Interim Results

RNS Number : 6371X

Tavistock Investments PLC

28 November 2017

 

28^th November 2017

TAVISTOCK INVESTMENTS PLC

("Tavistock" or the "Company")

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

 The Company today announces its unaudited interim results for the six months ended 30 September 2017.

FINANCIAL HIGHLIGHTS

-       130% increase in discretionary FUM to £745m

-       40% increase in ongoing business revenues to £12.4m

-       426% increase in reported EBITDA to £137,000

-       23% increase in net assets to £18.3m

OPERATIONAL HIGHLIGHTS

-     Level of discretionary FUM continued to rise at a significant pace, predominantly through organic growth

-     Tavistock Wealth's revenue in the six-month period of £1.52m compares favourably with revenue of £1.66m for the full year to 31 March 2017

-     Launched three new Acumen funds in June 2017, increasing the range of in-house funds to seven

-     High degree of revenue visibility - high retention rate of FUM combined with high level of recurring advisory income

-     Successfully completed disposal of a network subsidiary adding a further £1 million to the Group's cash resources and significantly reducing its regulatory capital requirement

Brian Raven, Group Chief Executive, said: "We are continuing to make extremely good progress. I am pleased with the interim results in general, and with the organic growth of FUM into Tavistock Wealth in particular. Our business model is now firmly established and the Company's prospects are excellent." 

Enquiries:

Tavistock Investments Plc Oliver Cooke Brian Raven	Tel: [phone]
Arden Partners Plc William Vandyk	Tel: [phone]
Allenby Capital Limited Nick Naylor Nick Athanas	Tel: [phone]
Templars Communications Limited Kitty Parry Malika Shermatova	Tel: [phone]

CHAIRMAN'S STATEMENT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

I am pleased to report continued good progress for the business. The Tavistock Investments Group is made up of an investment management business, Tavistock Wealth, together with various financial advisory businesses. The key performance indicator for the Group is the performance of Tavistock Wealth.

Investment Management

Most of Tavistock Wealth's revenues are derived from funds being managed on a discretionary basis ("FUM").  As shown in the table below, the level of FUM continued to rise at a significant pace, predominantly through organic growth, with the level at the end of the period being some 130% higher than at the same stage in the previous year.

	30 Sept '17 £m	31 March '17 £m	30 Sept '16 £m
FUM	745	603	324

Tavistock Wealth's current average gross revenue is 0.44% of FUM per annum and during the six-month period it achieved revenue of £1.52 million. This compares favourably with revenue of £1.66 million for the full year to 31 March 2017.

We continue to be satisfied with investment performance in what have been uncertain market conditions. Tavistock Wealth launched three new Acumen funds in June 2017; the Acumen Bond Portfolio, the Acumen Equity Portfolio and the Acumen Strategic Portfolio. This increased the range of in-house funds to seven.

Advisory

The performance of the Group's ongoing advisory businesses is another key area of focus and gross revenues grew by 33% from £8.1 million, in the six-month period to 30 September 2016, to £10.8 million this period.

In August, the Company announced the disposal of a network subsidiary, Tavistock Financial Limited ("TFL"), to Sanlam UK for a cash consideration of £1 million. During the period, this now discontinued operation had gross revenues of £7.5 million and a loss from operations of £21,000.

TFL resulted from the acquisition of Standard Financial Group ("SFG") in February 2015. SFG owned Financial Limited, the 7^th largest advisory network in the UK. Acquiring this business was a relatively inexpensive means of the Company attaining critical mass and establishing itself as a national operator, at an early stage in its development.

With the prior approval of the regulator, TFL was created in July 2015 in order to accommodate all staff and network members from Financial Limited. Having resolved all historic regulatory obligations, Financial Limited and the other businesses within SFG were then liquidated. 

The Company invested a little under £1.2 million in acquiring SFG, establishing TFL, transferring all staff and advisers to it and liquidating SFG. The Company subsequently recovered some £1.6 million from the TFL business.

In addition, prior to announcement of the disposal, 58 advisers had transferred out of TFL into the other Group network, The Tavistock Partnership. These advisers are keen to develop a closer commercial relationship with the Company, including recommending the use of its centralised investment proposition to their clients when appropriate to do so.

Completion of the transaction, after the period end, has added a further £1 million to the Group's cash resources, and significantly reduced its regulatory capital requirement.

Financial Performance

During the period, the Group's ongoing underlying businesses generated EBITDA of £297,000 on gross revenue of £12.4 million (six months to 30 September 2016 EBITDA loss of £42,000 on gross revenue of £8.9 million) and cash absorbed by operations was £36,000 (six months to 30 September 2016 cash absorbed by operations was £990,000).

The Group also incurred £160,000 of reorganisation costs, including costs associated with the disposal of TFL, which have adversely impacted the reported results.

For the six-month period ended 30 September 2017, the ongoing Group has therefore reported EBITDA of £137,000 and cash absorbed by operations of £196,000. The Company repaid £250,000 of debt and settled £1.35 million of deferred consideration obligations. It also entered into new leasing arrangements to cover the costs of opening two new offices and completing a refurbishment programme.

At the end of the period, the Group had net assets of £18.3 million (30 September 2016 £14.91 million) which included cash resources, prior to receipt of the £1 million TFL consideration, of £2.74 million (30 September 2016 £3.8 million).

The ongoing Group's results for the period can be summarised as follows:

	6 Months ended 30 Sept '17 £'000s	6 Months ended 30 Sept '16 £'000s	Movement
Gross Revenues	12,361	8,860	40% increase
Underlying EBITDA	297	(42)	807% increase
Reorganisation	(160)	-	-
Reported EBITDA	137	(42)	426% increase
Depreciation & Amortisation	(484)	(463)	5% increase
Share based payments	(134)	(214)	37% decrease
Exceptional income/(costs)	471	(76)	720% increase
Loss from Operations	(10)	(795)	99% decrease
Loss per share	0.002p	0.213p	99% decrease
Net Assets	18,307	14,912	23% increase
Cash at end period	2,744*	3,807	28% decrease

*Excluding £1 million consideration received after period end.

Future Prospects

The Company has made great strides over the last three years. Its business model is now firmly established and its prospects are excellent.

It is anticipated that with continued organic growth, the EBITDA contribution from the Group's advisory businesses will become sufficient to cover all of the Group's operating costs. The Group's profitability will then be directly linked to the profitability of its investment management business.

The Group's investment management business has a relatively fixed overhead base and, as a consequence, the revenue resulting from increased levels of FUM has a direct impact on Group profitability.

The Company enjoys a high retention rate of FUM. Similarly, it enjoys a high level of recurring income within its advisory businesses. This combination gives the business a very high degree of revenue visibility.

Given this visibility, and because the Group is making rapid progress, it is useful to illustrate the potential profitability of the business model. For example, if the FUM managed by Tavistock Wealth were to increase to £1.5 billion and the continuing Group's underlying cost base were to remain unchanged, the EBITDA produced on an annualised basis would be over £5 million.

I look forward to updating you on further progress.

Oliver Cooke

Executive Chairman

27^th November 2017

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

		Unaudited	Unaudited
		6 months ended	6 months ended
		30 September	30 September
		2017	2016
	Note	£'000	£'000
Revenue - continuing operations	2	12,361	8,860
Cost of sales - continuing operations		(7,628)	(6,533)
		------------	------------
Gross profit		4,733	2,327
Administrative expenses- continuing operations		(4,743)	(3,122)
		--------------	--------------
Loss from operations		(10)	(795)
Memorandum: Adjusted EBITDA		137	(42)
Depreciation & amortisation		(484)	(463)
Exceptional income/(costs)		471	(76)
Share based payments		(134)	(214)
		--------------	--------------
Loss from operations		(10)	(795)
Finance costs		(137)	(95)
Finance income		-	1
		------------	--------------
Loss before taxation and attributable to equity holders of the parent		(147)	(889)
Taxation		61	139
		------------	------------
Loss from continuing operations Discontinued operations (net of tax) Loss after taxation and attributable to equity holders of the parent and total comprehensive income for the period		(86) (21) ------------ (107)	(750) 85 ------------ (665)
		======	======
Loss per share (continuing operations)
Basic	3	(0.002)p	(0.213)p
		======	=======

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2017

		Unaudited		Unaudited
		30 September 2017		30 September 2016
		£'000	£'000	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment			534		431
Intangible assets	4		19,545		16,917
			-----------------		-----------------
Total non-current assets			20,079		17,348
Current assets
Trade and other receivables		2,560		1,887
Cash and cash equivalents		2,744		3,807
		-----------------		-----------------
Total current assets			5,304		5,694
			-----------------		-----------------
Total assets			25,383		23,042
LIABILITIES
Current liabilities			(2,252)		(1,972)
Non-current liabilities
Other payables			(1,780)		(2,270)
Term loan			(2,219)		(2,251)
Provisions			(413)		(367)
Deferred taxation			(412)		(1,270)
			------------------		------------------
Total liabilities			(7,076)		(8,130)
			------------------		------------------
Total net assets			18,307		14,912
			=========		=========
Capital and reserves attributable to owners
of the parent
Share capital	5		12,720		11,308
Share premium			27,882		26,107
Retained deficit			(22,295)		(22,503)
			------------------		------------------
Total equity			18,307		14,912
			=========		=========

The financial statements were approved by the Board and authorised for issue on 27^th November 2017.

Oliver Cooke

Executive Chairman

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

	Share capital	Share premium	Retained deficit	Total equity
	£'000	£'000	£'000	£'000
31 March 2016	10,262	20,688	(22,052)	8,898
Issue of shares	1,046	5,419	-	6,465
Loss after tax and total comprehensive income	-	-	(665)	(665)
Equity settled share based payments	-	-	214	214
	-------------	--------------	---------------	--------------
30 September 2016	11,308	26,107	(22,503)	14,912
	--------------	--------------	--------------	--------------
Issue of shares	1,377	1,711	-	3,088
Profit after tax and total comprehensive income	-	-	89	89
Equity settled share based payments	-	-	92	92
	--------------	--------------	--------------	--------------
31 March 2017	12,685	27,818	(22,322)	18,181
	--------------	--------------	--------------	--------------

Issue of shares	35	64	-	99
Loss after tax and total comprehensive income	-	-	(107)	(107)
Equity settled share based payments	-	-	134	134
	--------------	--------------	--------------	--------------
30 September 2017	12,720	27,882	(22,295)	18,307
	--------------	--------------	--------------	--------------

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

		Unaudited		Unaudited
		6 months ended 30 September 2017		6 months ended 30 September 2016
		£'000	£'000	£'000	£'000
Cash flows from operating activities
Loss before tax (continuing and discontinued) Adjustments for:			(168)		(782)
Share based payments			134		214
Depreciation on property plant and equipment			65		38
Amortisation of intangible assets			419		425
Net finance costs			137		94
			-----------------		-----------------
Cash flows from operating activities before changes			587		(11)
in working capital
(Increase)/Decrease in trade and other receivables			(613)		2,112
(Decrease) in trade and other payables			(170)		(2,931)
Corporation tax paid			-		(160)
			-----------------		-----------------
Cash used in operations			(196)		(990)
Investing activities
Finance income		-		1
Purchase of fixed assets		(260)		(143)
Cash on acquisition		-		1,339
Acquisition of subsidiaries		(1,352)		(2,587)
		-----------------		-----------------
Net cash generated from investing activities			(1,612)		(1,390)
Financing activities
Finance costs		(137)		(95)
New financing		281		2,000
Loan Repayments		(250)		-
Issue of new share capital (net of costs)		100		891
		-----------------		-----------------
Net cash from financing activities			(6)		2,796
			-----------------		-----------------
Net (decrease)/increase in cash and cash equivalents			(1,814)		416
Cash and cash equivalents at beginning of the period			4,558		3,391
			------------------		------------------
Cash and cash equivalents at end of the period			2,744		3,807
			=========		=========

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

1.      ACCOUNTING POLICIES

Basis of preparation 

The interim financial statements have been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRS) and IFRIC interpretations issued by the International Accounting Standards Board (IASB) adopted by the European Union. 

The accounts have been prepared in accordance with accounting policies that are consistent with the March 2017 Report and Accounts and that are expected to be applied in the Report and Accounts of the year ended 31 March 2018. There are new or revised standards or interpretations that apply to the period beginning 1 April 2017 but they do not have a material effect on the financial statements for the period ended 30 September 2017. 

This report is not prepared in accordance with IAS 34, which is not mandatory.  The financial information does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. Statutory accounts for Tavistock Investments Plc for the year ended 31 March 2017 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.  

Disposal of Subsidiary and Discontinued Operations

On the 10 August 2017, the Company announced the sale of Tavistock Financial Limited ("TFL") to Sanlam UK. The gain on sale recognised in the period represents the consideration receivable less 1) the carrying value of assets sold, and 2) anticipated associated costs

As the entity represents a separate major line of business and was part of a single coordinated plan to sell, the results of TFL have been separately recognised on the statement of financial position as 'discontinued operations'.

2.      SEGMENTAL INFORMATION

         A segmental analysis of revenue and expenditure for the period is:

		Investment Management		Advisory Support	2017	2016
		£'000		£'000	£'000	£'000
Revenue		1,524		10,837	12,361	8,860
Cost of Sales		(198)		(7,430)	(7,628)	(6,533)
Administrative Expenses			(661)	(2,870)	(3,531)	(1,863)
Group costs					(1,212)	(1,259)
					-------------	-------------
(Loss) from continuing operations					(10)	(795)
(Loss)/profit from discontinuing operations					(21)	85
					-------------	-------------
Loss from operations					(31)	(710)
					======	======

The segmental analysis above reflects the parameters applied by the Board when considering the Group's monthly management accounts. The Directors do not consider a division of the balance sheet to be appropriate or useful for the purposes of understanding the financial performance and position of the Group.

During the period under review the Group operated, and earned revenue exclusively within the UK.

3.	LOSS PER SHARE	Unaudited	Unaudited
		6 months ended	6 months ended
		30 September 2017	30 September 2016
	Loss per share has been calculated using the following:
	Loss from continuing operations (£'000)	(10)	(795)
	Weighted average number of shares ('000s)	536,718	371,955
		--------------	--------------
	Basic loss per ordinary share	(0.002)p	(0.213)p
		=======	=======

4.	INTANGIBLE ASSETS	Customer	Regulatory	Goodwill	Other
		& Adviser	Approvals	Arising on	Intangible
		Relationships	& Systems	Consolidation	Assets	Total
		£'000	£'000	£'000	£'000	£'000
	Cost
	Balance at 1 April 2017	5,415	1,815	14,751	474	22,455
	Additions	-	-	-	10	10
	Disposals	-	-	-	-	-
		-------------	-------------	-------------	------------	---------------
	Balance at 30 September 2017	5,415	1,815	14,751	484	22,465
		-------------	-------------	------------	------------	---------------
	Accumulated amortisation
	Balance at 1 April 2017	1,730	566	205	-	2,501
	Additions	-	-	-	-	-
	Amortisation	245	113	-	61	419
		------------	-----------	-----------	------------	---------------
	Balance at 30 September 2017	1,975	679	205	61	2,920
		-----------	------------	------------	------------	---------------
	Net Book Value
	At 31 March 2017	3,685	1,249	14,546	474	19,954
		======	======	======	======	=======
	At 30 September 2017	3,440	1,136	14,546	423	19,545
		======	======	======	======	=======

5.	SHARE CAPITAL	Unaudited	Unaudited
		30 September 2017	30 September 2016
		£'000	£'000
	Called up share capital
	Allotted, called up and fully paid
	537,186,045 Ordinary shares of 1 pence each
	(2016: 395,886,278 shares of 1 pence each)	5,372	3,959
	100,000 "G" Ordinary shares of 1 pence each	-	1
	30,450,078 Deferred shares of 9 pence each	2,741	2,741
	465,344,739 Deferred "A" shares of 0.99 pence each	4,607	4,607
		------------	-------------
		12,720	11,308
		======	======

6.      EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION

On 26th October 2017, the Company completed the sale of Tavistock Financial Limited to Sanlam UK and received total cash consideration of £1 million which will be used by the Group for working capital purposes.  

As a consequence of the transaction, the Group's cash resources have been strengthened and simultaneously its regulatory capital requirement has been reduced.

The board currently anticipates that the transaction will have no material impact on the future profitability of the Group.

 

END

 

 

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