REG - Tavistock Investment - Final Results <Origin Href="QuoteRef">TAVI.L</Origin> - Part 2
05/07/2016 07:05
- Part 2: For the preceding part double click ID:nRSE2032Da
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 nor taxable profit.
Recognition of deferred tax assets is restricted to those instances where it
is probable that future taxable profit will be available against which the
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 JUDGMENTS
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 not impaired any goodwill or intangible assets during the year (15 month
period ended 2015: £23l,000).
3. SEGMENTAL INFORMATION
A segmental analysis of revenue and expenditure for the period is:
Investment Management AdvisorySupport 2016 2015
£'000 £'000 £'000 £'000
REVENUE
Fees and Commissions 987 28,518 29,505 4,801
Other - 345 345 198
------------ --------------- ------------- -------------
TOTAL REVENUE 987 28,863 29,850 4,999
------------ --------------- ------------- -------------
Cost of Sales (472) (23,703) (24,175) (3,346)
Administrative Expenses (740) (4,145) (4,885) (1,204)
Group costs (3,559) (1,434)
------------- -------------
Loss from operations (2,769) (985)
====== ======
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.
4. LOSS FROM OPERATIONS Year ended 15 months ended
31 March 2016 31 March 2015
£'000 £'000
This is arrived at after charging/(crediting):
Staff costs (see note 5) 3,155 1,538
Depreciation 48 26
Amortisation of intangible fixed assets 688 595
Loss on adjustments to deferred consideration (note 14) 1,297 -
Gain on bargain purchase - (1,282)
Impairment of intangible fixed assets - 231
Auditors' remuneration in respect of the Company 8 21
Audit of subsidiary undertakings 60 35
Auditors' remuneration - non-audit services -interim 4 4
Auditors' remuneration - non-audit services -taxation 10 9
Auditors' remuneration - non-audit services - reporting accountants - 138
Operating lease expense - property 199 107
===== =====
5. STAFF COSTS Year ended 15 months ended
31 March 2016 31 March 2015
£'000 £'000
Staff costs for all employees, including directors and development
staff consist of:
Wages, fees and salaries 2,361 864
Social security costs 242 58
Pensions 24 29
----------- -----------
2,627 951
Share based payment charge 528 587
----------- -----------
3,155 1,538
===== =====
Year ended 15 months ended
31 March 2016 31 March 2015
The average number of employees of the group during the period Number Number
was as follows:
Directors and management 10 9
Operations and administration 56 31
----------- -----------
66 40
====== ======
The remuneration of the highest paid director was £151,325 (period ended 2015:
£104,166). The total remuneration of key management personnel was £828,766
(period ended 2015: £435,565).
Directors' Detailed Emoluments
Details of individual Directors' emoluments for the year are as follows:
Salary and fees Benefits in kind Pension contributions Total2016 Total2015
£ £ £ £ £
O Cooke 135,000 1,942 12,000 148,942 104,166
B Raven 135,000 4,325 12,000 151,325 104,166
P Young* 25,000 - - 25,000 18,750
R Rennison* 25,000 - - 25,000 21,875
---------------- ---------------- -------------- ---------------- ---------------
320,000 6,267 24,000 350,267 248,957
======== ======= ======= ======= =======
*Denotes non-executive Director
All pension contributions represent payments into defined contribution
schemes.
6. TAXATION ON LOSS FROM ORDINARY ACTIVITIES Year ended 15 months ended
31 March 2016 31 March 2015
£'000 £'000
Current tax credit (6) -
Deferred tax (credit)/charge (369) 119
------------ ------------
Tax (credit)/charge for the period (375) 119
====== ======
Loss on ordinary activities before tax (2,792) (983)
====== ======
The tax assessed for the period differs from the standard rate of corporation
tax in the UK applied to loss before tax.
Year ended 15 months ended
31 March 2016 31 March 2015
£'000 £'000
The differences are explained below:
Loss on ordinary activities at the standard rate of corporation tax in
the UK of 20% (2015: 21.40%) (558) (210)
Effects of:
Unutilised losses and other deductions - 71
Expenses not deductible for tax purposes 289 12
Other short term timing differences (88) 245
Differences between capital allowances and depreciation 23 1
Capital gains 54 -
Income not taxable for tax purposes (24) -
Adjust closing deferred tax to average rate of tax (85) -
Deferred tax not recognised 14 -
----------- -----------
Tax (credit)/charge for period (see above) (375) 119
Factors affecting future tax charges ===== =====
The deferred tax liability of £702,000 (2015: 1,069,000) 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 £325,000 in relation to trading and other losses carried forward due to uncertainty around the timing and recoverability
of such losses.
7. LOSS PER SHARE Year ended 15 months ended
31 March 2016 31 March 2015
£'000 £'000
Loss per share has been calculated using the following:
Loss (£'000) (3,183) (864)
Weighted average number of shares ('000s) 289,631 101,414
-------------- --------------
Basic loss per ordinary share (1.10)p (0.85)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.
8. PROPERTY, PLANT AND EQUIPMENT Office fixtures
Freehold Computer fittings and
improvement equipment equipment Total
£'000 £'000 £'000 £'000
Cost
Balance at 1 April 2015 15 200 136 351
Additions - 19 211 230
Transfer on acquisition - - 17 17
--------- --------- -------------- ---------------
Balance at 31 March 2016 15 219 364 598
--------- --------- -------------- ---------------
Accumulated depreciation
Balance at 1 April 2015 13 168 101 282
Depreciation charge 2 10 36 48
Transfer on acquisition - - 11 11
--------- --------- -------------- ---------------
Balance at 31 March 2016 15 178 148 341
--------- --------- -------------- ---------------
Net Book Value
At 31 March 2016 - 41 216 257
===== ===== ===== =====
At 31 March 2015 2 32 35 69
===== ===== ===== ======
9. INTANGIBLE ASSETS Customer Regulatory Goodwill Other
& Adviser Approvals Arising on Intangible
Relationships & Systems Consolidation Assets Total
£'000 £'000 £'000 £'000 £'000
Cost
Balance at 1 April 2015 4,591 1,350 7,618 - 13,559
Additions 101 - 230 275 606
Disposals (682) - - - (682)
------------- ------------- ------------- ------------ ---------------
Balance at 31 March 2016 4,010 1,350 7,848 275 13,483
------------- ------------- ------------ ------------ ---------------
Accumulated amortisation
Balance at 1 April 2015 433 188 205 - 826
Impairment charges - - - - -
Amortisation 446 242 - - 688
------------ ----------- ----------- ------------ ---------------
Balance at 31 March 2016 879 430 205 - 1,514
----------- ------------ ------------ ------------ ---------------
Net Book Value
At 31 March 2016 3,131 920 7,643 275 11,969
====== ====== ====== ====== =======
At 31 March 2015 4,158 1,162 7,413 - 12,733
====== ====== ====== ====== =======
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.
Amortisation is charged over a period between 5 and 10 years.
GOODWILL AND IMPAIRMENT
The carrying value of goodwill in respect of each
subsidiary entity is as follows:
Goodwill carrying amount
31 March 2016 31 March 2015
£'000 £'000
Tavistock Financial Limited (formerly Standard Financial 260 260
Group Limited)
Tavistock Wealth Limited 1,915 1,915
Tavistock Partners Limited 5,004 5,004
Cornerstone Asset Holdings Limited 234 234
Duchy Independent Financial Advisers Limited 230 -
------------- -------------
7,643 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
Duchy Independent Financial Advisers Limited
On 6 May 2015, the Group acquired 100% of the ordinary shares in Duchy
Independent Financial Advisers Limited, an independent financial advisory
company, for a total consideration of £506,000 which was satisfied through the
issue to the vendors of 1,733,333 ordinary shares of 1p each at an issue price
of 7.5 pence per share, cash of £220,000 and deferred consideration of
£156,000.
Book Fair value Fair value
value adjustments to group
£'000 £'000 £'000
Cost
Tangible fixed assets 6 - 6
Intangible fixed assets 1 - 1
Debtors 67 - 67
Cash at bank and in hand 256 - 256
Creditors due within one year (132) - (132)
--------- -------------- ------------
Net assets on acquisition 198 - 198
--------- -------------- ------------
Included in the Consolidated Statement of Comprehensive Income is revenue of
£749,326 and profit of £21,132 arising from Duchy Independent Financial
Advisers Limited. The primary reason for the acquisition was to increase the
size of the Group and the assets under influence.
10. TRADE AND OTHER RECEIVABLES 31 March 2016 31 March 2015
£'000 £'000
Trade receivables 498 665
Prepayments and accrued income 589 697
Amounts recoverable in respect of claims and complaints 1,418 2,855 2,855
Other receivables 1,200 160
------------- -------------
3,705 4,377
====== ======
11. LIABILITIES 31 March 2016 31 March 2015
£'000 £'000
Current liabilities
Trade payables 495 1,060
VAT and social security liabilities 106 119 119
Accruals 938 636
Deferred consideration on acquisitions (see note 14) 4,476 1,190
Other payables 1,810 83
Corporation tax payable 1 70
------------- -------------
7,826 3,158
====== ======
Non-current liabilities
Loan 250 250
Deferred consideration on acquisitions (see note 14) - 2,354
------------- -------------
250 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
percent 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
Total
£'000
Balance at 1 April 2015 3,663
Payments to settle claims (923)
Provisions utilised (1,100)
-------------
Balance at 31 March 2016 1,640
=======
The amount provided relates to claims arising from the conduct of thematic
past business reviews and from specific complaints received from clients of
the Group's advisers. The provision represents the gross obligation and, where
these amounts can be recovered from insurers or from advisers, 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 2016 31 March 2015
£'000 £'000
Loans and receivables
Trade receivables 498 665
Cash and cash equivalents 3,385 4,739
Financial liabilities at amortised cost
Trade payables 495 1,060
Accruals 814 636
====== =======
The table below illustrates the due date of trade receivables:
31 March 2016 31 March 2015
£'000 £'000
Current 407 444
31 - 60 days - 8
61 - 90 days - 2
91 - 120 days 3 208
121 and over 88 3
------------- -------------
498 665
====== ======
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
31 March 2016 31 March 2015
£'000 £'000
At the year end the Group had the following cash balances: 3,385 4,739
====== ======
Cash at bank comprises Sterling cash deposits held across a number of banks.
At 31 March 2016, £1,470,000 (2015: £1,542,000) of cash is held on deposit in
special interest bearing accounts to maximise returns
All monetary assets and liabilities within the group are denominated in the
functional currency of the operating unit in which they are held. All amounts
stated at carrying value equate to fair value.
The table below illustrates the ageing of trade payables:
31 March 2016 31 March 2015
£'000 £'000
Current 487 761
31 - 60 days - 37
61 - 90 days - 8
91 - 120 days - 254
121 and over 8 -
---------------- ----------------
495 1,060
======== ========
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 2016 31 March 2015
£'000 £'000
Deferred consideration: due within one year
Tavistock Wealth Limited 3,650 -
Standard Financial Group Limited 437 600
Cornerstone Asset Holdings Limited 233 590 590
Duchy Independent Financial Advisers Limited 156 -
----------------- -----------------
Total 4,476 1,190
======= =======
Deferred consideration: due after more than one year
Tavistock Wealth Limited - 2,222
Cornerstone Asset Holdings Limited - 132
-------------- --------------
Total - 2,354
======= =======
Tavistock Wealth Limited
The deferred consideration reflects the Directors' best estimation of the
value of the deferred consideration on acquisition was which has been
calculated by reference to an estimated value of the funds under management at
31 May 2016. Please see note 19 regarding events after the date of the
statement of financial positions.
Standard Financial Group Limited
The deferred consideration has been calculated by reference to the number of
network members at completion who remained with the Group at 31 January 2016.
This has been settled subsequent to the year end through the issue of
10,057,938 ordinary shares.
Cornerstone Asset Holdings Limited
The Group acquired Cornerstone Asset Holdings Limited for 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.
Duchy Independent Financial Advisers Limited
The deferred consideration referred to above has been calculated by reference
to certain of performance conditions and is to be settled through the issue of
ordinary shares of 1p each at an issue price of 7.5p per share.
15. SHARE CAPITAL 31 March 2016 31 March 2015
£'000 £'000
Called up share capital
Allotted, called up and fully paid
291,348,638 Ordinary shares of 1 pence each
(2015: 289,615,305 shares of 1 pence each) 2,913 2,896
10,000,000 "A" Ordinary 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
------------ -------------
10,262 10,245
====== ======
After the year end date, the "A" Ordinary Shares were converted into 100,000
Ordinary Shares.
Share Options
During the period, the Company issued options within its EMI (Enterprise
Management Incentive) Share Option Scheme to employee over a total of
9,650,000 ordinary shares of 1p each. These options become capable of
exercise between October 2017 and December 2020.
In addition the Company granted options within the Scheme over 100,000 G
Ordinary shares with an exercise price of 1p per share. The 100,000 G Ordinary
Shares, resulting from the exercise of these options will convert as a class
between 1 August 2016 and 31 July 2018 into such number of Ordinary Shares as
shall equate to 10 per cent of the Company's fully diluted share capital as at
31 July 2016 as enlarged by such conversion.
On 6 May 2015 1,733,333 new ordinary shares of 1p were issued at an issue
price of 7.5p per share.
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 9,650,000 Ordinary shares under its EMI Share Option Scheme. These options have been valued using the Black- Scholes pricing model. The weighted average of the assumptions used in the model are:
Share price at grant 4.35p
Exercise price 5.30p
Expected volatility 82%
Expected life 9.15 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* 5.24 8,800,000
Granted during the period 5.30 9,650,000
--------------- -------------------
Outstanding at the end of the period 5.28 18,450,000
======= =========
*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 5.46p and their weighted contractual life was 9.54
years.
At the year-end no options outstanding were exercisable.
There were no options exercised in the period. The weighted average fair value
of each option granted during the current period was 3.43p and their weighted
average contractual life was 9.15 years. No options granted during the period
had vested.
The Company had also issued EMI options over 100,000 G Ordinary Shares for
which performance criteria has now been met, so will convert as a class
between 1 August 2016 and 31 July 2018 into such
- More to follow, for following part double click ID:nRSE2032DcRecent news on Tavistock Investments
See all newsREG - Tavistock Investment - Director/PDMR Shareholding
AnnouncementREG - Tavistock Investment - Director/PDMR Shareholding
AnnouncementREG - Tavistock Investment - Interim Results
AnnouncementREG - Tavistock Investment - Result of AGM
AnnouncementREG - Tavistock Investment - Notice of AGM
Announcement