Tatton Asset Management (TAM) 

 

It has been a huge few years for Tatton. The three-year growth target of moving from £9bn AUM on 31 Mar 21 to £15bn Assets Under Influence (AUI) by 31 Mar 24 was comfortably exceeded, with AUI closing 17% above target at £17.6bn – a 96% gain over three years. 

Yet FY24 was without doubt the most impressive. AUM jumped +30% over the year purely from organic growth, with net flows of +£2.3bn (record net inflows for Tatton and a net flow rate far higher than all peers - page 4), and a tailwind from investment performance of +£1.5bn. 

Growth drove impressive financial metrics, with revenue up 14% from £32.3m in FY23 to £36.8m and adjusted operating profit up 13% from £16.4m to £18.5m, while adjusted operating margin still topped 50% at 50.3% compared to 50.7% in FY23 (again, a leading industry metric – page 13). 

The one disappointment was 50%-owned 8AM Global not growing as expected, resulting in an impairment charge of £1.3m, which pared back statutory profits (although c£900k of contingent consideration was released which is now unlikely to be paid). PBT grew 5% from £16.0m in FY23 to £16.8m. The increase in corporation tax rate hurt PAT growth, which fell from £13.4m to £12.9m. 

Tatton’s balance sheet remains exceptionally strong, with net assets increasing from £41.8m at the end of FY23 to £43.3m and net cash remaining robust at £24.8m, declining slightly from £26.5m at the end of FY23. This is after the Group paid out £10.8m in dividends during the year (FY23: £8.0m) and purchased £3.3m of its own shares (FY23: nil). Tatton has no debt. 

A full-year dividend of 16.0p has been recommended, up 10% (FY23: 14.5p), a yield of 2.7%. 

Forecasts upgraded, fundamental value rises to 640p 

Tatton has exceeded our previous forecasts for FY24. It has set an ambitious new 5-year plan to reach £30bn AUI by end-FY29. It has had an exceptionally strong start to FY25, with net inflows of £0.9bn in Q1-25 up to 14 Jun (matching the total inflows of H1-24), bringing AUI to £18.6bn. 

We therefore increase our FY25 forecasts as detailed below, as well as our fundamental valuation which rises from 620p to 640p per share.

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