Tilney Group has reaped the rewards of the Towry money machine in 2016, after the national advice firm contributed £52.6 million to the firm’s revenues in the five months to the year’s end.
According to financial statements for the 12 months to December 2016 filed at Companies House, Tilney’s revenue almost doubled, rising by 96% to £135.2 million. Aside from Towry’s contribution, this figure includes eight months from asset manager Ingenious, which contributed £8.1 million.
Overall, the company revealed a loss of £23 million over the year. This was due to operating and administrative expenses of £133 million, including acquisition and integration costs of £17.7 million.
Operational expenses increased by 97% to £81.3 million, but fell as a percentage of revenue to 70% from 75%, due to synergies and improved productivity.
Drilling down into Tilney’s numbers, the group’s main source of revenue is its discretionary division, which is divided into two through its core investment management service (CIMS) and personalised investment management service. Together they contributed £100 million. Following the acquisition of Towry, the fund of funds that fuelled the business’s success was placed under the CIMS and renamed ‘Tilney Umbrella A’.
Umbrella A houses five sub-funds, originally launched in 2008, which generated £450 million over six years to the end of 2015, contributing to Towry’s total revenue of £541 million over the same period. Since the acquisition, Tilney has integrated these funds after making some changes, including the reduction of charges.
In April 2017, these funds had £5.48 billion in assets under management. The company said in its accounts that the unitised investment funds reached £5.8 billion in assets.
According to its results, the CIMS’ returns ranged from 7.2% to 16.6% which Tilney described as ‘a good result given difficult market conditions early in 2016, followed by the dual political shocks of the Brexit vote and Trump election, the sell-off in bond markets and sharp rotation experienced within stock markets.’
The rest of the revenue is split between advisory investment management, execution-only, financial planning and investment revenue. These contributed £13.5 million, £8.7 million, £12.6 million and £214,000 respectively.
The firm also set aside a provision of £1.7 million for client redress, held in relation to legacy issues in acquired businesses. Provisions, including for the integration of Towry, totalled £5.7 million at the year end.
The group was also refinanced in 2016 by raising £302 million of new equity. It also refinanced its bank borrowings, and increased it to £403 million at year end, with over 80% due for settlement within