Meteor Asset Management has offered a bullish assessment of its near term prospects and cited improved trading post-RDR which has led to a six-figure profit for the past year, after recently filed accounts raised concerns over “short term cash flow difficulties” faced by the firm.
In Meteor AM’s financial statements for the 15 month period ending 31 July 2013, posted on the 15 September on Companies House, auditor Grant Thornton raised issues over overdue debts and poor trading in a section concerning its ability to continue as a ‘going concern’.
It added that Meteor AM is dependent on its parent company Meteor Capital Group Ltd for continued operational support, adding that the group is “facing short term cash flow difficulties”.
The financial statements warned that Meteor Capital and its subsidiaries have experienced a “challenging trading environment”, in particular following the implementation of the Retail Distribution Review.
Meteor AM generated turnover of £5.4m in the 15-month period, down from £6.8m in the 12 months ended April 2012, and made a gross profit of just £7,734.
A “significant overdue debt” of £350,184 to its parent company had an “adverse impact on the group’s cash flows”. The statements cited plans to improve the financial position including through the raising of £1m, but said considerable “uncertainty” remained.
However, the firm appears to have turned around its performance, with unaudited accounts for the year to July 2014 showing a six-figure profit and managing director Graham Devile citing improved long-term benefits from the RDR, as IFAs have engaged with structured products.
He said the firm had raised the money mentioned in the accounts and that trading had improved considerably, saying the 2014/2015 profit was likely to exceed total profit for the previous year in the first quarter alone.
Speaking to FTAdviser, Mr Devile admitted that the 15 months to the end of July 2013 were a “poor trading period”. He stated this was due to three major factors, one of which being the regulator’s ban on the promotion of unregulated collective investment schemes to retail investors.
The group had invested £500,000 to the development of an offshore fund vehicle “which had been going until 2010”, designed principally for the delivery of Ucis.
“We were looking to use this to help enhance our structured product offering, thereby providing greater investor protection by way of fully collaterised diversification, in addition to the launch of a clean energy fund.
“However as a result of the changes in the regulatory landscape for Ucis, this route was no longer a marketable proposition for us and accordingly it was decided that the carrying values associated should be written down to nil.
“All but £25,000 of this £500,000 had been incurred and paid for prior to the start of the period.”
He added that a further £400,000 of the losses was attributable to a “single bad debtor”, which has also been written down with regard to the year-end accounts “even though the debt is still being chased”.
Mr Devile continued: “We have made a very strong start to 2015 [financial year], and are currently on track to exceed the total profit for 2014 before the end of the first quarter.
“Furthermore we are currently looking at a number of opportunities to really push on this year and develop, all based on our core structured product proposition.”
He added that Meteor has benefitted in the long-term from RDR as a number of advisers are now looking at structured products.
He said: “A number of IFAs did take a fresh look at structured products and so, we’ve got a number of firms who, through that early period, started to dabble and they’ve got more comfortable over the 12-month period now that is becoming more mainstream to their advice process.”
donia.o’loughlin@ft.com
