Tatton Asset Management (TAM) H2 2024 earnings summary

Executive summary

• FY24 revenue rose 13.9% to £36.8m and adjusted operating profit increased 12.9% to £18.5m; AUM/AUI grew 26.9% to £17.6bn, with record £2.3bn organic net inflows.

• AUM/AUI reached £18.6bn by June 2024 after £900m of flows in the first three months of FY25.

• A new five-year target is £30bn AUM/I by FY29, expected through organic growth, with M&A potential as upside.

• IFA firms providing regular business grew 12.2% to nearly 1,000; average account size was ~£140,000, with a 15 bps fee.

Financial highlights

• Adjusted operating margin was 50.3% (prior year: 50.7%); adjusted profit before tax rose 19.1% to £18.8m and profit for the year was £12.9m.

• Administrative expenses rose just over 14% YoY, reflecting flow-linked variable pay and first-year compliance, audit and TCFD costs.

• Finance income was £640,000 and is expected to be closer to £1m in FY25, generated from interest on own cash balances.

• Year-end cash was £24.8m, with £16.9m operating cash flow; operating cash conversion was 91%, with elevated debtors absorbing working capital.

• The total year dividend was 16p; the payout split changed to 50/50 between interim and final dividends and is expected to continue.

Outlook and guidance

• FY25 net-flow guidance is £150m–£200m per month; management said the unusually strong recent run-rate was insufficient basis for projecting flows consistently at that level.

• FY29 AUM/I target is £30bn, expected organically; M&A could provide additional growth.

• Annual margin expansion of 1%–2% is expected, supported by business mix and operating leverage, partly offset by costs and lower revenue yield; inflation of 3%–5% and investment in resources are expected to continue.

• Paradigm mortgage applications in the first four months of 2024 were 35% ahead YoY; a recovery toward 2022–23 activity levels is anticipated, though the market remains uncertain.