TIDMTAVI
RNS Number : 9033K
Tavistock Investments PLC
07 September 2021
TAVISTOCK INVESTMENTS PLC
RESULTS FOR THE YEARED 31 MARCH 2021
PAYMENT OF INTERIM DIVID
POTENTIAL SHARE BUY BACK
7th September 2021
Tavistock Investments Plc ("Tavistock" or the "Company") is
pleased to announce its financial results for the year ended 31
March 2021.
Financial highlights
-- 58% increase in EBITDA to GBP2.88 million (year ended 31 March 2020: GBP1.83 million)
-- Earnings per share of 0.13p (year ended 31 March 2020: Loss per share of 0.95p)
-- Performance turnaround - profit from operations of GBP1.23
million (year ended 31 March 2020: Loss of GBP5.5 million)
-- Operational improvement of some GBP0.75 million per annum
following a reorganisation project - reduced operational footprint
and improved operational performance of the business; project
provision of GBP1.2 million established to cover one-off costs
-- Recent initial cash receipt of GBP20 million from sale of
subsidiary, Tavistock Wealth Limited
-- Repayment of all debt post period end
Operational highlights
Advisory Business
-- 508% increase in EBITDA to GBP2.28 million (year ended 31 March 2020: GBP375,000)
-- Performance turnaround of three entities, with Tavistock
Private Client Limited, The Tavistock Partnership and Tavistock
Partners Limited all contributing positive earnings
-- Current financial year - unaudited Q1 revenues up 28% to
GBP6.9 million (Q1 2020: GBP5.4 million)
Investment Management
o Funds under management ("FUM") increased for 7th consecutive
year, up (15%) to GBP1.15 billion (31 March 2020: GBP1 billion)
-- 7% increase in revenue for Tavistock Wealth to GBP5.9 million
(year ended 31 March 2020: GBP5.5 million)
-- 30% increase in EBITDA to GBP3.9 million (year ended 31 March 2020: GBP3.0 million)
-- Current year - sale to Titan Wealth for up to GBP40 million in cash plus a ten-year earn-out
Group
o Entry into ten-year strategic partnership with Titan
Wealth
o Acquisition of Chater Allan Financial Services LLP adding
c.GBP110 million to the Group's funds under advice
o Launch of the Tavistock Platform, providing a low-cost
platform service to advisory and investment clients
Looking ahead
The Board is focussed on the following objectives:
-- Continued improvement of operational efficiency - improving
use of data and management information, maintaining focus on costs
and other efficiency initiatives
-- Development of a much larger Group via an accelerated acquisition programme
-- Enhancement of shareholder value
Interim dividend - 0.05p per share (gross)
o Five times larger than 2019 maiden dividend of 0.01p per
share
o Reflects strong financial performance of the business
o Record date of 17 September 2021
o Payment date of 4 October 2021
Potential share buy back
o Following receipt of the initial GBP20 million of sale
proceeds, the Board intends to use the shareholder authority for
the Company to make strategic buy backs of shares
o Up to a maximum equivalent to 10% of shares in issue
o Maximum price of 5% above mid-market price
o Any shares purchased will be cancelled, thereby enhancing the
earnings and value of each remaining issued share
Brian Raven, Group Chief Executive, said : "Our future prospects
have been transformed by continued strong financial performance and
entry into the strategic partnership with Titan Wealth. The sale of
Tavistock Wealth to Titan for up to GBP40 million in cash plus a
ten-year earn-out vindicates our belief that the value we have
built within the business remains largely unrecognised. The
transaction proceeds equip us to accelerate the growth of the
business, developing a much larger and more profitable distribution
and wealth management group, to deliver enhanced value to
shareholders."
For further information
Tavistock Investments Plc Tel: 01753 867000
Oliver Cooke
Brian Raven
Allenby Capital Limited Tel: 020 3328 5656
(Nominated adviser and broker)
Corporate Finance:
Nick Naylor, Nick Athanas, Liz
Kirchner
Sales and Corporate Broking:
Tony Quirke
Powerscourt Tel: 07711 380 007
Gilly Lock 020 7250 1446
Chloe Retief
TAVISTOCK INVESTMENTS PLC
CHAIRMAN'S STATEMENT
FOR THE YEARED 31 MARCH 2021
I am pleased to report that the Company's future has been
transformed by the strong financial performance of the business
during the year and the subsequent entry into a ten-year strategic
partnership with Titan Wealth.
The Group is reporting a creditable 58% increase in the level of
adjusted EBITDA (being earnings before interest, taxation,
depreciation and amortisation as adjusted for share-based payments
and exceptional items). Adjusted EBITDA for the year under review
was GBP2.88million (prior year: GBP1.83million).
As part of the arrangements with Titan, it has acquired the
Group's investment management business, Tavistock Wealth Limited,
for a consideration of up to GBP40 million in cash together with a
ten-year earn out. GBP20 million was paid upon completion, with the
remaining GBP20 million to be paid in instalments over the next
three years linked to the maintenance of Tavistock Wealth's
revenue. The transaction completed in August 2021.
The receipt of these funds enables the Board to continue to grow
the business, both organically and through acquisition, without the
need to dilute the interests of shareholders.
Details of the strategies followed, both to protect the business
during the onset of the coronavirus pandemic and to achieve the
marked improvement in adjusted EBITDA, can be found in the
Strategic Report.
Investment Management
In July 2020, John Leiper was appointed as the Group's new Chief
Investment Officer and fund performance began to improve
dramatically. Over the subsequent 9 months to the financial year
end, 5 of the Company's 7 risk progressive ACUMEN funds performed
in the top quartile when measured against the appropriate
Investment Association (IA) sector, a standard industry benchmark,
with 4 of them being ranked in the top decile.
Despite becoming Titan employees, John Leiper and the investment
team continue to work closely with Tavistock's advisers and other
members of the Group. Tavistock is Titan's principal retail
distribution partner and the Group has formed a new subsidiary,
Tavistock Asset Management Limited, to oversee and promote the
Group's centralised investment proposition, within which clients
invest in either the ACUMEN funds, or the Group's ranges of active,
passive and socially responsible portfolios.
Gross revenue for investment management rose by 7% during the
year to GBP5.9 million (2020: GBP5.5 million). However, operating
costs within the business were reduced and consequently adjusted
EBITDA improved by 30% to GBP3.9 million (2020: GBP3 million).
Funds under management at GBP1.2 billion have increased 15%
compared to the previous year (2020: GBP1 billion).
The business has once again been short-listed as a finalist for
a variety of industry awards including "Company of the year" and
"Best Discretionary Fund Manager" in the Money Marketing Awards
2021.
Advisory
The Group's advisory business delivered a commendable 508%
improvement in adjusted EBITDA performance, from GBP375,000 in the
prior year to GBP2.28 million in the year under review. Revenues,
at GBP23.7 million were in line with the previous year (2020:
GBP23.3 million).
The improvement in adjusted EBITDA was predominately achieved by
greatly improving the performance of three subsidiaries, each of
which now makes a significantly greater contribution to the Group's
profitability.
The proceeds from the disposal of Tavistock Wealth will enable
the Group to supplement the organic growth of its advisory business
with an accelerated programme of acquisitions.
Financial review
At the start of the financial year, during the first wave of the
coronavirus pandemic, before vaccines had been developed and the
entire country had been placed into lock-down, the Board negotiated
a one-year capital repayment holiday on a historic GBP1.4 million
term loan from NatWest and secured a precautionary GBP2.13 million
CBILS facility.
This enabled the Board to bring forward the launch of a
long-planned Group reorganisation project. This project has proved
particularly effective and is anticipated to reduce the Group's
overhead costs by approximately GBP750,000 in a full year. A
provision of GBP1.2 million to cover the one-off cost of the
project has been charged to the profit and loss account as an
exceptional item.
Further details of the project can be found in the Strategic
Report.
During the year, the Board attempted to introduce a new growth
share incentive arrangement to replace the use of share options as
a means of incentivising Directors and Senior Managers. The reason
for seeking such a change was to avoid the share-based payment
charges that adversely impact the Company's reported performance to
a material extent and consequently also adversely impact the
Company's share price and its market capitalisation.
Having consulted with several of the Company's larger
shareholders and received assurances from them that they would vote
in favour of the introduction of the new growth share incentive
scheme, the Executive Directors, on 1 March 2021, surrendered for
nil consideration all the share options previously held by
them.
Notwithstanding the assurances that had been received, two of
the shareholders subsequently changed their minds and instead of
voting in favour of the introduction of the new growth share
incentive arrangement, voted against it. Consequently, whilst the
resolution received majority support, it failed to reach a
sufficient level (75%) for it to be passed as a special
resolution.
The rejection of an alternative incentive arrangement has
obliged the Company to revert to the use of share options. After
the balance sheet date, new options have been issued to the
Executive Directors to replace those that had been surrendered by
them in good faith. The number of options issued to them, together
with the exercise price, reflected the loss of the tax benefit
accruing to the original options they held.
The Company also reduced its share capital by GBP11.8 million
during the year, with shareholders' consent and the sanction of the
Courts, by writing off deferred shares with a nominal value of
GBP7.3 million and by reducing the share premium account by GBP4.5
million. The GBP11.8 million was then credited to the Company's
revenue reserve account which eliminated the historic deficit on
that account and created the distributable reserves required to
enable the Company to pay dividends.
Financial performance
The Group has continued to grow the level of adjusted EBITDA, as
it has done every year since its inception. For the year ended 31
March 2021, adjusted EBITDA was GBP2.88 million, a 58% increase
over the previous financial year (GBP1.83 million).
Following discussion with the Company's auditors regarding the
requirements of IFRS 2 in relation to the share options surrendered
by the Executive Directors in March 2021, only a proportion of the
historic share-based payment charge has been eliminated in the
accounts for the year under review. Where replacement share options
have been issued in respect of those options which have been
cancelled, the charge recognised will only be the marginal fair
value of the replacement options above that of the cancelled
options. Thus, the balance of the historic charge will serve to
reduce the charge that would otherwise have been made in connection
with such replacement options.
The Group is reporting an Operating Profit of GBP1.23 million,
after providing GBP1.2 million for the one-off reorganisation
costs, referred to above. This compares favourably with the prior
year's Operating Loss of GBP5.47 million.
Gross revenues at GBP28.7 million were in line with those of the
previous year (GBP28.8 million) and Gross profit at GBP12.1 million
was 3% ahead of the prior year (GBP11.8 million). At the year end,
the Group's net assets increased by 2% from GBP15.4 million in 2020
to GBP15.7 million in 2021.
The Group generated GBP2.2 million from operations (31 March
2020: GBP2.4 million) and made GBP2.0 million of payments (31 March
2020: GBP3.4 million) on loan interest, finance costs, the purchase
of client books and the development of key initiatives. As
discussed in the Strategic Report, the Group secured a GBP2.13
million CBILS facility and ended the year with cash resources of
GBP4.5 million (31 March 2020: GBP2.4 million).
The financial performance of the Group during the past two years
is summarised in the table below. Adjusted EBITDA is highlighted in
the table as this is considered the most appropriate measure of the
Group's performance because it removes the distorting effect of
one-off gains and losses arising on acquisitions, as well as the
impact of non-cash items.
31 Mar 2021 31 Mar Movement
GBP'000 2020
GBP'000
Gross Revenues 28,712 28,803
------------ --------- -------------
Adjusted EBITDA 2,875 1,825 58% increase
------------ --------- -------------
Depreciation & amortisation (727) (1,295) 44% decrease
------------ --------- -------------
Additional depreciation resulting from
the introduction of IFRS16 - (275)
------------ --------- -------------
Share based payments 282 (229)
------------ --------- -------------
Profit from Operations- before exceptional
items 2,430 26
------------ --------- -------------
Impairment of intangible assets - (5,039) * below
------------ --------- -------------
Provision for one-off reorganisation costs
/ Acquisition related costs (1,200) (460)
------------ --------- -------------
Reported Profit/ (Loss) from Operations 1,230 (5,473)
------------ --------- -------------
Earnings/(Loss) per share 0.13p (0.95)p
------------ --------- -------------
Net assets at year end 15,730 15,404 2% increase
------------ --------- -------------
Cash Resources at year end 4,457 2,416 85% increase
------------ --------- -------------
* An Impairment provision was recognised on Intangible Assets in
the year ended 31 March 2020
Post Balance Sheet Events
On 8 April 2021, the Company announced that it had established a
captive cell insurance facility that would enable it to provide a
proportion of the Group's professional indemnity insurance
requirement through an in-house insurer and thereby save
approximately GBP250,000 per annum, compared to the cost of
obtaining the same level of insurance cover as last year from third
party providers. Such cells are established under the umbrella of
an existing insurance provider, in this instance based in Guernsey.
The insurance provider supplies both the professional expertise and
the necessary regulatory capital. As part of a licensed insurance
entity, the cell acts in the same way as a traditional 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.
On 14 June 2021 the Company announced its entry into a ten-year
strategic partnership with Titan Wealth, as detailed above. As part
of the arrangements Titan has acquired the Group's investment
management business, Tavistock Wealth, for a consideration of up to
GBP40 million in cash together with a ten-year earn out. The
transaction was completed in August 2021.
On 15 June 2021 the Company announced the acquisition of the
business and assets of Chater Allan Financial Services LLP, an
independent advisory business based in Cambridge. The acquisition
of this business has added approximately GBP110 million to the
Group's funds under advice and is expected to contribute to the
Group's profitability in the current financial year.
Future Prospects
Having received the initial GBP20 million from the sale of
Tavistock Wealth, the Board paid down historic borrowings and will
now consider the Company making market purchases of its own shares.
Any shares purchased in this manner will be cancelled, thereby
improving the earnings per share for all remaining issued
shares.
One of the Board's stated objectives is to establish a growing
dividend stream for the benefit of the Company's shareholders. I am
therefore pleased to advise you of our intention to pay an interim
dividend of 0.05 pence (gross) per share. The Record Date for this
dividend will be Friday 17(th) September 2021 and the Payment Date
will be Monday 4(th) October 2021. This dividend is five times
larger than the maiden dividend of 0.01 pence per share that was
paid in July 2019 and reflects the Company's strong financial
performance and prospects.
The Board's focus is now on developing a much larger and more
profitable distribution and wealth management business and by so
doing, delivering enhanced value to shareholders
The funds from Titan Wealth will enable the Board to make
acquisitions without diluting the interests of shareholders. It is
anticipated that the contribution to the Group's profitability from
such acquisitions will exceed Tavistock Wealth's historic
contribution in the short to medium term.
I would like to take the opportunity to acknowledge once again
the significant contribution, the hard work and the dedication of
our excellent staff and to thank them for the enormous support that
they have given to the business over the past year.
I look forward to updating you further.
Oliver Cooke
Chairman
6 September 2021
TAVISTOCK INVESTMENTS PLC
STRATEGIC REPORT
FOR THE YEARED 31 MARCH 2021
The Board of Directors, both individually and collectively, have
continued to act in a manner which they consider, in good faith,
would be most likely to promote the ongoing success of the Company
for the benefit of its members as a whole, as required by S172
Companies Act 2006. In doing so they have, amongst other matters,
given regard to the following:
- The likely long-term consequences of any decisions
- The interests of the Company's employees
- The need to foster the Company's relationships with its customers, suppliers, and others
- The impact of the Company's operations on both the community and the environment
- The desirability of maintaining the Company's reputation for
high standards of business conduct, and
- The need to act fairly between members of the Company.
During the year under review, the Board's focus was on achieving
three principal objectives, each of which was intended to further
the interests of the Company's shareholders.
These objectives were:
- To protect and preserve the business in the face of the pandemic
- To improve the operational efficiency and commercial performance of the business
- To grow the business.
To protect and preserve the business
At the start of the financial year, the first wave of the
coronavirus pandemic was unfolding, vaccines had not yet been
developed, the Government had placed the entire country into
lock-down and no one could foresee what the impact would be on
businesses in general, and on Tavistock in particular.
Against this backdrop, the Board's priority was to protect the
business which it did as swiftly as possible, by cutting costs and
by preserving the Company's cash resources. To achieve this end,
and to lead by example, each member of the Board immediately agreed
to waive twenty per cent of their salaries during the first quarter
of the year and to review the position thereafter. At the same
time, all members of staff were invited to consider making a
similar voluntary sacrifice and a very high proportion agreed to
participate. It was made clear to all that there was no guarantee
of repayment and it was humbling to see the high level of support
that was forthcoming. It was therefore particularly gratifying to
be able to repay every member of staff in full, in February
2021.
In addition, each of the Company's landlords were approached
with a view to waiving or deferring a proportion of the first
quarter's rent. Most agreed to do what they could, with only one
landlord being unprepared to offer any form of assistance.
Having protected the business's resources as far as possible,
the Board then investigated the support packages being offered by
the Government. Subsequently, some of the Group's administrative
staff were placed on furlough and the Group secured a precautionary
GBP2.13 million CBILS facility. It also negotiated a one-year
capital repayment holiday on a historic GBP1.4 million term loan
facility from NatWest.
To improve the operational efficiency and commercial performance
of the business
The CBILS facility, together the loan repayment holiday, gave
the Board the confidence to bring forward the launch of a
long-planned Group reorganisation project.
This project has proved particularly effective and has resulted
in:
- a reduction in the number of offices from eleven to six,
- a reduction in staff numbers and replacement of the Chief Investment Officer,
- withdrawal from historically unproductive commercial
arrangements, such as the partnership with the Law Society,
- the introduction of a new adviser retention programme,
- significant strengthening of the Group's IT infrastructure; and
- comprehensive updating of the compliance oversight and risk management regimes.
A reorganisation reserve of GBP1.2 million was established in
the Group's Profit and Loss account to cover the anticipated
one-off cost of the project. It is the Board's current expectation
that the project will deliver a reduction in the Group's overheads
of approximately GBP750,000 per annum.
The Board also successfully increased the profit contribution
from three previously underperforming subsidiaries.
It the year under review, the Group's high net worth advisory
business, Tavistock Private Client Limited, contributed
approximately GBP204,000 to the Group's adjusted EBITDA - in marked
contrast to the prior year's adjusted EBITDA loss of GBP494,000.
Similarly, the Group's appointed representative network business,
The Tavistock Partnership, contributed approximately GBP134,000
versus the prior year's adjusted EBITDA loss of GBP223,000 and
Tavistock Partners Limited increased its contribution from
GBP36,000 (2020) to GBP543,000 (2021).
The Company also launched the Tavistock Platform, a low-cost
platform for use by the Group's advisers and their clients.
Growing the business
The challenge faced by the Board had long been the inability to
grow through acquisition whilst the Company's share price, and thus
its market capitalisation, sat so far below the intrinsic value of
the assets developed within the Group. The Board believes that a
conservative sum of the parts valuation of the Group's advisory and
investment management businesses would total GBP80 million to
GBP100 million. This would be equivalent to a share price of
between 13p and 16p per share. By contrast, at a share price of
2.3p as of 31(st) March 2021, the market valued the Company at
approximately GBP14 million - equivalent to less than 20% of the
Board's assessment.
This mismatch meant that the Board could neither issue new
shares as consideration for an acquisition, nor raise additional
working capital, without further, significant reduction in
shareholder value. It also resulted in the Company receiving an
unwelcome bid approach from an opportunistic newcomer to the
market, which was vigorously rebuffed and ultimately proved to be
no more than an expensive distraction.
The Board had previously considered partnering with a private
equity provider to take the Company off the market and to fund its
development. However, following investigation this was rejected as
not being in the best long-term interests of all shareholders.
In June 2021, after the year end date, the Company announced
that it had entered a ten-year strategic partnership with Titan
Wealth Holdings Limited and that as a part of the arrangements
Titan would acquire the Group's investment management business,
Tavistock Wealth Limited, for a consideration of up to GBP40
million (equivalent in value to 6.58p per share currently in issue)
together with a ten-year earn out. This transaction was completed
in August 2021.
Consequently, the Company's share price rose, albeit to a level
that remains significantly below the value of the Group's
underlying assets. More importantly, the Company now has the
financial resources to fund an acquisition programme without any
dilution in shareholder value.
Use of Proceeds
The Company received GBP20 million in cash, on completion, with
a further GBP20 million to be paid over the next three years,
linked to the maintenance of TWL's revenues.
Of this sum, approximately GBP3.5 million has been used to repay
historic bank debt, including the GBP2.13 million CBILS loan taken
out in 2020. The Board will now consider the Company making market
purchases of its own shares which, as a consequence, will increase
the earnings per share of the shares remaining in issue. However,
the predominant use of the funds will be to accelerate the growth
of the Group's wealth management business both organically and
through an acquisition programme.
Current objectives
In the current financial year, the Board is focussed on the
following areas:
-- efficiently and effectively fulfilling its role as Titan's
principal retail distribution partner
-- increasing the scale of the Group's advisory business both organically and by acquisition
-- improving shareholder value.
Financial Review
Details of the Company's strong financial performance during the
year under review can be found in the Chairman's Statement.
Risks and Uncertainties
The Group continues to face the usual risks of operating within
a regulated environment. To mitigate these risks, the Board has
comprehensively updated the Group's compliance oversight and risk
management regimes. The Board also actively promotes an ethos of
acting at all times with honour, dependability and vigilance, and a
culture within which the client is placed at the centre of
everything that the Company does.
The Company also faces the challenge of replacing the lost
contribution to its profitability resulting from the disposal of
Tavistock Wealth Limited. It expects to do this with the
contribution to be received from acquisitions and the development
of Tavistock Asset Management over the short to medium term.
Given the proceeds from the disposal of Tavistock Wealth, the
Board remains confident that the business has sufficient cash
resources to meet its working capital requirements and to justify
use of the going concern assumption as the appropriate basis on
which to prepare the Group's accounts.
Corporate Governance
Our activities in relation to Corporate Governance are set out
separately within the Corporate Governance Report on pages 10 to
15.
Future Prospects
The Company's strong financial performance during the year under
review, its profitable trading in the current year and its
substantial cash resources mean that it has emerged from the crisis
in extremely good shape.
As highlighted above, the Board's operational focus will be on
working closely with Titan, its new partner, and on increasing
shareholder value by developing a much larger wealth management
business. If this is accomplished without shareholder dilution, it
will increase the earnings and thus the value of each share in
issue.
I look forward to updating you on our progress.
Approved by the Board of Directors and signed on its behalf
by
Oliver Cooke
Chairman
6 September 2021
TAVISTOCK INVESTMENTS PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEARED 31 MARCH 2021
The Board recognises that good corporate governance can reduce
risk within the business, can promote confidence and trust amongst
its stakeholders and underpins the effectiveness of the Company's
management framework.
The Directors, in acknowledgement of the importance of good
corporate governance, have adopted the Quoted Companies Alliance
Corporate Governance Code (the "QCA Code"), as the basis of the
Company's governance framework, and consider that the Company
complies with the QCA Code so far as is practicable having regard
to the size, nature and current stage of the Company's
development.
The QCA Code includes ten broad principles that the Company
holds in mind as it seeks to deliver growth to its shareholders in
the medium and long-term. These principles and the manner in which
the Company seeks to comply with them can be summarised as
follows.
Principle 1:
Establish a strategy and business model which promote long-term
value for shareholders
-- The Board's original strategy had been to establish a
profitable investment management business, to use the Group's
advisory business as a means of promoting investment management
services and to improve shareholder value through the delivery of
increased profitability.
-- The partnership with Titan Wealth Management has led to a
modification of this strategy. It has enabled the Company to
accelerate receipt of part of the adjusted EBITDA contribution that
would have been generated by the investment management business.
The Company will continue to derive income from this area of
activity, at a lower level but with a lower cost base
-- Consequently, the Company now has at its disposal the
resources required to more rapidly expand its advisory business and
to accelerate the growth of investment management assets.
-- The Group's advisory business trades profitably in its own
right and as the scale of this business grows, so too will its
commercial value and its value as Titan's principal retail
distribution partner.
-- The Board has gained shareholder approval to allow the
Company to make market purchases of its own shares. Any shares
purchased in this manner will be cancelled which will reduce the
number of shares that the Company has in issue and will increase
the earnings per share of those shares remaining in issue.
-- The combination of an increase in the commercial value of the
business and a reduction in the number of shares in issue, will
lead to a long-term improvement in shareholder value.
-- Key risks have been addressed in the Strategic Report.
Principle 2:
Seek to understand and meet shareholder needs and
expectations
-- The Board welcomes constructive engagement with shareholders
and over the past year has demonstrated its willingness to respond
appropriately when valid concerns have been raised by them.
-- The Company believes that shareholder expectations are most
effectively managed through the release of regulatory announcements
and through discussion with shareholders at the Company's Annual
General Meeting. The AGM adhered to the relevant covid restrictions
and all Board members endeavoured to attend the AGM in person.
-- The Executive Directors meet regularly with the Company's
major shareholders and ensure that the views expressed by them are
communicated fully to the Board.
-- Board members make themselves available to meet with
shareholders and with potential investors as and when required.
Principle 3:
Take into account wider stakeholder and social responsibilities
and their implications for long-term success
-- The Board places great emphasis on the safety, wellbeing and
mental health of all of the Company's employees and has engaged in
a number of initiatives to improve each of these.
-- The Company also recognises the importance of engagement with
its stakeholder groups, which, in addition to its employees,
include investors, clients, strategic partners and the relevant
authorities. The Board seeks to treat each of these groups in a
fair and open manner.
-- The Company has continued to support a national charity, the
Clock Tower Foundation, and to encourage the involvement of staff
in various local and national fund-raising events.
-- The Company endeavours to take account of, and to respond to,
feedback received from stakeholders.
-- Environmental responsibility and sustainability are important
to the Company, and a number of initiatives have been pursued to
improve the recycling of paper, to reduce the use of plastics and
to reduce carbon footprint through the greater use of online
meeting technology and a reduction in the number of office
premises.
Principle 4:
Embed effective risk management throughout the organisation,
considering both opportunities and threats
-- During the year under review, the Company undertook a
comprehensive overhaul of the Group's compliance and risk
management processes. This included the introduction of individual
advisor score cards to allow for more effective oversight. The
score cards directly link each adviser's track record with the
level of risk associated with each of the products that they
recommend to their clients. This enables the Company to determine
the specific level of compliance oversight to be applied to each
adviser.
-- The Group has also established a separate Risk Committee,
which examines and assesses the risks associated with all aspects
of the Group's operations. This committee includes the Company's
non-executive directors and has recently been strengthened through
the recruitment of an experienced Risk Manager. Regular reports are
prepared by this committee that are reviewed by the Audit Committee
before being submitted to the Board.
-- Commercial risks and opportunities are considered by the
Board and by the Group's Leadership Board, which is comprised of
the Executive Directors and the heads of all major Group functions.
The Leadership Board meets formally on a monthly basis.
Principle 5:
Maintain the board as a well-functioning, balanced team led by
the chair
-- The composition, roles and responsibilities of the Board and
of the various Committees are set out on page 14 of the Report and
Accounts. The number of meetings held, and Directors' attendance is
also detailed.
-- To enable the Board to discharge its duties in an effective
manner, all Directors receive appropriate and timely information.
The Agenda for each meeting is determined by the Chairman who
arranges for briefing papers to be distributed to all participants
for consideration ahead of meetings. All meetings are minuted and
the accuracy of the minutes is confirmed at the subsequent meeting
before being approved and signed by the Chairman.
-- Both the Chairman, Oliver Cooke, and the Chief Executive,
Brian Raven, have considerable experience of operating at board
level in public and in private companies. The Chairman is a
qualified Chartered Accountant and has served as finance director
on the boards of various public companies. The Chief Executive has
held a number of sales, operational and leadership roles at board
level within public companies. The Non-Executive Directors, Roderic
Rennison and Peter Dornan, both have extensive sector knowledge and
experience and come from strong regulatory backgrounds.
-- The Executive Directors devote the whole of their time to the
business of the Group. The Non-Executive Directors devote one to
two days per month to their duties.
-- Under the terms of their contracts, the Non-Executive
Directors are required to obtain the prior written consent of the
Board before accepting additional commitments that might conflict
with the interests of the Group or impact the time that they are
able to devote to their role as a Non-Executive Director of the
Company.
-- The Company does not currently have a separate Nominations
Committee as this is considered unnecessary given the Company's
size and stage of development. The need for such a committee will
be kept under review by the Board as the Company develops.
Principle 6:
Ensure that between them the directors have the necessary
up-to-date experience, skills and capabilities
-- Biographies for each of the Directors can be found in the Directors' Report.
-- The Chairman complies with the continuing professional
development requirements of the Institute of Chartered Accountants
in England and Wales, of which he is a long-standing member. The
Chief Executive Officer, in conjunction with other members of the
executive team, ensures that the Directors' knowledge is kept up to
date on key issues and developments pertaining to the Company, its
operational environment and to the Directors' responsibilities as
members of the Board. During the course of the year, Directors have
consulted and received advice as well as updates from the Company's
nominated advisors, brokers, company secretary, legal counsel and
various other external advisers on a number of matters, including
corporate governance. From time to time, members of the Board also
participate in industry forums.
Principle 7:
Evaluate board performance based on clear and relevant
objectives, seeking continuous improvement
-- The Group has established separate Remuneration and Audit
Committees and through which the Non-Executive Directors are able
to monitor and assess the performance of the Executive Directors
and to hold them to account.
-- The respective Board members periodically review and
cross-evaluate the Board's performance and effectiveness in the
Company. It remains the intention of the Board, in due course, to
create a more formal process that will focus more closely on
objectives and targets for improving performance.
-- Directors' performance is open to assessment by shareholders
and all Directors are subject to re-election by the shareholders at
least once every three years.
Principle 8:
Promote a corporate culture that is based on ethical values and
behaviours
-- The Company's ethos is, to act at all times with honour,
dependability and vigilance. The Board also actively promotes a
culture in which the client is placed at the centre of everything
that the Company does.
-- The Board places great emphasis on the wellbeing of the
Company's employees and on providing a safe and secure environment
for them. The Company's Employee Handbook provides a guideline for
employees on the day-to-day operations of the Company.
-- The Company is similarly committed to a transparent, flexible
and open culture promoting family values and avoiding
discrimination on the basis of gender, religious belief, age,
ethnicity or sexual orientation.
-- The Company is mindful of the need for, and is committed to,
environmental responsibility and sustainability.
Principle 9:
Maintain governance structures and processes that are fit for
purpose and support good decision-making by the board
-- Good decision making requires information, consideration,
discussion, and challenge followed by action, communication and the
acceptance of collective responsibility. This is accomplished
through the employment of Directors who have the confidence to
express their views, through the prior circulation of briefing
papers allowing adequate time for their proper consideration ahead
of meetings. Board meetings are openly conducted, with the accurate
minuting of outcomes and the wider communication of those outcomes
as appropriate.
-- The avoidance of conflicts of interest, through the
delegation of responsibility for certain areas to specialist
committees, such as audit and remuneration, has strengthened the
governance structure within the Company.
Principle 10:
Communicate how the Company is governed and is performing by
maintaining a dialogue with shareholders and other relevant
stakeholders
-- Information on the Company's commercial progress and its
financial performance is disseminated to shareholders and to the
market through the announcement of its full-year and half-year
results, the posting of such announcements onto the Company's
website in a timely manner and by mailing copies of the Annual
Report and Accounts to shareholders. These are also made available
for discussion with shareholders at the Company's AGM.
-- Departmental heads liaise regularly and meet formally on a
monthly basis to share and review information on the Company's
progress and to discuss progress within their specific areas of
responsibility.
-- Other members of staff are briefed informally on an ad-hoc
basis and formally through emails from the Chief Executive and
other senior management as appropriate, as well as a series of
presentations delivered at the Annual Company Day. During the year,
on-line meetings replaced physical ones.
BOARD OF DIRECTORS AND BOARD COMMITTEES
The Board is responsible for formulating, reviewing and
approving the Group's strategy, budgets and corporate actions. The
Board is also responsible for ensuring a healthy corporate culture.
The Board currently comprises two Executive Directors and two
Non-Executive Directors.
The Executive Directors are:
Oliver Cooke Chairman
Brian Raven Chief Executive Officer
The Non-Executive Directors are:
Roderic Rennison
Peter Dornan
The Non-Executive Directors have a strong compliance background
and are considered to be independent. All Directors are required to
stand for re-election at least once in every three years.
All members of the Board are equally responsible for the
management and proper stewardship of the Group. The Non-Executive
Directors are independent of management and free from any business
or other relationship with the Company or Group and are thus able
to bring independent judgement to issues brought before the
Board.
The Board meets at least ten times per year and more frequently
where necessary to approve specific decisions. In the year under
review the Board met 15 times with no apologies for absence being
recorded. Directors are free to take independent professional
advice as they consider appropriate at the Company's expense.
The Board has established two Committees with clearly defined
terms of reference and detailed below are the members of the
Committees and their duties and responsibilities.
Audit Committee
The Audit Committee has primary responsibility for monitoring
the quality of internal controls and ensuring that the financial
performance of the Group is properly measured and reported on. It
receives reports from the Group's management and the Company's
auditors relating to the interim and annual accounts and the
accounting and internal control systems in use throughout the
Group.
The members of the Audit Committee are as follows:
Peter Dornan (Non-Executive Director) Committee Chairman
Roderic Rennison (Non-Executive Director)
Oliver Cooke (Chairman)
The Committee approves the appointment and determines the terms
of engagement of the Company's auditors and, in consultation with
the auditors, the scope of the audit. The Audit Committee has
unrestricted access to the Company's auditors.
During the year under review the Audit Committee met twice and
all members of the Committee were in attendance.
Remuneration Committee
The Remuneration Committee is comprised of the two Non-Executive
Directors, Roderic Rennison and Peter Dornan, and is chaired by
Roderic Rennison.
The Remuneration Committee reviews the performance of the
Executive Directors and approves any proposed changes to their
remuneration packages, terms of employment and participation in
share option schemes and other incentive schemes.
No Director may vote in connection with any discussions
regarding his own remuneration.
For the year under review, three Remuneration Committee meeting
were held, and both members of the Committee were in
attendance.
Nomination Committee
The Directors do not consider it necessary, or appropriate, at
present to establish a Nomination Committee given the size of the
Company. This will be kept under review as the Company
develops.
TAVISTOCK INVESTMENTS PLC
DIRECTORS' REPORT
FOR THE YEARED 31 MARCH 2021
Principal Activities, Review of the Business and Future
Developments
The principal activities of the Group during the year were the
provision of investment management services and the provision of
support services to a network of financial advisers. The key
performance indicators recognised by management are gross revenues,
operating profit, as represented by adjusted EBITDA, and the level
of funds under management by the Group.
An overall review of the Group's performance during the year and
its future prospects is given in the Chairman's Statement and in
the Strategic Report.
Substantial shareholdings
The Company has been advised of the following interests in more
than 3% of its ordinary share capital as at 6 September 2021:
Name Number % of
of Ordinary Shares
Shares
Brian Raven 68,759,362 11.31%
Andrew Staley 55,953,204 9.21%
Lighthouse Group
Plc 30,487,805 5.02%
Oliver Cooke 30,367,756 5.00%
Christopher Peel 30,035,277 4.94%
Hugh Simon 30,000,000 4.94%
Helium Rising
Stars 29,398,378 4.84%
Kevin Mee 27,930,050 4.59%
Paul Millott 26,902,417 4.43%
Directors
Details of the Directors of the Company who served during the
period are as follows:
Oliver Cooke
Chairman, aged 66
Oliver has over 40 years of financial and business development
experience gained in a range of quoted and private companies
including over twenty-five years' experience as a public company
director. He has considerable experience in the fields of corporate
finance, strategic transformation, acquisitions, disposals and
fundraisings. Oliver is a Chartered Accountant and a Fellow of the
Association of Chartered Certified Accountants.
Brian Raven
Group Chief Executive, aged 65
Brian has been involved in the financial services sector since
2010. He has a wide range of business experience, having held many
sales and general management posts at senior management and board
level, including running public companies on both AIM and the
Official List. Most notably, in 1991 Brian founded Card Clear Plc,
subsequently renamed Retail Decisions plc, a business engaged in
combating the fraudulent use of plastic payment cards. He led the
company until 1998 by which time it was an international Group,
listed on AIM, with a market capitalisation of some GBP100 million.
As a principal, Brian has been responsible for identifying,
negotiating and integrating numerous acquisitions, as well as for
delivering organic growth.
Roderic Rennison
Non-Executive Director, Chairman of Remuneration Committee, aged
66
Roderic has more than 40 years of experience in financial
services encompassing a variety of roles including sales, strategy,
product development, proposition, operations and latterly
acquisitions, mergers, and integrations together with corporate
affairs, risk and regulatory matters. He provides consultancy
services in the sector to a range of providers, fund managers and
intermediaries and particularly specialises on the Retail
Distribution Review, for which he chaired the professionalism and
reputation work stream.
Peter Dornan
Non-Executive Director, Chairman of Audit Committee, aged 65
Peter has spent more than 40 years in the financial services
industry. Having joined AEGON in 1981 as a sales consultant he
progressed through a series of sales and general management
positions to being appointed to the executive management board in
1999. He had executive responsibility for post-acquisition
integration of a number of businesses including Guardian Assurance,
Positive Solutions and Origen. Peter was also responsible for
Scottish Equitable International in Luxembourg from 1996 until 2002
and was appointed chairman of AEGON Ireland when it was launched in
2002. Since 2012, Peter has acted as a consultant to a number of
businesses within the financial services sector with a particular
emphasis on governance, risk management and financial controls.
Diversity
Tavistock is an equal opportunities employer and does not
discriminate against staff on the basis of disability, age,
religious belief, gender, ethnicity or sexual orientation.
Greenhouse gas emissions
The Group currently has minimal greenhouse gas emissions to
report from its operations and does not have responsibility for any
other emission producing sources, as defined by the Companies Act
2006 (Miscellaneous Reporting) Regulations 2018. As a consequence,
it has not published a GHG Emissions Statement.
Communication with shareholders
The Board welcomes constructive engagement with shareholders and
over the last year has demonstrated its willingness to respond
appropriately where valid concerns are raised by them. Each
shareholder receives a copy of the annual report, which contains
the Chairman's Statement. The annual and interim reports, together
with other corporate press releases are made available on the
Company's website www.tavistockinvestments.com. The Annual General
Meeting provides a forum for shareholders to raise issues with the
Directors. The Notice convening the meeting is issued with 21 clear
days' notice. Separate resolutions are proposed on each
substantially separate issue.
Going concern
In light of the ongoing coronavirus pandemic the Board undertook
a detailed review of the Group's business to confirm the continued
propriety of the going concern assumption as the basis upon which
to prepare the accounts for the year ended 31 March 2021. Having
completed this review and given the proceeds arising from the
disposal of Tavistock Wealth, the Board remains confident that the
business has sufficient cash resources to meet its working capital
requirements for the foreseeable future, being at least the next
twelve months, and to justify use of the going concern assumption
as the appropriate basis upon which to prepare the Group's
accounts.
Financial instruments
Details of the use of financial instruments by the Group are
contained in Note 15 of the financial statements.
Share capital
Changes to share capital during the year are summarised in Note
16 to the accounts.
Charitable and Political Donations
The Group did not make any material political or charitable
donations in the year (2020: GBP16,372).
Post Balance Sheet Events
On 8 April 2021 the Company announced that it had established a
captive cell insurance facility that would enable it to provide a
proportion of the Group's professional indemnity insurance
requirement through an in-house insurer. Details of this facility
can be found in the Chairman's Statement.
On 14 June 2021 the Company announced its entry into a ten-year
strategic partnership with Titan Wealth, as detailed in the
Chairman's Statement. As a part of the arrangements Titan has
acquired the Group's investment management business, Tavistock
Wealth, for a consideration of up to GBP40 million in cash together
with a ten-year earn out. The transaction was completed in August
2021.
On 15 June 2021 the Company announced the acquisition of the
business and assets of Chater Allan Financial Services LLP, an
independent advisory business based in Cambridge. The acquisition
of this business has added approximately GBP110 million to the
Group's funds under advice and is expected to contribute to the
Group's profitability in the current financial year.
Dividends
One of the Board's stated objectives is to establish a growing
dividend stream for the benefit of the Company's shareholders. I am
therefore pleased to advise you of our intention to pay an interim
dividend of 0.05 pence (gross) per share . The Record Date for this
dividend will be Friday 17(th) September 2021 and the Payment Date
will be Monday 4(th) October 2021. This dividend is five times
larger than the maiden dividend of 0.01 pence per share that was
paid in July 2019 and reflects the Company's strong financial
performance and prospects .
Auditors
A resolution reappointing Crowe UK LLP will be proposed at the
Annual General Meeting in accordance with S489 of the Companies Act
2006.
Supplier payment policy
The Group's policy is to agree terms of payment with suppliers
when entering into a transaction, ensure that those suppliers are
aware of the terms of payment by including them in the terms and
conditions of the contract and pay in accordance with contractual
obligations. Trade creditors at 31 March 2021 represented 24 days'
purchases (2020: 22 days).
Internal control
The Group has adopted the QCA's Corporate Governance Code. The
key elements of the internal control systems, which have regard to
the size of the Group, are that the Board meets regularly and takes
the decisions on all material matters, the organisational structure
ensures that responsibilities are defined and authority only
delegated where appropriate, and that regular management accounts
are presented to the Board to enable the financial performance of
the Group to be analysed.
The Directors acknowledge that they are responsible for the
system of internal control, which is established in order to
safeguard the assets, maintain proper accounting records and ensure
that financial information used within the business or published is
reliable. Any such system of control can, however, only provide
reasonable, not absolute, assurance against material misstatement
or loss.
Directors' responsibilities
The Directors are responsible for preparing the annual report
and financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial period. Under that law the Directors
have elected to prepare the Group financial statements in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and in accordance
with UK Generally Accepted Accounting Principles ("UK GAAP")
including Financial Reporting Standard 101, the Financial Reporting
Standard applicable in the UK and Republic of Ireland and
applicable law. Under company law the Directors must not approve
the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and Company
and of the profit or loss of the Group for that period.
The Directors are also required to prepare financial statements
in accordance with the rules of the London Stock Exchange for
companies trading securities on the Alternative Investment
Market.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- for the Group financial statements, state whether they have
been prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006;
-- for the parent Company financial statements, state whether
applicable UK GAAP including Financial Reporting Standard 101 have
been followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the parent
Company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Directors' interests
The Directors' beneficial interests in the Ordinary Share
Capital and options to purchase such shares are as follows:
Ordinary shares of 1p each
31 March 2021 31 March 2020
Share options Shares Share options Shares
Executive Directors:
Oliver Cooke - 28,959,256 26,600,000 27,709,256
Brian Raven - 67,422,362 31,600,000 66,172,362
Non-Executive Directors:
Roderic Rennison - 355,011 - 355,011
Peter Dornan - 250,000 - -
During the year, the Board attempted to introduce a new growth
share incentive arrangement to replace the use of share options as
a means of incentivising Directors and Senior Managers. The reason
for seeking such a change was to avoid the share-based payment
charges that adversely impact the Company's reported performance to
a material extent and consequently also adversely impact the
Company's share price and its market capitalisation.
Having consulted with a number of the Company's larger
shareholders and received assurances from them that they would vote
in favour of the introduction of the new growth share incentive
scheme, the Executive Directors, on 1 March 2021, surrendered for
nil consideration all of the share options previously held by
them.
Notwithstanding the assurances that had been received, two of
the shareholders subsequently changed their minds and instead of
voting in favour of the introduction of the new growth share
incentive arrangement, voted against it. Consequently, whilst the
resolution received majority support, it failed to reach a
sufficient level (75%) for it to be passed as a special
resolution.
The rejection of an alternative incentive arrangement has
obliged the Company to revert to the use of share options as a
means of incentivising and rewarding the Executive Directors and
other senior management.
Full details of the share options that had previously been held
by the Executive Directors are given in the Remuneration
Report.
Directors' statement as to disclosure of information to
auditors
The Directors have taken all of the steps required to make
themselves aware of any information needed by the Group's auditors
for the purposes of their audit and to establish that the auditors
are aware of that information.
The Directors are not aware of any audit information of which
the auditors are unaware.
Approved by the Board of Directors and signed on its behalf
by
Oliver Cooke
Chairman
6 September 2021
TAVISTOCK INVESTMENTS PLC
AUDIT COMMITTEE REPORT
FOR THE YEARED 31 MARCH 2021
On behalf of the Board, I am pleased to present the Audit
Committee report for the financial year ended 31 March 2021.
Principal Responsibilities of the Committee
-- Ensuring the financial performance of the Group is properly
reviewed, measured and reported;
-- Monitoring the quality and adequacy of internal controls and
internal control systems implemented across the Group;
-- Receiving and reviewing reports from the Group's management
and auditors relating to the interim and annual accounts;
-- Reviewing risk management policies and systems;
-- Advising on the selection, appointment, re-appointment and
remuneration of independent external auditors and scheduling
meetings with external auditors, independent of management where
appropriate, for discussions and reviews; and
-- Reviewing and monitoring the extent and independence of
non-audit services provided by external auditors.
Members of the Committee
The Committee members are the two Non-Executive Directors, Peter
Dornan (Committee Chairman) and Roderic Rennison, and Oliver Cooke
who is a Chartered Accountant and has previously served as a
partner in public practice.
The Committee met twice during the year, with all members in
attendance.
Audit Process
The audit process commenced with the preparation by the auditors
of an audit plan, which contained information regarding the
proposed audit process, timetable, targeted areas and the general
scope of work and considered any pertinent matters or areas for
special inclusion.
Following the audit, an Audit Findings Report was prepared by
the auditors and submitted to the Audit Committee and this was
followed by a conference call with the Committee to review and
discuss the contents of the Report. The Audit Committee then
provided a report to the Board together with its recommendations.
For the year ended 31 March 2021, no major areas of concern were
highlighted.
Risk Management and Internal Control
As referred to under Principle 4 of the Corporate Governance
Report, the Group has undertaken a comprehensive overhaul of its
compliance and risk management regimes. It has also established a
separate Risk Committee which examines and assesses the risks
associated with all aspects of the Group's operations. This
committee has recently been strengthened through the recruitment of
an experienced risk manager. The Audit Committee reviews reports
produced by the Risk Committee from time to time and considers that
the framework is operating effectively.
The Audit Committee approved the reappointment of Crowe UK LLP
as Auditors.
The Audit Committee also considered the non-audit services
provided by them and considered that there was no threat to
independence in the provision of these services and that
satisfactory controls were in place to ensure this
independence.
Internal Audit
At present, the Group does not have an internal audit function
and the Committee believes that despite this, management is able to
derive assurances as to the adequacy and effectiveness of internal
controls and risk management procedures.
Approved by the Committee and signed on its behalf by
Peter Dornan
Committee Chairman
6 September 2021
TAVISTOCK INVESTMENTS PLC
REMUNERATION REPORT
FOR THE YEARED 31 MARCH 2021
Compliance
Described below are the principles that the Group has applied in
relation to Directors' remuneration.
The Remuneration Committee
The only members of the Remuneration Committee are the two
independent Non-Executive Directors, Roderic Rennison (Committee
Chairman) and Peter Dornan.
The Committee is mindful of the need to attract, retain and
reward key staff. It reviews the scale and structure of the
Executive Directors' and senior employees' remuneration, the terms
of their service agreements and the extent of their participation
in share option schemes and any other bonus arrangements.
The remuneration of, and the terms and conditions applying to,
the Non-Executive Directors are determined by the entire Board.
During the year under review, the Remuneration Committee met
three times with both members in attendance.
As referred to in the Directors Report, on 1 March 2021 the
Executive Directors surrendered, for nil consideration, all of the
share options previously held by them. The surrender of these
options by the Executive Directors was done in good faith.
Share options
During the year, the Board attempted to introduce a new growth
share incentive arrangement to replace the use of share options as
a means of incentivising Directors and Senior Managers. The reason
for seeking such a change was to avoid the share-based payment
charges that adversely impact the Company's reported performance to
a material extent and as a consequence also adversely impact the
Company's share price and its market capitalisation.
Having consulted with a number of the Company's larger
shareholders and received assurances from them that they would vote
in favour of the introduction of the new growth share incentive
scheme, the Executive Directors, on 1 March 2021, surrendered for
nil consideration all of the share options previously held by
them.
Notwithstanding the assurances that had been received, two of
the shareholders subsequently changed their minds and instead of
voting in favour of the introduction of the new growth share
incentive arrangement, voted against it. Consequently, whilst the
resolution received majority support, it failed to gain a
sufficient level of support (75%) for it to be passed as a special
resolution.
The rejection of an alternative incentive arrangement has
obliged the Company to revert to the use of share options as a
means of incentivising and rewarding the Executive Directors and
other senior management. After the balance sheet date, new options
have been issued to the Executive Directors to take the place of
those that had been surrendered by them in good faith. The number
of options issued to them, together with the exercise price,
reflected the loss of the tax benefit accruing to the original
options held by them.
Service contracts
The term of the Directors' service contracts can be summarised
as follows:
Oliver Cooke 3 May 2013 To 31 March 2023, terminable
thereafter on twelve months'
notice
Brian Raven 12 May 2014 To 31 March 2023, terminable
thereafter on twelve months'
notice
Non-executive Directors
Roderic Rennison 12 May 2014 Initial term 2 years, terminable
at any time on three months'
notice
Peter Dornan 22 August 2017 Initial term 2 years, terminable
at any time on three months'
notice
Directors' remuneration
Details of each Director's remuneration are provided in Note 6
to the financial statements entitled Staff Costs.
Directors' interest in shares
Details of the Directors beneficial shareholdings can be found
in the Directors Report.
Approved by the Committee and signed on its behalf by
Roderic Rennison
Committee Chairman
6 September 2021
TAVISTOCK INVESTMENTS PLC
INDEPENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF TAVISTOCK
INVESTMENTS PLC
FOR THE YEARED 31 MARCH 2021
Opinion
We have audited the financial statements of Tavistock
Investments Plc (the "Parent Company") and its subsidiaries (the
"Group") for the year ended 31 March 2021, which comprise:
-- the Group consolidated statement of comprehensive income for
the year ended 31 March 2021;
-- the Group consolidated and Parent Company statements of
financial position as at 31 March 2021;
-- the Group consolidated and Parent Company statements of
changes in equity for the year then ended
-- the Group consolidated statement of cash flows for the year then ended; and
-- the notes to the financial statements, including a summary of
significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law and
International Accounting Standards in conformity with the
requirements of the Companies Act 2006. The financial reporting
framework that has been applied in the preparation of the Parent
Company financial statements is applicable law and United Kingdom
Accounting Standards, including Financial Reporting Standard 101
The Financial Reporting Standard applicable in the UK and Republic
of Ireland (United Kingdom Generally Accepted Accounting
Practice).
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group's and of the Parent Company's affairs as at 31
March 2021 and of the Group's profit for the year then ended;
-- the group financial statements have been properly prepared in
accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006;
-- the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
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
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the group and company's
ability to continue to adopt the going concern basis of accounting
included obtaining and reviewing management's assessment of going
concern. This involved gaining an understanding of managements
basis for the identification of events or conditions that may cast
a significant doubt on the ability of the Group and company to
continue as a going concern, and whether a material uncertainty
related to going concern exists.
Furthermore, we performed specific audit procedures around going
concern; whereby we obtained managements budgets and forecasts and
tested these for arithmetic accuracy. Furthermore, we assessed and
challenged the assumptions used in Board's assessment of going
concern which included a full assessment of the Group's financial
resources and working capital forecasts.
We also reviewed actual financial results against budgeted
results, assessed the reasonableness of budgets and forecasts for
successive financial years, evaluated the feasibility of
management's plans in respect of going concern as well as
considered whether new facts or information have become available
since management made their assessment.
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 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.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of
materiality. An item is considered material if it could reasonably
be expected to change the economic decisions of a user of the
financial statements. We used the concept of materiality to both
focus our testing and to evaluate the impact of misstatements
identified.
Based on our professional judgement, we determined overall
materiality for the Group financial statements as a whole to be
GBP215,000 (FY2020: GBP215,000), based on 0.75% of Total Group
Turnover.
We use a different level of materiality ('performance
materiality') to determine the extent of our testing for the audit
of the financial statements. Performance materiality is set based
on the audit materiality as adjusted for the judgements made as to
the entity risk and our evaluation of the specific risk of each
audit area having regard to the internal control environment. Where
considered appropriate performance materiality may be reduced to a
lower level, such as, for related party transactions and directors'
remuneration.
Group materiality GBP215,000
Group performance materiality GBP161,250
Parent company materiality GBP155,000
Parent company performance materiality GBP116,250
We agreed with the Audit Committee to report to it all
identified errors in excess of GBP10,750 (2019: GBP10,750). Errors
below that threshold would also be reported to it if, in our
opinion as auditor, disclosure was required on qualitative
grounds.
Overview of the scope of our audit
The Group consists of Tavistock Investments Plc itself and the
subsidiaries as disclosed in Note V to the Company financial
statements. Our Group audit was scoped by obtaining an
understanding of the Group and its environment, including
Group-wide controls, and assessing the risks of material
misstatement at the Group level.
All of the trading subsidiaries, including King Financial
Planning LLP have been subject to a full scope audit. Only material
balances were audited in the Luxembourg domiciled entity; Tavistock
S.a.r.l.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had
the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
We set out below, those matters we identified as being Key Audit
Matters.
This is not a complete list of all risks identified by our
audit.
FOR THE YEARED 31 MARCH 2021
Key audit matter How the scope of our audit addressed
the key audit matter
Revenue recognition
The Group derives its revenue
from fees and commissions arising * For each company in the Group, we gained an
from investment management and understanding of its business model and the services
advisory support services. During and products it delivers to its customers;
the year ended 31 March 2021,
the Group recorded total revenue
of GBP28,712 (FY2020: GBP28,803k). * Based on that understanding, we identified when the
Investment management fees and performance obligation(s) was satisfied and,
commissions are earned from consequently, when revenue is earned;
the provision of investment
management services and account
for 19% of total revenue. Advisory * We selected a sample of contracts to confirm our
support services fees and commissions understanding of the principal terms and obligations;
are earned from the provision
of support services to a network
of financial advisers and account * We gained an understanding of the key systems used to
for 81% of total revenue. capture and record that income and evaluate any key
The key revenue recognition controls;
risk is in respect of ensuring
revenue is recognised in the
year that it has been earned. * Where the Group utilises third party platforms we
evaluated those platforms and the safeguards
management have in place to corroborate the output
from those platforms;
* We performed an overall analytical review and
corroborated the reasons for any large and unusual
variances;
* For a selection of transactions, we confirmed that
the recognition criteria in relation to the income
earned in the period has been met;
* We reviewed and tested the basis for accrued and
deferred income;
* We reviewed aged receivables profile and credit notes
issued after the reporting date; and
* We reviewed and tested revenue cut off procedures.
Carrying value of goodwill and separately identifiable intangible
assets
The Group's investments in the We evaluated, in comparison to
parent and other intangible the requirements set out in IAS36,
assets comprise goodwill arising management's assessment (using
on consolidation, customer & discounted cash flow models) as
adviser relationships, regulatory to whether goodwill, investments
approvals & systems and internally and/or intangible assets were impaired.
developed assets.
We tested the arithmetical accuracy
When assessing the carrying of the model, performed sensitivity
value of goodwill, investments analysis on the key assumptions
(including fair value) and intangible in relation to growth rates and
assets, management make judgements discount rates utilised within
regarding the appropriate cash managements impairment assessment.
generating unit, strategy, future
trading and profitability and We performed stress testing where
the assumptions underlying these. we examined the change in goodwill
We considered the risk that value should the growth rate fall
goodwill, investments and/or or if the discount rate were to
intangible assets were impaired. increase.
We examined management's evaluation
of the fair value of investments.
We challenged, reviewed and considered
by reference to external evidence,
management's impairment and fair
value models as appropriate and
their key estimates, including
the discount rate. We reviewed
the appropriateness and consistency
of the process for making such
estimates.
Our audit procedures in relation to these matters were designed
in the context of our audit opinion as a whole. They were not
designed to enable us to express an opinion on these matters
individually and we express no such opinion.
Other information
The Directors are responsible for the other information
contained within the annual report. The other information comprises
the information included in the Annual 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.
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.
Opinion 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.
Matters on which we are required to report by exception
In 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
where 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.
Responsibilities of the directors
As explained more fully in the directors' responsibilities
statement set out on pages 16 to 20, 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 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.
Auditor's responsibilities for the audit of the financial
statements
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 obtained an understanding of the legal and regulatory
frameworks within which the Group and parent company operates. We
also considered and obtained an understanding of the U.K. legal and
regulatory framework which we considered in this context were the
Companies Act 2006 and U.K. taxation legislation.
We identified the greatest risk of material impact on the
financial statements from irregularities, including fraud, to be
the override of controls by management. Our audit procedures to
respond to these risks included enquiries of management about their
own identification and assessment of the risks of irregularities,
sample testing on the posting of journals and reviewing accounting
estimates for biases including agreeing to supporting evidence
where appropriate.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. We are not responsible for preventing
non-compliance and cannot be expected to detect non-compliance with
all laws and regulations.
These inherent limitations are particularly significant in the
case of misstatement resulting from fraud as this may involve
sophisticated schemes designed to avoid detection, including
deliberate failure to record transactions, collusion or the
provision of intentional misrepresentations.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: 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.
John Glasby (Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
London
6 September 2021
TAVISTOCK INVESTMENTS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 MARCH 2021
Year ended Year ended
31 March 31 March
2021 2020
Note GBP'000 GBP'000
Revenue 3 28,712 28,803
Cost of sales 3 (16,546) (17,048)
------------ ------------
Gross profit 12,166 11,755
Administrative expenses 3 (10,936) (17,228)
-------------- --------------
Profit/(Loss) from Operations 5 1,230 (5,473)
Memorandum:
Adjusted EBITDA 2,875 1,825
Depreciation & amortisation 9&10 (727) (1,570)
Share based payments 282 (229)
Provision for one off reorganisation
costs/acquisition related costs (1,200) (460)
Intangible asset impairment 10 - (5,039)
-------------- --------------
Profit/(Loss) from Operations 1,230 (5,473)
------------------------------------------------- ----- --------------- ---------------
Finance costs 12 (235) (241)
Profit share due to fellow member of
LLP (47) (25)
------------ ------------
Profit/(Loss) before taxation 949 (5,739)
Taxation 7 (156) 274
------------ ------------
Profit/(Loss) after taxation and attributable
to equity holders of the parent and
total comprehensive income for the
year 792 (5,465)
====== ======
Profit/(Loss) per share
Basic and diluted 8 0.13p (0.95p)
====== ======
The notes below form part of the Group financial statements.
TAVISTOCK INVESTMENTS PLC Company number: 05066489
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2021
31 March 2021 31 March 2020
Note GBP'000 GBP'000 GBP'000 GBP'000
ASSETS
Current assets
Trade and other receivables 11 3,286 4,998
Cash and cash equivalents 4,457 2,416
----------------- -----------------
Total current assets 7,743 7,414
Non-current assets
Tangible fixed assets 9 1,037 915
Intangible assets 10 17,703 16,907
----------------- -----------------
Total non-current assets 18,740 17,822
----------------- -----------------
Total assets 26,483 25,236
LIABILITIES
Current liabilities 12 (5,445) (4,994)
Non-current liabilities
Loan & Lease liability 12 (3,297) (1,396)
Payments due regarding
purchase
of client lists 12 (928) (1,234)
Provisions 13 (831) (2,115)
Deferred taxation 14 (249) (93)
------------------ ------------------
Total liabilities (10,750) (9,832)
------------------ ------------------
Total net assets 15,733 15,404
========= =========
Capital and reserves
attributable
to owners
of the parent
Share capital 16 6,079 13,426
Share premium 1,541 6,001
Retained earnings 16 8,113 (4,023)
------------------ ------------------
Total equity 15,733 15,404
========= =========
The financial statements were approved by the Board and
authorised for issue on 6 September 2021.
Oliver Cooke
Chairman
The notes below form part of the Group financial statements.
TAVISTOCK INVESTMENTS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MARCH 2021
Retained
earnings/ Total
Share capital Share premium (deficit) equity
GBP'000 GBP'000 GBP'000 GBP'000
31 March 2019 13,101 5,681 1,214 19,996
-------------- -------------- -------------- --------------
Payment of 2019 interim dividend - - (58) (58)
Issue of shares 325 325 - 650
Cost of share issue - (5) - (5)
Loss for the year total and comprehensive
income - - (5,408) (5,408)
Equity settled share based payments - - 229 229
-------------- -------------- -------------- --------------
31 March 2020 13,426 6,001 (4,023) 15,404
-------------- -------------- -------------- --------------
Bfwd reserves of previously unconsolidated
subsidiaries - - (181) (181)
Profit for the year total and
comprehensive income - - 792 792
Equity settled share based payments - - (282) (282)
Court sanctioned capital reduction (7,347) (4,460) 11,807 -
-------------- -------------- -------------- --------------
31 March 2021 6,079 1,541 8,113 15,733
-------------- -------------- -------------- --------------
The notes below form part of the Group financial statements.
TAVISTOCK INVESTMENTS PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MARCH 2021
Year ended Year ended
31 March 2021 31 March 2020
GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Profit/(Loss) before tax
Adjustments for: 949 (5,739)
Share based payments (282) 229
Depreciation on tangible fixed
assets 513 506
Amortisation of intangible assets 214 1,064
Impairment on intangibles 207 5,039
Restructuring Provision 1,200 -
Net finance costs 235 241
Acquisition related costs - 460
----------------- -----------------
Cash flows from operating
activities
before changes
in working capital 3,036 1,800
Decrease in trade and other
receivables
and contract assets 430 375
(Decrease)/ Increase in trade
and other payables (570) 1,798
----------------- -----------------
Cash generated in operations 2,896 3,973
Investing activities
Intangible assets- client lists
and internally developed assets (1,277) (3,112)
Purchase of tangible fixed assets (190) (114)
Deferred consideration payments (763) (1,095)
----------------- -----------------
Net cash used from investing
activities (2,230) (4,321)
Financing activities
Finance costs (235) (241)
New loans 2,130 -
Leases (458) (241)
Loan repayments (63) (462)
Issue of new share capital - 650
Dividend payment - (58)
----------------- -----------------
Net cash generated from financing
activities 1,374 (352)
----------------- -----------------
Net increase/(decrease) in cash
and cash equivalents 2,040 (700)
Cash and cash equivalents at
beginning
of the year 2,416 3,116
------------------ ------------------
Cash and cash equivalents at end
of the year 4,457 2,416
========= =========
The notes below form part of the Group financial statements.
Reconciliation of net cashflow to movement Year ended Year ended
in net debt:
31 March 2021 31 March 2020
GBP000 GBP000
Net increase/(decrease) in cash and
cash equivalents 2,040 (700)
New loans (2,130) -
New lease liability (349) (757)
Lease repayments 322 446
Repayment of loans 63 323
----------------- -----------------
Movement in net debt in the year (54) (688)
Net debt at 1 April 2020 94 782
----------------- -----------------
Net Debt at 31 March 2021 40 94
========= =========
The net debt comprises:
Year ended Year ended
31 March 2021 31 March 2020
GBP'000 GBP'000
Cash 4,457 2,416
Current loans (607) (457)
Current leases (513) (469)
Non-current loans (2,983) (1,066)
Non-current leases (314) (330)
- ---------------- - -----------------
Net Debt at 31 March 2021 40 94
========= =========
Reconciliation of net debt:
2020 Cashflows New loans New leases 2021
Long term borrowings 1,523 (63) 2,130 - 3,590
Lease liabilities 799 (458) - 485 826
Long Term Debt 2,322 (521) 2,130 485 4,416
The notes below form part of the Group financial statements.
TAVISTOCK INVESTMENTS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 MARCH 2021
1. ACCOUNTING POLICIES
Principal accounting policies
Tavistock Investments Plc ("The Company") is a public company
limited by share capital, incorporated in the United Kingdom with
registered company number 05066489 and its registered office is at
1 Queen's Square, Ascot Business Park, Lyndhurst Road, Ascot,
Berkshire, SL5 9FE (from 10 August 2021). The principal accounting
policies applied in the preparation of these consolidated financial
statements are set out below. These policies have been consistently
applied to all the periods presented, unless otherwise stated.
Basis of preparation
The consolidated financial statements have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006
Basis of Consolidation
The Group comprises a holding company and a number of individual
subsidiaries and all of these have been included in the
consolidated financial statements in accordance with the principles
of acquisition accounting as laid out by IFRS 3 Business
Combinations.
Newly effective standards
For the year ended 31 March 2021 the Group has adopted the newly
effective standard Definition of Business as per amendments to IFRS
3 Business combinations.
Standards available for early adoption
As per amendments to IAS 1 Classification of liabilities as
current or non-current is available for early adoption. The Group
have elected not to adopt as it would not provide further useful
information to the users of the financial statements. Adoption will
be enforced as of 1st January 2023.
Revenue recognition
Revenues within the advisory business are predominantly
comprised of advisory support commissions. Income is recognised and
accrued for when contractually committed, the resulting cash will
then be received at the point the underlying transaction
settles.
Revenues within the investment management business are
calculated as a percentage of funds under management. Income is
calculated daily and is received and recognised monthly. The
charges are collected directly from the assets held and there are
no significant payment terms. All revenues arise over time and are
received in arrears, none are linked to subsequent performance
obligations.
Government grants
Grants from the government are recognised at their fair value
where there is reasonable assurance that the grant will be
received, and the Group will comply with all attached conditions.
Grant income is netted off against the relevant expenses within
these financial statements. There are no unfulfilled conditions or
other contingencies attaching to these grants. The Group did not
benefit directly from any other form of government assistance.
Government grants relating to costs are deferred and recognised in
the profit and loss over the period necessary to match them with
the costs that are intended to compensate.
Intangible assets
Intangible assets include goodwill arising on the acquisition of
subsidiaries and represents the difference between
the fair value of the consideration payable and the fair value
of the net assets that have been acquired.
Also included within intangible assets are various assets
separately identified in business combinations (such as FCA
permissions, established systems and processes, adviser and client
relationships and brand value) to which the Directors have ascribed
a commercial value and a useful economic life. The ascribed value
of these intangible assets is being amortised on a straight-line
basis over their estimated useful economic life, which is generally
considered to be between 5 and 10 years.
During the year the Group has invested in the development of a
number of key initiatives designed to generate additional FUM
inflows. Where appropriate, this expenditure has been capitalised
as intangible assets.
Intangible assets are initially recognised at cost.
Costs that are directly associated with the production of
identifiable and unique products controlled by the Group and
capable of producing future economic benefits are recognised as
intangible assets. Direct costs include employee costs and directly
attributable overheads. After recognition, under the cost model,
intangible fixed assets are measured at cost less any accumulated
amortisation and any accumulated impairment losses.
Development costs are recognised as assets only if all of the
following conditions are met:
-- An asset is created that can be separately identified;
-- It is probable that the asset created will generate future economic benefits; and
-- The development cost of the asset can be measured reliably.
Client lists, Regulatory approvals & systems and Internally
developed assets are considered to have a finite useful life and
are only amortised once ready for use. If a reliable estimate of
the useful life cannot be made, the useful life shall not exceed
ten years.
Financial assets
Loans and receivables: These assets are deemed to be
non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They arise principally
through the provision of goods and services to customers (trade
receivables), but also incorporate other types of contractual
monetary asset. They are carried at amortised cost using the
effective interest method.
Financial liabilities
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
income statement over the period of the borrowings using the
effective interest method.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date.
Payments made under leases (net of any incentives received from
the lessor) have been recognised in accordance with IFRS 16 as
follows:
The Group's leases primarily relate to properties. Lease terms
are negotiated on an individual basis and contain a wide range of
different terms and conditions. Property leases will often include
extension and termination options, open market rent reviews, and
uplifts.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the individual lessee company's incremental
borrowing rate taking into account the duration of the lease.
The lease liability is subsequently measured at amortised cost
using the effective interest method, with the finance cost charged
to profit or loss over the lease period to produce a constant
periodic rate of interest on the remaining balance of the
liability. It is remeasured when there is a change in future lease
payments arising from a change in
index or rate, or if the Group changes its assessment of whether
it will exercise an extension or termination option. The lease
liability is recalculated using a revised discount rate if the
lease term changes as a result of a modification or re-assessment
of an extension or termination option.
The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement date, plus
any initial direct costs incurred, less any lease incentives
received. The right-of-use asset is typically depreciated on a
straight-line basis over the lease terms. In addition, the
right-of-use asset may be adjusted for certain remeasurements of
the lease liability, such as indexation and market rent review
uplifts. Please refer to Note 9 for further details.
Share based payments
Where share options are awarded to employees, the fair value of
the options at the date of grant is charged to the statement of
comprehensive income on a straight-line basis over the vesting
period. Non-market vesting conditions are taken into account by
adjusting the number of options expected to vest at each statement
of financial position date so that, ultimately, the cumulative
amount recognised over the vesting period is based on the number of
options that eventually vest. Market vesting conditions are
factored into the fair value of the options granted. The cumulative
expense is not adjusted for failure to achieve a market vesting
condition.
Fair value is calculated using the Black-Scholes model, details
of which are given in Note 17.
Tangible fixed assets
Tangible fixed assets are stated at cost net of accumulated
depreciation and provision for impairment. Depreciation is provided
on all tangible fixed assets, at rates calculated to write off the
cost less estimated residual value, of each asset on a
straight-line basis over its expected useful life. The residual
value is the estimated amount that would currently be obtained from
disposal of the asset if the asset were already of the age and in
the condition expected at the end of its useful economic life.
The method of depreciation for each class of depreciable asset
is:
Computer equipment - 3 years straight line
Office fixtures, fittings & equipment - 5 years straight line
Impairment of Assets
Impairment tests on goodwill are undertaken annually at the
reporting date. The recoverable value of goodwill is estimated on
the basis of value in use, defined as the present value of the cash
generating units with which the goodwill is associated. When value
in use is less than the book value, an impairment is recorded and
is irreversible.
Other non-financial assets are subject to impairment tests
whenever circumstances indicate that their carrying amount may not
be recoverable. Where the carrying value of an asset exceeds its
estimated recoverable value (i.e.
the higher of value in use and fair value less costs to sell),
the asset is written down accordingly. Where it is not possible to
estimate the recoverable value of an individual asset, the
impairment test is carried out on the asset's cash-generating unit.
The carrying value of tangible fixed assets is assessed in order to
determine if there is an indication of impairment. Any impairment
is charged to the statement of comprehensive income. Impairment
charges are included under administrative expenses within the
consolidated statement of comprehensive income.
Taxation and deferred taxation
Corporation tax payable is provided on taxable profits at
prevailing rates.
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the Statement of
Financial Position differs from its tax base, except for
differences arising on:
-- the initial recognition of goodwill; and
-- the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting nor taxable profit.
Recognition of deferred tax assets is restricted to those
instances where it is probable that future taxable profit will be
available against which the asset can be utilised. The amount of
the asset or liability is determined using tax rates that have been
enacted or substantively enacted by the reporting date and are
expected to apply when the deferred tax liabilities/(assets) are
settled/(recovered).
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable Group company; or
-- different Group entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
Provisions
Provisions are recognised when the group has a present legal or
constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the
obligation, and the amount can be reliably estimated. Provisions
are measured at the present value of management's best estimate of
the expenditure required to settle the present obligation at the
end of the reporting period.
As referenced in Note 13, settlement in relation to the claims
provision has been made on a case by case basis in respect of the
cost of defending claims and, where appropriate, the estimated cost
of settling claims. Where recovery of the cost of settlement is
expected to be virtually certain, a corresponding asset is
recognised to offset the provision. Any net provision is recognised
in the Group's statement of comprehensive income.
2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of these financial statements has required
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses
during the reporting period. These judgements and estimates are
based on management's best knowledge of the relevant facts and
circumstances, having regard to prior experience, but actual
results may differ from the amounts included in the financial
statements. Information about such judgements and estimations is
contained below, as well as in the accounting policies and
accompanying notes to the financial statements.
Impairment of goodwill and other intangible assets
The Group is required to test, on an annual basis, whether
goodwill has suffered any impairment. Other intangible assets are
tested whenever circumstances indicate that their carrying value
may not be recoverable. The recoverable amount is estimated based
on value in use calculations.
In assessing the carrying value of Goodwill the Directors have
used 5 year forecasts which have been discounted by entity over 5
years and then in perpetuity using a discount rate of 15%. The
forecast assumes no annual growth in revenue after year one and a
2% annual increase in costs. Sensitivity analysis was also
performed alongside this to create various scenarios, with
different growth rates. In all scenarios, the recoverable amount
exceeded the carrying value.
As referenced in the Chairman's report on page 2 one of the
Group's subsidiaries, Tavistock Wealth, has been disposed of post
year end. This is the only material difference between current year
performance and the five year forecast.
Revenue recognition
In applying the accounting policy 'revenue recognition' on page
34 the Group have made the judgement to only recognise income that
has been contracted and earned. Accrued income represents revenue
that has been earned but not yet received.
Internally Developed Intangible Assets
Included in the amount capitalised in respect of key initiatives
are apportioned staff costs. Staff costs are capitalised where the
relevant staff member is directly involved in the product
development process. Management estimates the amount of time each
employee has spent on each project during the reporting period and
prorate the staff costs accordingly.
Share based payments
The share-based payment charge to the Profit or Loss account is
estimated from the operation of the Black-Scholes Model in respect
of share options granted by the Company as referred to in more
detail in Note 17.
Amortisation of Development costs and other Intangibles
Product development costs are being amortised over 10 years. The
estimated useful economic life of the intangible assets are based
on management's judgement and experience. When management
identifies that the actual useful economic life differ materially
from the estimates used to calculate amortisation, that charge is
adjusted accordingly.
Claims provision
As outlined in Note 13, having sought legal advice the Directors
have judged it appropriate to make a provision for potential
liabilities arising as a consequence of the fraudulent activities
of a former adviser. Since recognition of the provision GBP1.3
million has been paid by our insurers. An equivalent receivable
provision has also been made (see Note 11) as the Directors believe
that any liability that might ultimately arise is fully covered by
the professional indemnity insurance policies that the Group has in
place.
3. SEGMENTAL INFORMATION
A segmental analysis of revenue and expenditure for the year
is:
Group Investment Advisory Investment Advisory
(Plc) Management Support 2021 Management Support 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
REVENUE
Fees and Commissions (905) 5,856 23,761 28,712 5,518 23,285 28,803
Cost of Sales 344 (447) (16,443) (16,546) (464) (16,584) (17,048)
Administrative
Expenses (1,574) (5,438) (7,012) (2,932) (8,637) (11,569)
Group (Plc)
Staff (1.750) (1,055)
Overheads (974) (3,914)
Exceptional (1,200) (690)
------------ ------------
(3,924) (5,659)
====== ======
Profit/ (Loss)
from operations 1,230 (5,473)
====== ======
The segmental analysis above reflects the parameters applied by
the Board when considering the Group's monthly management accounts.
The Directors do not make reference to segmental analysis as part
of the day to day assessment of the business therefore have not
disclosed a segmental consolidated statement of financial position
within the accounts.
During the year under review the Group's revenue was generated
exclusively within the UK.
4. GRANT INCOME
The Group has taken advantage of government initiatives
introduced to support businesses impacted by Covid-19.
The Group has recognised GBP223,000 in respect of government
grant income for employees furloughed in the financial year. This
income has been netted off against staff costs within the financial
statements.
The Group also secured a precautionary Coronavirus Business
Interruption Loan Scheme (CBILS) facility from NatWest in the year.
The first year's interest on this facility has been met by the
government and as a consequence the Group has recognised a further
GBP41,000 of grant income which has been netted off against finance
cost expense within the financial statements. This facility has
been repaid in full after the balance sheet date.
5. PROFIT FROM OPERATIONS
2021 2020
GBP'000 GBP'000
This is arrived at after charging:
Staff costs (see Note 6) 6,925 7,338
Depreciation 513 506
Amortisation of intangible fixed assets 214 1,064
Lease expense- property 286 283
Impairment of Other Intangibles - 5,039
Provision for one off reorganisation
costs/acquisition related costs 1,200 460
Auditors' remuneration in respect of the
Company 8 7
Audit of the Group and subsidiary undertakings 55 51
Auditors' remuneration - non-audit services
-interim 2 2
Auditors' remuneration - non-audit services
-taxation 11 10
------------- -------------
76 70
====== ======
6. STAFF COSTS
2021 2020
GBP'000 GBP'000
Staff costs for all employees, including
Directors consist of:
Wages, fees and salaries 6,211 6,130
Social security costs 673 639
Pensions 323 340
----------- -----------
7,207 7,109
Share based payment (credit)/charge (282) 229
----------- -----------
6,925 7,338
===== =====
2021 2020
The average number of employees of the Number Number
Group during the year
was as follows:
Directors and key management 8 7
Operations and administration 123 137
----------- -----------
131 144
===== = ===== =
The remuneration of the highest paid director was GBP435,939
(2020: GBP288,552). The total remuneration of key management
personnel was GBP2,080,320 (2020: GBP1,771,867).
All pension contributions represent payments into defined
contribution schemes.
Directors' Detailed Emoluments
Details of individual Directors' emoluments for the year are as
follows:
Salary Benefits Performance Pension Total Total
& fees in kind Bonus contributions 2021 2020
& allowances
GBP GBP GBP GBP GBP
O Cooke 220,000 36,473 37,500 33,000 326,973 242,753
B Raven 280,000 38,939 75,000 42,000 435,939 288,552
P Dornan* 30,000 - - - 30,000 25,000
R
Rennison* 30,000 - - - 30,000 25,000
---------------- ---------------- ---------------- -------------- ---------------- ----------------
560,000 75,412 112,500 75,000 822,912 581,305
======== ======= ======= ======= ======= =======
* Denotes non-executive Director.
7. TAXATION ON PROFIT FROM ORDINARY ACTIVITIES
2021 2020
GBP'000 GBP'000
Deferred tax charge/(credit) 156 (274)
------------ ------------
Tax charge/(credit) for the year 156 (274)
====== ======
The tax assessed for the year differs from the standard rate of
corporation tax in the UK applied to profit before
tax.
2021 2020
GBP'000 GBP'000
Total Profit/(Loss) on ordinary activities
before tax 949 (5,739)
====== ======
Profit/(Loss) on ordinary activities
at the standard rate of corporation tax
in the UK of 19% (2020: 19%) 180 (1,090)
Effects of:
Unutilised losses 103 218
Expenses not deductible for tax purposes 104 1,511
Other timing differences (189) (400)
Differences between capital allowances
and depreciation (426) (513)
Adjust closing deferred tax to average - -
rate of tax
Deferred tax not recognised 384 -
----------- -----------
Tax charge/(credit) for the year 156 (274)
====== ======
8. EARNINGS PER SHARE
2021 2020
GBP'000 GBP'000
Earnings/ (Loss) per share has been calculated
using the following:
Profit/ (Loss) (GBP'000) 792 (5,465)
Weighted average number of shares ('000s) 607,795 576,450
-------------- --------------
Earnings/(Loss) per ordinary share 0.13p (0.95p)
======= =======
Earnings/(Loss) per ordinary share has been calculated using the
weighted average number of shares in issue during the relevant
financial periods. IAS 33 requires presentation of diluted EPS when
a company could be called upon to issue shares that would decrease
earnings per share or increase the loss per share. There would be
no dilutive impact were the share options to be exercised.
9. TANGIBLE FIXED ASSETS Office fixtures,
Leasehold Motor Computer fittings
and
property vehicles equipment equipment Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
Balance at 1 April
2019 - 28 284 696 1,008
Additions - - 107 7 114
Disposals (150) (28) (51) (3) (232)
Adoption of IFRS
16 841 - - - 841
------------- ------------- ------------- ------------ ---------------
Balance at 31 March
2020 691 - 340 700 1,731
------------- ------------- ------------- ------------ ---------------
Additions 485 - 65 125 676
Disposals - - (65) (212) (278)
------------- ------------- ------------- ------------ ---------------
Balance at 31 March
2021 1,176 - 340 613 2,129
------------- ------------- ------------ ------------ ---------------
Accumulated
depreciation
Balance at 1 April
2019 - 23 61 338 422
Depreciation 275 5 96 130 506
Disposals (30) (28) (51) (3) (112)
------------- ------------- ------------- ------------ ---------------
Balance at 31 March
2020 245 - 106 465 816
------------- ------------- ------------- ------------ ---------------
Depreciation 330 - 150 73 553
Disposals - - (65) (212) (277)
------------ ----------- ----------- ------------ ---------------
Balance at 31 March
2021 575 - 191 326 1,092
----------- ------------ ------------ ------------ ---------------
Net Book Value
At 31 March 2021 601 - 149 287 1,037
====== ====== ====== ====== =======
At 31 March 2020 446 - 234 235 915
====== ====== ====== ====== =======
Included in Office fixtures, fittings and equipment are assets
acquired under lease agreements with a net book value of GBP158,261
(2020: GBP339,000).
Included in Computer equipment are assets acquired under lease
agreements with a net book value of GBP32,774 (2020: 58,628).
Included in Leasehold property are assets acquired under lease
agreements with a net book value of GBP601,000 (2020:
GBP446,000).
Depreciation charged on leased assets was GBP469,285 (2020:
GBP426,000).
10. INTANGIBLE ASSETS Regulatory Goodwill Internally
Client Approvals Arising Developed
on
Lists & Systems Consolidation Assets Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
Balance at 1 April 2019 6,117 1,815 14,751 1,424 24,107
Additions 2,291 - - 825 3,116
------------- ------------- ------------- ------------ ---------------
Balance at 31 March
2020 8,408 1,815 14,751 2,249 27,223
------------- ------------- ------------- ------------ ---------------
Additions 779 - - 498 1,277
Disposals (2) (1,815) - (59) (1,876)
Impairment of intangibles - - - (207) (207)
------------- ------------- ------------- ------------ ---------------
Balance at 31 March
2021 9,185 - 14,751 2,481 26,418
------------- ------------- ------------ ------------ ---------------
Accumulated amortisation
Balance at 1 April 2019 2,780 959 235 236 4,210
Amortisation 777 171 - 116 1,064
Impairment 3,482 685 - 875 5,042
------------- ------------- ------------- ------------ ---------------
Balance at 31 March
2020 7,039 1,815 235 1,227 10,316
------------- ------------- ------------- ------------ ---------------
Amortisation 203 - - 11 214
Disposals - (1,815) - - (1,815)
------------ ----------- ----------- ------------ ---------------
Balance at 31 March
2021 7,242 - 235 1,238 8,715
----------- ------------ ------------ ------------ ---------------
Net Book Value
At 31 March 2021 1,944 - 14,516 1,243 17,703
====== ====== ====== ====== =======
At 31 March 2020 1,369 - 14,516 1,022 16,907
====== ====== ====== ====== =======
Client Lists relate to identifiable relationships between
acquired companies, their adviser network and the associated client
bases.
Regulatory Approvals and Systems relate to the estimated costs
incurred by acquired companies in obtaining authorisations to carry
on their relevant business and in putting in place the appropriate
staffing and information structures. Following on from the prior
year's impairment all Regulatory Approvals and Systems have now
been written off as nil net book value items.
Internally Developed Assets predominately represent costs
associated with various initiatives including the i-stock app.
Amortisation is charged over a period between 5 and 10
years.
GOODWILL
The carrying value of goodwill in respect of each cash generating
unit is as follows:
31 March 31 March
2021 2020
GBP'000 GBP'000
Financial Advisory business 12,601 12,601
Investment Management business 1,915 1,915
------------- -------------
14,516 14,516
====== ======
In assessing the carrying value of Goodwill the Directors have
used 5-year forecasts and discounted the anticipated future
cashflows by entity over 5 years and then in perpetuity using a
discount rate of 15%. In all scenarios, the recoverable amount
exceeded the carrying value.
11. TRADE AND OTHER RECEIVABLES 31 March 31 March
2021 2020
GBP'000 GBP'000
Trade receivables 43 96
Prepaid Law Society contract
expenses - 153
Other prepayments and accrued
income 2,298 2,333
Other receivables 945 2,416
------------- -------------
3,286 4,998
====== ======
Included within other receivables is the sum of GBP692,000
(2020: GBP2.1m) being the estimated amount recoverable from
insurers in connection with the provision detailed in Note 13.
12. LIABILITIES 31 March 31 March
2021 2020
GBP'000 GBP'000
Current liabilities
Trade payables 1,202 1,151
Accruals 832 770
Commissions payable 890 1,130
VAT and social security liabilities 364 177
Other payables 148 144
Payments due regarding purchase of
client lists 890 696
Leases 513 469
Term loans 607 457
------------- -------------
5,445 4,994
====== ======
31 March 31 March
2021 2020
GBP'000 GBP'000
Non-current liabilities
Payments due regarding purchase of
client lists 929 1,234
Leases 314 330
Term loans 2,983 1,066
------------- -------------
4,226 2,630
====== ======
The Company has entered into two term loan facilities with
NatWest. The first of these was entered into in November 2018 and
has a remaining term of 3 years. It is secured by a fixed and
floating charge over the assets of the Group. The loan carries an
interest rate of 5.12% over the Bank of England base rate. The
Group arranged a 12 month capital repayment holiday on the facility
commencing June 2020 however, the amount included within current
liabilities represents the amount considered at the year-end date
to be payable within the following 12 months.
The second term loan is a Coronavirus Business Interruption Loan
Scheme (CBILS) facility entered into with NatWest in August 2020.
The loan term is six years with capital repayments starting in
August 2021. The loan carries an interest rate of 2.53% over the
Bank of England base rate and the interest accrued in the first
year of the facility has been paid on the Company's behalf by the
government. Both of these loans have been repaid in full after the
balance sheet date.
Included within the GBP235,000 (2020: GBP241,000) Finance Costs
is an amount of GBP117,000 (2020: GBP122,000) related to bank
loans. The remainder of the charge relates to leases and bank
charges. In the normal course of business, if the Company were
liable for the interest accruing on the CBILS loan documented
above, finance costs in relation to bank loans would have increased
by GBP41,000, totalling GBP276,000 for the financial year (2020:
GBP241,000). The first year's interest has been recognised as
Government grant income which has been netted off against the
finance cost expense within these financial statements. Further
information on Government Grant Income has been disclosed in Note
4.
13. PROVISIONS
Total
GBP'000
Balance at 1 April 2020 2,115
Additions 1,200
Payments to settle claims (936)
Provisions utilised (923)
Provisions settled (625)
-------------
Balance at 31 March 2021 831
=======
In December 2018, Mr Neil Bartlett one of the Group's former
advisers was found guilty of fraud and was sentenced to eight years
imprisonment. As a consequence of his actions, the subsidiary
company within the Group with which he was previously associated
has been approached by a number of victims, the majority of whom
were previously unknown to the company, seeking to recover monies
stolen from them by Mr Bartlett.
All steps are being taken by the Group to refute these
approaches and to address them individually in an appropriate
manner. Having sought legal advice, the Directors consider it
appropriate that the provision for this matter is GBP692,000 at the
year end date (2020: GBP2,100,000). This provision is matched by an
equivalent receivable provision (see Note 11) as the Directors
believe that any liability that might ultimately arise is fully
covered by the professional indemnity insurance policies that the
Group has in place.
GBP625,000 has been settled from the provision to bring the
closing provision balance in line with most up to date estimate as
provided by the Company's third party legal representative.
14. DEFERRED TAX
The Directors anticipate that the Deferred tax asset relating
to losses brought forward will be realised within the medium term.
Total
GBP'000
Balance at 1 April 2020 (93)
Deferred tax credit in the year (156)
-------------
Balance at 31 March 2021 (249)
=======
The deferred tax provision comprises: 31 March 31 March
2021 2020
GBP'000 GBP'000
Unutilised tax losses - (103)
Deferred tax on intangibles 249 196
Other timing differences - -
------------- -------------
249 93
====== ======
For taxation purposes, the parent company of the Group,
Tavistock Investments Plc, has to date incurred losses amounting to
GBP3.38million (31 March 2020 GBP3.57million), no deferred tax
asset in connection with these losses has been recognised in the
accounts.
15. FINANCIAL RISK MANAGEMENT
The Group is exposed to risks that arise from its use of
financial instruments. These financial instruments are within the
current assets and current liabilities shown on the face of the
statement of financial position and comprise the following:
Credit risk
The Group is exposed to a low level of credit risk primarily on
its trade receivables, which are spread over a range of Investment
platforms and advisers. Receivables are broken down as follows:
31 March 2021 31 March
2020
GBP'000 GBP'000
Loans, accrued income and
receivables
Trade receivables 43 96
Accrued income 1,925 2,486
Other receivables 945 316
====== ======
The table below illustrates the due date of trade
receivables:
31 March 2021 31 March
2020
GBP'000 GBP'000
Current 9 42
31 - 60 days - 13
61 - 90 days 4 4
91 - 120 days 11 10
121 and over 19 27
------------- -----------
43 96
====== ======
Liquidity risk
Liquidity risk arises from the Group's management of working
capital and the finance charges and repayments of its
liabilities.
The Group's policy is to ensure that it will have sufficient
cash to allow it to meet its liabilities when they become due.
Other than the loans referred to in Note 12, the Group currently
has no bank borrowing or overdraft facilities.
The Group's policy in respect of cash and cash equivalents is to
limit its exposure by reducing cash holding in the operating units
and investing amounts that are not immediately required in funds
that have low risk and are placed with a reputable bank.
Loan Covenants
The Group has provided various performance covenants to NatWest
bank in connection with the term loan facility entered into in
November 2018. These give rise to a potential risk of
non-compliance which the Group mitigates by continually monitoring
its performance against the covenants.
Cash at bank and cash equivalents
31 March 2021 31 March
2020
GBP'000 GBP'000
At the year end the Group had the following
cash balances: 4,457 2,416
====== ======
Cash at bank comprises Sterling cash deposits held within a
number of banks. At 31 March 2021, GBPNil (2020: GBP199,084) of
cash is held on deposit in special interest bearing accounts to
maximise returns.
All monetary assets and liabilities within the Group are
denominated in the functional currency of the operating unit in
which they are held. All amounts stated at carrying value equate to
fair value.
31 March Due within Due within
2021 one year 1-5 years
GBP'000 GBP'000 GBP'000
Financial liabilities
at amortised cost
Trade payables 1,202 1,202 -
Accruals 832 832 -
Commissions payable 890 890 -
VAT and social security
liabilities 364 364 -
Other payables 148 148 -
Payments due regarding purchase
of client lists 1,818 890 928
Leases 827 513 314
Term loans 3,590 607 2,983
------------- ------------- -------------
9,671 5,446 4,225
====== ====== ======
31 March Due within Due within
2020 one year 1-5 years
GBP'000 GBP'000 GBP'000
Financial liabilities
at amortised cost
Trade payables 1,151 1,151 -
Accruals 770 770 -
Commissions payable 1,130 1,130 -
VAT and social security
liabilities 177 177 -
Other payables 144 144 -
Payments due regarding purchase
of client lists 1,930 696 1,234
Leases 799 469 330
Term loan 1,523 457 1,066
------------- ------------- -------------
7,624 4,994 2,630
====== ====== ======
Capital Disclosures and Risk Management
The Group's management define capital as the Group's equity
share capital and reserves.
The Group has a requirement to maintain a minimal level of
regulatory capital, which in practice means the FCA requires the
Group's core tier one capital, which is composed primarily of
retained earnings and shares, to exceed 25% of the Group's fixed
costs. Compliance with minimum regulatory capital is assessed
internally monthly and reported to the FCA on a half yearly basis.
Should additional capital be required management ensure that this
is introduced in a timely manner.
The Group's objective when maintaining capital is to safeguard
its ability to continue as a going concern, so that in due course
it can provide returns for shareholders and benefits for other
stakeholders.
The Group manages its capital structure and makes adjustments to
it in the light of changes in the business and in economic
conditions. In order to maintain or adjust the capital structure,
the Group may from time to time issue new shares, based on working
capital and product development requirements and current and future
expectations of the Company's share price.
The Group monitors both its operating and overall working
capital with reference to key ratios such as gearing and regulatory
capital requirements.
Share capital is used to raise cash and as direct payments to
third parties for assets or services acquired.
Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market interest rates.
The Group considers the interest rates available when deciding
where to place cash balances. The Group has no material exposure to
interest rate risk.
16. SHARE CAPITAL AND SHARE PREMIUM
31 March 31 March
2021 2020
GBP'000 GBP'000
Called up share capital
Allotted, called up and fully paid
607,795,801 Ordinary shares of 1 pence each
(2020: 607,795,801 Ordinary shares of 1 pence
each) 6,079 6,078
30,450,078 Deferred shares of 9p each - 2,741
465,344,739 Deferred "A" shares of 0.99 pence
each - 4,607
------------ ------------
6,079 13,426
Share premium 1,540 6,001
------------ ------------
7,619 19,427
====== ======
Court sanctioned capital reduction
During the year, with shareholders' consent and with the prior
sanction of the Courts, the Company reduced its share capital by
GBP11,808,000 by writing off the Deferred shares and by reducing
its Share Premium account by GBP4,460,000. This reduction was
credited to the Company's Revenue Reserve account, which eliminated
the historic deficit on that account and created distributable
reserves.
The following describes the nature and purpose of each of the
Company's reserves:
Reserve Description and purpose
Share capital Amount subscribed for share capital at nominal value.
Share premium Amount subscribed for share capital in excess of
nominal value.
Retained Cumulative net gains and losses recognised in the
earnings consolidated statement of comprehensive income.
17. SHARE BASED PAYMENTS
During the year the Company issued options over 17,425,000
(2020: 250,000) Ordinary shares.
These options have been valued using the Black-Scholes pricing
model. The weighted average of the assumptions
used in the model are:
31 March 31 March
2021 2020
Share price at grant 1.68p 2.81p
Exercise price 5.71p 5.25p
Expected volatility 25% 46%
Expected life 10 years 10 years
Risk free rate 0.3% 0.8%
Expected volatility has been determined by reference to the
fluctuations in the Company's share price between the
formation of its current Group structure and the grant date of
the share options.
31 March 2021 31 March 2020
Weighted Weighted
average average price
price
(pence) Number (pence) Number
Outstanding at the beginning
of the year 5.72 126,875,783 5.72 129,657,799
Granted during the year 5.71 17,425,000 5.25 250,000
Surrendered/Lapsed during
the year 5.69 (92,779,800) 5.25 (3,032,016)
------------------- -------------------
Outstanding at the end
of the year 5.80 51,520,983 5.72 126,875,783
========= =========
During the year the Executive Directors surrendered all of the
58,200,000 share options previously held by them. Further
background details are included in the Directors Report.
The exercise price of options outstanding at the end of the
year, 3,423,000 of which had vested and were exercisable, was 5.25p
and their weighted contractual life was 10 years.
There were no options over Ordinary shares exercised in the
period. The weighted average fair value of each option granted
during the current period was assessed as being 0.07p and their
weighted average contractual life was 10 years.
The vesting conditions in relation to management are disclosed
in the Remuneration Report on pages 22 to 23.
18. LEASING COMMITMENTS 31 March 31 March 2020
2021
GBP'000 GBP'000
The Group's future minimum lease payments
fall due as follows:
Not later than 1 year 510 503
Later than 1 year and not later than
5 years 224 393
------------- -------------
734 896
===== =====
Included in minimum lease payments not later than 1 year is
GBP382,000 (2020: GBP293,000) in relation to leases and in later
than 1 year and not later than 5 years is GBP179,000 (2020:
GBP221,000) in relation to leases.
19. RELATED PARTY TRANSACTIONS
During the year, Tavistock Wealth Limited received fees of
GBP3,483,959 (2020: GBP3,627,618) under the terms of an agreement
entered into with Investment Fund Services Limited ("IFSL"). IFSL
is a company of which Andrew Staley, a significant shareholder in
Tavistock Investments Plc, is a Director.
In September 2019, in order to bolster the Company's regulatory
capital position in a manner that would not be dilutive to
shareholders, it entered into a GBP630,000 unsecured, convertible
loan facility with three Group Directors, Oliver Cooke, Brian Raven
and Christopher Peel (no longer a Director at balance sheet date).
The Facility could be drawn down by the Company at any point within
the following year. Each of the potential lenders gave an
irrevocable undertaking to the Company that upon receipt of 30
days' notice and subject to compliance with regulatory obligations
regarding close periods, they would provide up to GBP210,000 of
loan capital to the Company on the following terms:
-- Facility fee 5% of the funds committed;
-- interest payable on funds drawn down of 10%;
-- the repayment of any sums drawn down, together with interest
thereon, to be made on 30 September 2020;
-- the option for the Company only, at its absolute discretion,
to elect to convert amounts drawn down, together with interest
thereon, into new ordinary shares in the Company of 1p each, at a
conversion price of 2p per share, being the then bid price; and
-- a non-utilisation fee payable, if appropriate, on 30
September 2020, equivalent to 3% of funds committed but not drawn
down.
T his facility was not called upon by the Company and has
subsequently been formally terminated.
20. POST BALANCE SHEET EVENTS
On 8 April 2021 the Company announced that it had established a
captive cell insurance facility that would enable it to provide a
proportion of the Group's professional indemnity insurance
requirement through an in-house insurer and thereby to save
approximately GBP250,000 per annum compared to the cost of
obtaining the same level of insurance cover as last year from third
party providers. Such cells are established under the umbrella of
an existing insurance provider, in this instance based in Guernsey.
The insurance provider supplies both the professional expertise and
the necessary regulatory capital. As part of a licensed insurance
entity, the cell acts in the same way as a traditional 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.
On 14 June 2021 the Company announced its entry into a ten-year
strategic partnership with Titan, as detailed in the Chairman's
Statement. As a part of the arrangements Titan has acquired the
Group's investment management business, Tavistock Wealth, for a
consideration of up to GBP40 million in cash together with a
ten-year earn out. The transaction was completed in August
2021.
On 15 June 2021 the Company announced the acquisition of the
business and assets of Chater Allan Financial Services LLP, an
independent advisory business based in Cambridge. The acquisition
of this business has added approximately GBP110 million to the
Group's funds under advice and is expected to contribute to the
Group's profitability in the current financial year.
TAVISTOCK INVESTMENTS PLC Company number 05066489
COMPANY BALANCE SHEET
AS AT 31 MARCH 2021
At 31 March 2021 At 31 March 2020
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Investments V 17,983 17,973
Tangible fixed assets VI 678 744
----------------- -----------------
18,661 18,717
Current assets
Debtors VII 1,846 1,561
Cash at bank and in hand VIII 2,120 539
----------------- -----------------
3,966 2,100
Creditors: amounts falling
due within
one year IX (12,358) (6,660)
---------------- ----------------
Net current liabilities (8,392) (4,560)
Creditors: amounts falling
due after one year X (3,146) (1,732)
--------------- ---------------
Total assets less total
liabilities 7,123 12,425
======= =======
Capital and reserves
Called up share capital XI 6,079 13,426
Share premium account 1,541 6,006
Retained deficit (497) (7,007)
------------------ ------------------
Shareholders' funds 7,123 12,425
========= =========
These accounts do not include a Cashflow Statement, or a
Financial Instruments note, as permitted by Section 1.8 of FRS
101.
The loss of the parent company for the year was GBP 5,020,000
(2020: GBP8,136,000)
The financial statements were approved by the Board and
authorised for issue on 6 September 2021.
Oliver Cooke
Chairman
The notes below form part of the Company financial
statements.
TAVISTOCK INVESTMENTS PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MARCH 2021
Share Share Retained Shareholder
Capital Premium deficit funds
GBP'000 GBP'000 GBP'000 GBP'000
31 March 2019 13,101 5,681 (1,642) 17,140
------------- -------------- -------------- -------------
Issue of shares 325 325 - 650
Payment of 2019 interim dividend (58) (58)
Loss after tax - - (8,136) (8,136)
Equity settled share based
payments - - 229 229
------------- ------------- ------------- -------------
31 March 2020 13,426 6,006 (7,007) 12,425
------------- -------------- -------------- -------------
Court sanctioned capital reduction (7,347) (4,465) 11,812 -
Loss after tax - - (5,020) (5,020)
Equity settled share based
payments - - (282) (282)
------------- -------------- --------------- --------------
31 March 2021 6,079 1,541 (497) 7,123
------------- -------------- -------------- -------------
The notes below form part of the Company financial
statements.
TAVISTOCK INVESTMENTS PLC
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS
FOR THE YEARED 31 MARCH 2021
I. ACCOUNTING POLICIES
The principal accounting policies applied are summarised
below.
Basis of preparation
The financial statements have been prepared under the historical
cost convention as modified by the revaluation of Tangible Assets
and in accordance with Financial Reporting Standard 101 Reduced
Disclosure Framework, the Financial Reporting Standard applicable
in the United Kingdom and the Republic of Ireland and the Companies
Act 2006.
The preparation of financial statements in compliance with FRS
101 Reduced Disclosure Framework requires the use of certain
critical accounting estimates. It also requires management to
exercise judgement in applying the Company's accounting policies
(see Note 2 in the Group financial statements).
All accounting policies that are not unique to the Company are
listed on pages 34 to 37. All additional accounting policies have
been applied as follows:
Going concern
The Directors are of the opinion that the Company has sufficient
working capital for the foreseeable future, being at least the next
twelve months. On this basis, they consider it appropriate that the
accounts have been prepared on a going concern basis.
Valuation of investments
Investments held as fixed assets are stated at cost less any
provision for impairment in value. An impairment was recognised in
the previous financial year (see Note V).
II. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Impairment of Investments
The Company is required to test, on an annual basis, whether the
carrying value of its investment in its subsidiaries has suffered
any impairment.
In assessing the carrying value of Investments the Directors
have used 5-year forecasts and discounted the anticipated future
cashflows by entity over 5 years and then in perpetuity using a
discount rate of 15%. In all scenarios, the recoverable amount
exceeded the carrying value.
Share based payments
The share-based payment charge to the Profit or Loss account has
been estimated using the Black-Scholes Model in respect of share
options granted by the Company, as referred to in more detail in
Note 17.
III. LOSS FOR THE FINANCIAL PERIOD
The Company has taken advantage of the exemption allowed under
s408 of the Companies Act 2006 and has not presented its own profit
and loss account in these financial statements. The Company's loss
for the year was GBP5,020,000 (2020: Loss of GBP8,136,000).
Included within this loss is a provision of GBP1,200,000 for the
one-off costs of a Group reorganisation, as described in the
Strategic report on pages 7 to 9.
All Group staff are employed by Tavistock Investments Plc and
their costs are recharged to the relevant subsidiaries. Details of
the Company's staff costs are shown in Note IV.
IV. STAFF COSTS
2021 2020
GBP'000 GBP'000
Staff costs for all employees, including
Directors consist of:
Wages, fees and salaries 1,331 567
Social security costs 143 69
Pensions 69 86
----------- -----------
1,543 722
===== =====
2021 2020
The average number of employees of the Number Number
Company during the year
was as follows:
Directors and key management 2 2
Operations and administration 18 3
----------- -----------
20 5
During the year the Company incurred an additional GBP5.67
million (2020: GBP6.39 million) of staff costs relating to 111
employees (2020: 139 employees) which were recharged to subsidiary
companies within the Group.
V. INVESTMENTS 31 March 31 March 2020
2021
GBP'000 GBP'000
Subsidiary undertakings
Cost
Balance at 1 April 2020 23,282 22,836
Additions 10 446
-------------- --------------
Balance at 31 March 2021 23,292 23,282
Provisions for impairment
Balance at 1 April 2020 (5,309) (357)
Impairment charge - (4,952)
-------------- --------------
Balance at 31 March 2021 (5,309) (5,309)
-------------- --------------
Carrying value of investments 17,983 17,973
======= =======
At the year end the Company had the following wholly owned
subsidiaries:
Registered Office Address Name Holding
1 Queen's Square, Lyndhurst Road, Tavistock Wealth Limited Direct
Ascot, Berkshire, SL5 9FE (from
10 August 2021)
Tavistock Partners Limited Direct
1 Bracknell Beeches, Old Bracknell Tavistock Partners (UK) Ltd Direct
Lane, Bracknell, RG12 7BW (to
9 August 2021)
Duchy Independent Financial Direct
Advisers Limited
Price Bailey Financial Services Direct
Limited
Tavistock Private Client Limited Indirect
The Tavistock Partnership Limited Direct
Tavistock Services Limited Direct
Tavistock Estates Planning Direct
Services Limited
3, The Cornerstone Market Place, Cornerstone Asset Holdings Direct
Kegworth, Derby DE74 2EE Limited
26 Upper Pembroke Street, Dublin Tavistock Wealth (Global) Limited Direct
2, Ireland
30, Boulevard Royal, L-2449 Luxembourg, Tavistock S.à.r.l. Direct
Grand-Duché de Luxembourg
The Company owns 100% of King Financial Planning LLP and the
other member is entitled to 50% of the profit share.
VI. TANGIBLE FIXED ASSETS
Office
Leasehold fixtures,
property Computer fittings
and
equipment equipment Total
GBP'000 GBP'000 GBP'000 GBP'000
Cost
Balance at 1 April 2020 573 130 676 1,379
Additions 269 23 71 363
Disposals - (14) (210) (224)
--------- --------- -------------- ---------------
Balance at 31 March 2021 842 139 537 1,518
--------- --------- -------------- ---------------
Accumulated depreciation
Balance at 1 April 2020 207 39 389 635
Depreciation charge 261 47 120 428
Disposals - (14) (210) (224)
--------- --------- -------------- --------------
Balance at 31 March 2021 469 72 299 839
--------- --------- -------------- ---------------
Net Book Value
At 31 March 2021 373 68 237 678
===== ===== ===== =====
At 31 March 2020 366 92 286 744
===== ===== ===== ======
Included in Leasehold property are assets acquired under lease
agreements with a net book value of GBP373,000 (2020:
GBP336,000).
Included in Computer equipment are assets acquired under lease
agreements with a net book value of GBP33,000 (2020:
GBP59,000).
VI. TANGIBLE FIXED ASSETS (continued)
Included in Office fixtures, fittings and equipment are assets
acquired under lease agreements with a net book value of GBP137,000
(2020: GBP296,000).
VII. DEBTORS: due within one year 31 March 2021 31 March 2020
GBP'000 GBP'000
Trade debtors - 19
Prepayments and accrued income 201 186
Other debtors 105 190
Amounts owed by subsidiary undertakings 1,540 1,166
----------- -----------
1,846 1,561
===== =====
VIII. CASH AND CASH EQUIVALENTS
31 March 2021 31 March 2020
GBP'000 GBP'000
Cash at bank and in hand 2,120 539
------------- -------------
2,120 539
====== ======
IX. CREDITORS: amounts falling due
within one year
31 March 2021 31 March 2020
GBP'000 GBP'000
Trade creditors 221 430
Accruals 267 88
Other tax and social security 360 255
Other creditors 404 404
Term loan 607 63
Provision 277 -
Amounts owed to subsidiary undertakings 10,222 5,420
------------ ------------
12,358 6,660
====== ======
X. CREDITORS: amounts falling due after
one year
31 March 31 March 2020
2021
GBP'000 GBP'000
Term loan 2,983 1,460
Other creditors 163 272
------------- -------------
3,146 1,732
====== ======
Details of the Company's borrowings are provided in Note 12 of
the consolidated financial statements.
X1. SHARE CAPITAL
Details of the Company's share capital and the movements in the
year can be found in Note 16 to the consolidated financial
statements.
X1I. SHARE OPTIONS
EMI Share Option Scheme
Details of the share options outstanding at 31 March 2021 can be
found in Note 17 in the consolidated financial statements.
XI1I. RELATED PARTY TRANSACTIONS
Advantage has been taken by the Company of the exemptions
provided by Section 33.1A of FRS102 not to disclose Group
transactions in respect of wholly owned subsidiaries.
In September 2019, in order to bolster the Company's regulatory
capital position in a manner that would not be dilutive to
shareholders, it entered into a GBP630,000 unsecured, convertible
loan facility with three Group Directors, Oliver Cooke, Brian Raven
and Christopher Peel (no longer a Director at balance sheet date).
The Facility could be drawn down by the Company at any point within
the following year. Each of the potential lenders gave an
irrevocable undertaking to the Company that upon receipt of 30
days' notice and subject to compliance with regulatory obligations
regarding close periods, they would provide up to GBP210,000 of
loan capital to the Company on the following terms:
-- Facility fee 5% of the funds committed;
-- interest payable on funds drawn down of 10%;
-- the repayment of any sums drawn down, together with interest
thereon, to be made on 30 September 2020;
-- the option for the Company only, at its absolute discretion,
to elect to convert amounts drawn down, together with interest
thereon, into new ordinary shares in the Company of 1p each, at a
conversion price of 2p per share, being the then bid price; and
-- a non-utilisation fee payable, if appropriate, on 30
September 2020, equivalent to 3% of funds committed but not drawn
down.
T his facility was not called upon by the Company and has
subsequently been formally terminated.
TAVISTOCK INVESTMENTS PLC
ADVISERS
Registrars Share Registrars Limited
The Courtyard
17 West Street
Farnham
Surrey
GU9 7DR
Nominated Adviser Allenby Capital
& Broker 5 St Helen's Place
London
EC3A 6AB
Independent Auditors Crowe U.K. LLP
55 Ludgate Hill
London
EC4M 7JW
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September 07, 2021 02:00 ET (06:00 GMT)
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