TIDMTAVI

RNS Number : 1227U

Tavistock Investments PLC

21 November 2019

Tavistock Investments plc

("Tavistock", "Company" or "Group")

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHSED 30 SEPTEMBER 2019

FINANCIAL HIGHLIGHTS

-- Continued increase in gross revenue for the Group for this period to more than GBP14.3 million (30 September 2018: GBP14.0 million)

   --    Continued increase in gross profit to GBP5,811,000 (30 September 2018: GBP5,651,000) 
   --    95% increase in EBITDA to GBP1,006,000 (30 September 2018: GBP516,000) 

OPERATIONAL HIGHLIGHTS:

   --    Continued growth in funds under management (FUM) for the 18th consecutive quarter 

o Total FUM reached over GBP1.1 billion, an 18% increase (from GBP941 million) over the last year and a 49% increase (from GBP745 million) since 30 September 2017

o Gross revenues for Tavistock Wealth at GBP2.74 million for the six-month period, compares favourably with revenue of GBP4.9 million for the full year to 31 March 2019

o Average gross revenue remained steady at 0.51% of FUM value per annum

   --    Protected products 

o Last year, the Company launched two new funds protected by contractual guarantees provided by Morgan Stanley & Co International plc. These are the ACUMEN Capital Protection Portfolio ("ACPP") and the ACUMEN Income-Protection Portfolio ("AIPP")

o To date the funds have attracted over GBP250 million of inflows

o Earlier in the year, Tavistock established a Luxembourg regulated fund structure in order to facilitate investment in the protected portfolios by overseas based investors - a Reserved Alternative Investment Fund (RAIF)

o The RAIF has now been admitted to trading on the Luxembourg Stock Exchange and is available for investment via Euroclear and ClearStream

   --    The performance of the advisory business remains a key area of focus 

o During the period revenues remained steady at GBP11.6 million

o At the end of the period, the Group's advisory business had 180 advisers

   --    Endorsements 

o Tavistock Wealth voted "The One to Watch" in Growth Investor Awards 2019

o During the period, the Group was ranked 14th in the Financial Times' Top 100 Financial Advisers 2019

POST-PERIOD HIGHLIGHTS

-- Launching another protection portfolio in the near future, the ACUMEN ESG ("Environmental, Social, Governance") Protection Portfolio, which will carry the same 90% high watermark capital guarantee as the ACPP

Brian Raven, Group Chief Executive, Tavistock Investments said: "We see these results as particularly encouraging given the backdrop of political uncertainty and the market headwinds that have impacted our industry and the country. Our investment management business and our work with key partners have continued to play an essential role in our success and profitability. It is difficult to predict how markets will react and how investors may behave in the months ahead. Political events might have a significant impact on our business, however, we believe our commitment to developing strong partnerships, as well as broadening our investment proposition, will drive further growth."

Enquiries

 
    Tavistock Investments Plc      Tel: 01753 867000 
     Oliver Cooke 
     Brian Raven 
 
    Arden Partners Plc             Tel: 020 7614 5900 
     Paul Shackleton 
 
    Allenby Capital Limited        Tel: 020 3328 5656 
     Nick Naylor 
     Nick Athanas 
 
    Vested                         Tel: 020 3691 7990 
     Paul Andrieu 
     Amelia Graham 
 

TAVISTOCK INVESTMENTS PLC

CHAIRMAN'S STATEMENT

FOR THE SIX MONTHSED 30 SEPTEMBER 2019

I am pleased to advise that the business has reported a 95% increase in the level of EBITDA achieved during the period under review as compared with the same period in the previous year, and that good progress continues to be made with the organic development of the business.

The performance in this period was particularly encouraging given the backdrop of political uncertainty and the market headwinds that have been faced by the Company, the industry and by the country as a whole. However, it is difficult to assess the impact that the continuing political and economic uncertainty might have on the Company's performance in the second half of the year.

Investment Management

The success of the investment management business remains key to the profitability of the Group and I am pleased to report that the level of funds being managed on a discretionary basis ("FUM") has now risen for an 18(th) consecutive quarter. However, the pace of growth slowed during the period under review as the paralysis seen in parliament increased investor anxiety, reduced the level of investment activity, whilst market challenges adversely impacted valuations. As shown in the table below, the level of FUM has risen by 18% (GBP172 million) over the last year and by over 49% (GBP368 million) since 30 September 2017.

 
         30 Sept '19   30 Sept '18   30 Sept 
             GBPm          GBPm        '17 
                                       GBPm 
  FUM       1,113          941         745 
        ------------  ------------  -------- 
 

Tavistock Wealth's current average gross revenue is 0.51% of FUM value per annum and during the six-month period it achieved revenues of GBP2.74 million. This compares favourably with revenue of GBP4.9 million for the full year to 31 March 2019.

Now that Tavistock Wealth has established a successful five-year track record, a number of UK advisory firms outside the ownership of the Group have been recommending our investment management services to their clients. To date, these clients have introduced some GBP35 million of inflows. Discussions with other firms are ongoing. In addition, as a separate initiative, discussions are being held with a number of significantly larger potential business partners, each of whom has the ability to generate substantial inflows of funds.

Industry recognition continues to increase with Tavistock Wealth once again being selected as a finalist, and on this occasion being voted as "The One to Watch", at this year's Growth Investor Awards.

Update on Key Initiatives

1 Protected Products

Last year, the Company launched two new funds protected by contractual guarantees provided by Morgan Stanley & Co International plc, one of the world's largest investment companies. These are the ACUMEN Capital Protection Portfolio ("ACPP") and the ACUMEN Income-Protection Portfolio ("AIPP"). These funds provide high watermark capital guarantees to investors, ensuring that the Net Asset Value ("NAV") of the ACPP can never fall below 90% of its highest ever value, and the AIPP (which takes slightly more risk) below 85%. These funds have been well received and been positively reviewed by a recognised industry research analyst. To date the funds have attracted over GBP250 million of inflows.

In the near future the Company will be launching another new protection portfolio, the ACUMEN ESG ("Environmental, Social, Governance") Protection Portfolio, which will carry the same 90% high watermark capital guarantee as the ACPP. The ACUMEN ESG Protection Portfolio will use both positive and negative screening of potential investments, to ensure that, as a minimum, it achieves an MSCI ESG rating of A.

It is our belief that the new ACUMEN ESG Protection Portfolio will be as well received as the existing protection portfolios and that these funds remain unique within the UK. Our objective continues to be to make these funds available to as wide an audience as possible both within the UK and offshore.

2 Law Society Endorsement

Last year we launched Tavistock Law, a specialised business which has been formally endorsed by the Law Society as the preferred provider of investment advice to its members in the fields of Trusts and Court of Protection awards. The objective of this new business is to work closely with the Society, advising members and outlining the suitability of the new protected products for Trusts and their beneficiaries. After a stuttering start, resulting from staff changes and an internal reorganisation within the Law Society, this partnership is now beginning to gain traction.

3 Smartphone App

Tavistock Wealth soft-launched its new smartphone app, branded "i-stock" earlier in the year. The purpose of the soft-launch was firstly, to ensure that the mechanics of the app functioned well and were sufficiently robust to be able to handle large volumes of traffic, and secondly, to enable suitable helpdesk protocols to be developed, tested and documented. I am pleased to advise that this initial stage has been successfully completed. The next stage is to refine the consumer messaging and enable all of Tavistock Wealth's funds to be accessible via i-stock. Client accounts are currently free of charge without any administration, dealing, entry, exit or other charges applied.

4 Offshore

Earlier in the year, we established a Luxembourg regulated fund structure in order to facilitate investment in the protected portfolios by overseas based investors - a Reserved Alternative Investment Fund (RAIF). The Tavistock Fund SCA SICAV - RAIF currently has a single sub-fund, the Tavistock Guaranteed Portfolio. This portfolio holds cash together with investments in the ACPP and AIPP referred to above, structured so as to guarantee the same high watermark 90% protection. The RAIF has now been admitted to trading on the Luxembourg Stock Exchange and is available for investment via Euroclear and ClearStream. The task of getting the RAIF listed on a number of other worldwide trading platforms favoured by potential investors is ongoing.

5 Lighthouse

In May, Tavistock announced the termination of its strategic relationship with Lighthouse due to the indefinite postponement of agreed marketing activity following Lighthouse's acquisition by Quilters. As a consequence, the Company has during the period under review written off the GBP133,000 investment that it had made in the creation of a range of bespoke share classes, the development of a dedicated website and the full supporting promotional literature designed specifically for this partnership.

Advisory

The performance of the Group's advisory businesses is another key area of focus and during the period gross revenues remained materially unchanged at GBP11.6 million. Increased revenue, with improved profitability, generated by registered individuals has replaced the gross revenue lost as a consequence of having required a number of poorer performing appointed representative firms to leave the Group. This is in line with the Group's ongoing drive to minimise the risk associated with the Group's advisory business and to appropriately match this risk against potential commercial reward.

At the end of the period, the Group's advisory businesses had 180 individual advisors. The Group has also recently been ranked 14(th) in the Financial Times' Top 100 Financial Advisers 2019.

Financial Performance

During the period, the Group generated EBITDA of GBP1,006,000 on gross revenue of GBP14.3 million (six months to 30 September 2018, EBITDA of GBP516,000 on gross revenue of GBP14 million).

Cash generated from operations was GBP1,008,000 (six months to 30 September 2018, GBP130,000). However, during the period the Company settled GBP520,000 of deferred consideration obligations, spent GBP665,000 on the purchase of client books, invested GBP385,000 on the key initiatives referred to above, reduced debt and finance obligations by GBP515,000 and distributed GBP58,000 to shareholders through the payment of a maiden dividend. The net effect has been a reduction in the Group's cash resources from GBP3.12 million at 31 March to GBP1.98 million at 30 September 2019.

At the end of the period, the Group had net assets of GBP20 million (31 March 2019, GBP19.9 million) which included cash resources of GBP1.98 million (31 March 2019, GBP3.1million).

The Group's results for the period and its position at the end of the period can be summarised as follows.

 
                         6 Months ended   6 Months ended      Movement 
                           30 Sept '19      30 Sept '18 
                            GBP'000s         GBP'000s 
 Gross Revenues              14,311           14,034        2% increase 
                        ---------------  ---------------  --------------- 
 Reported EBITDA             1,006             516          95% increase 
                        ---------------  ---------------  --------------- 
 Depreciation 
  & 
  Amortisation               (755)            (503)         50% increase 
                        ---------------  ---------------  --------------- 
 Share based payments        (131)            (200)         36% decrease 
                        ---------------  ---------------  --------------- 
 Profit / (Loss) 
  from operations 
  before investment 
  write off                   120             (187)        164% increase 
                        ---------------  ---------------  --------------- 
 Investment write            (133)*             -                - 
  off 
                        ---------------  ---------------  --------------- 
 Reported Loss 
  from operations             (13)            (187)         93% decrease 
                        ---------------  ---------------  --------------- 
 Loss per share              0.01p            0.05p         80% decrease 
                        ---------------  ---------------  --------------- 
 
                          30 Sept '19      31 March '19       Movement 
                            GBP'000s         GBP'000s 
                        ---------------  ---------------  --------------- 
 Net Assets                  20,002           19,996       0.03% increase 
                        ---------------  ---------------  --------------- 
 Cash at end of 
  the period                 1,978            3,116         37% decrease 
                        ---------------  ---------------  --------------- 
 

*Write off of investment in strategic relationship with Lighthouse Group Plc.

Future Prospects

Solid progress has been made with the development of the business during the period, but at present it is very difficult to predict how markets will react and how investors may behave in the months ahead. Political events might also have a significant impact on our business.

The management team will maintain its focus on a three stranded strategy for the development of the business. The first strand being to bring to fruition and to maximise asset inflows from the key initiatives referred to above; the second strand is to enter into a number of strategic partnerships with the larger entities with whom discussions are currently being held; and the third is to explore suitable acquisition opportunities.

I look forward to updating you on further progress.

Oliver Cooke

Chairman

20 November 2019

TAVISTOCK INVESTMENTS PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHSED 30 SEPTEMBER 2019

 
                                                      Unaudited        Unaudited 
                                                 6 months ended   6 months ended 
                                                   30 September     30 September 
                                                           2019             2018 
                                          Note          GBP'000          GBP'000 
 
 Revenue                                   2             14,311           14,034 
 
 Cost of sales                                          (8,500)          (8,383) 
                                                   ------------     ------------ 
 Gross profit                                             5,811            5,651 
 
 Administrative expenses                                (5,824)          (5,838) 
                                                 --------------   -------------- 
 Loss from operations                                      (13)            (187) 
 
 Memorandum: 
  Adjusted EBITDA                                         1,006              516 
 Depreciation & amortisation                              (888)            (503) 
 Share Based Payment                                      (131)            (200) 
                                                 --------------   -------------- 
 Loss from operations                                      (13)            (187) 
---------------------------------------  -----  ---------------  --------------- 
 
 
 Finance costs                                            (119)            (133) 
                                                   ------------     ------------ 
 Loss before taxation and attributable 
  to equity holders of the parent                         (132)            (320) 
 
 Taxation                                                    54               62 
                                                   ------------     ------------ 
 Loss after taxation and attributable 
  to equity holders of the parent and 
  total comprehensive income for the 
  period                                                   (78)            (258) 
                                                         ======           ====== 
 Loss per share 
 Basic                                     3            (0.01)p          (0.05)p 
                                                         ======           ====== 
 

TAVISTOCK INVESTMENTS PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2019

 
                                                     Unaudited                                 Audited 
                                                 30 September 2019                          31 March 2019 
                                                 GBP'000              GBP'000             GBP'000              GBP'000 
 ASSETS 
 Non-current assets 
 Fixed assets                                                           1,197                                      586 
 Intangible assets                 4                                   21,942                                   19,897 
                                                            -----------------                        ----------------- 
 Total non-current assets                                              23,139                                   20,483 
 
 Current assets 
 Trade and other receivables                       6,901                                    5,353 
 Cash and cash equivalents                         1,978                                    3,116 
                                       -----------------                        ----------------- 
 Total current assets                                                   8,879                                    8,469 
                                                            -----------------                        ----------------- 
 Total assets                                                          32,018                                   28,952 
 
 LIABILITIES 
 
 Current liabilities                                                  (5,495)                                  (3,942) 
 
 Non-current liabilities 
 Other payables                                                          (13)                                     (13) 
 Term loan and deferred 
  consideration                                                       (3,689)                                  (2,127) 
 Provisions                                                           (2,465)                                  (2,465) 
 Deferred taxation                                                      (354)                                    (409) 
                                                           ------------------                       ------------------ 
 Total liabilities                                                   (12,016)                                  (8,956) 
                                                           ------------------                       ------------------ 
 Total net assets                                                      20,002                                   19,996 
                                                                    =========                                ========= 
 Capital and reserves 
 attributable 
 to owners 
 of the parent 
 Share capital                     5                                   13,101                                   13,101 
 Share premium                                                          5,681                                    5,681 
 Retained earnings                                                      1,220                                    1,214 
                                                           ------------------                       ------------------ 
 Total equity                                                          20,002                                   19,996 
                                                                    =========                                ========= 
 

The unaudited interim condensed consolidated financial statements were approved by the Board and authorised for issue on 20 November 2019.

Oliver Cooke

Chairman

TAVISTOCK INVESTMENTS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHSED 30 SEPTEMBER 2019

 
                                                                                    Retained 
                                            Share capital    Share premium          earnings     Total equity 
                                                  GBP'000          GBP'000           GBP'000          GBP'000 
 
 31 March 2018                                     12,720            4,882             1,088           18,690 
 
 Loss after tax and total comprehensive 
  income                                                -                -             (258)            (258) 
 
 Equity settled share based 
  payments                                              -                -               200              200 
                                            -------------   --------------   ---------------   -------------- 
 30 September 2018                                 12,720            4,882             1,030           18,632 
                                           --------------   --------------    --------------   -------------- 
 
 Issue of shares                                      381              869                 -             1250 
 
 Cost of share issue                                    -             (70)                 -             (70) 
 
 Profit after tax, adjustments 
  and total comprehensive income                        -                -               136              136 
 
 Equity settled share based 
  payments                                              -                -                48               48 
 
                                           --------------   --------------    --------------   -------------- 
 31 March 2019                                     13,101            5,681             1,214           19,996 
                                           --------------   --------------    --------------   -------------- 
 
 
 
 Loss after tax and total comprehensive 
  income                                                -                -             (67)             (67) 
 
 Equity settled share based 
  payments                                              -                -              131              131 
 
 Dividend payment                                       -                -             (58)             (58) 
                                           --------------   --------------   --------------   -------------- 
 30 September 2019                                 13,101            5,681            1,220           20,002 
                                           --------------   --------------   --------------   -------------- 
 

TAVISTOCK INVESTMENTS PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHSED 30 SEPTEMBER 2019

 
                                                   Unaudited                                Unaudited 
                                                 6 months ended                           6 months ended 
                                                30 September 2019                        30 September 2018 
                                               GBP'000              GBP'000             GBP'000              GBP'000 
 
 Cash flows from operating 
 activities 
 Loss before tax 
 
  Adjustments for:                                                    (132)                                    (320) 
 Share based payments                                                   131                                      200 
 Depreciation on fixed assets                                           272                                       84 
 Amortisation of intangible assets                                      483                                      419 
 Impairment                                                             133                                        - 
 Net finance costs                                                      119                                      133 
                                                          -----------------                        ----------------- 
 Cash flows from operating 
  activities 
  before changes                                                      1,006                                      516 
 in working capital 
 
 Increase in trade and other 
  receivables                                                       (1,384)                                    (143) 
 Increase/(Decrease) in trade and 
  other payables                                                      1,386                                    (243) 
                                                          -----------------                        ----------------- 
 Cash used in operations                                              1,008                                      130 
 
 Investing activities 
 Purchase of fixed assets                        (856)                                    (128) 
 Purchase of intangible assets                 (2,661)                                    (194) 
 Payment of deferred consideration               1,102                                    (630) 
                                     -----------------                        ----------------- 
 Net cash generated from investing 
  activities                                                        (2,415)                                    (952) 
 
 Financing activities 
 Finance costs                                   (119)                                    (133) 
 New financing                                     676                                       14 
 Loan repayments                                 (230)                                        - 
 Dividend payment                                 (58)                                        - 
                                     -----------------                        ----------------- 
 Net cash from financing 
  activities                                                            269                                    (119) 
                                                          -----------------                        ----------------- 
 Net decrease in cash and cash 
  equivalents                                                       (1,138)                                    (941) 
 
 Cash and cash equivalents at 
  beginning 
  of the period                                                       3,116                                    3,111 
                                                         ------------------                       ------------------ 
 Cash and cash equivalents at end 
  of the period                                                       1,978                                    2,170 
                                                                  =========                                ========= 
 

TAVISTOCK INVESTMENTS PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHSED 30 SEPTEMBER 2019

   1.       ACCOUNTING POLICIES 

Basis of preparation

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

The accounts have been prepared in accordance with accounting policies that are consistent with the March 2019 Report and Accounts and that are expected to be applied in the Report and Accounts of the year ended 31 March 2020.

This report is not prepared in accordance with IAS 34, which is not mandatory. The financial information does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. Statutory accounts for Tavistock Investments Plc for the year ended 31 March 2019 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

   2.       SEGMENTAL INFORMATION 

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

 
                                                         Unaudited        Unaudited 
                             Investment    Advisory     30 September     30 September 
                             Management     Support         2019             2018 
                               GBP'000     GBP'000        GBP'000          GBP'000 
 
 Revenue                           2,744     11,567           14,311           14,034 
 
 Cost of Sales                     (242)    (8,258)          (8,500)          (8,383) 
 
 Administrative Expenses         (1,165)    (3,509)          (4,674)          (4,461) 
 
 Group costs                                                 (1,150)          (1,377) 
                                                       -------------    ------------- 
 Loss from operations                                           (13)            (187) 
                                                              ======           ====== 
 
 

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

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

 
 3.    LOSS PER SHARE                                 Unaudited        Unaudited 
                                                    6 months ended   6 months ended 
                                                     30 September     30 September 
                                                         2019             2018 
       Loss per share has been calculated using 
        the following: 
  Loss from continuing operations (GBP'000)                   (78)            (258) 
  Weighted average number of shares ('000s)                575,296          537,186 
                                                    --------------   -------------- 
  Basic loss per ordinary share                            (0.01)p          (0.05)p 
                                                           =======          ======= 
 
 
 4.    INTANGIBLE ASSETS              Customer       Regulatory       Goodwill         Other 
                                      & Adviser       Approvals        Arising       Intangible 
                                                                          on 
                                    Relationships     & Systems     Consolidation      Assets           Total 
                                       GBP'000         GBP'000         GBP'000        GBP'000          GBP'000 
       Cost 
  Balance at 1 April 
   2019 (Audited)                           6,117           1,815          14,751          1,424            24,107 
  Additions                                 2,276               -               -            385             2,661 
  Impairment                                    -               -               -          (133)             (133) 
                                    -------------   -------------   -------------   ------------   --------------- 
  Balance at 30 September 
   2019                                     8,393           1,815          14,751          1,676            26,635 
       (Unaudited)                  -------------   -------------    ------------   ------------   --------------- 
 
       Accumulated amortisation 
  Balance at 1 April 
   2019 (Audited)                           2,780             959             235            236             4,210 
  Amortisation                                335              86               -             62               483 
                                     ------------     -----------     -----------   ------------   --------------- 
  Balance at 30 September 
   2019                                     3,115           1,045             235            298             4,693 
       (Unaudited)                    -----------    ------------    ------------   ------------   --------------- 
 
       Net Book Value 
  At 1 April 2019 (Audited)                 3,337             856          14,516          1,188            19,897 
                                           ======          ======          ======         ======           ======= 
  At 30 September 2019                      5,278             770          14,516          1,378            21,942 
  (Unaudited)                              ======          ======          ======         ======           ======= 
 
 
 5.    SHARE CAPITAL                                        Unaudited           Unaudited 
                                                           30 September        30 September 
                                                               2019                2018 
                                                             GBP'000             GBP'000 
       Called up share capital 
 
       Allotted, called up and fully paid 
 
  575,295,801 Ordinary shares of 1 pence 
   each                                                           5,753                    5,372 
 
          30,450,078 Deferred shares of 9 pence 
           each                                                   2,741                    2,741 
 
           465,344,739 Deferred "A" shares of 0.99 
            pence each                                            4,607                    4,607 
                                                           ------------             ------------ 
                                                                 13,101                   12,720 
                                                                 ======                   ====== 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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