REG - Tavistock Investment - Final Results <Origin Href="QuoteRef">TAVI.L</Origin> - Part 2
25/08/2015 07:00
- Part 2: For the preceding part double click ID:nRSY9394Wa
non-audit services - taxation 9 -
Auditors' remuneration - non-audit - Reporting accountants 138 -
Operating lease expense - property 107 1
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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 -
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951 144
Share based payment charge 587 -
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1,538 144
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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
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69 9
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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 Total2015 Total2013
£ £ £ £ £
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
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*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 -
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Tax credit for the period 119 -
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Loss on ordinary activities before tax (983) (516)
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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 -
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Current tax for period (see above) - -
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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
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Basic loss per ordinary share (0.85)p (7.36)p
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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
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Balance at 31 March 2015 315 36 351
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Accumulated depreciation
Balance at 1 January 2014 - - -
Depreciation charge 21 5 26
On acquisition 229 27 256
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Balance at 31 March 2015 250 32 282
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Net Book Value
At 31 March 2015 65 4 69
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At 31 December 2013 - - -
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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
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Balance at 31 March 2015 4,591 1,350 7,618 13,559
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Accumulated amortisation
Balance at 1 January 2014 - - - -
Impairment charges 26 - 205 231
Amortisation 162 433 - 595
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Balance at 31 March 2015 188 433 205 826
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Net Book Value
At 31 March 2015 4,403 917 7,413 12,733
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At 31 December 2013 - - - -
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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 -
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7,413 -
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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)
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Net assets on acquisition 158 2,240 2,398
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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)
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Net (liabilities)/assets on acquisition (213) 520 307
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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)
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Net assets on acquisition 1,087 1,040 2,127
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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)
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Net liabilities on acquisition (230) (139) (369)
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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
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4,377 43
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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 -
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3,158 129
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Non-current liabilities
Loan 250 -
Deferred consideration on acquisitions (see note 14) 2,354 -
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2,604 -
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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
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214 3,449 3,663
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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
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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 -
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665 -
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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
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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 -
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1,060 5
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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
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3,544 -
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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
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10,245 7,471
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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
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