REG - Tavistock Investment - Final Results <Origin Href="QuoteRef">TAVI.L</Origin> - Part 1
RNS Number : 9394WTavistock Investments PLC25 August 2015TAVISTOCK INVESTMENTS PLC
RESULTS FOR THE FIFTEEN MONTHS ENDED 31 MARCH 2015
25 AUGUST 2015
Tavistock Investment Plc ("the Company") today announces its financial results for the fifteen months ended March 2015.
The period under review was one of construction and the results include 15 months of overhead costs for the Group's holding company, Tavistock Investments, 10 months of trading for each of Tavistock Partners and Tavistock Wealth and 6 weeks of trading for Standard Financial Group, as well as certain associated transaction and fundraising costs.
Financial highlights:
Total revenue of 5 million (FY13: 176,000 when the Company operated its now discontinued loss making software business)
Post-tax loss of 864,000 (FY13: loss of 516,000)
EBITDA loss of 364,000 (FY13: loss of 309,000)
Net assets at March 2015 of 11.42 million, of which 4.74 million is cash (FY13 net assets: 238,000 including cash of 324,000)
Additional equity capital of 3.35 million raised in February 2015
Operational highlights:
Group established in May 2014 through simultaneous acquisitions of Tavistock Partners, an Independent Financial Advisory (IFA) business, and Tavistock Wealth, an investment management business
Strategic commercial relationship with Novia Financial plc announced in September 2014; investment of 250,000 in shares and provision of a three year, unsecured, convertible loan facility of up to 750,000
Launch of well-received discretionary fund management (DFM) service, which includes the provision of an extensive series of risk progressive model portfolios
Acquisition of Standard Financial Group Ltd which increased geographic reach and operational scale in February 2015
Acquisition of Cornerstone Asset Holdings Ltd. in March 2015
Post-period highlights:
Acquisition of Duchy Independent Financial Advisers to increase presence in West Country
Over 270 advisers, looking after approximately 65,000 clients with over 3 billion of assets under advice
Brian Raven, Tavistock Investment's Chief Executive, commented:
"We have made significant progress this year towards our ambition to become a large and profitable financial services group, by establishing a strong, national financial advisory and investment management business.
Over the coming year, our key focus will be on full integration of the firms we have acquired and ensuring the right infrastructure is in place to grow the Company profitably and rapidly.
We aim to deliver organic growth as well as continue to pursue selective acquisitions that meet our strategic criteria."
For further enquiries, please contact:
Tavistock Investments plc
Oliver Cooke, Chairman
Brian Raven, Chief Executive Tel: 01753 867 000
Northland Capital Partners Limited
William Vandyk / Matthew Johnson Tel: 020 7382 1100
WH Ireland Limited
Chris Fielding / Mark Leonard Tel: 020 7220 1660
Templars Communications Ltd
Kitty Parry Tel: 020 3642 3140
CHAIRMAN'S STATEMENT
I am pleased to present the Company's audited results for the fifteen month period to 31 March 2015 and to report that the Company has made significant progress on its journey towards its principal objective of becoming a large and profitable integrated financial services business.
Highlights:
On 30 May 2014 the foundations of an integrated financial services business were established through the simultaneous acquisitions of Tavistock Partners, formerly County Life and Pensions Ltd, an Independent Financial Advisory (IFA) business based in Kegworth in Derbyshire, and Tavistock Wealth, formerly Blacksquare Limited, an investment management business based in Windsor in Berkshire.
In September 2014 the Company entered into a strategic commercial relationship with Novia Financial plc. Novia is an established wrap platform operator with existing relationships with a high number of IFA firms. Under the terms of the strategic agreement, Tavistock Wealth has endorsed Novia as a preferred platform and Novia will introduce advisers to Tavistock on a selective basis. Tavistock Wealth will grant Novia supporting IFAs access to its services, usually only available to advisers that have joined Tavistock Partners.
As part of the arrangements, Novia and Cocoon Investment Holdings Limited (a substantial investor in Novia) invested a combined 250,000 in Tavistock shares and are providing the Company with a three year, unsecured, convertible loan facility of up to 750,000.
On 10 October 2014 it was announced that Tavistock Wealth had developed and launched a discretionary fund management (DFM) service, predominantly for use by clients of Tavistock Partners. The service includes the provision of an extensive series of risk progressive model portfolios many of which are managed in conjunction with a panel of third party specialists. The performance of these model portfolios has to date been good and the service has been well received by advisers and clients alike. From a standing start in October 2014, Tavistock Wealth now manages some 150 million on behalf of over 1,800 clients.
In February 2015 the Company increased both the geographic reach and the scale of its operations through the acquisition of Standard Financial Group Ltd, whose main subsidiary, Financial Ltd, operates an IFA network business from its base near Cheltenham in Gloucestershire. The Company also raised some 3.35 million of additional working capital through the issue of new ordinary shares.
In March 2015, the Company was able to bring ownership of various books of client relationships into Tavistock Partners through the acquisition of Cornerstone Asset Holdings Ltd.
In May 2015, after the end of the period under review, the Company announced the acquisition of Duchy Independent Financial Advisers Ltd, an IFA business with offices in Truro and in St Ives in Cornwall. It is intended that Duchy acts as a hub for further development of the Group's business in the West Country.
Financial Performance:
The period under review can be characterised as being one of construction and the results, which have been summarised below, include 15 months of overhead costs for the Group's holding company, Tavistock Investments, 10 months of trading for each of Tavistock Partners and Tavistock Wealth and 6 weeks of trading for Standard Financial Group as well as certain associated transaction and fundraising costs.
Tavistock Partners has traded profitably since its acquisition and as Tavistock Wealth's revenues have grown it is now close to trading profitably on a consistent basis. The historic drop in the number of members within Financial's network prior to its acquisition by the Group caused that business to be trading at a loss at the time of its acquisition. However, measures are now being taken to mitigate these losses and these are summarised in more detail in the Strategic Report. Duchy continues to trade profitably.
For the period under review the Group has reported total revenues of 4,999,000 (year ended 31 December 2013, at a time when it still operated its now discontinued loss making software business, 176,000) and EBITDA (earnings before interest, taxation, depreciation and amortisation) of (364,000) (year ended 31 December 2013 (309,000)). The reported loss before taxation was (983,000) and (864,000) after taxation (year ended 31 December 2013 (516,000)). As at 31 March 2015 the Group had net assets of 11,424,000 of which 4,739,000 was represented by cash (31 December 2013 net assets 238,000 including cash of 324,000).
Current Status:
236 financial advisers from Financial Limited have now transferred to the newly established Tavistock Financial network. Together with the Tavistock Partners network, Duchy IFAs and new joiners, this means we now have over 270 advisers covering most regions of the UK, looking after some 65,000 clients with over 3 billion of assets under advice. Tavistock Wealth already manages 150 million and is making rapid progress. With some 4.74 million of available cash resources, the Group is also well placed to take advantage of the opportunities that it has to further develop the business.
Future Prospects:
In contrast to the period under review the current year can be characterised as one of establishment during which the Board will be focused on integrating the businesses that have been acquired and putting in place the infrastructure required for the Company to deliver attractive performance in the following year. It remains our objective to introduce and to manage a dividend stream for the benefit of the Company's shareholders at the earliest practical opportunity.
I would like to thank all of our staff for their hard work and their commitment during the period and I look forward to updating shareholders on our continued progress in the near future.
Oliver Cooke
Executive Chairman
24 August 2015
STRATEGIC REPORT
The Company's prime objective, to become a large and profitable integrated financial services business, remains unchanged.
During the period under review the Board's principal focus was on the creation of an integrated business, offering both financial advisory and investment management services to its clients, and on ensuring that both of these activities operate in concert.
Having achieved this, the Board's focus moved to securing the critical mass and establishing the infrastructure that would enable the Group to generate meaningful levels of profitability in future years. This will in turn enable the Board to deliver another of its objectives, namely the establishment and management of a dividend stream for the benefit of the Company's shareholders.
The Board currently has three main areas of focus, which in effect are the yardsticks by which its success can be measured.
These can be summarised as follows.
- the reorganisation of Standard Financial Group and the integration of the business of its principal subsidiary, Financial Ltd, into the Group,
- the adaptation and implementation of a new software system to automate significant elements of the advisory business and thereby to greatly enhance both productivity and compliance oversight, and
- to significantly increase the uptake of the Group's investment management services.
Reorganisation:
The Company has recently secured regulatory consent for one of its other subsidiary companies, Tavistock Financial Ltd, to operate an IFA network business and with the sanction of the Regulator, the Company has transferred the majority of the members of Financial's network the new Tavistock Financial network. Some members of Financial's network may in due course be invited to become appointed representatives of the Group's other advisory business, Tavistock Partners, where a retirement guarantee is made available to members. It is anticipated that in due course Financial Ltd will cease to provide network services and that the entity will then be closed down.
The establishment of the new network will enable the Company to achieve significant operational cost savings, most notably through a reduction in the level of the professional indemnity insurance premium and other regulatory fees.
Automation:
Contracts have been signed for the introduction of a new software system that will ultimately be used by all advisers wishing to operate under the Company's banner.
The new system will allow advisers to operate more cost effectively. It will also enable the Company to improve its monitoring of advisers' activity and to ensure that clients are consistently treated in a fair, professional and efficient manner.
Uptake of Investment Services:
Tavistock Partners' clients were first advised of the Company's new DFM service in August 2014. The service is competitively priced and offers wide choice. The vast majority of model portfolios have consistently outperformed comparable industry benchmarks. As a consequence it has been well received by advisers and clients alike.
The focus now is on increasing the target audience for the service and thereby increasing the level of assets managed by Tavistock Wealth.
This will be achieved primarily by making the service available for use where appropriate by the clients of those members who have joined the Tavistock Financial network. It is also intended to improve access to the service by making a number of the model portfolios available on a wider range of platforms.
Risks and Uncertainties:
The principal risk facing the business relates to the execution of the strategy outlined above.
There can be no absolute certainty that the planned cost savings will be delivered within the anticipated timescales, that the deployment of the new software system will go as planned or that the rapid pace at which the DFM service has been adopted to date will continue into the future. However, a great deal has been achieved by senior management in the short period of the Group's operational existence and the Board remains confident that rapid progress will continue.
The Company also faces the usual risks of operating within a regulated environment, but to mitigate these risks the Board actively promotes an ethos and culture in which the client is placed at the centre of everything that the Company does.
The Board considers that the Company has sufficient working capital for its current needs.
Future Prospects:
The Company has a number of significant growth opportunities and is well placed to take advantage of these. This is an exciting time for the Company and I look forward to reporting to you in the near future on the next milestones that your Company achieves.
Principal Activities, Review of the Business and Future Developments
The principal activities of the Group during the period were the provision of support services to a network of IFAs and the provision of investment management services. The key performance indicators recognised by management are gross revenues, IFA numbers and the level of clients' assets under advice or management by the Group.
An overall review of the Group's trading performance and future developments is given in the Chairman's Statement and in the Strategic Report. The Group is not unduly impacted by environmental matters and as a consequence does not offer comment on them.
Substantial shareholdings
The company has been advised of the following interests in more than 3% of its ordinary share capital as at 3 August 2015:
Name
Number of shares
% of Ordinary shares
Andrew Staley
35,625,000
12.23%
Stephen Moseley
32,422,244
11.13%
Kevin Mee
27,066,666
9.29%
Paul Millott
27,000,000
9.27%
City Financial
25,000,000
8.58%
Brian Raven
14,993,756
5.15%
Directors
The Directors of the Company during the period were:
Executives:
Oliver Cooke
Brian Raven (appointed 12 May 2014)
Non Executives:
Roderic Rennison (appointed 12 May 2014)
Philip Young (appointed 12 May 2014)
Former Non Executives: Dominic Wheatley and William Astor resigned on 12 May 2014.
Oliver Cooke
Executive Chairman, aged 60
Oliver has over 35 years of financial and business development experience gained in a range of quoted and private companies including over fifteen years' experience as a public company director. He has considerable experience in the fields of 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 59
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 100 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 60
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 RDR, for which he chaired the professionalism and reputation work stream.
Philip Young
Non-Executive Director, Chairman of Audit Committee, aged 41
Philip began his career in 1996 at a small financial consultancy business specialising in complex regulatory issues, CCL, in Macclesfield. Philip moved to Bankhall Investment Associates Ltd in 1998, where he worked initially in the compliance area, then moved to become Commercial Manager for Bankhall's e-commerce department. In 2003 he co-founded threesixty services LLP and threesixty support LLP, with a number of colleagues, and became an equity partner. threesixty has grown to become one of the most significant forces in adviser support in the UK, providing professional business services to over 700 firms with more than 7000 advisers. threesixty was acquired by Standard Life Plc in 2010, after which Philip was appointed Managing Director and continues to run the business today.
Corporate Governance
The Board confirms that the Group has had regard, throughout the accounting period, to the provisions set out in the UK Corporate Governance Code which was issued by the Financial Reporting Council in May 2010 and updated in September 2014. Whilst not required to do so the Directors, as a matter of best practice, have voluntarily endeavoured to comply with those of the provisions which they consider to be relevant to a company of this size.
The Board of Directors
The Board currently comprises two executive Directors and two non-executive Directors.
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 judgment to issues brought before the Board.
The Board meets at least ten times per year and more frequently where necessary to approve specific decisions. Directors may take independent professional advice at the Company's expense.
The Audit Committee
The Audit Committee is comprised of the Chairman and the non-executive Directors 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 receives and reviews reports from management and the Company's auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The Audit Committee has unrestricted access to the Company's auditors.
During the 15 month period under review the Audit Committee met twice.
The Nomination Committee
The Directors do not consider it necessary for a company of this size to have a separate Nomination Committee.
Directors' interests
The Directors beneficial interests in the Ordinary Share Capital and options to purchase such shares were as follows:
Ordinary shares of 1p each
31 March 2015
31 December 2013
Share options
Shares
Share options
Shares
Executive Directors:
Oliver Cooke (*)
1,600,000
1,616,667
-
200,000
Brian Raven (*)
1,600,000
14,993,756
N/A
N/A
Non-executives Directors:
Roderic Rennison
Philip Young
-
-
250,000
500,000
N/A
N/A
N/A
N/A
Dominic Wheatley (**)
N/A
N/A
265,000
1,118,051
Lord Astor (**)
N/A
N/A
320,461
500,000
The figures for 31 December 2013 are presented as if the consolidation of Ordinary Shares on 2 June 2014 on the basis of 1 New Ordinary Share of 1p each for every 100 existing Ordinary Shares of 0.01p each had already taken place.
(*) In addition to the above interests in the Ordinary Shares of the Company, Oliver Cooke and Brian Raven have each subscribed for 5,000,000 A Ordinary Shares at 0.05 pence per share and have each been granted options over 50,000 G Ordinary shares of 1p each, as detailed in the table in the Remuneration Report. Either the 100,000 G Ordinary Shares, referred to in the table in the Remuneration Report, or the 10,000,000 A Ordinary Shares, but not both, will convert as a class into such number of Ordinary Shares as shall equate to 10 per cent of the Company's issued share capital as enlarged by such conversion on or after 31 July 2016.
(**) Dominic Wheatley and Lord Astor resigned on 12 May 2014.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE 15 MONTH PERIOD ENDED 31 MARCH 2015
15 months ended
Year ended
31 March
31 December
2015
2013
Note
'000
'000
Revenue
4,999
176
Cost of sales
(3,346)
(113)
------------
------------
Gross profit
1,653
63
Analysis of administrative expenses
Administrative expenses - other
(2,592)
(372)
Transaction costs
(476)
-
Impairment of intangible assets
(231)
-
Gain on bargain purchase
1,282
-
Amortisation and depreciation
(621)
(114)
Total administrative expenses
(2,638)
(486)
--------------
--------------
Loss from Operations
4
(985)
(423)
Memorandum:
Earnings before Interest, Tax, Depreciation and Amortisation
(364)
(309)
Depreciation and Amortisation
(621)
(114)
--------------
--------------
Loss from Operations
(985)
(423)
Loss on disposal of discontinued operations
-
(92)
Finance costs
(2)
(2)
Finance income
4
1
------------
--------------
Loss before taxation and attributable to equity holders of the parent
(983)
(516)
Taxation
6
119
-
------------
------------
Loss after taxation and attributable to equity holders of the parent and total comprehensive income for the period
(864)
(516)
======
======
Loss per share (continuing operations)
Basic
7
(0.85)p
(7.36)p
Diluted
(0.78)p
(7.36)p
======
=======
The results above relate to continuing operations for the period ending 31 March 2015. Revenue and Cost of sales for the year ended 31 December 2013 relate wholly to discontinued operations. Of the 423,000 of Loss from Operations in 2013, 194,000 relates to discontinued operations and 229,000 to continuing operations.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 15 MONTH PERIOD ENDED 31 MARCH 2015
Share capital
Share premium
Merger reserve
Retained deficit
Shares to be issued
Total equity
'000
'000
'000
'000
'000
'000
31 December 2012
7,277
11,529
(118)
(18,481)
135
342
Issue of shares
194
358
-
-
(135)
417
Reserves transfers
-
-
118
(123)
-
(5)
Loss before and after tax and total
comprehensive income
-
-
-
(516)
-
(516)
-----------
-------------
----------
----------------
------------
------------
31 December 2013
7,471
11,887
-
(19,120)
-
238
------------
-------------
----------
---------------
------------
-----------
Issue of shares
2,774
8,799
-
-
-
11,573
Loss after tax and total comprehensive income
-
-
-
(864)
-
(864)
Equity settled share based payments
-
-
-
587
-
587
Costs charged against share premium
-
(110)
-
-
-
(110)
-------------
--------------
-------------
---------------
---------------
--------------
31 March 2015
10,245
20,576
-
(19,397)
-
11,424
--------------
--------------
-------------
--------------
--------------
--------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2015
31 March 2015
31 December 2013
'000
'000
'000
'000
ASSETS
Non-current assets
Property, plant and equipment
8
69
-
Intangible assets
9
12,733
-
-----------------
-----------------
Total non-current assets
12,802
-
Current assets
Trade and other receivables
10
4,377
43
Cash and cash equivalents
4,739
324
-----------------
-----------------
Total current assets
9,116
367
-----------------
-----------------
Total assets
21,918
367
LIABILITIES
Current liabilities
11
(3,158)
(129)
Non-current liabilities
Other payables
11
(2,604)
-
Provisions
12
(3,663)
-
Deferred taxation
(1,069)
-
------------------
---------------
Total liabilities
(10,494)
(129)
------------------
---------------
Total net assets
11,424
238
=========
=======
Capital and reserves attributable to owners
of the parent
Share capital
15
10,245
7,471
Share premium
20,576
11,887
Retained deficit
(19,397)
(19,120)
------------------
---------------
Total equity
11,424
238
=========
=======
The financial statements were approved by the Board and authorised for issue on 24 August 2015.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE 15 MONTH PERIOD ENDED 31 MARCH 2015
15 Months ended
31 March 2015
Year ended
31 December 2013
'000
'000
'000
'000
Cash flows from operating activities
Loss before tax
Adjustments for:
(983)
(516)
Share based payments
587
-
Depreciation on property plant and equipment
26
-
Amortisation of intangible assets
595
-
Impairment of intangible assets
231
-
Gain on bargain purchase
(1,282)
-
Loss on disposal of discontinued operations
-
92
Net Finance (income)/costs
(2)
1
-----------------
-----------------
Cash flows from operating activities before changes
in working capital
(828)
(423)
Increase in trade and other receivables
(772)
(43)
Decrease in trade and other payables
(58)
(30)
-----------------
-----------------
Cash used in operations
(1,658)
(496)
Investing activities
Finance income
4
1
Net cash on hive down of subsidiary
-
372
Purchase of property, plant and equipment
(21)
-
Cash on acquisition
2,604
-
Acquisition of subsidiaries
(600)
-
-----------------
-----------------
Net cash generated from investing activities
1,987
373
Financing activities
Finance costs
(2)
(2)
Issue of new share capital (net of costs)
4,088
417
-----------------
-----------------
Net cash from financing activities
4,086
415
-----------------
-----------------
Net increase in cash and cash equivalents
4,415
292
Cash and cash equivalents at beginning of the period
324
32
------------------
------------------
Cash and cash equivalents at end of the period
4,739
324
=========
=======
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 31 MARCH 2015
1. ACCOUNTING POLICIES
Principal accounting policies
The Company is a public company incorporated and domiciled in the United Kingdom. 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 financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs") and those parts of the Companies Act 2006 which apply to companies preparing their financial statements under IFRSs.
Frequency of Reporting
The accounting reference date of various group companies has been changed to create a uniform reporting date for the Group of 31 March in each year.
Changes in accounting policies
Standards issued but not yet effective up to the date of issuance of the Group's financial statements are listed below:
IFRS 9 Financial Instruments (effective from 1 April 2015)
IFRS 14 Regulatory Deferral Accounts (effective from 1 April 2016)
The implementation of these standards is not expected to have any material effect on the Group's financial statements.
Going concern
The Directors' current anticipation is that in due course the activities of Standard Financial Group Ltd, together with its subsidiaries Financial Ltd and Investments Ltd, will cease and that these entities will then be closed down. They are of the opinion that all group companies, including these subsidiaries, have sufficient working capital for the foreseeable future and on this basis consider it appropriate that the accounts be prepared on a going concern basis.
Basis of Consolidation
During the period the Group acquired a number of new subsidiaries and 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. The comparative figures reflect the results of Tavistock Investments Plc together with the results of its previous subsidiary undertaking, SocialGO Development Limited, until 29 July 2013.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. All such revenue is reported net of discounts and Value Added Tax. Revenue represents either gross Independent Financial Adviser ("IFA") income or investment management fees receivable in respect of the period. This revenue is recognised as and when it is earned and is calculated on a monthly basis.
Goodwill
Goodwill results from 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. Included within Goodwill are various intangible assets (such as FCA permissions, Tavistock Wealth's OEIC structure, established systems and processes, management knowhow and experience, 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 considered to be five years. The residual element of Goodwill is not being amortised but is subject to an annual impairment review.
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 rate method.
Cash and cash equivalents: Cash and cash equivalents include cash in hand and deposits held at call with UK banks.
Financial liabilities
Other financial liabilities include trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.
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 16.
Property, plant and equipment
Property, plant and equipment are stated at cost net of accumulated depreciation and provision for impairment. Depreciation is provided on all property plant and equipment, 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 - 4 years straight line
Office fixtures, fittings & equipment - 4 - 7 years straight line
Impairment of Assets
Impairment tests on goodwill are undertaken annually at the balance sheet 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 property, plant and equipment 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 balance sheet 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 or 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 difference can be utilised. The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the balance sheet 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.
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 judgments 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 judgments and estimations is contained below, as well as in the accounting policies and accompanying notes to the financial statements.
Impairment of goodwill and 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 determined based on value in use calculations. The Group has impaired goodwill and intangible assets of 231,000 during the period (31 December 2013 - Nil).
3. SEGMENTAL INFORMATION
During the period under review, the Group acquired businesses in the financial services sector. A segmental analysis of revenue and expenditure for the period is:
Investment Management
Advisory
Support
Total
'000
'000
'000
REVENUE
Fees and Commissions
443
4,358
4,801
Other
-
198
198
------------
---------------
-------------
TOTAL REVENUE
443
4,556
4,999
------------
---------------
-------------
Cost of Sales
264
3,082
3,346
------------
---------------
-------------
Administrative Expenses (including Plc costs)
339
2,299
2,638
------------
---------------
-------------
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.
As this is the first accounting period in which the Group has traded in the financial services sector, no comparative figures are available. During the period under review the Group operated exclusively within the UK.
15 months ended
Year ended
31 March 2015
31 December 2013
'000
'000
Revenue
United Kingdom
4,999
28
United States of America
-
110
EU (non-UK)
-
10
Other
-
28
------------
-----------
4,999
176
======
=====
4.
LOSS FROM OPERATIONS
15 months ended
Year ended
31 March 2015
31 December 2013
'000
'000
This is arrived at after charging:
Staff costs (see note 5)
1,538
144
Depreciation
26
1
Amortisation of intangible fixed assets
595
113
Impairment of intangible fixed assets
231
-
Auditors' remuneration in respect of Company
21
14
Audit of subsidiary undertakings
35
-
Auditors' remuneration - non-audit services - interim
4
-
Auditors' remuneration - non-audit services - taxation
9
-
Auditors' remuneration - non-audit - Reporting accountants
138
-
Operating lease expense - property
107
1
=====
=====
5.
STAFF COSTS
15 months ended
Year ended
31 March 2015
31 December 2013
'000
'000
Staff costs for all employees, including directors and development
staff consist of:
Wages, fees and salaries
864
133
Social security costs
58
11
Pensions
29
-
-----------
-----------
951
144
Share based payment charge
587
-
-----------
-----------
1,538
144
=====
======
15 months ended
Year ended
31 March 2015
31 December 2013
The average number of employees of the group during the period
Number
Number
was as follows:
Directors and management
9
5
Operations and administration
60
2
Development
-
2
-----------
-----------
69
9
======
======
The highest paid director during the period was paid 104,166 (31 December 2013: 58,000).
Directors' Detailed Emoluments
Details of individual Directors' emoluments for the 15 month period are as follows:
Salary and fees
Benefits in kind
Pension contributions
Total
2015
Total
2013
O Cooke
83,333
12,500
8,333
104,166
58,000
B Raven
83,333
12,500
8,333
104,166
-
P Young*
18,750
-
-
18,750
-
R Rennison*
21,875
-
-
21,875
-
D Wheatley*
-
-
-
-
15,000
Lord Astor*
-
-
-
-
15,000
----------------
---------------
--------------
----------------
---------------
207,291
25,000
16,666
248,957
88,000
========
=======
=======
=======
=======
*Denotes non-executive Director
6.
TAXATION ON LOSS FROM ORDINARY ACTIVITIES
15 months ended
Year ended
31 March 2015
31 December 2013
'000
'000
Current tax (see below)
-
-
Deferred tax credit
119
-
-----------
-----------
Tax credit for the period
119
-
=====
=====
Loss on ordinary activities before tax
(983)
(516)
=====
=====
The tax assessed for the period differs from the standard rate of corporation tax in the UK applied to loss before tax.
Period ended
Year ended
31 March 2015
31 December 2013
'000
'000
The differences are explained below:
Loss on ordinary activities at the standard rate of corporation tax in
the UK of 21.4% (2013: 23.25%)
(210)
(120)
Effects of:
Losses transferred on disposal of operating business
-
100
Unutilised losses and other deductions
71
20
Expenses not deductible for tax purposes
12
-
Other short term timing differences
126
-
Differences between capital allowances and depreciation
1
-
-----------
-----------
Current tax for period (see above)
-
-
=====
======
The deferred tax liability relates entirely to timing differences arising on the recognition of intangible fixed assets. The credit to the profit and loss account in the period represents the reduction in these differences between point of initial recognition and the period end.
The Group has not recognised a deferred tax asset of 240,000 in relation to trading losses carried forward and the share based payments charge due to uncertainty around the timing and recoverability of such losses.
7.
LOSS PER SHARE
15 months ended
Year ended
31 March 2015
31 December 2013
'000
'000
Loss per share has been calculated using the following:
Loss ('000)
(864)
(516)
Weighted average number of shares ('000s)
101
7
--------------
---------------
Basic loss per ordinary share
(0.85)p
(7.36)p
=======
========
Loss per ordinary share has been calculated using the weighted average number of shares in issue during the relevant financial periods, allowing for the consolidation of Ordinary Shares on 2 June 2014. The diluted loss per share is calculated on the diluted weighted average number of shares of 111,000.
8.
PROPERTY, PLANT AND EQUIPMENT
Office fixtures
Computer
fittings and
equipment
equipment
Total
'000
'000
'000
Cost
Balance at 1 January 2014
-
-
-
Additions
21
-
21
On acquisition
294
36
330
---------
--------------
---------------
Balance at 31 March 2015
315
36
351
---------
--------------
---------------
Accumulated depreciation
Balance at 1 January 2014
-
-
-
Depreciation charge
21
5
26
On acquisition
229
27
256
---------
--------------
---------------
Balance at 31 March 2015
250
32
282
---------
--------------
---------------
Net Book Value
At 31 March 2015
65
4
69
=====
=====
=====
At 31 December 2013
-
-
-
====
=====
======
9.
INTANGIBLE ASSETS
Customer
Regulatory
Goodwill
& Adviser
Approvals
Arising on
Relationships
& Systems
Consolidation
Total
'000
'000
'000
'000
Cost
Balance at 1 January 2014
-
-
-
-
Additions
4,591
1,350
7,618
13,559
-------------
-------------
-------------
---------------
Balance at 31 March 2015
4,591
1,350
7,618
13,559
-------------
-------------
------------
---------------
Accumulated amortisation
Balance at 1 January 2014
-
-
-
-
Impairment charges
26
-
205
231
Amortisation
162
433
-
595
------------
-----------
-----------
---------------
Balance at 31 March 2015
188
433
205
826
-----------
------------
------------
---------------
Net Book Value
At 31 March 2015
4,403
917
7,413
12,733
======
======
======
=======
At 31 December 2013
-
-
-
-
======
======
======
=======
Customer and Adviser Relationships 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.
Both the above intangible asset classes have remaining amortisation periods between four and five years.
GOODWILL AND IMPAIRMENT
The carrying value of goodwill in respect of each subsidiary entity is as follows:
Goodwill carrying amount
31 March 2015
31 December 2013
'000
'000
Standard Financial Group Limited (and subsidiaries)
260
-
Tavistock Wealth Limited
1,915
-
Tavistock Partners Limited
5,004
Cornerstone Asset Holdings Limited
234
-
-------------
-------------
7,413
-
======
=======
In determining whether to impair the carrying value of goodwill the Directors have given consideration to the anticipated performance of each of these entities as part of a value in use calculation. Their consideration included reference to a generally accepted future medium term (three year) growth rate of 10%, followed by a long term rate of 3% thereafter. They also assumed a discount rate of 15%. It is considered that any reasonably possible levels of change in the key assumptions would not result in impairment of the goodwill.
ACQUISITIONS DURING THE PERIOD
Tavistock Partners Limited
On 30 May 2014, the Group acquired 100% of the ordinary shares in Tavistock Partners Limited, formerly County Life and Pensions Limited, an independent financial advisory company, for a total consideration of 7,350,000 which was satisfied in full through the issue to the vendors of 98,000,000 ordinary shares of 1p each at an issue price of 7.5 pence per share.
Book
Fair value
Fair value
value
adjustments
to group
'000
'000
'000
Cost
Tangible fixed assets
10
-
10
Intangible fixed assets
-
2,800
2,800
Debtors
434
-
434
Cash at bank and in hand
123
-
123
Creditors due within one year
(409)
-
(409)
Deferred taxation
-
(560)
(560)
---------
--------------
------------
Net assets on acquisition
158
2,240
2,398
---------
--------------
------------
Included in the Consolidated Statement of Comprehensive Income is revenue of 3,396,000 and profit of 497,000 arising from Tavistock Partners Limited.
Tavistock Wealth Limited
On 30 May 2014, the Group also acquired 100% of the ordinary shares in Tavistock Wealth Ltd, formerly Blacksquare Limited, an investment management company, for an initial consideration of 1 in cash and deferred consideration to be calculated by reference to the value of funds under management at 31 May 2016 and to be settled through the issue of new ordinary shares of 1p each at an issue price of 7.5p per share. The Directors' estimate of the value of the deferred consideration on acquisition was 2,222,000.
Book
Fair value
Fair value
value
adjustments
to group
'000
'000
'000
Cost
Tangible fixed assets
5
-
5
Intangible fixed assets
-
650
650
Debtors
21
-
21
Cash at bank and in hand
2
-
2
Creditors due within one year
(182)
-
(182)
Creditors due after more than one year
(59)
-
(59)
Deferred taxation
-
(130)
(130)
---------
--------------
---------
Net (liabilities)/assets on acquisition
(213)
520
307
---------
--------------
---------
Included in the Consolidated Statement of Comprehensive Income is revenue of 443,000 and a loss of 77,216 arising from Tavistock Wealth Limited.
Standard Financial Group Limited and Subsidiaries
On 13 February 2015, the Group acquired 100% of the ordinary shares of Standard Financial Group Limited, together with its two operating subsidiaries Financial Limited and Investments Limited. The main trading subsidiary, Financial Limited, provides network services to independent financial advisors. The initial consideration was 500,000 in cash and the deferred consideration, to be calculated by reference to the number of network members at completion remaining with the Group at 31 January 2016, will be settled at the Company's discretion either in cash or through the issue of new ordinary shares of 1p each at an issue price of 7.5p per share. The Directors' current estimate of the maximum value of the deferred consideration in 600,000.
Book
Fair value
Fair value
value
adjustments
to Group
'000
'000
'000
Cost
Tangible fixed assets
47
-
47
Intangible fixed assets
-
1,300
1,300
Debtors
432
-
432
Cash at bank and in hand
2,478
-
2,478
Creditors due within one year
(1,870)
-
(1,870)
Deferred taxation
-
(260)
(260)
------------
--------------
------------
Net assets on acquisition
1,087
1,040
2,127
------------
--------------
--------------
Included in the Consolidated Statement of Comprehensive Income is revenue of 1,159,000 and a loss of 61,000 arising from Standard Financial Group Limited and Subsidiaries.
Cornerstone Asset Holdings Limited and Subsidiary
On 30 March 2015, the Group acquired 100% of the ordinary shares of Cornerstone Asset Holdings Limited, a company with a number of pre-existing client relationships together with its subsidiary, Sutcliffe Solloway Financial Planning Limited, an FCA regulated entity, for a cash consideration of 100,000.
Book
Fair value
Fair value
value
adjustments
to group
'000
'000
'000
Cost
Intangible fixed assets
1,097
100
1,197
Cash at bank and in hand
1
-
1
Creditors due within one year
(709)
-
(709)
Creditors due after more than one year
(619)
-
(619)
Deferred taxation
-
(239)
(239)
---------
--------------
---------
Net liabilities on acquisition
(230)
(139)
(369)
---------
--------------
---------
Sutcliffe Solloway Financial Planning Limited has subsequently changed its name to Tavistock Financial Limited.
No revenue, profit or loss arising from Cornerstone Asset Holdings Limited is included in the Consolidated Statement of Comprehensive Income.
10.
TRADE AND OTHER RECEIVABLES
31 March 2015
31 December 2013
'000
'000
Trade receivables
665
-
Prepayments and accrued income
697
13
Amounts recoverable in respect of claims and complaints
2,855
-
Other receivables
160
30
-------------
-------------
4,377
43
======
=======
11.
LIABILITIES
31 March 2015
31 December 2013
'000
'000
Current liabilities
Trade payables
1,060
5
VAT and social security liabilities
119
-
Accruals
636
124
Deferred consideration on acquisitions (see note 14)
1,190
-
Other payables
83
-
Corporation tax payable
70
-
-------------
-------------
3,158
129
======
=======
Non-current liabilities
Loan
250
-
Deferred consideration on acquisitions (see note 14)
2,354
-
-------------
-------------
2,604
-
======
=======
Novia Financial plc and Cocoon Investment Holdings Ltd have provided the Company with a three year, unsecured, convertible loan facility of up to an aggregate of 750,000, for business development and working capital purposes of which 250,000 had been drawn down at the balance sheet date.
Interest on amounts drawn down under the facility accrue at the rate of 1 per cent. per annum over the base rate and are paid quarterly. Any funds drawn down under the Loan Facility fall due for repayment at the end of the term, being 27 August 2017. The principal sum outstanding under the Loan Facility may be converted, at a share price of 7.5 pence per share, into new ordinary shares in the capital of the Company at any time prior to the end of the term at the discretion of the Lenders.
12.
PROVISIONS
Clawback
of indemnity
Claims and
commission
Complaints
Total
'000
'000
'000
Balance at 1 January 2014
-
-
-
Claims arising on acquisition
-
3,383
3,383
Other new provisions made
214
66
280
-------------
-------------
-------------
214
3,449
3,663
======
======
=======
Provision for claw back of indemnity commission
The provision for clawback of indemnity commission represents the potential cost of claw backs from product providers as a consequence of subsequent policy cancellations or from mid-term adjustments in respect of policies written at 31 March 2015. The amount provided represents the gross potential obligation and, where these amounts can be recovered from network members, a corresponding asset is recognised.
Claims and Complaints
The amount provided for potential claims arising from the conduct of thematic past business reviews and from potential specific complaints received from clients of the network's advisers represents the gross obligation and, where these amounts can be recovered from insurers or from network members and insurers, a corresponding asset is recognised.
13. 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 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 2015
31 December 2013
'000
'000
Loans and receivables
Trade receivables
665
-
Cash and cash equivalents
4,739
324
Financial liabilities at amortised cost
Trade and other payables
1,060
5
Accruals
636
124
======
=======
The table below illustrates the due date of trade receivables:
31 March 2015
31 December 2013
'000
'000
Current
444
-
31 - 60 days
8
-
61 - 90 days
2
-
91 - 120 days
208
-
121 and over
3
-
-------------
-------------
665
-
======
======
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 and so cash holdings may be high during certain periods throughout the period.
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.
Cash at bank and cash equivalents
Floating rate financial assets of 1,542,000 (31 December 2013: 324,000) comprise Sterling cash deposits on special interest bearing accounts. Fixed rate financial assets on short term deposit comprised 406,000 (2013: nil), which carried a weighted average rate of interest of 0.65% (2013: 0.25%).
31 March 2015
31 December 2013
'000
'000
At 31 March 2015 the Group had the following cash balances:
4,739
324
======
======
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.
The table below illustrates the ageing of trade payables:
31 March 2015
31 December 2013
'000
'000
Current
761
5
31 - 60 days
37
-
61 - 90 days
8
-
91 - 120 days
254
-
-------------
-------------
1,060
5
======
======
Capital Disclosures and Risk Management
The Group's management define capital as the Group's equity share capital and reserves.
The Group's objective when maintaining capital is to safeguard the Group's ability to continue as a going concern, so that it can begin to 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.
Share capital is used to raise cash and as direct payments to third parties for assets or services acquired.
Market risk
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.
14.
DEFERRED CONSIDERATION
31 March 2015
31 December 2013
'000
'000
In respect of:
Tavistock Wealth Limited (after more than one year)
2,222
-
Standard Financial Group Limited (within one year)
600
-
Cornerstone Asset Holdings Limited (within one year)
590
-
Cornerstone Asset Holdings Limited (after more than one year)
132
-------------
-------------
3,544
-
=======
=======
Acquisition of Tavistock Wealth Limited
The Directors' estimate of the value of the deferred consideration on acquisition was 2,222,000 which has been calculated by reference to an estimated value of the funds under management at 31 May 2016 and is to be settled through the issue of ordinary shares of 1p each at an issue price of 7.5p per share.
Acquisition of Standard Financial Group Limited
The Directors' current estimate of the maximum value of the deferred consideration is 600,000, which has been calculated by reference to the number of network members at completion who still remain with the Group at 31 January 2016 and will be settled, at the Company's discretion, either in cash or through the issue of ordinary shares of 1p each at an issue price of 7.5p per share.
Cornerstone Asset Holdings Limited
The Group acquired Cornerstone Asset Holdings Limited for a cash consideration of 100,000. The deferred consideration referred to in the table above relates to the amount owed in respect of businesses previously acquired by Cornerstone Asset Holdings Limited and has been calculated by reference to the anticipated revenues to be generated by those businesses.
15.
SHARE CAPITAL
31 March 2015
31 December 2013
'000
'000
Called up share capital
Allotted, called up and fully paid
289,615,305 Ordinary shares of 1 pence each
(2013: 1,228,916,168 shares of 0.01 pence each)
2,896
122
10,000,000 Ordinary "A" shares of 0.01 pence each
1
1
30,450,078 Deferred shares of 9p each
2,741
2,741
465,344,739 Deferred "A" shares of 0.99 pence each
4,607
4,607
------------
-------------
10,245
7,471
======
======
On 2 June 2014 the Company's ordinary shares were consolidated on the basis of 1 new ordinary share of 1p each for every 100 existing ordinary shares of 0.01p each. On the same date, the Company issued 98,000,000 new ordinary shares of 1p each at an issue price of 7.5p per share in consideration for the acquisition of Tavistock Partners Limited and a further 6,666,667 new ordinary shares of 1p each at an issue price of 7.5p per share to raise 500,000, before expenses, of additional working capital. It also issued an aggregate of 333,334 new ordinary shares of 1p each at an issue price of 7.5p per share to Oliver Cooke and Brian Raven as an underwriting fee.
In September 2014, the Company placed 4,533,334 ordinary shares of 1p each at an issue price of 7.5p per share to raise 340,000, before expenses, of additional working capital.
In February 2015, the Company issued an aggregate total of 167,792,809 ordinary shares of 1p each at an issue price of 2p per share to raise 3,355,856, before expenses, of additional working capital.
Transaction costs
During the period, 110,000 (2013: nil) of fund raising costs relating to the issue of shares were offset against the value standing to the credit of the share premium account.
Share Options
During the period, the Company issued options within its EMI (Enterprise Management Incentive) Share Option Scheme to Directors and senior management over a total of 8,300,000 ordinary shares of 1p each with an exercise price of 5.25p per share. Half of these options become capable of exercise in October 2017 and the other half become capable of exercise in October 2019.
In addition the Company granted options within the Scheme over 100,000 G Ordinary shares with an exercise price of 1p per share. Either the 100,000 G Ordinary Shares, or the 10,000,000 A Ordinary Shares, referred to in the Share Capital table above, but not both, will convert as a class into such number of Ordinary Shares as shall equate to 10 per cent. of the Company's issued share capital as enlarged by such conversion on or after 31 July 2016.
At the beginning of the period there existed a number of options that had been granted by the previous management of the Company. Following the consolidation of the Company's ordinary shares on 2 June 2014 the number of shares covered by these options was 1,098,947 of which a significant proportion, being options over 598,947 shares, were sufficiently out of the money as to cause them to be of negligible value. The options over the remaining 500,000 shares have an exercise price of 5p per share.
For the purposes of the table in Note 16, the options of negligible value have been ignored on the grounds of materiality.
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 deficit Cumulative net gains and losses recognised in the consolidated statement of
comprehensive income.
16.
SHARE BASED PAYMENTS
During the period the Company issued options over 8,300,000 Ordinary shares under its EMI Share Option Scheme.
These options have been valued using the Black- Scholes pricing model. The assumptions used in the model are:
Share price at grant
7.25p
Exercise price
5.25p
Expected volatility
40%
Expected life
10 years
Risk free rate
1.8%
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.
Ordinary shares
Weighted
average price
(pence)
Number
Outstanding at the beginning of the period*
5.00
500,000
Granted during the period
5.25
8,300,000
---------------
-------------------
Outstanding at the end of the period
5.24
8,800,000
=======
=========
*Following consolidation of 1 new ordinary share of 1p each for every 100 existing ordinary shares of 0.01p each.
The exercise price of options outstanding at the end of the period, 500,000 of which had vested, was 5.235p and their weighted contractual life was 9.6 years. Exercise prices at the end of the period ranged from 5p to 5.25p.
There were no options exercised in the period. The weighted average fair value of each option granted during the current period was 3.91p and their weight average contractual life was 10 years. No options granted during the period had vested.
The Company had also issued EMI options over 100,000 G Ordinary Shares which, subject to certain performance criteria, could convert into such number of ordinary shares as would be equivalent to 10% of the Company's issued share capital as enlarged by such conversion on or after 31 July 2016. These options have been valued by reference to a current assessment of the Company's future market capitalisation.
17. RELATED PARTY TRANSACTIONS
Following the successful completion of the initial transactions on 30 May 2014, the Company paid 108,333 to Corrib Associates, an entity controlled by Oliver Cooke and 104,000 to Brian Raven for consultancy services which had been provided by them to the Company on a contingency basis prior to that date.
A fee of 12,500 was paid to each of Oliver Cooke and Brian Raven in relation to the underwriting by them of 250,000 of the fundraising carried out by the Company in May 2014. This was settled in shares at an issue price of 7.5p per share.
Payments of 2,400 and 4,000 were made to Rennison Consulting (a firm controlled by Roderic Rennison) and to threeSixty Support LLP (a firm in which Philip Young is Managing Director) respectively in relation to due diligence services provided in connection with the acquisition of Tavistock Partners Limited.
During the period Tavistock Wealth received gross commission of 286,191 from IFSL (Investment Fund Services Limited) and paid to that company 171,435 in management charges. IFSL is a company of which Andrew Staley, a significant shareholder in Tavistock Investments Plc, is a director.
In September 2014, Novia Financial Limited ("Novia") and one of its major shareholders, Cocoon Investment Holdings Limited ("Cocoon" and together, the "Lenders") agreed to provide the Company with a three year, unsecured, convertible loan facility of up to an aggregate of 750,000, for business development and working capital purposes. The Lenders have a minor shareholding in the Company and Novia is the operator of one of the wrap platforms on which clients' funds are administered.
As at 31 March 2015, the amount outstanding was 250,000.
Interest on amounts drawn down under the facility accrue at the rate of 1 per cent. per annum over the base rate and are paid quarterly. Any funds drawn down under the Loan Facility fall due for repayment at the end of the term, being 27 August 2017. The principal sum outstanding under the Loan Facility may be converted, at a share price of 7.5 pence per share, into new ordinary shares in the capital of the Company at any time prior to the end of the term at the discretion of the Lenders.
18. EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION
On 3 May 2015 the Company announced the acquisition of Duchy Independent Financial Advisers Limited, an IFA business with offices in Truro and St Ives in Cornwall.
The initial consideration was 350,000, of which sum 220,000 was paid in cash and the balance of 130,000 was settled through the issue of 1,733,333 new ordinary shares of 1p each at an issue price of 7.5p per share.
At the date of acquisition, Duchy Independent Financial Advisers Limited had net assets of 205,425, consisting of assets of 265,083 and liabilities of 59,658.
Subject to certain performance criteria the vendors may be entitled to receive up to an additional 156,000 which may be settled at the Company's discretion either in cash or in shares at the same issue price.
Under certain circumstances, if the Company's share price has not risen to 7.5p by May 2017, a further "adjustment" consideration may become payable by the Company, either in cash or further shares at the Company's discretion, to have the effect of adjusting the issue price per share referred to above to the highest average closing price achieved by Tavistock's shares over any five consecutive trading days in the period between completion and the date on which the adjustment payment is made.
This information is provided by RNSThe company news service from the London Stock ExchangeENDFR SEAFMLFISESA
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