Strategic Report

General Information
Financial risk factors
The Group’s and Company’s activities expose it to a variety of financial risks: market risk (including interest rate risk and cash flow risk, credit risk and liquidity risk. The Group’s overall risk management programme seeks to minimise potential adverse effects on the Group’s financial performance.

Market risk, interest rate risk and cash flow risk
The Group’s main sources of revenue and operating cash flows are substantially independent of changes in market interest rates. The Group has significant interest-bearing assets on which it seeks to obtain a commercial rate of return from AA or above rated UK institutions whilst not having a material adverse effect on cash flow. There are no significant variable rate interest-bearing liabilities.

Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as commercial transactions. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board. The utilisation of credit limits is regularly monitored. The Group receives the majority of its income directly from blue chip financial institutions in accordance with instructions placed by its clients thereby minimising the risk of incurring bad debts.

Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding and the ability to close out market positions. The Group maintains flexibility by maintaining significant headroom in its cash position. Management monitors forecasts of the Group’s liquidity on the basis of expected cash flows. This is carried out in accordance with recommended accounting practice and limits set by the Group. The Board reviews the Group’s liquidity at its monthly meetings.

Capital risk management
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an appropriate capital structure to reduce the cost of capital. The Group monitors capital by maintaining or adjusting the capital structure by adjusting the amount of dividends paid to shareholders, issuing new shares and unsecured securities or selling assets to maintain financial resources. The capital employed by the Group is composed of equity attributable to the shareholders and long term unsecured corporate bonds, as detailed in the Statement of Changes in Equity.

Key performance indicators
The directors consider the key performance indicators (“KPIs”) for the Group are as follows:

  • Revenue – this is total income (excluding VAT) from all revenue streams;
  • Gross margin – this is the revenue generated by the Group after fees paid to its independent financial advisors and other direct costs of sale.
  • Adjusted EBITDA margin – this is profit generated from the Group’s operating activities before any financing income or costs, taxation, non cash share based payments, depreciation and amortisation as a proportion of revenue;
  • Adjusted profit before tax – profit before taxation, non cash share based payments, depreciation and amortisation of intangible assets;
  • Adjusted EPS – total comprehensive income for the year, net of tax, attributable to equity holders of the Group, adjusted to add back acquisition costs expensed under IFRS 3 (Revised) and the amortisation of intangible assets, divided by the number of ordinary shares in issue;

Non-financial KPI’s
The directors consider the non financial key performance indicators (“KPIs”) for the Group are as follows:

  • Advice Quality Reviews – review of the suitability of financial planning and investment advice provided to our client base;
  • File Quality – measuring the quality and integrity of documentation ensuring that it provides sufficient defence against future financial and regulatory scrutiny and represents the quality of advice provided;
  • Complaints – measuring the volume of regulated advice and service complaints received within any given period;
  • TCF Surveys – qualitative information sought from 10% of all clients who engage in new/repeat advice process; and
  • Breaches – measuring process failures throughout the group and thematic evidence produced to highlight weaknesses for action.

Directors during the financial year
John Wheatley, Alan Hudson, Paul Wright, Susan Lewis, Mark Chambers, Austin Broad and Alexis Larvin were directors of the Company throughout the financial year.

Director’s report
Some strategic considerations are documented within the Directors Report.

Full disclosure of information
Each of the Directors at the time of this report confirm that so far as they are aware, there is no relevant audit information of which the company’s auditor is unaware and he / she has taken all appropriate steps to make himself / herself aware of any relevant audit information and to establish that the company’s auditor is aware of that information.

Approved by the board

John Wheatley


27 January 2017

Annual Report

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