Tatton Asset Management PLC (LON:TAM) maiden interim results to 30 September 2017 repeat the impressive headline figures revealed in its October trading update, namely.
15.3% rise in Funds under Management to £4.44 bn (March 2017: £3.85 bn);
Fund inflows continue at a run-rate of over £80 million per month;
1.1% rise in membership of Paradigm Partners to 356 (March 2017: 352)
5.0% rise in membership of Paradigm Mortgage Services to 1,143.
The interims also reveal improving profitability for all three divisions (Tatton Capital; Paradigm Partners and Paradigm Mortgage Services). The Group results are as follows:
Group revenue up 31% YoY to £7.3m (previous year: £5.6m)
Adjusted EBIT of £3.1m (previous year 1H: £2.0m);
Adj EBIT margin of 42.2% (previous year 1H: 35.4%);
Maiden interim DPS of 2.2p.
The interims also reveal that Tatton Asset Management has added a 10th platform, Fidelity Funds Network, and during the year Tatton Capital won the prestigious ILP Moneyfacts Award for “Best Discretionary Fund Manager”.
CEO, Paul Hogarth, has a positive outlook: he observes: “[Tatton is] seeing unprecedented demand for a low cost DFM service to the mass affluent market place served by the IFA sector, which the Group is ideally placed to capitalise on.”
Zeus view
Tatton Asset Management PLC’s maiden interim results confirm that the Group’s business model is performing in line with expectations set at its IPO in July 2017.
Better than expected revenues prompt us to nudge up our revenue and profit forecasts; but we leave our adj EPS and DPS forecasts unchanged, as there are slightly higher average shares in issue than we had estimated.
We set out the changes to our forecasts for FY18E and FY19E on page 2 of this note.
Valuation
At 189p, c. 9% of Tatton’s share price is surplus capital and Tatton shares are trading on 3.4% prospective dividend yield and on 20.3x FY(Mar)18e adj EPS.
Looking forward to the following year we see prospects for over 20% EPS and DPS growth. With £4.4 billion AuM on 30 September 2017, Tatton’s enterprise value is 2.4% of the AuM
