key audit matter
For all material revenue streams we obtained an understanding
of key controls. This was performed through documenting
system descriptions for each revenue stream and completing a
walkthrough of any controls identified within the process.
To obtain comfort over the operating effectiveness of 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
administrators was assessed to the extent that it was relevant
to our audit. The control reports and relevant bridging letters
were obtained and reviewed, paying particular attention to
the nature of any exceptions in the testing identified by the
independent service auditor of the outsourced administrators.
• Where the control reports had not been prepared for the year
ended 30 September 2023, we assessed the gap period,
which was less than three months in all cases, and obtained
bridging letters where necessary.
Detailed procedures were also performed as set our below:
MANAGEMENT AND MARKETING FEES
• We recalculated a sample of management fees recognised in
the year
• based on AUM data, independently obtained from the third
party fund administrators and commitments and rates
prevalent in the respective investment management or
marketing fee agreements. We traced the sample through
to invoice and subsequent cash receipt or to debtors and
accrued income where relevant.
• We verified the validity of accrued and deferred income as
at 30 September 2023 by agreeing a sample of fee rates
and fee terms back to the latest contracts as well as agreed
receipt of amounts to bank statements where possible.
We recalculated a sample of fees and considered the
appropriateness of the point of recognition.
• We reviewed the invoices raised after the year end and
compared to the accrued income balance to assess that the
income recognised in the profit and loss account for the year
is materially correct.
KEY OBSERVATIONS:
Based on the work performed we consider that revenue has
been recognised appropriately and is in accordance with the
Group’s revenue recognition accounting policy.
40
AssetCo plc | Report and Financial Statements 2023 8. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
Key audit matter
How the scope of our audit addressed the key audit matter
Impairment of goodwill and intangible assets
Refer to Note 2G Intangible Assets and
Note 21 Goodwill & intangible assets.
We obtained management’s impairment assessment and
performed the following procedures:
• Tested management’s goodwill and intangible asset
impairment assessment for compliance with IAS 36 including
validating inputs to the calculation for the discount rate
and assessing and challenging the reasonableness of the
assumptions surrounding the forecasts used.
• Where a value in use calculation was used by management
in the impairment assessment, we 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, as well as against current
period performance.
• Where a net realisable value calculation was used by
management, we challenged the enterprise value multiple
used, with assistance from our internal valuations experts. In
addition we considered the nature and amount of disposal
costs included in the calculation.
• Reviewed calculations prepared by management in order
to recalculate the value of the Investment Management
Agreement intangibles. With the assistance of our internal
valuation experts we assessed the methodology adopted by
management to carry out an impairment assessment. Our
internal valuations experts also assisted with providing 3rd
party data in order to recalculate the recoverable value of
goodwill and other intangibles. We also vouched other inputs
to the calculation to the audited data where relevant.
• Tested the mathematical accuracy of the models.
• Based on the procedures above recalculated the recoverable
amount.
KEY OBSERVATIONS
Based on the audit procedures performed and evidence
obtained, we considered the inputs and assumptions made
in the impairment of goodwill and intangible assets to be
appropriate.
Goodwill and intangible assets of
£13.5m are recognised on the Group’s
Statement of Financial Position following
the acquisition of Saracen in FY 2021,
Revera, River and Mercantile Group
Limited (‘River’) in FY 2022 and SVM
Asset Management (‘SVM’) in FY 2023.
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 valuation 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 Saracen,
River, and Revera. Each of these entities
are considered a separate subsidiary 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 21, Intangible assets.
Investment Management Agreement
intangibles relates to the intangible assets
recognised as a result of the purchase of
SVM. The intangible assets arise from the
relationship between SVM and Scottish
Friendly as well as SVM and Noramco.
Goodwill and intangible assets in the
Group is a significant risk as the estimated
recoverable amount of these balances is
subjective due to the inherent uncertainty
involved in forecasting and discounting
future cash flows. For these reasons we
considered the impairment of goodwill and
intangible assets to be a key audit matter.
41
AssetCo plc | Report and Financial Statements 2023 8. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
Key audit matter
Going concern
Refer to note 2A.
The financial statements for the Group
have been prepared on a going concern
basis, as the directors believe the group is
able to continue in business for a period
of at least 12 months from the date of
approval of the financial statements.
During our audit of the Group going concern
assessment, we noted that post year end
performance has been in line with the stressed
scenario which includes annualised falls in
assets under management (AUM), as opposed
to the base case forecasts. This resulted in
increased scrutiny over the key assumptions
and uncertainties surrounding going concern.
As such, we consider going concern to be a
significant audit risk and a key audit matter.
How the scope of our audit addressed the key audit matter
In order to respond to this risk:
• We have evaluated the Directors’ assessment of going
concern, including the reliability of underlying data
used in the going concern assessment and whether
assumptions are appropriate and consistent.
• We have considered the Director’s plans for further actions
in relation to the going concern assessment, including
whether such plans are feasible in the circumstances.
• We have considered the accuracy and appropriateness
of disclosures in the financial statements
regarding the going concern assessment and
any material uncertainties that may exist.
• We have obtained the cash flow forecasts in supporting the
going concern assessment and have challenged the key
inputs and assumptions. We have considered these against
post year end performance and have specifically challenged
whether the stressed scenarios modelled are reasonable.
• We have obtained the internal capital adequacy and risk
assessment (ICARA) document and have inspected the
forecasts used by management. We have ensured they are
consistent with the going concern assessment performed.
We also inspected the ICARA to assess whether there
are any other relevant considerations to the audit or
going concern that we were not previously aware of.
• We have reviewed and challenged the stress
testing performed by management.
KEY OBSERVATIONS
Based on the audit procedures performed and
evidence obtained, we considered the inputs and
assumptions made in the going concern assessment
to be appropriate and that the financial statements are
appropriately prepared on the going concern basis.
42
AssetCo plc | Report and Financial Statements 2023 8. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we
use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly,
misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the
nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect
on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and
performance materiality as follows:
Materiality
Basis for
determining
materiality
Rationale for
the benchmark
applied
Performance
materiality
Basis for
determining
performance
materiality
Rationale for
the percentage
applied for
performance
materiality
Group financial statements 2023
£735,000
Parent company financial statements 2023
£700,000
1% of Total Assets
Capped at 95% of Group Materiality
Materiality was capped at 95% of Group
materiality to take into consideration
component aggregation risk.
We have considered the fact the Group is
in its third period of operations following
the change in strategy to asset and wealth
management, with their largest acquisition to
date having taken place in the prior period,
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 resulting in total assets
being the most appropriate benchmark.
477,750
455,000
65% of Materiality
Performance materiality was determined after taking into account the following factors:
• This is a first year audit and we have identified that there are a few accounts that would be
subjective of estimation uncertainty.
• The location of the Group.
• Sampling approach.
• Number of brought forward adjustments from the prior year.
43
AssetCo plc | Report and Financial Statements 2023 8. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
COMPONENT MATERIALITY
For the purposes of our Group audit opinion, we set
materiality for each significant component of the Group,
apart from the Parent Company whose materiality is set
out above, based on a percentage of between 8% and
60% of Group materiality dependent on the size and our
assessment of the risk of material misstatement of that
component. Component materiality ranged from £61k
to £439k. In the audit of each component, we further
applied performance materiality levels of 65% or 70% of
the component materiality as applicable to our testing
to ensure that the risk of errors exceeding component
materiality was appropriately mitigated.
REPORTING THRESHOLD
We agreed with the Audit Committee that we would
report to them all individual audit differences in excess
of £36,750. We also agreed to report differences below
this threshold that, in our view, warranted reporting on
qualitative grounds.
OTHER INFORMATION
The directors are responsible for the other information.
The other information comprises the information
included in the Annual Report and financial statements
other than the financial statements and our auditor’s
report thereon. Our opinion on the financial statements
does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
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 course of the audit,
or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent
material misstatements, we are required to determine
whether this gives rise to a material misstatement in the
financial statements themselves. 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 in this regard.
OTHER COMPANIES ACT 2006 REPORTING
Based on the responsibilities described below
and our work performed during the course of
the audit, we are required by the Companies
Act 2006 and ISAs (UK) to report on 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 the
Directors’ report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
the Strategic report and the Directors’ report have
been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of
the Group and Parent Company and its environment
obtained in the course of the audit, we have not
identified material misstatements in the strategic report
or the Directors’ report.
MATTERS ON WHICH WE ARE REQUIRED
TO REPORT BY EXCEPTION
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept
by the Parent Company, or returns adequate for our
audit have not been received from branches not
visited by us; or
the Parent Company financial statements are not in
agreement with the accounting records and returns;
or
•
• certain disclosures of Directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
44
AssetCo plc | Report and Financial Statements 2023 8. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
NON-COMPLIANCE WITH LAWS AND REGULATIONS
Based on:
• Our understanding of the Group and the industry in
which it operates;
• Discussion with management and those charged
with governance including review of meeting
meetings of the Board of Directors; and
• Obtaining an understanding of the Group’s policies
and procedures regarding compliance with laws
and regulations,
we considered the significant laws and regulations
to be the applicable accounting framework,
UK tax legislation, AIM Listing Rules, FCA
Regulations and Companies Act 2006.
The Group is also subject to laws and regulations
where the consequence of non-compliance could have
a material effect on the amount or disclosures in the
financial statements, for example through the imposition
of fines or litigations.
Our procedures in respect of the above included:
• Review of minutes of meeting of those charged with
governance for any instances of non-compliance
with laws and regulations.
• Review of correspondence with regulatory and tax
authorities for any instances of non-compliance with
laws and regulations.
• Review of financial statement disclosures and
agreeing to supporting documentation.
Involvement of tax specialists in the audit.
•
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Statement of Director’s
responsibilities, the Directors are responsible for
the preparation of the financial statements and
for being satisfied that they give a true and fair
view, and for such internal control as the Directors
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
Parent 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 Parent Company or to cease
operations, or have no realistic alternative but to do so.
AUDITOR’S 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 auditor’s 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.
EXTENT TO WHICH THE AUDIT WAS CAPABLE OF
DETECTING IRREGULARITIES, INCLUDING FRAUD
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:
45
AssetCo plc | Report and Financial Statements 2023 8. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
FRAUD
We assessed the susceptibility of the financial
statements to material misstatement, including fraud.
Our risk assessment procedures included:
• Enquiry with management and those charged with
governance regarding any known or suspected
instances of fraud;
• Obtaining an understanding of the Group’s policies
and procedures relating to:
– Detecting and responding to the risks of fraud;
–
and
Internal controls established to mitigate risks
related to fraud;
• Review of minutes of meeting of those charged with
governance for any known or suspected instances
of fraud;
• Discussion amongst the engagement team as to
how and where fraud might occur in the financial
statements;
• Performing analytical procedures to identify any
unusual or unexpected relationships that may
indicate risks of material misstatement due to fraud;
and
• Considering remuneration incentive schemes
and performance targets and the related financial
statement areas impacted by these.
Based on our risk assessment, we considered the
area’s most susceptible to fraud to be Revenue
Recognition, Management Override of controls,
Impairment of Goodwill and Intangible assets and
Acquisition Accounting of SVM Asset Management.
Our procedures in respect of the above included:
• Testing a sample of journal entries throughout the
year, which met a defined risk criteria, by testing key
attributes of these journals, including agreeing to
supporting documentation and understanding the
business rationale behind the postings. In addition,
we tested a sample of journals which did not meet
this risk criteria, in order to incorporate an element
of unpredictability into our testing;
• We tested consolidation journals, and any manual
or late journals tested in the financial reporting
process;
• We considered the design and implementation
of controls over the key areas susceptible to
management override;
• Assessing significant estimates made by
management for bias (refer to key audit maters on
Impairment of Goodwill and Intangible assets);
• Verifying assumptions included in the recognition
and valuation of assets and liabilities recognised on
the initial acquisition of SVM Asset Management
with the assistance of our internal valuations
experts; and d
In response to the risk of fraud in revenue
recognition we have performed the procedures set
out in the Key Audit Matters section of this report.
•
We also communicated relevant identified laws and
regulations and potential fraud risks to all engagement
team members who were all deemed to have
appropriate competence and capabilities and remained
alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
46
AssetCo plc | Report and Financial Statements 2023 8. INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ASSETCO PLC CONTINUED
Our audit procedures were designed to respond to risks
of material misstatement in the financial statements,
recognising that 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,
misrepresentations or through collusion. There are
inherent limitations in the audit procedures performed
and the further removed non-compliance with laws and
regulations is from the events and transactions reflected
in the financial statements, the less likely we are to
become aware of it.
A further description of our responsibilities is available
on the Financial Reporting Council’s website at: www.
frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
USE OF OUR REPORT
This report is made solely to the Parent Company’s
members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has
been undertaken so that we might state to the Parent
Company’s members those matters we are required
to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other
than the Parent Company and the Parent Company’s
members as a body, for our audit work, for this report,
or for the opinions we have formed.
Neil Fung-On
Senior Statutory Auditor
for and on behalf of BDO LLP, Statutory Auditor
London, UK
15 March 2024
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
47
AssetCo plc | Report and Financial Statements 2023 FINANCIAL STATEMENTS
9.
CONSOLIDATED
INCOME STATEMENT
FOR THE YEAR ENDED 30 SEPTEMBER 2023
CONTINUING OPERATIONS
Revenue
Cost of sales
Gross profit
Other income
Provision against doubtful debt
Other administrative expenses
Total administrative expenses
Other gains/(losses)
Operating (loss)
Gain on bargain purchase
Finance income
Finance costs
Finance (loss)/income
Share of results of associate
(Loss) before tax
Income tax credit
(Loss) for the year
(Loss) attributable to:
Owners of the parent
Non-controlling interest
(Loss) for the period attributable to continuing operations
DISCONTINUED OPERATIONS
(Loss) from discontinued operation (attributable to equity holders
of the company)
Total (Loss) attributable to the owners of the parent during the year
Continuing operations (loss) per ordinary share attributable to the owners
of the parent during the year
Basic – pence (restated)
Diluted – pence (restated)
Discontinued operations (loss) per ordinary share attributable to the owners
of the parent during the year
Basic – pence (restated)
Diluted – pence (restated)
Total (Loss) per ordinary share attributable to the owners of the parent
during the year
Basic – pence (restated)
Diluted – pence (restated)
50
2023
£’000
Restated
2022
£’000
Note
5
7
8
9
10
13
14
15
24
17
6
18
18
18
18
18
18
14,979
–
14,979
2,321
(1,467)
(28,069)
(29,536)
122
(12,114)
–
74
(510)
(436)
(352)
(12,902)
195
(12,707)
(12,707)
–
(12,707)
6,285
–
6,285
2,690
–
(20,387)
(20,387)
(9,732)
(21,144)
3,227
12,393
(10)
12,383
181
(5,353)
59
(5,294)
(4,479)
–
(4,480)
(13,992)
(26,699)
(4,062)
(8,542)
(9.06)
(9.06)
(9.98)
(9.98)
(19.04)
(19.04)
(4.35)
(4.35)
(3.15)
(3.15)
(7.50)
(7.50)
AssetCo plc | Report and Financial Statements 2023
10. CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 SEPTEMBER 2023
(Loss) 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)/for the year
Attributable to:
Owners of the parent
Non-controlling interests
Total comprehensive (loss) for the year
2023
£’000
Restated
2022
£’000
Note
5
(26,699)
(8,542)
–
–
–
–
(26,699)
(8,542)
(26,699)
–
(26,699)
(7,727)
(815)
(8,542)
51
AssetCo plc | Report and Financial Statements 2023
11. CONSOLIDATED AND COMPANY’S
STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2023
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
Lease 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
Note
19
20
21
22
24
25
26
27
30
28
20
33
29
20
30
32
32
32
32
32
Group
2023
£’000
98
1,534
13,495
–
24,626
–
39,753
5,807
13
1,159
25,573
32,551
72,304
950
905
1,855
14,347
697
1,465
16,507
18,362
1,493
209
653
43,063
95
8,429
53,942
–
53,942
72,304
Restated
Group
2022
£’000
Company
2023
£’000
Restated
Company
2022
£’000
32
224
24,600
–
22,765
1,208
48,829
9,700
37
1,173
43,066
53,976
102,805
–
1,070
1,070
12,750
294
1,437
14,481
15,551
1,493
–
653
43,063
–
43,139
88,348
(1,094)
87,254
102,805
–
–
–
38,122
24,797
–
62,919
2,502
–
–
3,698
6,200
69,119
–
–
–
13,233
–
1,437
14,670
14,670
1,493
209
653
43,063
95
8,936
54,449
–
54,449
69,119
–
–
–
69,921
22,584
–
92,505
34
–
–
7,394
7,428
99,933
–
–
–
5,853
–
1,437
7,290
7,290
1,493
–
653
43,063
–
47,434
92,643
–
92,643
99,933
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 £31,655,000 (Restated 2022: £3,640,000).
The notes on pages 56 to 109 are an integral part of these consolidated financial statements. The financial
statements were authorised for issue by the board of directors and were signed on its behalf by Gary Marshall.
Gary Marshall
Chief Financial and Operating Officer
52
15 March 2024
AssetCo plc | Report and Financial Statements 2023
12. CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2023
Share
capital
£’000
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 2021
843 27,770
653 2,762 5,496 18,892 56,416
(279) 56,137
–
(7,727)
(7,727)
(815)
(8,542)
Restated loss for the year
Other comprehensive expense:
Exchange differences on
translation
Restated total comprehensive
income for the year
Shares issued on acquisition
(note 32)
Costs of share issue (note 32)
Share-based payments – LTIP
(note 32)
Share premium cancellation
(note 32)
–
–
–
598
–
–
–
–
–
–
52
4,255
– (32,025)
Shares bought for treasury
–
Restated balance at
30 September 2022
Loss for the year
Other comprehensive expense:
Exchange differences on
translation
Total comprehensive income
for the year
NCI transfer on sale of Rize ETF
Limited
IFRS2 share scheme charge
Shares bought for treasury
Treasury shares used to settle
conversion of loan notes
(note 32)
Dividends paid
Balance at
30 September 2023
1,493
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
209
–
–
–
–
–
–
–
– 41,301
– (1,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(7,727)
(7,727)
(815)
(8,542)
– 41,899
– 41,899
–
–
–
–
–
–
(1,000)
(1,189)
– (5,496)
–
–
– 32,025
–
(51)
–
(51)
–
–
–
–
–
–
–
(1,000)
(1,189)
–
(51)
653 43,063
– 43,139 88,348
(1,094) 87,254
– (26,699) (26,699)
– (26,699)
–
–
–
–
–
– (26,699) (26,699)
– (26,699)
(1,094)
(1,094)
1,094
–
95
–
(95)
–
(6,815)
(6,815)
–
–
1,791
2,000
(1,798)
(1,798)
–
–
(6,815)
2,000
(1,798)
–
–
–
–
1,493
209
653 43,063
95
8,429 53,942
– 53,942
53
AssetCo plc | Report and Financial Statements 2023
13. COMPANY STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 SEPTEMBER 2023
Share
capital
£’000
Share
premium
£’000
Capital
redemption
reserve
£’000
Merger
reserve
£’000
Other
reserve
£’000
Profit
and loss
account
£’000
Total
Equity
£’000
843
27,770
653
2,762
5,496
19,101
56,625
–
–
–
–
–
–
–
–
–
–
–
41,301
(1,000)
–
–
–
653
43,063
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5,496)
–
–
–
–
–
–
–
95
–
–
(3,641)
(3,641)
–
–
(3,641)
(3,641)
–
–
–
32,025
(51)
41,899
(1,000)
(1,189)
–
(51)
47,434
92,643
(31,655)
(31,655)
–
–
(31,655)
(31,655)
(6,836)
(6,836)
–
95
1,791
2,000
(1,798)
(1,798)
653
43,063
95
8,936
54,449
Balance at 1 October 2021
Restated loss for the year
Other comprehensive expense:
Exchange differences on translation
Restated total comprehensive income
for the year
Shares issued on acquisition (note 32)
Costs of share issue (note 32)
Share-based payments
– LTIP (note 32)
–
–
–
598
–
–
–
–
–
–
52
4,255
Share premium cancellation (note 32)
Shares bought for treasury
–
–
Restated balance at 30 September 2022
1,493
Loss for the year
Other comprehensive expense:
Exchange differences on translation
Total comprehensive income for the year
Shares bought for treasury
IFRS 2 share scheme charge
Treasury shares used to settle conversion
of loan notes (note 32)
Dividends paid
–
–
–
–
–
–
–
Balance at 30 September 2023
1,493
(32,025)
–
–
–
–
–
–
–
209
–
209
54
AssetCo plc | Report and Financial Statements 2023
14. CONSOLIDATED AND COMPANY’S
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
Cash flows from operating activities
Cash (outflow) from continuing operations
Corporation tax paid
Finance costs
Group
2023
£’000
Restated
Group
2022
£’000
Company
2023
£’000
Restated
Company
2022
£’000
(11,201)
(15,070)
(270)
(9,345)
(137)
–
(31)
(10)
–
–
–
–
Notes
34
15
Net cash (outflow) from Continuing Operations
(11,338)
(15,111)
(270)
(9,345)
Net cash inflow/(outflow) from Discontinued
Operations
266
(3,247)
–
–
Net cash (outflow) from total operations
(11,072)
(18,358)
(270)
(9,345)
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
Finance costs
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
Dividends paid
Lease payments
Loan from group company
Payments for treasury shares
Net cash (outflow)/inflow from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange differences on translation
23
24
7
14
14
15
19
21
32
32
32
2,801
–
–
–
74
(14)
24
(114)
–
42,148
(21,871)
1,977
–
–
–
(1,001)
(21,871)
1,977
11,459
5,000
11,459
974
–
1,017
(15)
(12)
–
–
–
–
–
–
–
–
–
–
2,771
35,677
5,000
(9,436)
209
–
(1,798)
(630)
–
(6,837)
(9,056)
(17,357)
43,066
(136)
–
(1,000)
(104)
–
(51)
(1,155)
16,164
26,902
–
209
(1,798)
–
(6,837)
(8,426)
(3,696)
7,394
–
–
(1,000)
–
5,000
(51)
3,949
(14,832)
22,226
–
Cash and cash equivalents at end of year
28
25,573
43,066
3,698
7,394
55
AssetCo plc | Report and Financial Statements 2023
15. NOTES TO THE FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2023
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 March 2024.
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.
A. 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 2023.
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
There have been no new adoptions in the year.
NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
Certain new accounting standards and interpretations have been published that are not mandatory for
30 September 2023 reporting periods and have not been early adopted by the Company or the Group, including
changes to IAS 1 (Classification of Liabilities as Current or Non-current) and IAS 12 (Deferred tax related to Assets
and Liabilities arising from a single transaction)These standards are not expected to have a material impact on the
Group or Company in the current or future reporting periods and on foreseeable future transactions.
GOING CONCERN
The Group is currently loss making, albeit with a trajectory that evidences improving operational losses over time
and which affords a pathway to profitability. Against this background, the Directors have given careful consideration
to the going concern assumption on which the Group’s accounts have been prepared. Having carefully considered
the Group’s operational and regulatory requirements, the Directors have concluded that the Group has adequate
financial resources to continue operating for the 12 months from the date of signing these financial statements.
On that basis the Directors have continued to adopt the Going Concern basis of accounting in preparing the
consolidated Group and Company accounts.
56
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
As part of this review, the Directors have prepared projections rolling forward more than two years from the date
of signing for the Company and Group under several scenarios from growth to stressed environments. The latter
includes a fall of 30% in assets under management over the 2024 financial year. Those projections were subject
to challenge and review to ensure that appropriate stresses were applied to the projections with key drivers to
the stress scenarios taking account of the principal risks and uncertainties identified in the Risk Management
section of the Strategic Report on page 14. For the purpose of this assessment, management made conservative
assumptions regarding future growth, assuming both nil growth and further reductions in revenue. The ability to
achieve cost saving measures and the reasonableness of the stress testing applied was considered in the light of
those assumptions. Sensitivity analysis and modelling to take account of specific one-off risks to the Group and
Company was undertaken in line with the principal risks and uncertainties.
In the event that profitability is not achieved, there will be an increased risk to the going concern assessment in
subsequent reporting periods. The risk should be considered in the context that the Group has no external debt and
had net cash at 31 January 2024 of £12.6m. The Group is required to hold a minimum level of regulatory capital
together with a buffer of at least a 10% at all times.
The Directors also acknowledge less resilience within the Group to one-off shocks and macroeconomic events while
losses continue. Principal risks and uncertainties are set out in the Strategic Report on page 15. Current initiatives,
outlined in the Chairman’s Statement and Business Review, will deliver further cost savings and the Directors
are committed to additional cost saving initiatives as necessary to respond to future business developments.
Should there be a need for additional capital, the directors have the option of seeking to raise additional capital,
of considering potential partnerships or of re-structuring the business. AssetCo also has a structured 30% equity
interest in Parmenion. An independent valuation concluded that AssetCo’s equity interest had a value of between
£75 and 90m (or 53p to 64p per share) at that time (end August 2023).
B. 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 23).
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.
57
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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%. The accounting for this interest is set out in note 7. There are no repayment dates for the loan notes
until 2050 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 for the Group’s
accounting policies for business combinations.
C. 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.
58
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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. Services
are provided to the Manager of the ETF funds as a Marketing Agent for the funds and as such recognised at the
time that services are 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 had four segments for the year ended 30 September 2023; 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, the Group does 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.
D. 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.
OTHER GAINS OR LOSSES
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. Specific costs included are; one-off
redundancy costs relating to the Group’s restructuring plans, specific one-off retention bonuses issued by River and
Mercantile Group PLC prior to its acquisition and a one-off provision with regards to the infrastructure business.
E. FOREIGN CURRENCY TRANSLATION
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.
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
other comprehensive income.
59
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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.
F. 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.
G. INTANGIBLE ASSETS
GOODWILL
Goodwill is measured as described in note 23 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 21).
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.
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.
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.
60
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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.
H. FINANCIAL INSTRUMENTS
FINANCIAL ASSETS
Investments and other financial assets
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).
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.
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.
61
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held on call with banks.
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.
I. 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.
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AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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 2023 the Company has held 8,283,027 (2022: 72,941)
shares with a nominal value of £82,830 (2022: £729) for an aggregate consideration of £4,887,995 (2022: 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.
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.
J. 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.
K. EARNINGS PER SHARE
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
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.
L. 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.
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AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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.
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 the UK.
M. 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;
•
•
• equity interests issued by the Group;
•
•
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.
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.
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AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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.
N. 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.
O. 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 4a Critical accounting estimates the position in respect of the Company’s
2022 tax liability is uncertain and whilst a range of outcomes is possible, the maximum possible tax payable would
be £3,437,000 being £2,000,000 more than currently recognised. At a minimum tax payable could be £nil resulting
in a reduction in liabilities of up to £1,437,000.
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AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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 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.
P. 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.
RESTRICTED SHARE PLAN (“RSP”)
After the balance sheet date on 7 November 2023 certain employees were granted an award that vests over
3 years. Due to conditions that existed in the year, the charge for the RSP has commenced in the current financial
year and will be spread over the life of the award.
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.
Q. 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.
R. 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.
S. DEFFERED 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.
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AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
3. FINANCIAL RISK MANAGEMENT
A. 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.
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 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 28.
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 31.
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.
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.
CURRENCY RISK
The Company and Group transacts principally in sterling. The Company’s and Group’s exposure to currency risk is
detailed in note 31.
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.
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AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
3. FINANCIAL RISK MANAGEMENT CONTINUED
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.
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 31 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.
B. CAPITAL RISK MANAGEMENT
The Group considers its capital to comprise:
Issued share capital
Share premium account
Capital redemption reserve
Merger reserve
Other reserve
Retained earnings
Non-controlling interest
Total equity
Cash and cash equivalents
Total equity less Cash and cash equivalents
2023
£’000
1,493
209
653
Restated
2022
£’000
1,493
–
653
43,063
43,063
95
8,430
53,943
–
53,943
–
43,139
88,348
(1,094)
87,254
(25,573)
(43,066)
28,370
44,188
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. The Group’s internal compliance and finance departments
in these businesses regularly monitor and report to FCA to ensure the business complies with the 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.
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AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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
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 21.
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 21 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 –
principally due to the Grant Thornton litigation which concluded in 2021. 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
including the application of carried forward losses before 1 April 2017 driven from HMRC guidance on this matter.
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 maximum possible tax
payable would be £3,437,000 being £2,000,000 more than currently recognised. At a minimum tax payable could
be £nil resulting in a reduction in liabilities of up to £1,437,000.
B. SIGNIFICANT JUDGEMENTS
ACCOUNTING FOR SUBSIDIARIES
During the year AssetCo sold its shareholding in Rize ETF Limited.
AssetCo held 68% of the equity of Rize ETF Limited. Whilst the founders of the business had a material stake
(which could be increased by 5% percentage points in the event of a sales “trigger” being met) there was in place
a comprehensive shareholder agreement which conferred considerable control to the Group via the appointment of
Board representation and the way in which key matters had to be agreed, including the ability to block resolutions
as well as voting patterns and economic dependency. Accordingly we believe it was appropriate to account for Rize
as a subsidiary entity.
At the year-end Rize ETF Limited was considered sold and no longer owned by the Group.
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AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS CONTINUED
RECOVERABILITY OF RECEIVABLES
Advanced drawings and specific other balances 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 2023 the Group has taken a
provision of £1,467,000 against these receivables.
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.
GOING CONCERN ASSUMPTIONS
Inputs, including stresses, management actions and forecasting all require significant judgement in concluding on
going concern. These have been set out in more detail in the basis of preparation note on page 56.
DISCONTINUED OPERATIONS
During the year the Group sold two separate operations classified as Discontinued Operations under IFRS 5. These
were for the sale of River and Mercantile Asset Management LLC and Rize ETF Limited. River and Mercantile
Asset Management LLC represented a specific geographic area of business for the Group (being the USA) and
Rize ETF Limited represented a major line of business for the Group. Both sales completed within the year ended
30 September 2023 and so qualify as discontinued operations under the standard.
HELD FOR SALE ASSETS
No assets were classified as held for sale by the Group as at 30 September 2023. As noted in the post balance
sheet subsequent events note 37; as at 30 September 2023 the Group held two businesses which were identified
as potential targets for disposal; The Infrastructure business (under entities; River and Mercantile Infrastructure LLP
and River and Mercantile Infrastructure GP S.a r.l.) and Saracen Asset Managers Limited.
An analysis of these operations under IFRS 5 was conducted, in both cases that at 30 September 2023 there was
not enough certainty about the proposed transactions to classify them as held for sale under IFRS 5. In addition,
for Saracen Asset Managers Limited, the operating activity of the entity was expected to be retained by the Group
meaning that its identification as a discontinued operation and subsequent removal from the face of the Financial
Statements would not be representative of the continuing operations of the Group.
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AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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 has historically been 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.
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 2022 includes the
UAE business.
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.
CHANGES TO SEGMENTAL REPORTING
By 30 September 2023 the US business has been sold alongside Rize ETF Limited. During the 2023 financial year
the UAE did not generate any revenue and only incurred administrative costs.
Consequently the US business is now presented as a Discontinued Operation for the purposes of Segmental
reporting. Additionally the Exchange Traded Funds segment (fully encompassed by the now sold Rize ETF Limited)
has also been moved to Discontinued Operations. Additionally, depreciation and amortisation have been removed
from the segmental reporting for the year ended 30 September 2023 as management no longer places reliance on
its analysis at segmental level.
Further detail of these Discontinued Operations can be found in note 6.
GEOGRAPHICAL ANALYSIS OF REVENUE FOR CONSOLIDATED GROUP
FOR THE YEAR ENDED 30 SEPTEMBER 2023
UK
US
2023
£’000
16,536
186
16,722
2022
£’000
6,905
1,270
8,175
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AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
5. SEGMENTAL REPORTING CONTINUED
ANALYSIS OF REVENUE AND RESULTS BY COMMERCIAL ACTIVITY
FOR THE YEAR ENDED 30 SEPTEMBER 2023
Revenue
Management fees
Marketing fees
Total revenue to external
customers
Segment result
Operating (loss)/profit
Finance income
Finance costs
(Loss) on sale of subsidiary
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
Active
equities
£’000
Infrastructure
asset
management
£’000
14,419
–
14,419
560
–
560
(9,415)
(2,413)
75
(450)
–
(9,790)
19
(9,771)
40,456
(8,039)
32,417
–
–
–
(2,413)
(11)
(2,424)
173
(1,013)
(840)
Digital
platform
£’000
Head
office
£’000
Discontinued
Operations
£’000
Total
£’000
–
–
–
–
–
–
(352)
(352)
–
(352)
–
–
–
186
1,557
15,165
1,557
1,743
16,722
(2,500)
2,213
(60)
–
–
(347)
187
(160)
(2,832)
(17,160)
(6)
6
2,282
(504)
(11,160)
(11,160)
–
(352)
(13,992)
(26,894)
–
195
(13,992)
(26,699)
–
–
–
31,675
(9,310)
22,365
–
–
–
72,304
(18,362)
53,942
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AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
5. SEGMENTAL REPORTING CONTINUED
ANALYSIS OF REVENUE AND RESULTS BY COMMERCIAL ACTIVITY
FOR THE YEAR ENDED 30 SEPTEMBER 2022
Active
equities
£’000
Infrastructure
asset
management
£’000
Exchange
traded
funds
£’000
Digital
platform
£’000
Revenue
Management fees
Marketing fees
Total revenue to external
customers
Segment result
6,372
–
6,372
79
–
79
–
1,724
1,724
Operating profit/(loss)
(7,124)
(151)
(2,794)
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
–
974
(10)
–
(6,160)
59
(6,101)
56,826
(12,157)
44,669
–
–
–
–
–
–
–
–
(151)
(2,794)
–
–
(151)
(2,794)
1,706
(678)
1,028
19,324
(461)
18,863
–
–
–
–
–
–
–
181
181
–
181
–
–
–
Head
office
£’000
–
–
–
Total
£’000
6,451
1,724
8,175
(15,076)
(25,145)
3,940
11,459
–
–
323
–
323
3,940
12,433
(10)
181
(8,601)
59
(8,542)
24,949
102,805
(2,255)
(15,551)
22,694
87,254
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AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
6. DISCONTINUED OPERATIONS
Within the year ended 30 September 2023 two businesses were sold and have been classified as Discontinued
Operations under IFRS 5. These are River and Mercantile Asset Management LLC and Rize ETF Limited.
Under these standards the Discontinued Operations have been separately identified on the face of the Financial
Statements and have instead been disclosed below to help the users of the accounts better understand the
continuing operations of the Group.
River and Mercantile Asset Management LLC
Rize ETF Limited
Loss on disposal
2023
£’000
(470)
(2,362)
(11,160)
(Loss) from discontinued operation (attributable to equity holders of the company)
(13,992)
Non-controlling interest
Operating cashflows
River and Mercantile Asset Management LLC
Rize ETF Limited
Operating cash (outflow) from Discontinued Operations
RIVER AND MERCANTILE ASSET MANAGEMENT LLC
–
2023
£’000
(1,149)
(2,286)
(3,435)
2022
£’000
(453)
(2,794)
–
(3,247)
(815)
2022
£’000
(453)
(2,794)
(3,247)
2023
£’000
2022
£’000
186
186
(656)
(470)
–
(470)
–
(470)
166
166
(659)
(493)
40
(453)
–
(453)
Revenue
Management fees
Total revenue to external customers
Operating expenses
Operating profit/(loss)
Finance income
(Loss)/profit before tax
Income tax
(Loss)/profit for the year
74
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
6. DISCONTINUED OPERATIONS CONTINUED
RIZE ETF LIMITED
Revenue
Marketing fees
Total revenue to external customers
Operating expenses
Operating profit/(loss)
(Loss)/profit before tax
Income tax
(Loss)/profit for the year
2023
£’000
2022
£’000
1,635
1,635
(3,997)
(2,362)
(2,362)
–
1,724
1,724
(4,518)
(2,794)
(2,794)
–
(2,362)
(2,794)
DISPOSAL COSTS
The disposal of River and Mercantile Asset Management LLC (“LLC”) and Rize ETF Limited (“Rize”) resulted in a net
loss totalling £11,160,000. This is broken down as follows:
Fair value of consideration received
Impairment of existing intangible assets
Disposal of net assets/(liabilities) on sale
Total gain/(loss) on disposal
LLC
£’000
440
–
(99)
341
Rize
£’000
4,779
Total
£’000
5,219
(16,924)
(16,924)
644
545
(11,501)
(11,160)
The deferred consideration for the LLC constitutes an agreed percentage of future revenues up to 30 June 2025
estimated at $139,000 before discount.
The deferred consideration for Rize includes both a cash and earn-out element. Given the uncertainty and lack of
Group control over the ability to earn a consideration on the earn-out element, no value has been ascribed to this.
In addition, there was a deferred cash element of £2,650,000 payable 18 months from completion. This has been
discounted present value using a rate of 14.65%.
75
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
7. OTHER INCOME
Interest on loan notes held in associate
Other income
Total other income
2023
£’000
2,214
107
2,321
Restated
2022
£’000
2,690
–
2,690
INTEREST ON LOAN NOTES HELD IN ASSOCIATE
As set out in note 24 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 recognised £2,214,000 of interest on those loan notes and this is reflected in
other income.
Prior Year Restatement
Interest on loan notes held for the year ended 30 September 2022 has been restated. The income previously
presented was £1,977,000. This was equal to the interest earned and received in cash by Shillay TopCo Limited in
the year. The Directors have restated this figure to reflect accrued interest earned but not received.
The impact of this restatement is an additional £713,000 which has been recognised in the prior year relating to
interest accrued for, but which had not yet been received in either cash or payment in kind loan notes. This has had
the effect of increasing profit and investments in associates by £713,000 for the 2022 year.
As at 30 September 2023 interest is fully accrued up to that date. The restatement has not affected the 2023 figures.
8. ADMINISTRATIVE EXPENSES AND EXCEPTIONAL ITEMS
Included with administrative expenses are exceptional items as shown below:
2023
£’000
2,967
1,467
–
4,434
152
201
104
24,645
29,536
2022
£’000
3,196
–
671
3,867
1,116
–
3,250
12,154
20,387
Restructuring costs
Provision against doubtful debt
Costs of re-admission to AIM
Exceptional items
Acquisition costs
Disposal Costs Rize and LLC
Share-based payment expense and social security
Other administrative expenses
Total administrative expenses
76
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
8. ADMINISTRATIVE EXPENSES AND EXCEPTIONAL ITEMS CONTINUED
Restructuring costs include, salaries of employees being made redundant from the point of notice of redundancy,
severance costs, costs associated with the implementation of the new target operating model and guaranteed
bonuses awarded by River and Mercantile Group PLC (“RMG”) prior to its acquisition (the final tranche of these
bonuses will vest in January 2024). The provision against doubtful debt is against the receivables due from the
Partners of the Infrastructure business, repayable through future profits. As noted in the Chairmans Statement and
note 37 the Group has entered talks to transfer its interest in the Infrastructure business to the partners.
The Group has 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.
A further breakdown of administrative costs has been provided below to show staff costs, amortisation and
depreciation:
Staff costs (note 12)
Amortisation and depreciation
Other administrative costs
Total administrative expenses
2023
£’000
2022
£’000
15,429
15,160
684
13,423
29,536
238
4,989
20,387
Reconciliation of ‘Operating loss for continuing business excluding exceptionals’.
The table below reconciles statutory losses to the Strategic Report’s KPI for Operating loss for continuing business
excluding exceptionals:
Continuing operations: Operating loss
Adjusted for:
(Reduction) in fair value of asset held for resale (note 9)
Exceptional items
Operating profit/loss for continuing business excluding exceptionals for the year
2023
£’000
2022
£’000
(12,114)
(21,145)
–
4,434
(7,680)
9,750
3,867
(7,528)
77
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
9. OTHER GAINS AND LOSSES
(Reduction) in fair value of asset held for resale
Gain on disposal of fair value investments
2023
£’000
–
122
122
2022
£’000
(9,750)
18
(9,732)
2023
During the year the Group made a small gain on certain assets held at fair value through profit or loss of £122,000.
2022
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 taken 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.
10. OPERATING LOSS AND PROFIT
Operating (loss)/profit is stated after charging the following:
Depreciation of property plant and equipment (note 19)
Depreciation of right-of-use assets (note 20)
Amortisation of intangible assets (note 21)
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 12)
Expense relating to short-term and low-value leases
2023
£’000
28
865
661
212
295
260
10
–
–
15,429
–
2022
£’000
14
187
227
25
262
90
10
86
471
15,160
66
78
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
11. DIRECTORS’ EMOLUMENTS
Director
Martin Gilbert
Peter McKellar
Campbell Fleming
Gary Marshall
Jonathan Dawson
Tudor Davies
Christopher Mills
Mark Butcher
Aggregate fees and emoluments
Salary and fees
Long term incentive plan
Total
2023
£’000
2022
£’000
2023
£’000
2022
£’000
2023
£’000
2022
£’000
83
72
98
138
60
55
45
25
576
138
110
165
–
23
70
39
39
584
–
–
–
9
–
–
–
–
9
784
653
313
–
–
–
–
–
1,750
83
72
98
147
60
55
45
25
585
922
763
478
–
23
70
39
39
2,334
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
the prior year. As the Scheme has closed no further charges will come through the income statement. An IFRS 2
accounting charge of £9,000 was accrued in the year ended 30 September 2023 relating to the portion of the
Restricted Share Plan awarded in November 2023 to Gary Marshall.
Pension allowances paid to current directors were £24,000 (2022: none). The highest paid director received
aggregate emoluments, including awards under the share- based payments charge, of £138,000 (2022: £922,000).
79
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
12. 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 (discontinued operation)
Head office
The costs incurred in respect of these employees were:
Continuing operations:
Wages and salaries
Social security costs
Share-based payments
Other pension costs
Group
2023
No.
92
6
14
13
125
Group
2023
£’000
13,473
1,408
113
435
Group
2022
No.
Company
2023
No.
Company
2022
No.
36
5
13
14
68
Group
2022
£’000
11,251
965
2,749
195
–
–
–
13
13
–
–
–
14
14
Company
2023
£’000
Company
2022
£’000
1,306
159
26
13
1,073
171
2,749
12
4,005
15,429
15,160
1,504
Wages and salaries include termination payments of £1,095,000 (2022: £1,140,000). These amounts are reflected
in the total exceptional restructuring costs set out in Note 8.
Employee benefit obligations
The Group’s subsidiaries have defined contribution pension schemes in place. The pension contribution charge in
2023 amounted to £435,000 (2022: £195,000).
13. GAIN ON BARGAIN PURCHASE
Arising on acquisition of RMG
2023
£’000
–
2022
£’000
3,227
In the prior year the calculation of the difference arising on acquisition of River and Mercantile between the purchase
consideration and the value of net assets acquired gave rise to a negative amount of goodwill as the value of
net assets acquired was larger than the consideration. In accordance with accounting standards the amount of
£3,227,000 was treated as a credit to the income statement.
80
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
14. FINANCE INCOME
Finance income from continuing operations was:
Dividend income
Gain on foreign exchange
Interest income
15. FINANCE COSTS
Finance costs from continuing operations were:
Lease liability finance charge
Finance costs on bonds and letters of credit
Loss on foreign exchange
2023
£’000
–
–
74
74
2023
£’000
(90)
(208)
(212)
(510)
2022
£’000
11,459
927
7
12,393
2022
£’000
(10)
–
–
(10)
16. GROUP AND COMPANY DIVIDENDS
The Group has not declared any interim or final dividends with respect to the financial year to September 2023.
In respect of the financial year to 30 September 2022 an interim dividend of 1.3p per share 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.
17. INCOME TAX
Current tax
Current tax on (loss)/profits for the year
Total current tax expense/(credit)
Deferred tax
Continuing operations
Discontinued operations
Total deferred tax (credit)/expense
Income tax (credit)/expense
2023
£’000
2022
£’000
11
11
(199)
(7)
(206)
(195)
(13)
(13)
(46)
–
(46)
(59)
81
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
17. INCOME TAX 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) before tax continuing operations
(Loss) before tax discontinued operations
Total (loss) before tax
Tax credit at a standard rate of 22% (2022: 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
2023
£’000
(12,902)
(13,992)
(26,894)
(5,917)
4,416
(3,491)
–
(184)
–
4,981
(195)
Restated
2022
£’000
(4,538)
(4,062)
(8,600)
(1,634)
404
(3,003)
(5)
752
–
3,427
(59)
The rate applicable from 1 April 2023 increased to 25%, resulting in a pro-rata rate for the period of 22%. The rate
applicable from 1 April 2022 to 31 March 2023 was 19%. Deferred taxes at the reporting date have been measured
using these enacted tax rates and reflected in these financial statements.
82
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
18. LOSS & EARNINGS PER SHARE
In August 2023 the Company effected a 10 for 1 share split (see Note 32). The prior year share numbers and EPS
have been adjusted for this.
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 buybacks
(see note 32). The prior year has been restated to split out continuing and discontinued operations.
(Loss)/profit from continuing operations – £000
(Loss)/profit from discontinued operations – £000
Total (loss) attributable to owners of the parent
2023
(12,707)
(13,992)
(26,699)
Restated
2022
(4,480)
(3,247)
(7,727)
Weighted average number of ordinary shares in issue post share split – no.
140,364,398 103,017,624
Basic earnings per share from continuing operations – pence
Basic earnings per share from discontinued operations – pence
Total basic earnings per share
(9.06)
(9.98)
(19.04)
(4.35)
(3.15)
(7.50)
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. As at 30 September 2022, the LTIP was discontinued
therefore there were no dilutive potential ordinary shares.
(Loss)/profit from continuing operations – £000
(Loss)/profit from discontinued operations – £000
Total (loss) attributable to owners of the parent
2023
(12,707)
(13,992)
(26,699)
Restated
2022
(4,480)
(3,247)
(7,727)
Weighted average number of ordinary shares in issue post share split – no.
140,364,398 103,017,624
Diluted earnings per share from continuing operations – pence
Diluted earnings per share from discontinued operations – pence
Total diluted earnings per share
(9.06)
(9.98)
(19.04)
(4.35)
(3.15)
(7.50)
83
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
19. PROPERTY, PLANT & EQUIPMENT
CONSOLIDATED GROUP
Cost
At 1 October 2021
Acquisition of subsidiary
Additions
Disposals
At 30 September 2022
Acquisition of subsidiary
Additions
Disposals
At 30 September 2023
Accumulated depreciation
At 1 October 2021
Charge for the year
Disposals
At 30 September 2022
Acquisition of subsidiary
Charge for the year
Disposals
At 30 September 2023
Net book value at 30 September 2023
Net book value at 30 September 2022
Leasehold
improvements
£’000
Fixtures and
fittings
£’000
Computer
equipment
£’000
Total
£’000
–
2
–
–
2
68
17
(1)
86
–
1
–
1
17
4
–
22
64
1
34
–
–
(26)
8
38
–
–
46
34
–
(26)
8
36
–
–
44
2
–
40
13
15
–
68
137
–
–
205
24
13
–
37
127
24
(15)
173
32
31
74
15
15
(26)
78
243
17
(1)
337
58
14
(26)
46
180
28
(15)
239
98
32
84
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
19. PROPERTY, PLANT & EQUIPMENT CONTINUED
COMPANY
Cost
At 1 October 2021 and 30 September 2022
Disposals
At 30 September 2023
Accumulated depreciation
At 1 October 2020 and 30 September 2022
Disposals
At 30 September 2023
Net book value at 30 September 2023
Net book value at 30 September 2022
20. RIGHT OF USE ASSETS AND LEASE LIABILITY
CONSOLIDATED GROUP
Cost:
At 1 October 2021
Acquisition of subsidiary
At 30 September 2022
Additions
Write offs
At 30 September 2023
Accumulated depreciation:
At 1 October 2021
Charge for the year
At 30 September 2022
Charge for the year
Write offs
At 30 September 2023
Net book value at 30 September 2023
Net book value at 30 September 2022
Fixtures and
fittings
£’000
Total
£’000
26
(26)
–
26
(26)
–
–
–
26
(26)
–
26
(26)
–
–
–
Right of
use asset
£’000
–
411
411
2,175
(411)
2,175
–
187
187
865
(411)
641
1,534
224
85
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
20. RIGHT OF USE ASSETS AND LEASE LIABILITY CONTINUED
Lease liability:
At 1 October 2021
Acquisition of subsidiary
Payments made
Interest charge
At 30 September 2022
Additions
Write offs
Payments made
Interest charge
At 30 September 2023
Of which:
Current lease liabilities
Non-current liabilities
At 30 September 2023
Lease liability
£’000
–
398
(114)
10
294
2,160
(254)
(630)
76
1,646
696
950
1,646
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. On 20th October
2022 the Coleman Street lease agreements were renegotiated and extended, leading to a full write down of the
existing lease balances held and recognition of the new lease agreements effective from 14th January 2023.
86
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21. GOODWILL AND INTANGIBLE ASSETS
Goodwill
£’000
Customer
relationships
£’000
Software
£’000
Website
development
£’000
Brand
£’000
Group
Cost
At 1 October 2021
Acquisition of business
Additions
Cost at 30 September 2022
Acquisition of business
Additions
Disposal of business
Cost at 30 September 2023
Accumulated amortisation
At 1 October 2021
Acquisition of business
Charge for the year
Amortisation at 30 September 2022
Acquisition of business
Impairment
Charge for the year
Disposal of business
19,787
648
–
20,435
6,340
–
(16,860)
9,915
–
–
–
–
–
11,860
–
(11,860)
–
–
2,400
1,250
–
2,400
200
–
–
–
1,250
–
–
–
2,600
1,250
–
–
64
64
–
–
232
–
296
–
–
98
98
–
–
340
–
438
812
Total
£’000
20,087
4,748
12
24,847
6,590
12
100
–
12
112
–
12
(124)
(17,134)
–
14,315
14
–
11
25
–
–
12
(37)
–
–
20
–
227
247
–
11,860
673
(11,961)
819
13,496
87
24,600
200
450
–
650
50
–
(150)
550
6
–
54
60
–
–
89
(64)
85
465
590
Amortisation at 30 September 2023
–
Net book value at
30 September 2023
Net book value at
30 September 2022
9,915
2,304
20,435
2,336
1,152
Software and website development are internally generated and have finite lives as set out in Note 2. Amortisation
of all intangible assets is included in administrative expenses in the income statement. Customer relationships
principally relates to the customer relationships recognised on acquisition of the River and Mercantile Group, with
a carrying amount of £2,118,000 (2022: £2,336,000) and a remaining amortisation period of 10 years. Software
principally relates to the software acquired through the purchase of the River and Mercantile Group, with a carrying
amount of £705,000 (2022: £895,000) and a remaining amortisation period of 4 years.
87
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21. GOODWILL AND INTANGIBLE ASSETS CONTINUED
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
SVM
Total
2023
£’000
–
3,575
6,340
9,915
2022
£’000
16,860
3,575
–
20,435
IMPAIRMENT REVIEW
Goodwill is reviewed annually for impairment and its recoverability has been assessed at 30 September 2023 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 discounted cash flow projections based on the
most recent budgets and forecasts maintained by the Group. The most recent budgets prepared are part of the
annual planning process for the year ending 30 September 2024 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 any forecasted growth.
Consolidated assessment: As at 30 September 2023 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 2023 with the
exception of Rize ETF Limited as detailed below
Company assessment: As at 30 September 2023 the Company was deemed to require an impairment in some of
its investments in subsidiaries as set out in note 22.
Rize ETF Limited
The Rize ETF balance was written down in the year before being sold. Full details of the sale can be found within
note 6.
Saracen Fund Managers Limited
Following the 2022 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.
Key inputs
Modelling was performed to support both discounted cash flow (DCF) and net present value (NPV) methodologies.
The overall approach to impairment reviews for 2023 represents a more conservative approach with a reduction in
expected revenue growth in all cases vs. prior year modelling.
88
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
21. GOODWILL AND INTANGIBLE ASSETS CONTINUED
Key DCF inputs included: Forecasting revenue driven by AuM. Previously modelling was based on new business
targets, expected net funds flows and estimated impact of market performance. Modelling for the year ended
30 September 2023 took the 2024 budget as its starting point which is more conservative in its approach to
modelling revenue growth. Revenue growth was modelled to be broadly flat for the financial years ending 2024 and
2025 with a subsequent annual growth rate of 2%. Costs were grown at 2% p.a. where applicable, notably below
current inflation rates, primarily due to expected future cost saving measures and a strategy throughout the business
to manage costs. The discount rate applied for the analysis was 14.65% (2022: 14.5%) based on the risk-free rate
of interest and specific risks relating to the Group.
Key NPV inputs included: A broad spectrum of third party transaction and trading data was analysed (both current
and historical). It is noted that industry trading multiples have fallen in the period based on peer group share price
analysis and this was incorporated into the relevant modelling. This data was compared with the relevant cash
generating units and businesses in the Group to select an appropriate and conservative valuation multiples after
taking into account any identified free cash and estimated costs to realise these prices.
22. INVESTMENTS IN SUBSIDIARIES
Company shares in group undertakings:
At 1 October
Additions in the year
Impairment & Disposal
At 30 September
2023
£’000
69,921
9,073
(40,872)
38,122
2022
£’000
25,194
45,249
(522)
69,921
Investments in Group undertakings are recorded at cost, which is the fair value of the consideration paid, less any
impairment. In the year the additions relate to the issue of loan note with respect of the acquisition of SVM, an
additional £2,216,000 in cash was paid by the Company’s subsidiary River Global Holdings Limited, and £73,000
with respect to the share award detailed in note 32. The disposal and impairment in the year of £16,750,000 and
£5,000,000 respectively relate to Rize.
An additional impairment was recognised in relation to the Company’s investment in River and Mercantile Group
Limited for £18,880,000, and in relation to Revera Asset Management for £241,000. As noted in note 21 a review of
goodwill and intangible assets was conducted for the year ended 30 September 2023 and as a result of this testing
it was considered appropriate to impair the values of these investments to the higher of their net realisable value or
value in use. The methodology for this modelling has been set out in note 21.
The impairment charged in 2022 relates to management’s view that the carrying value of the investment in Revera
Asset Management Limited should be written down to its underlying net asset value following its combination with
Saracen Fund Managers Limited.
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AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
22. INVESTMENTS IN SUBSIDIARIES CONTINUED
The subsidiaries of AssetCo plc as at 30 September 2023 are as follows:
Proportion
held
Class of
shareholding
Note
Name of Company
River and Mercantile Group Limited
River Global Holdings Limited
River Global Group Services Limited
River and Mercantile Group Trustees Limited
River and Mercantile US Holdings Limited
River Global Investors LLP
River and Mercantile Infrastructure LLP
River and Mercantile Infrastructure GP S.a.r.l.
Revera Asset Management Limited
Saracen Fund Managers Limited
SVM Asset Management Holdings Limited
SVM Asset Management Limited
SVM Investment Management Limited
SVM Investment Managers Limited
AAMCO Limited
AssetCo Asset Management Limited
AssetCo Asset Managers Limited
AssetCo Investment Management Limited
1
1
1
1
1
1
1
1
2
2
2
2
2
2
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%
100%
100%
100%
100%
100%
100%
100%
Ordinary
Investment advisor company
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
General partner company
Investment management
Investment management
Investment management
Investment management
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Notes:
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.
All subsidiary undertakings are included in the consolidation of the Group.
90
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23. BUSINESS COMBINATION
SUMMARY OF ACQUISITIONS
On 31 October 2022 AssetCo plc announced the completion of the acquisition of the entire share capital and 100%
voting rights of SVM Asset Management Holdings Limited (“SVM”). SVM is an active equities fund management
Group based in Edinburgh.
Details of the purchase consideration are as follows:
Cash paid
Convertible loan notes issued
Fair value adjustment to loan notes
Total consideration
The fair value of assets and liabilities recognised as a result of the acquisition are as follows:
Cash
Trade and other receivables
Plant and equipment
Right-of-use assets
Trade payables
Other payables
Lease liability
Corporation tax liability
Total net assets recognised on acquisition
Fair value adjustments
Intangible assets: brand
Intangible assets: customer relationships
Deferred tax liability
Net identifiable assets/(liabilities) acquired
Goodwill
Net assets acquired
ACQUIRED RECEIVABLES
The fair value of acquired trade receivables was £444,000 and no loss allowance has been recognised on
acquisition.
SVM
£’000
2,216
9,000
(173)
11,043
SVM
£’000
5,017
444
2
–
(238)
(565)
–
(145)
4,515
50
200
(62)
4,703
6,340
11,043
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AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23. BUSINESS COMBINATION CONTINUED
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 was 5 years, however this has been disposed of in the year. 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%.
COMPUTER SOFTWARE
In the prior year, RMG had two internally developed computer programs which were 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 estimated the total
development costs which needed 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
In the prior year, RMG’s relationships with Institutional Investors was recognised at cost, being the fair value at
the date of acquisition. Following initial recognition, this was carried at cost less any accumulated amortisation
and accumulated impairment losses, with the related charge recognised in the consolidated income statement.
Amortisation is charged on a straight-line basis over an estimated useful life of 11 years. The valuation approach
applied to Customer Relationships was 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 were 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 assumed a weighted average cost of
capital of 17%, which was 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 business was accounted for from the date of acquisition (31 October 2023). Had the business been
consolidated from the start of the period, this would have increased the Group’s consolidated revenue by £249,000
and operating losses by £101,000 for the year. The revenues of the business for the 12 months to 30 September
2023 were £3,058,000 and the operating losses for the 12 months to 30 September 2023 was £1,108,000.
92
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
23. BUSINESS COMBINATION CONTINUED
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
2023
£’000
2,216
(5,017)
(2,801)
2022
£’000
1,001
(43,149)
(42,148)
ACQUISITION-RELATED COSTS
Acquisition-related costs of £205,000 (2022: £1,116,000) that were not directly attributable to the issue of shares
are included in administrative expenses in the statement of profit or loss.
CONVERTIBLE LOAN
The terms of the £9,000,000 loan were for loan notes with a nominal value of £9 million, unsecured and carrying
a coupon of 1%. The reduction in nominal value of the loan notes represents a fair value adjustment to reflect the
difference in the 1% coupon and a market interest rate. The first £2 million of loan notes were convertible into
AssetCo ordinary shares in certain circumstances, at market value, up to 31 December 2022 with the remainder
convertible into AssetCo ordinary shares, at £1.45 per share, up to 31 December 2023. If not converted the loan
notes were repayable at nominal value on 31 December 2023. As announced on 20 March 2023 the SVM vendors,
following an extension of their conversion option date to 28 February 2023, duly exercised their option to convert
the first £2 million of loan notes into AssetCo ordinary shares. The market price agreed was 68.7p per share and
led to the issue to the SVM vendors of 2,911,208 AssetCo ordinary shares which were satisfied by the transfer of
shares from those held in treasury. As set out in Companies Act 2006 the difference between the average purchase
price of these shares and the agreed issue price is taken to share premium.
The final settlement of the loan occurred after year end and has been described in note 37.
24. GROUP INTEREST IN ASSOCIATES
Purchase of interest in Parmenion
Share of operating results for 2022
Interest earned in the year (restated)
Payment of interest (restated)
Restated balance at 30 September 2022
Share of operating results for 2023
Interest earned in the year
Closing balance at 30 September 2023
Total
£’000
21,871
181
2,690
(1,977)
22,765
(352)
2,213
24,626
Equity
£’000
Restated
Loan notes
£’000
171
181
–
–
352
(352)
–
–
21,700
–
2,690
(1,977)
22,413
–
2,213
24,626
During the period, £2,333,000 interest accrued were settled via the issue of an additional loan note. Further details
on the restatement of prior year interest can be found on note 7.
93
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
24. GROUP INTEREST IN ASSOCIATES CONTINUED
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 Company 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
Shillay TopCo Limited
30 September 2023
£’000
Shillay TopCo Limited
30 September 2022
£’000
31,657
107,752
(18,772)
(128,216)
(7,579)
36,203
87,241
(17,330)
(105,219)
895
UNAUDITED SUMMARISED STATEMENT OF COMPREHENSIVE INCOME
Revenue
Profit for the period
Net Asset Adjustment
Total comprehensive income
Equity interest (%)
Equity interest
Share of operating results for 2023
Shillay TopCo Limited
30 September 2023
£’000
Shillay TopCo Limited
30 September 2022
£’000
40,761
921
(9,095)
(8,174)
30%
(2,452)
(352)
40,800
602
–
602
30%
181
181
94
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
24. GROUP INTEREST IN ASSOCIATES CONTINUED
SHILLAY TOPCO LIMITED MOVEMENT IN NET ASSETS FOR THE YEAR ENDED 30 SEPTEMBER 2022
The Shillay TopCo Limited (Shillay) accounts for the year ended 31 December 2022 were the first set of consolidated
accounts for the entity. These accounts were approved and signed 28th June 2023. This accounting period was
also the first accounting period in which the purchase price allocation and any resulting tax positions were calculated
in respect of its acquisitions of Parmenion Capital Partners LLP and EBI Portfolios Limited. As a result of finalising
these positions for the 2022 consolidated accounts for the Shillay group net assets were reduced by £9.1m relative
to the presented figures as at September 2022 primarily as a result of adjustments for uplifts in goodwill recognised
on acquisition and the recognition of additional deferred tax liabilities.
SHARE OF OPERATING RESULTS
The AssetCo Group has recognised this adjustment in its accounts for the year ended September 2023, reducing
the value of its equity investment by its share of these losses down to a value of £nil.
It is important to note that this adjustment reflects a finalisation of accounting positions for the December 2022 year
end for Shillay TopCo Limited and has no bearing on the underlying performance of its investment in Parmenion.
25. LONG TERM RECEIVABLES
Drawings in advance of profits
Group
2023
£’000
–
Group
2022
£’000
1,208
Company
2023
£’000
Company
2022
£’000
–
–
In the period, members of a partnership in the Group have received drawings and special drawings in advance
of future profits of £380,000 (2022: 1,208,000). However due to the expected recoverability of these drawings a
provision has been made against the balance of drawings on the balance sheet in addition to a receivable in relation
to the fund managed by the partners. The total provision at 30 September 2023 was £1,467,000 this has been
further described in note 8.
95
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
26. TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Amounts due from Group undertakings
Consideration receivable on sale of US and UK
Solutions businesses
Prepayments and accrued income
Group
2023
£’000
377
2,767
–
–
2,662
5,806
Restated
Group
2022
£’000
1,441
2,364
–
3,018
2,877
9,700
Company
2023
£’000
Company
2022
£’000
–
2,174
258
–
70
2,502
–
–
–
–
34
34
Due to their short-term nature, the carrying value of trade and other receivables is considered to be substantially
equal to its 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 £503,000 (2022: £2,639,000).
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 2023, trade and other receivables of £nil (2022: £nil) were impaired, and all trade receivables
were aged less than 30 days. The amount of the provision was immaterial (2022: immaterial). No trade receivables
were written off during the year (2022: £nil).
Allocation Restatement
The 2022 allocations of trade and other receivables have been restated. No adjustment has been made to the total
of trade and other receivables. The impact of these changes is to reallocate £1,629,000 from Other Receivables to
Prepayments and Accrued Income.
96
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
27. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
Seeded funds
Group
2023
£’000
13
13
Group
2022
£’000
Company
2023
£’000
Company
2022
£’000
37
37
–
–
–
–
The Group 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.
AMOUNTS RECOGNISED IN PROFIT OR LOSS
Fair value (losses)/gains on equity investments
Dividends received recognised in finance income
Group
2023
£’000
–
–
Group
2022
£’000
(9,750)
11,459
Company
2023
£’000
Company
2022
£’000
–
–
(9,750)
11,459
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 27 the Group has a financial instrument classified at level 2 which is an immaterial
investment in a seed fund.
28. CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Cash and cash equivalents
Cash and cash equivalents
UK sterling
US dollars
Euros
Australian dollars
New Zealand dollars
Group
2023
£’000
25,573
25,573
24,971
302
297
3
–
Group
2022
£’000
43,066
43,066
41,270
1,576
12
13
195
Company
2023
£’000
Company
2022
£’000
3,698
3,698
7,394
7,394
3,698
7,394
–
–
–
–
–
–
–
–
25,573
43,066
3,698
7,394
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.
97
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
29. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Other taxation and social security
Amounts due to Group undertakings
Deferred consideration
Accruals and deferred income
Group
2023
£’000
655
1,046
242
–
7,000
5,403
14,346
Restated
Group
2022
£’000
1,135
1,802
441
–
100
9,272
12,750
Company
2023
£’000
Company
2022
£’000
–
712
26
5,495
7,000
–
84
2
68
5,100
100
499
13,233
5,853
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 £152,000 (2022: £810,000).
Deferred consideration outstanding at 30 September 2023 represents loan notes payable with respect to the
acquisition of SVM. In the prior year deferred consideration is in respect of the acquisition of Revera Asset
Management Limited and was paid in 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.
Allocation Restatement
The 2022 allocations of trade and other payables have been restated. No adjustment has been made to the total of
trade and other payables. The impact of these changes is to reallocate £10,212,000 from Trade Payables to Other
Payables (£1,710,000), Other taxation and social security (£336,000) and Accruals (£8,166,000). Other creditors
now includes balances due to Partners in the LLP subsidiary of the Group and the Accruals balance for 2022 is
principally made up of accrued bonus and other compensation accruals.
30. CURRENT TAXATION
Tax receivable
Tax (payable)
Corporation tax (payable)
Group
2023
£’000
1,159
(1,465)
(304)
Group
2022
£’000
1,173
(1,437)
(264)
Company
2023
£’000
Company
2022
£’000
–
(1,437)
(1,437)
–
(1,437)
(1,437)
In the current year, corporation tax payable made up of a payable balance of £1,465,000 and a receivable balance
of £1,159,000. The receivable is expected to be received by end of the calendar year 2023 and relates to tax
payments made by a Group subsidiary in prior years.
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.
98
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
31. FINANCIAL ASSETS AND LIABILITIES
The following tables illustrate the categorisation and carrying value of financial assets and liabilities as at
30 September 2023. Credit risk is also discussed in note 3. It should be noted that Loans to associates has been
included in the financial assets table in 2023 to reflect the nature of the loan as a financial asset. The prior year other
receivables balance has been restated to remove tax assets which are not classified as financial liabilities within the
2023 year end and to include all relevant accruals balances.
FINANCIAL ASSETS
Trade receivables
Other receivables
Amounts due to Group undertakings
Consideration for US Solutions business
Cash and cash equivalents
Financial assets at amortised cost
Financial assets held as investments in associates
Financial assets at fair value through profit and loss
FINANCIAL LIABILITIES AT AMORTISED COST
Trade payables
Other payables
Accruals
Intercompany payables
Lease liability
Group
2023
£’000
377
5,429
–
–
25,573
31,379
24,626
13
Restated
Group
2022
£’000
1,441
5,396
–
1,807
43,066
51,710
22,765
37
Company
2023
£’000
Company
2022
£’000
–
2,174
258
–
3,698
6,130
–
–
–
7,394
7,394
24,797
22,584
–
–
56,018
74,512
30,927
29,978
Group
2023
£’000
655
1,047
5,403
–
1,646
8,751
Restated
Group
2022
£’000
1,134
1,902
9,217
–
294
Company
2023
£’000
Company
2022
£’000
–
93
–
5,492
–
84
501
–
–
–
12,547
5,585
585
99
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
31. 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 2023:
2023
Due in one year or less
Due in more than one year
Restated 2022
In one year or less
Trade
payables
£’000
Other
payables
and accruals
£’000
Lease liability
and accruals
£’000
Deferred
Considerations
£’000
655
–
6,450
–
697
1,091
1,134
11,074
294
7,000
–
–
Total
£’000
14,802
1,091
12,503
CURRENCY RISK
The Company and Group has performed sensitivity testing on the fair value of the Group and Company’s financial
instruments of a 10% movement in sterling against all other currencies from the closing rates as at 30 September
2023, with all other variables remaining constant. A 10% variation would have had an impact on the post-tax profit
balance sheet of £52,000 (2022: £328,000).
2023
US dollar
Euro
Australian dollar
2022
US dollar
Euro
Australian dollar
New Zealand dollar
Swiss franc
Financial
assets
£’000
Financial
liabilities
£’000
407
135
3
545
3,901
142
13
379
–
4,435
(22)
(4)
–
(26)
(495)
(44)
(237)
–
(41)
(817)
Net
£’000
385
131
3
519
3,406
98
(224)
379
(41)
3,618
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.
100
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
32. EQUITY
SHARE CAPITAL AND SHARE PREMIUM
2023
Shares
2022
Shares
2023
£000
2022
£000
Ordinary shares of £0.01 each (2022: £0.01)
Fully paid
149,292,970
149,292,970
1,493
1,493
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.
MOVEMENT IN ORDINARY SHARES
Number of
shares
No.
8,424,847
5,985,541
518,909
–
14,929,297
134,363,673
149,292,970
–
149,292,970
Share
capital
£000
843
598
52
–
1,493
–
1,493
–
1,493
Share
premium
£000
27,770
–
4,255
(32,025)
–
–
–
209
209
Total
£000
28,613
598
4,307
(32,025)
1,493
–
1,493
209
1,702
Opening balance at 1 October 2021
Consideration shares re: RMG (1)
Shares arising from LTIP (2)
Share premium cancellation (3)
Effect of 10 for 1 share split (3)
Balance at 30 September 2022
Share premium arising on treasury shares used
in loan note conversion (note 23)
Balance at 30 September 2023
Notes:
1. 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.
2. 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.
3. 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.
101
AssetCo plc | Report and Financial Statements 2023
15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
32. EQUITY CONTINUED
OTHER RESERVES
Opening balance at 1 October 2021
Arising on acquisition of RMG
Costs of RMG acquisition
Share-based payments in relation to LTIP (see note 36)
IFRS 2 share scheme charge
Capital
redemption
reserve
£’000
653
–
–
–
–
Merger
reserve
£’000
2,762
41,301
(1,000)
–
–
Balance at 30 September 2022 and 2023
653
43,063
Other
reserve
£’000
5,496
–
–
(5,496)
95
95
Total
£’000
8,911
41,301
(1,000)
(5,496)
95
43,811
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.
A Merger Reserve arose on the issue of shares to vendors of Saracen Fund Managers Limited rather than share
premium.
The share scheme charge in the year, relates to the RSP awarded after the balance sheet date, however due to
circumstances that existed in the year the charge for the award has commenced in the current year and will be
spread over the life of the award (note 37)
An Other Reserve movement arose during the prior year when the Company terminated its Long-Term Incentive
Plan (“LTIP”). The original balance of £5,496,000 was recognised in the year ended 2021 fully in respect of the
equity settled LTIP award. 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.
102
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
32. EQUITY CONTINUED
RETAINED EARNINGS
Opening balance as at 1 October
Net (loss)/profit for period
Share based payment charge
Cancellation of share premium
Dividends paid
Treasury shares used to settle conversion of loan notes
Shares purchased for Treasury
Non-controlling interest on sale of Rize
Exchange movement
Balance as at 30 September
2023
£’000
Restated
2022
£’000
43,139
18,892
(26,699)
(7,727)
(95)
–
(1,798)
1,791
(6,815)
(1,094)
–
–
32,025
–
–
(51)
–
–
8,429
43,139
As at 30 September 2023 the Group held 8,283,027 of treasury shares (2022: 72,941) further described in note 2.
33. DEFERRED TAXATION
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
Group
2023
£’000
745
160
905
Group
2023
£’000
–
31
874
905
Group
2022
£’000
861
209
1,070
Group
2022
£’000
28
45
997
1,070
Company
2023
£’000
Company
2022
£’000
–
–
–
–
–
–
Company
2023
£’000
Company
2022
£’000
–
–
–
–
–
–
–
–
103
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
33. DEFERRED TAXATION CONTINUED
Deferred tax movements:
Group
At 1 October 2021
Acquisition of subsidiary
Credited/(charged) to profit and loss
At 30 September 2022
Acquisition of subsidiaries
Disposal of subsidiaries
Credited/(charged) to profit and loss
At 30 September 2023
Financial assets at
fair value through
profit and Loss
£’000
Right-of-use
assets
£’000
Intangible
assets
£’000
–
28
–
28
–
–
(28)
–
–
45
–
45
–
–
(13)
32
49
1,011
(63)
997
(21)
63
(165)
874
Total
£’000
49
1,084
(63)
1,070
(21)
63
(206)
905
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 2023 or 30 September 2022. 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% (2022: 25%)
2023
£’000
55,075
13,769
2022
£’000
36,600
9,150
The unused tax losses were incurred by AssetCo plc, Revera Asset Management Limited, River and Mercantile US
Holdings Limited and Mercantile Group Limited. Of these tax losses £7,477,000 relate to US tax losses from the
Group’s former US business and are only utilisable against US generated profits.
104
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
34. RECONCILLIATION OF LOSSES AND PROFITS BEFORE TAX TO NET CASH INFLOW FROM
OPERATIONS
(Loss)/profit for the year before taxation
(12,902)
(5,354)
(31,655)
(3,642)
Group
2023
£’000
Restated
Group
2022
£’000
Company
2023
£’000
Restated
Company
2022
£’000
Share-based payments
– in respect of LTIP
Cash effect of LTIP
Share of (loss)/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 15)
Movement in foreign exchange
Finance income (note 14)
Provision against doubtful debt (note 8)
Dividends from investment held at fair value
Decrease in receivables
(Decrease)/increase in payables
–
–
352
(2,213)
–
–
–
–
–
–
28
665
860
510
(76)
(74)
1,467
2,749
(3,938)
(181)
(2,690)
–
9,750
(18)
–
5,462
(3,227)
14
227
187
10
–
(974)
–
23
–
–
(2,213)
(4,000)
–
–
35,871
2,749
(3,938)
–
(2,690)
–
9,750
–
522
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(11,459)
3,841
(3,659)
928
(6,556)
(5,000)
(2,468)
9,171
(11,459)
(638)
(712)
Cash (outflow)/inflow from continuing operations
(11,201)
(15,070)
(271)
(10,058)
105
AssetCo plc | Report and Financial Statements 2023 15. 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:
INTERCOMPANY BALANCES
Amounts receivable from Rize ETF Ltd.
Amounts payable to River & Mercantile Holdings Ltd.
Amounts payable to Revera Asset Management Limited
Amounts payable from River Global Investors LLP
Amounts payable from River Global Services Limited.
2023
£’000
–
(5,000)
(492)
156
102
(5,234)
2022
£’000
–
–
–
(–)
The balance with River & Mercantile Holdings is a current loan, payable on demand within the next year. Subsequent
to year end, the amount was repaid.
During the year loans were made by the Company to Rize ETF Limited totalling £490,000 accruing interest at a rate
of 15% p.a. from the date of utilisation. On completion of the sale of Rize ETF Limited the loan balance was settled
and accrued interest totalling £15,000 was written off as part of the sale agreement. Further details on the sale can
be found in note 6.
KEY MANAGEMENT COMPENSATION
Salaries, fees and other employee benefits
Share-based payments
2023
£’000
575
95
670
2022
£’000
584
1,750
2,334
Further details on directors’ emoluments can be found in note 11.
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.
Details of the Directors’ shareholdings in the Company can be found in the Directors’ Report.
106
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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.
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
2023
£’000
2,749
501
3,250
2022
£’000
5,496
777
6,273
107
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
36. LONG TERM INCENTIVE PLAN CANCELLATION CONTINUED
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
2021
£’000
1,649
1,374
–
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.
37. POST BALANCE SHEET EVENTS
a) Completion of acquisition of Ocean Dial Asset Management Limited (“ODAM”)
On 2 October 2023 the Group completed the acquisition of ODAM. The purchase was for 100% of the shares and
voting rights of the Company.
The acquisition is earnings enhancing for the Group and it is anticipated that further synergies will be achievable due
to further integration of the business in order to capitalise on the existing operating model of the Group.
The consideration was satisfied by the delivery of 1,464,129 ordinary shares of £0.01 each in the capital of the
Company satisfied from shares held in treasury and £2.46m in cash (£1.82m net of cash within the business). A
final 1,464,129 Ordinary Shares of the Company, again satisfied from shares held in treasury, were delivered on
30 January 2024. The total paid for the ODAM business was therefore 2,928,258 Ordinary Shares, funded from
treasury, and £2.46m in cash (£1.82m net of cash within the business). Using a share price of 38p (price as at
29 September 2023) this would indicate a fair value paid of £3,573,000.
In the year to September 2023, the Group incurred some professional fee costs in relation to the purchase however
the transaction has not had a material impact on the results for the year.
It should be noted that management has not yet fully concluded its assessment of purchase price allocation
however the Net Assets of ODAM on acquisition were £669,000 with cash of £642,000. It is expected that the
majority of the net cost of acquisition will be accounted for as Goodwill once finalised.
b) Sale of Interest in River and Mercantile Infrastructure LLP (“RMI”)
On 6 October 2023 the Group announced it had reached an agreement in principle to transfer its interest in RMI
to the partners of RMI, which would then continue to operate outside of the Group. Subsequent dialogue with the
partners of RMI and investors in the fund advised by RMI has identified a different route forward whereby AssetCo
and River Group exit the Infrastructure business, the fund continues to be appropriately advised and the partners of
RMI establish a business outside of the AssetCo Group. The transaction to effect this has yet to be completed but
was at an advanced stage of discussion at the date of publication of AssetCo results. In the meantime, measures
were taken to move the current RMI business to break even from January 2024 and it is anticipated that a clean
break will be achieved in the near future which is satisfactory to both the current clients and the current RMI Team.
108
AssetCo plc | Report and Financial Statements 2023 15. NOTES TO THE FINANCIAL STATEMENTS CONTINUED
37. POST BALANCE SHEET EVENTS CONTINUED
c) Award of Restricted Share Plan (“the Plan”)
On 6 November 2023 the Group announced that it has put in place a Restricted Share Plan for a limited number of
executives, partners and staff. The Plan has awarded rights over up to 5,013,000 ordinary shares in the Company,
which it is expected would be satisfied from shares currently held in treasury. Vesting of Shares under the Scheme is
due on 1 October 2026 and is subject to usual provisions for malus, clawback and for apportionment or forfeiture in
respect of good and bad leavers prior to that date at the discretion of the Board’s Remuneration Committee.
Due to conditions that existed in the year, the charge for the RSP has commenced in the current financial year and
will be spread over the life of the award.
d) Rebrand of Equities business
On 4 December 2023 the Group rebranded its Equities business to River Global, reflecting the bringing together of
all of the River and Mercantile, Saracen and SVM brands under one brand and operating model.
e) Settlement of SVM loan notes
On 27 December 2023, the Group settled the loan notes due to the previous owners of SVM. This represented an
outflow of cash of £7m from the business.
109
AssetCo plc | Report and Financial Statements 2023 16. 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 at 10.00 a.m. on 24 April
2024. The Annual General Meeting is being held to
consider and vote on the Resolutions below. Resolutions
1 to 10 will be proposed as ordinary resolutions and
Resolutions 11, 12 and 13 will be proposed as special
resolutions. Voting on all Resolutions will be conducted
by way of a show of hands.
Please carefully read 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 2023,
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 Tudor Davies as a Director of the
Company.
5. To re-elect Christopher Mills as a Director of the
Company.
6. To re-elect Jonathan Dawson as a Director of the
Company.
7. To re-elect Gary Marshall as a Director of the
Company.
8. That BDO 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.
9. That the remuneration of BDO as auditors of the
Company be determined by the Directors of the
Company.
10. 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 or 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
11. THAT subject to Resolution 10 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 10 as if sub-
section (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
110
AssetCo plc | Report and Financial Statements 2023 16. NOTICE OF ANNUAL GENERAL MEETING CONTINUED
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.
13. That a general meeting of the Company (other than
an AGM) may be called on not less than 14 clear
days’ notice.
15 March 2024
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 2025, 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.
12. 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
14,247,407;
(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 2025; and
(e) the Company may make a contract or contracts
to purchase ordinary shares under the authority
conferred prior to the expiry of such authority
111
AssetCo plc | Report and Financial Statements 2023
16. NOTICE OF ANNUAL GENERAL MEETING CONTINUED
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 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 22 April 2024.
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.
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 the shareholder’s
rights to attend, speak and vote on their 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.
2.
Only those members registered on the Company’s
register of members at:
(a)
6.30 p.m. on 22 April 2024; 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 2 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.
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.
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.
5.
6.
112
AssetCo plc | Report and Financial Statements 2023
16. NOTICE OF ANNUAL GENERAL MEETING CONTINUED
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
(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 22 April 2024
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 or 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.
APPOINTMENT OF PROXY BY JOINT MEMBERS
12. 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
13. 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 10.00 am on 22 April
2024, 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 22 April 2024, 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.
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16. NOTICE OF ANNUAL GENERAL MEETING CONTINUED
TERMINATION OF PROXY APPOINTMENTS
14. 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 22 April 2024. 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
15. 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
16. As at 25 March 2024 (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 of which
6,818,898 were held in treasury. 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
25 March 2024 is 142,474,072.
VOTING
17. Voting on all Resolutions will be conducted by way
of a show of hands.
COMMUNICATION
18. 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)
(b)
e-mailing our investor relations team at info@
assetco.com; or
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
19. 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)
(b)
(c)
answering the question would interfere unduly
with the preparation for the AGM or involve the
disclosure of confidential information; or
the answer has already been given on a website
in the form of an answer to a question; or
it is undesirable in the interest of the Company
or the good order of the AGM that the question
be answered.
THE RESOLUTIONS EXPLAINED
20. The following Notes explain the proposed
Resolutions:
(a)
(b)
(c)
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.
Resolutions 2 to 7. 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.
Resolutions 8 and 9. 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 9 gives authority to the Directors
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AssetCo plc | Report and Financial Statements 2023
16. NOTICE OF ANNUAL GENERAL MEETING CONTINUED
in accordance with standard practice to
determine the auditor’s remuneration.
(d)
Resolution 10. 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 10 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 normal amount of
£690.494 representing 69,049,400 ordinary
shares of 1 pence each, which represents
approximately 50 per cent. of the issued
ordinary share capital of the Company
(excluding treasury shares). The authority
granted by this Resolution will expire at the
earlier of the conclusion of the next Annual
General Meeting of the Company.
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.
Resolution 11. 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. Resolution 12 seeks to
renew 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
(e)
rights issue, or (b) up to an aggregate nominal
amount of £690,494 representing 69,049,400
ordinary shares of 1 pence each (which
represents approximately 50 per cent. of the
issued ordinary share capital of the Company
(excluding treasury shares). The authority
granted by this Resolution will expire at the
conclusion of the next Annual General Meeting
of the Company.
(f)
Resolution 12. 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 14,247,407 ordinary shares, being 10
per cent. of the issued ordinary share capital
(excluding treasury shares).
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 conclusion of the
next Annual General Meeting of the Company.
Any ordinary shares purchased would be either
held as treasury shares or cancelled at the
discretion of the Directors.
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).
Resolution 13 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.
(g)
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AssetCo plc | Report and Financial Statements 2023
17. 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
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AssetCo plc | Report and Financial Statements 2023 18. COMPANY INFORMATION
COMPANY REGISTRATION NUMBER
04966347
REGISTERED OFFICE
30 Coleman Street
London
EC2R 5AL
DIRECTORS
Martin Gilbert (Chairman)
Tudor Davies
Jonathan Dawson
Gary Marshall
Peter McKellar
Christopher Mills
COMPANY SECRETARY
Gordon Brough
INDEPENDENT AUDITOR
BDO LLP
Chartered Accountants and Statutory Auditors
55 Baker Street
London
W1U 7EU
NOMINATED ADVISER
AND CORPORATE BROKER
Numis Securities Limited
45 Gresham Street
London
EC2V 7BF
JOINT CORPORATE BROKER
Panmure Gordon (UK) Limited
40 Gracechurch St
London
EC3V 0BT
REGISTRAR
Computershare Investor Services PLC
PO Box 82
The Pavilions
Bridgewater Road
Bristol
BS13 8AE
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