Year-end trading update

RNS Number : 7440U

Tavistock Investments PLC

08 April 2021

 

Certain information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as amended by Market Abuse (Amendment) (EU Exit) Regulations 2019/310.  Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Tavistock Investments Plc

("Tavistock" or the "Company")

Year-end trading update

8 April 2021

The Board of Tavistock is pleased to announce that the Company has achieved a strong close to the financial year just ended on 31 March 2021.

Financials

There is a limit to the amount of financial information the Board is permitted to release at this time, without incurring considerable additional expense, due to the Company being deemed to be in an "Offer Period" (as defined in the City Code on Takeovers and Mergers) as a result of the unwelcome approach from TEAM plc.

During the year, the Board initiated a group-wide reorganisation project (announced in November 2020) and implemented other process improvement and cost cutting measures (announced in February 2021).

Gross revenues in the Company's advisory business were in line with the last financial year, at £24 million, of which approximately 80% is annualised recurring revenue. The Board notes with interest that recently reported M&A transactions in the sector have been conducted at a multiple of between 3 - 3.5 times recurring advisory revenue.

Tavistock's funds under management at 31 March 2021 have also remained similar to last year at approximately £1.1 billion and the Board notes that investment management businesses have recently changed ownership at values equivalent to between 2% and 4% of funds under management.

The Company has, during the year ended 31 March 2021, benefited from the Government backed furlough scheme, which will clearly not be available in future years. However, the savings that the Board has achieved through the creation of a captive cell insurance facility will more than compensate for the absence of on-going furlough support. This captive cell insurance facility enables the Company to provide a proportion of its professional indemnity insurance requirement through an in-house insurer and thereby to save approximately £250,000 per annum compared to the cost of obtaining the same level of insurance cover as last year.

The Company also received financial support from the Government in the form of a £2.1 million CBILS loan. This was a precautionary measure and whilst funds were received upon approval of the loan, they have remained unutilised. The Company plans to repay the CBILS loan as soon as circumstances properly permit.

The Company's performance during Q1 of the financial year was enhanced by the voluntary salary sacrifices made by employees at that time. The Board is immensely grateful for the support they gave to the business during the early stage of the coronavirus pandemic when future developments were uncertain. The Board was therefore particularly pleased to have been able to repay them all, in full, during the final quarter of the financial year.

Investment funds

The reorganisation project referred to above, began with a review of the performance of the Company's investment funds. This led to the appointment of a new Chief Investment Officer, under whose supervision the performance of the investment funds has improved significantly. Following the first nine months of the new Chief Investment Officer's tenure, all six multi-asset ACUMEN funds are ranked in the top quartile of their appropriate IA Sector (Investment Association fund sectors used for comparative market analysis).

Operations

Alongside the reorganisation project, the Board undertook a risk and cost review of the Company's advice oversight regime. This has resulted in the development of a more streamlined, cost and risk effective training and competence scheme, with improved management information. Each adviser now benefits from a tailored oversight and development plan, significantly improving the Board's confidence in ensuring good client outcomes.

Tavistock's new low-cost platform, the Tavistock Platform, was launched in December 2020. It has been well received, already attracting many new clients and the Board believes that significant assets will be transferred to the Tavistock Platform over the next few years.

Potential offer from TEAM plc

The opportunistic approach made to the Company by TEAM plc, a newly listed AIM company supported by a small grouping of former employees and disaffected shareholders, has been an unwelcome distraction for the Company. TEAM plc has announced that it is considering a potential bid for the Company at a price that the Board believes to be significantly below the value of the Company's assets, as highlighted by the recent transaction multiples set out above and offering only illiquid shares as the consideration.

By contrast, the Board has been exploring ways in which the inherent value of the Company's assets can be used to fund the Company's further development and to deliver significant value for shareholders.

Enquiries

Tavistock Investments Plc Tel: [phone]

Oliver Cooke

Brian Raven 

Allenby Capital Limited

(Nominated Adviser and Broker to Tavistock)   Tel: [phone]

Corporate Finance:

Nick Naylor, Nick Athanas, Liz Kirchner

Sales and Corporate Broking:

Tony Quirke  

Powerscourt (PR adviser to Tavistock)  Tel: [phone]

Gilly Lock                                                                                                                                      020 7250 1446

Chloe Retief 

 Glossary:

A captive insurance cell ("Cell") is a wholly owned subsidiary that is established to insure the risks of its parent company group. Cells are established under the umbrella of an existing insurance provider within a suitable jurisdiction, in this instance, Guernsey. The insurance provider supplies both the professional expertise and the necessary regulatory capital. As part of a licensed insurance entity, it can therefore act in the same way as a typical insurance company, by receiving premiums and paying claims. However, it retains any underwriting profit for the benefit of its parent, rather than for the benefit of a third-party insurer.

Whilst established within a much larger insurance umbrella, each Cell, as well as the risk within it, is legally separated from all other Cells within its umbrella and ring-fenced from all other Cells' activities. Each Cell carries its own separate capital and operates individually, as a separate ring-fenced account.

 

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