The Directors present the strategic report for the year ended 30 June 2024.
The Group consists of the non trading parent company Tacit Holdings Limited (THL/Group) and its trading subsidiary companies, TIML Limited, which trades as Tacit Investment Management (Tacit), and Lucus Wealth Limited (Lucus Wealth). TIML Limited continues to be regulated by the Financial Conduct Authority (FCA) as a Small and Non-Interconnected (SNI) firm. Lucus Wealth Limited is regulated by the FCA to give Independent Financial Advice.
Last year, the Directors reported that the Board had agreed to acquire a small, directly regulated, IFA business, Lucus Wealth Limited. Lucus Wealth was acquired by THL on 09 August 2023, following approval from the FCA for the change of control. This is the first financial year in which Lucus Wealth is consolidated in the Group accounts.
Tacit’s principal activity is the investment management of (mostly) discretionary portfolios for private individuals and for some corporate entities in the form of pension funds. Known as Tacit Investment Management in the industry, the firm has a clear and consistent approach to investment which focuses first on the preservation of investors’ capital and, for those investors willing and able to take a higher level of risk, to grow their wealth in absolute terms. Tacit offers four core strategies in which investment risk is managed using the Growth/Stabiliser investment philosophy which Tacit has espoused consistently since its inception. These four strategies now have nearly fourteen complete years of public performance history. Tacit's fees are charged as a percentage of the value of client portfolios and its revenue is therefore directly related to movements in investment markets, up and down.
Lucus Wealth provides independent financial advice to clients mainly in the mass affluent and affluent sectors. Lucus Wealth operates on a 'total market' principle and is not restricted to proposing Tacit to its clients who have an investment management requirement. Lucus Wealth charges fees for specific pieces of advice commissioned by its clients.
The Group continued to acquire new clients through the year and has been successful in winning new business from private investors in a higher net worth bracket, confirming the appeal of high quality personalised professional service, and the depth of market experience of the senior managers in Tacit and Lucus Wealth.
The year began much as the previous one had finished with sticky inflation reads underpinning higher policy rates and acting as a drag on investment returns. The converse of this was that for the first time in over a decade higher bond yields offered attractive returns to investors and allowed a rebalancing of risk to incorporate sovereign and corporate debt for their inherent real returns alongside higher risk growth assets. Towards the end of the calendar year, however, equity markets began to stage a breakout from their range-bound patterns and the second half of the financial year brought a welcome transition to higher levels in all the Tacit strategies. As a result of the market growth in assets under management, the final quarter fee run was at an all-time high.
Total revenue increased by 15.7% from £2.07m to £2.4m. This is largely due to the inclusion of the results of the newly acquired subsidiary, Lucus Wealth Limited, which contributed £251k to total revenue. However, as noted last year, operating costs have increased again for several reasons, including the inclusion of the results of Lucus Wealth Limited, a change in the remuneration arrangement for some of the Directors who are now on the payroll, staff promotions and new hires (the total payroll costs increased by 141% over the previous year), and a general increase in most operating costs including third-party service provider costs. As a consequence, post-tax profit was £229k compared with £366k in the previous year. The Directors acknowledge that costs must be contained and reduced wherever possible, and that more energy must be devoted to winning new clients. The balance sheet on page 14 of the financial statements shows that net assets have increased by £304k to £1.5m, which indicates the underlying strength of the business.
Business plan
The Directors revised the Group business plan to focus on acquiring direct clients within the affluent and high net worth profile who require investment management supported by financial planning expertise, particularly in relation to pensions and inter-generational wealth planning as part of their overall wealth management. In line with the FCA’s Consumer Duty initiatives, the implementation of the business objective requires Tacit to have the permissions to give financial advice and qualified advisers to work alongside the Investment Directors. An application for additional permissions in TIML Limited was initiated with the FCA and confirmation that the application has been approved came after the close of the year and is a significant post-balance sheet development.
Tacit successfully recruited a qualified financial adviser in the year, in anticipation that the application to extend the permitted business of the Firm would be granted. Much work has been done to launch Tacit’s additional capabilities to existing and new clients to reduce corporate and fee barriers to relevant advice. By providing the relevant financial planning services alongside investment management under a single agreement, Tacit will offer exceptional value to its clients and will also retain professional fees which hitherto have been earned by third-party financial advisers.
The Board also recognised that many sole trader financial advisers and shareholders of small IFA businesses are seeking consolidation partners to benefit from a larger scale, or to retire and pass their books of clients to trusted partners. This is the principal rationale for the acquisition of Lucus Wealth, by having two independent streams of growing revenue which are not subject to the same market forces. Since becoming part of the Tacit Group, Lucus Wealth has recruited an additional qualified IFA with an established book of clients and has also successfully acquired a book of clients from an IFA who is retiring from regulated activity.
Principal risks & uncertainties
Operational Risk
Operational risks arise from the people, processes, and systems in use within Tacit, or from external events. In the course of the year, Tacit implemented intelliflo office as its client database and operating system. To further enhance our ability to monitor the firm’s alignment to Consumer Duty, the analytical capability of intelliflo will greatly enhance the Firm’s range and depth of management information (MI) and will enhance the client reporting experience and interactive communication with Tacit. The use of intelliflo will eliminate use of data extracts to provide monitoring and control analysis and will constitute a single data warehouse and analytical hub. Lucus Wealth is already a user of intelliflo and the next stage of implementation will be to seek efficiencies across the Group.
Regulatory environment
This is the first full year of operation under the FCA Consumer Duty regulations. Consumer Duty is now the foundation of the FCA’s regulatory programme for firms providing financial products and services to retail customers. Consumer Duty applies equally to Tacit and Lucus Wealth. In the course of the year, Tacit has undertaken work to define its target market, evaluate its value proposition, review its communications, and revise its policies to reflect the impact of the four Consumer Duty Principles and the Cross Cutting Rules on its business. A range of MI reports have been developed to enable the Senior Management to monitor compliance with the Consumer Duty obligations. As Lucus Wealth evolves within the Group, the Senior Management teams of Tacit and Lucus Wealth will work together to ensure a consistency of approach and culture across Group activities.
A programme of staff training will be critical to embedding Consumer Duty principles into the operations and client culture of Group businesses.
The FCA’s Investment Firms’ Prudential Regime (IFPR) is now fully embedded in TIML’s regulatory monitoring and reporting. The Firm is comfortably within its regulatory capital and Own Funds liquidity requirements and it remains the objective of the Directors to build the balance sheet to improve resilience and provide flexibility for future growth. Lucus Wealth is not subject to IFPR.
Technological environment
Tacit relies heavily on digital technology and believes in making the best use of technology to remain competitive and to provide an excellent service to clients. The Directors are very conscious of the risks of cybercrime and data breaches. Tacit employs a professional IT support firm to advise on security measures and to maintain system protection software on all devices. An encryption process is used for the transmission of all sensitive client information and clients can view details of their investments through a secure portal supported by AJ Bell.
The Directors have implemented cybercrime insurance cover and will continue to tighten the firm’s digital security measures as the IT support consultant advises.
At the operational level, the Group has incorporated the UK Government’s 10 Steps to Cyber Security into our day-to-day management of the firm.
Economic environment
The economic backdrop through much of the year was dominated by elevated interest rates and anxiety over economic growth rates. Inflation rates fell round much of the developed economies as energy costs subsided and new supply lines opened up in manufacturing industries. Growth remained subdued, but any fear of a global recession was not realised. Although inflation rates have fallen, this is largely the effect of the 12- month comparator and does not negate the elevated prices of many goods and services through the inflationary cycle, which are in themselves an enduring inhibitor to consumer spending.
Markets watch for signs of the Federal Reserve (Fed) commencing a programme of easing policy rates, but the Fed appears to fear a resurgence of inflation over the risk of recession. Against this backdrop, the indicators from the US point to a robust economy, unlike in China where industrial output has slowed and cracks in the inflated residential property market are a continuing cause of concern.
Political Environment
This year is marked by elections in the UK, several European nations and in the US later in 2024. Uncertainty is rarely a favourable condition for investing, and this is most pronounced in the US presidential election where an undertow of potential civil unrest could erupt whichever candidate is elected.
Of immediate concern to investors is the threat of tax rises in countries such as the US and the UK where high levels of public borrowing hang over their economies. In the UK, the election of a Labour government immediately after the balance sheet date brings uncertainty over the future taxation of wealth and asset transfers. Both Tacit and Lucus Wealth are positioned to offer the expert advice which clients in their respective target markets will require.
Capital adequacy
The regulated subsidiary, TIML Limited, is required to maintain minimum regulatory capital and liquidity levels as identified in the firm’s ICARA report. As an SNI regulated firm, Tacit continues to be capitalised in excess of regulator-imposed minimum capital adequacy and liquidity requirements. Tacit’s capital adequacy requirement is calculated based on three months contracted fixed costs.
Competitive environment, social and market forces
The Group continues to operate in a competitive marketplace with many larger competitors focusing on asset growth rather than investment management as their primary objective. The Directors perceive that the Consumer Duty regulations are already causing smaller firms to reassess their ability to compete in this new regulatory environment and that this presents opportunities for Tacit to acquire established books of business. The performance of the Tacit investment strategies affords it this opportunity and therefore the Directors see the competitive environment as a significant positive factor for its future growth.
Development and performance
The Directors intend to continue to assess relevant opportunities to develop or expand the firm’s activities, provided these are consistent with the Group’s business strategy and direction.
The Group's key financial performance indicators during the year were as follows:
Unit 2024 2023
Turnover £ 2,398,322 2,073,768
Operating profit £ 469,221 587,719
Investment outcomes and client retention
The four Tacit strategies performed well in absolute and relative terms when compared to the Asset Risk Consultants Private Client Indices. This was achieved by strictly adhering to the Growth/Stabiliser framework which underpins the Tacit Investment Philosophy as well as the ability to pivot towards technology companies following the sharp declines experienced by the Nasdaq during the preceding twelve-month period as interest rates rose sharply. Liquidity was an important factor also as it allowed the team to recycle monies from more defensive holdings towards our longer-term preferred investments. All strategies provided positive returns after all costs, over the 12 months (the performance since inception on 30 September 2010 for each strategy is shown in brackets next to the 1 year return). Conservative +4.81% (+62.62%); Real Return +8.98% (+110.78%); Steady Growth +11.21% (+140.42%); Total Return +13.11% (+211.58%).
Operational matters
As with all businesses based on relationship and exchange of ideas, being together is important for the development of a common culture and mutual support. For some of the founding Directors, remote working will remain the pattern, but as the Firm grows, the London office will be the working location for new employees. TIML's lease on the office at 17 Hanover Square expired immediately after the financial year end and the business has moved the short distance to 14 Hanover Square. Lucus Wealth operates from an office in Uxbridge.
Section 172 Statement and engagement with stakeholders
The Group is a discretionary investment management firm which depends on the trust and confidence of its stakeholders to operate sustainably in the long term. It seeks to put its clients’ best interests first, invests in its employees, supports the communities in which it operates and strives to generate sustainable profits for shareholders.
The Directors of the Group consider that they have acted in accordance with their duties codified in law, in particular their duty to act in the way in which they consider, in good faith, would be most likely to promote the success of the Group for the benefit of its members as a whole, having regard to the stakeholders and matters set out in section 172(1) of the Companies Act 2006.
Clients
The Group considers our clients to be one of the most important stakeholder Groups of our business model. Tacit and Lucus Wealth place the highest emphasis on personal service to each client and regularly review the processes by which we establish the individual needs of each client and respond to them with investment propositions and regular communications which meet their objectives and enable them to understand the basis on which our investment decisions are made.
Suppliers
The Group recognises that key suppliers and outsourced service providers can have a material impact on the long-term success of the business and so incorporates the interests of these stakeholders when making strategic long-term decisions. The Group believes that having due regard to the interests of these suppliers is a dynamic and ongoing process which requires thoughtful monitoring and assessment, and a willingness to engage with those suppliers to better understand their operating constraints and business development plans.
Employees
The Group is committed to being a responsible employer and recognises that for our business to succeed, we need to manage our employees’ performance through mentoring and structured training, and develop and encourage talent, ensuring that we operate as efficiently as possible.
High standards of business conduct
Maintaining a high standard of business conduct when dealing with stakeholders such as regulatory bodies is vital for the subsidiaries. The subsidiaries are regulated by the FCA and the Directors are very aware of the need to keep up to date with industry regulations and best practice. The subsidiaries recognise the importance of meeting their reporting obligations to the FCA and take client confidentiality and data protection very seriously as set out in our privacy notice on our website which is reviewed regularly.
The community and the environment
In their decision making, the Directors need to have regard to the impact of the Group’s operations on the community and environment. Wherever possible, the Group encourages carbon friendly business practices as evidenced by giving all staff the ability to work from home if possible.
On behalf of the board
The Directors present their annual report and financial statements for the year ended 30 June 2024.
The Directors who held office during the year and up to the date of signature of the financial statements were as follows:
Dividends declared after the year end and up to the date of approval of these financial statements totalled £115,052
The business’s principal financial instruments comprise bank balances, trade debtors and trade creditors. The main purpose of these instruments is to finance the business's operations.
In respect of bank balances, the liquidity risk is managed by maintaining a sufficient cash reserve at the bank to allow for short term net cash outflows. The firm’s cash is held in accounts that pay a competitive rate of interest.
Trade debtors are managed in respect of credit and cash flow risk through the Terms & Conditions of our engagement with clients and professional advisers, and through the regular monitoring of amounts outstanding for both time and credit limits. Retail client fees are taken directly by the custodian from client accounts operated by the custodian, thus mitigating credit risk associated with this aspect of the business. Trade creditors’ liquidity risk is managed by ensuring sufficient funds are available to meet liabilities when they fall due.
At all times the Directors must ensure that they meet the capital adequacy requirements stipulated by the Financial Conduct Authority, which must be reported periodically via the FCA Gateway.
The Directors have developed a business plan through the year that envisages offering financial advice services alongside the existing investment advice business of TIML Limited. The plan takes account of the new FCA Consumer Duty regulations as the Directors believe that providing wider, more holistic advice will become necessary to the client segment the Group targets.
To this end, an application was made by TIML Limited to the FCA for additional permissions to give financial advice on pensions and insurance. The FCA approved the application after the financial year end, making this a post-balance sheet development. It will enable TIML Limited to develop a holistic wealth management proposition for clients falling within its target market. Separately, the acquisition of Lucus Wealth Limited, adds a further dimension to the Group and Lucus Wealth will develop its independent financial advice services in its target markets.
Just Audit Limited has completed the fifth year of appointment and the Directors intend to appoint Just Audit Limited for a further year.
After making enquiries, the Directors have a firm expectation that the Group has resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and Group financial statements.
The Directors' responsibilities statement that the Directors agree to is detailed on page 8.
We have audited the financial statements of Tacit Holdings Limited (the 'parent company') and its subsidiaries (the 'Group') the year ended 30 June 2024 which comprise the Group profit and loss account, the Group balance sheet, the company balance sheet, the Group statement of changes in equity, the company statement of changes in equity, the Group statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's and the parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the Strategic Report and Directors' Report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of Directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
As explained more fully in the Directors' responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
We gained an understanding of the legal and regulatory framework applicable to the parent company and the Group and the industry in which it operates and considered the risk of acts by the parent company and the Group that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. We focused on laws and regulations which could give rise to a material misstatement in the financial statements, including, but not limited to, the Companies Act 2006, UK tax legislation, and FCA regulation, recognising the regulated nature of the Group's activities. Our tests included agreeing the financial statement disclosures to underlying supporting documentation and enquiries with management. There are inherent limitations in the audit procedures described above and, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. We did not identify any key audit matters relating to irregularities, including fraud. As in all our audits, we also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
The Group profit and loss account has been prepared on the basis that all operations are continuing operations.
The Group has no recognised gains or losses for the year other than the results above.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s profit for the year was £440,844 (2023 - £443,864 profit).
In the application of the Group’s accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
The preparation of the financial statements can require management to make judgements, estimates and
assumptions that affect the amounts reported for assets and liabilities as at the balance sheet date and the
amounts reported for revenues and expenses during the year.
(i) Impairment of Goodwill
The Group establishes a reliable estimate of the useful life of goodwill arising on business combinations. This estimate is based on a variety of factors such as the expected use of the acquired business and the expected useful life of the cash generating units to which the goodwill is attributed. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired, in accordance with the accounting policy.
Tacit Holdings Limited (“the company”) is a private limited company limited by shares domiciled and incorporated in England and Wales. The registered office is 14 Hanover Square, London, W1S 1HN.
The Group consists of Tacit Holdings Limited and all of its subsidiaries.
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the Group. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
Parent company disclosure exemptions
In preparing the separate financial statements of the parent company, advantage has been taken of the following disclosure exemptions available in FRS 102:
Only one reconciliation of the number of shares outstanding at the beginning and end of the period has been presented as the reconciliations for the Group and the parent company would be identical;
No cashflow statement has been presented for the company.
The consolidated financial statements consist of the financial statements of the parent company Tacit Holdings Limited together with all entities controlled by the parent company (its subsidiaries).
All financial statements are made up to 30 June 2024.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
After making enquiries, the Directors have a firm expectation that income is expected to continue at at least current levels and that together with reserves the Group has resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and financial statements.
Discretionary fund management income
Ongoing discretionary portfolio management charges and fund management charges, based on the value of assets invested, are recognised during the period the assets are held in the portfolio of investment fund. Turnover is shown net of VAT and other sales related taxes.
Investment consultancy services
Turnover is recognised at the fair value of the consideration received or receivable for consultancy services provided in the normal course of business, and is shown net of VAT and other sales related taxes.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.
Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the Group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the Group is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease.
The average monthly number of persons (including Directors) employed by the Group and company during the year was:
Their aggregate remuneration comprised:
The Directors received remuneration of £176,676 (2023: £nil)
3 Directors were participating in defined contribution schemes during the year (2023: none).
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
The corporation tax main rate for non-ring-fenced profits increased to 25%, applying to profits over £250,000, from 1 April 2023.
On 9 August 2023, Tacit Holdings Limited acquired the shares of Lucus Wealth Limited for a total cost of £611,700. This consisted of 653,707 Ordinary shares, issued as a share for share exchange for 4,100 Ordinary shares in Lucus Wealth Limited. Revenue of the acquired subsidiary for the year ended 30 June 2024 was £212K and profit after tax was £44K. Acquisition accounting has been applied. The assets and liabilities acquired were as follows:
Carrying value £ Fair value £
Fixed assets 555 555
Debtors 59,305 59,305
Cash 83,621 83,621
Creditors (95,635) (95,635)
Deferred tax adjustments (5,707) (5,707)
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Total identifiable assets and liabilities 42,139 42,139
Goodwill 569,561 569,561
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Total consideration 611,700 611,700
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Details of the company's subsidiaries at 30 June 2024 are as follows:
A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the Group in an independently administered fund.
The following are the major deferred tax liabilities and assets recognised by the Group and company, and movements thereon:
Other reserves arose upon acquisition of the subsidiary companies and represent the excess of fair value over nominal value of shares issued as consideration.
The profit and loss account includes all retained profits and losses.
At the reporting end date the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
For the first part of the year, the Group leased a property with an annual charge of £14,400 (2023:£nil) from a company under the control of a Director and his wife. Subsequently this arrangement transferred to a pension fund in the name of two of the Directors.
Dividends of £485,243 (2023:£769,996) were paid to the Directors and their close family.
During the year ended 30 June 2024, the Group paid £82,500 for consultancy services (2023:£nil) to another company owned by a director and shareholder. As at 30 June 2024, a total of £500 was owed to the related party company (2023:£nil).
During the year a subsidiary made advances to a Director of £24,375, which were outstanding at 30 June 2024 (2023:£nil). No interest is being charged on this loan and it is repayable on demand.