REG - Tavistock Investment - Interim Results <Origin Href="QuoteRef">TAVI.L</Origin>

Tavistock InvestmentsAnnouncement

28/11/2017 07:05

RNS Number : 6371X
Tavistock Investments PLC
28 November 2017
28th November 2017
TAVISTOCK INVESTMENTS PLC
("Tavistock" or the "Company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017
The Companytoday announces its unaudited interim results for the six months ended 30 September 2017. 
FINANCIAL HIGHLIGHTS
- 130% increase in discretionary FUM to 745m
- 40% increase in ongoing business revenues to 12.4m 
- 426% increase in reported EBITDA to 137,000
- 23% increase in net assets to 18.3m
OPERATIONAL HIGHLIGHTS
-Level of discretionary FUM continued to rise at a significant pace, predominantly through organic growth
- Tavistock Wealth's revenue in the six-month period of 1.52m compares favourably with revenue of 1.66m for the full year to 31 March 2017
-Launched three new Acumen funds in June 2017, increasing the range of in-house funds to seven
-High degree of revenue visibility - high retention rate of FUM combined with high level of recurring advisory income 
- Successfully completed disposal of a network subsidiary adding a further 1 million to the Group's cash resources and significantly reducing its regulatory capital requirement
Brian Raven, Group Chief Executive, said:"We are continuing to make extremely good progress. I am pleased with the interim results in general, and with the organic growth of FUM into Tavistock Wealth in particular.Our business model is now firmly established and the Company's prospects are excellent."
Enquiries:
Tavistock Investments Plc
Oliver Cooke
Brian Raven 
Tel: 01753 867000


Arden Partners Plc
William Vandyk
Tel: 020 7614 5900


Allenby Capital Limited
Nick Naylor
Nick Athanas
Tel: 020 3328 5656


Templars Communications Limited
Kitty Parry
Malika Shermatova
Tel: 020 3890 8118


CHAIRMAN'S STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017
I am pleased to report continued good progress for the business. The Tavistock Investments Group is made up of an investment management business, Tavistock Wealth, together with various financial advisory businesses. The key performance indicator for the Group is the performance of Tavistock Wealth.
Investment Management
Most of Tavistock Wealth's revenues are derived from funds being managed on a discretionary basis ("FUM"). As shown in the table below, the level of FUM continued to rise at a significant pace, predominantly through organic growth, with the level at the end of the period being some 130% higher than at the same stage in the previous year.

30 Sept '17
m
31 March '17
m
30 Sept '16
m
FUM
745
603
324
Tavistock Wealth's current average gross revenue is 0.44% of FUM per annum and during the six-month period it achieved revenue of 1.52 million. This compares favourably with revenue of 1.66 million for the full year to 31 March 2017.
We continue to be satisfied with investment performance in what have been uncertain market conditions. Tavistock Wealth launched three new Acumen funds in June 2017; the Acumen Bond Portfolio, the Acumen Equity Portfolio and the Acumen Strategic Portfolio. This increased the range of in-house funds to seven.
Advisory
The performance of the Group's ongoing advisory businesses is another key area of focus and gross revenues grew by 33% from 8.1 million, in the six-month period to 30 September 2016, to 10.8 million this period. 
In August, the Company announced the disposal of a network subsidiary, Tavistock Financial Limited ("TFL"), to Sanlam UK for a cash consideration of 1 million. During the period, this now discontinued operation had gross revenues of 7.5 million and a loss from operations of 21,000.
TFL resulted from the acquisition of Standard Financial Group ("SFG") in February 2015. SFG owned Financial Limited, the 7th largest advisory network in the UK. Acquiring this business was a relatively inexpensive means of the Company attaining critical mass and establishing itself as a national operator, at an early stage in its development.
With the prior approval of the regulator, TFL was created in July 2015 in order to accommodate all staff and network members from Financial Limited. Having resolved all historic regulatory obligations, Financial Limited and the other businesses within SFG were then liquidated. 
The Company invested a little under 1.2 million in acquiring SFG, establishing TFL, transferring all staff and advisers to it and liquidating SFG. The Company subsequently recovered some 1.6 million from the TFL business.
In addition, prior to announcement of the disposal, 58 advisers had transferred out of TFL into the other Group network, The Tavistock Partnership. These advisers are keen to develop a closer commercial relationship with the Company, including recommending the use of its centralised investment proposition to their clients when appropriate to do so. 
Completion of the transaction, after the period end, has added a further 1 million to the Group's cash resources, and significantly reduced its regulatory capital requirement.
Financial Performance
During the period, the Group's ongoing underlying businesses generated EBITDA of 297,000 on gross revenue of 12.4 million (six months to 30 September 2016 EBITDA loss of 42,000 on gross revenue of 8.9 million) and cash absorbed by operations was 36,000 (six months to 30 September 2016 cash absorbed by operations was 990,000). 
The Group also incurred 160,000 of reorganisation costs, including costs associated with the disposal of TFL, which have adversely impacted the reported results.
For the six-month period ended 30 September 2017, the ongoing Group has therefore reported EBITDA of 137,000 and cash absorbed by operations of 196,000. The Company repaid 250,000 of debt and settled 1.35 million of deferred consideration obligations. It also entered into new leasing arrangements to cover the costs of opening two new offices and completing a refurbishment programme.
At the end of the period, the Group had net assets of 18.3 million (30 September 2016 14.91 million) which included cash resources, prior to receipt of the 1 million TFL consideration, of 2.74 million (30 September 2016 3.8 million).
The ongoing Group's results for the period can be summarised as follows:

6 Months ended
30 Sept '17
'000s
6 Months ended
30 Sept '16
'000s
Movement
Gross Revenues
12,361
8,860
40% increase
Underlying EBITDA
297
(42)
807% increase
Reorganisation
(160)
-
-
Reported EBITDA
137
(42)
426% increase
Depreciation & Amortisation
(484)
(463)
5% increase
Share based payments
(134)
(214)
37% decrease
Exceptional income/(costs)
471
(76)
720% increase
Loss from Operations
(10)
(795)
99% decrease
Loss per share
0.002p
0.213p
99% decrease
Net Assets 
18,307
14,912
23% increase
Cash at end period
2,744*
3,807
28% decrease
*Excluding 1 million consideration received after period end.
Future Prospects
The Company has made great strides over the last three years. Its business model is now firmly established and its prospects are excellent.
It is anticipated that with continued organic growth, the EBITDA contribution from the Group's advisory businesses will become sufficient to cover all of the Group's operating costs. The Group's profitability will then be directly linked to the profitability of its investment management business.
The Group's investment management business has a relatively fixed overhead base and, as a consequence, the revenue resulting from increased levels of FUM has a direct impact on Group profitability.
The Company enjoys a high retention rate of FUM. Similarly, it enjoys a high level of recurring income within its advisory businesses. This combination gives the business a very high degree of revenue visibility.
Given this visibility, and because the Group is making rapid progress, it is useful to illustrate the potential profitability of the business model. For example, if the FUM managed by Tavistock Wealth were to increase to 1.5 billion and the continuing Group's underlying cost base were to remain unchanged, the EBITDA produced on an annualised basis would be over 5 million.
I look forward to updating you on further progress. 
Oliver Cooke
Executive Chairman
27th November 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017


Unaudited
Unaudited


6 months ended
6 months ended


30 September
30 September


2017
2016

Note
'000
'000




Revenue - continuing operations
2
12,361
8,860




Cost of sales - continuing operations

(7,628)
(6,533)


------------
------------
Gross profit

4,733
2,327




Administrative expenses- continuing operations

(4,743)
(3,122)


--------------
--------------
Loss from operations

(10)
(795)




Memorandum:
Adjusted EBITDA

137
(42)
Depreciation & amortisation

(484)
(463)
Exceptional income/(costs)

471
(76)
Share based payments

(134)
(214)


--------------
--------------
Loss from operations

(10)
(795)








Finance costs

(137)
(95)
Finance income

-
1


------------
--------------
Loss before taxation and attributable to equity holders of the parent
(147)
(889)




Taxation

61
139


------------
------------
Loss from continuing operations
Discontinued operations (net of tax)
Loss after taxation and attributable to equity holders of the parent and total comprehensive income for the period
(86)
(21)
------------
(107)
(750)
85
------------
(665)


======
======
Loss per share (continuing operations)



Basic 
3
(0.002)p
(0.213)p


======
=======
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2017


Unaudited
Unaudited


30 September 2017
30 September 2016


'000
'000
'000
'000
ASSETS
Non-current assets
Property, plant and equipment


534

431
Intangible assets
4

19,545

16,917



-----------------

-----------------
Total non-current assets
20,079
17,348
Current assets
Trade and other receivables

2,560

1,887

Cash and cash equivalents

2,744

3,807



-----------------

-----------------

Total current assets


5,304

5,694



-----------------

-----------------
Total assets


25,383

23,042






LIABILITIES











Current liabilities


(2,252)

(1,972)






Non-current liabilities





Other payables


(1,780)

(2,270)
Term loan


(2,219)

(2,251)
Provisions


(413)

(367)
Deferred taxation


(412)

(1,270)



------------------

------------------
Total liabilities


(7,076)

(8,130)



------------------

------------------
Total net assets


18,307

14,912



=========

=========
Capital and reserves attributable to owners





of the parent





Share capital
5

12,720

11,308
Share premium


27,882

26,107
Retained deficit


(22,295)

(22,503)



------------------

------------------
Total equity


18,307

14,912



=========

=========
The financial statements were approved by the Board and authorised for issue on 27th November 2017.
Oliver Cooke
Executive Chairman
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017

Share capital
Share premium
Retained deficit
Total equity

'000
'000
'000
'000





31 March 2016
10,262
20,688
(22,052)
8,898





Issue of shares 
1,046
5,419
-
6,465





Loss after tax and total comprehensive income
-
-
(665)
(665)





Equity settled share based payments
-
-
214
214

-------------
--------------
---------------
--------------
30 September 2016
11,308
26,107
(22,503)
14,912

--------------
--------------
--------------
--------------





Issue of shares
1,377
1,711
-
3,088





Profit after tax and total comprehensive income
-
-
89
89





Equity settled share based payments
-
-
92
92

--------------
--------------
--------------
--------------
31 March 2017
12,685
27,818
(22,322)
18,181

--------------
--------------
--------------
--------------
Issue of shares
35
64
-
99





Loss after tax and total comprehensive income
-
-
(107)
(107)





Equity settled share based payments
-
-
134
134

--------------
--------------
--------------
--------------
30 September 2017
12,720
27,882
(22,295)
18,307

--------------
--------------
--------------
--------------
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017


Unaudited
Unaudited


6 months ended 
30 September 2017
6 months ended
30 September 2016


'000
'000
'000
'000
Cash flows from operating activities
Loss before tax (continuing and discontinued)
Adjustments for:


(168)

(782)
Share based payments


134

214
Depreciation on property plant and equipment


65

38
Amortisation of intangible assets


419

425
Net finance costs


137

94



-----------------

-----------------
Cash flows from operating activities before changes


587

(11)
in working capital











(Increase)/Decrease in trade and other receivables


(613)

2,112
(Decrease) in trade and other payables


(170)

(2,931)
Corporation tax paid


-

(160)



-----------------

-----------------
Cash used in operations


(196)

(990)






Investing activities





Finance income

-

1

Purchase of fixed assets

(260)

(143)

Cash on acquisition

-

1,339

Acquisition of subsidiaries

(1,352)

(2,587)



-----------------

-----------------

Net cash generated from investing activities


(1,612)

(1,390)






Financing activities





Finance costs

(137)

(95)

New financing

281

2,000

Loan Repayments

(250)

-

Issue of new share capital (net of costs)

100

891



-----------------

-----------------

Net cash from financing activities


(6)

2,796



-----------------

-----------------
Net (decrease)/increase in cash and cash equivalents


(1,814)

416






Cash and cash equivalents at beginning of the period


4,558

3,391



------------------

------------------
Cash and cash equivalents at end of the period


2,744

3,807



=========

=========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017
1. ACCOUNTING POLICIES
Basis of preparation 
The interim financial statements have been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRS) and IFRIC interpretations issued by the International Accounting Standards Board (IASB) adopted by the European Union. 

The accounts have been prepared in accordance with accounting policies that are consistent with the March 2017 Report and Accounts and that are expected to be applied in the Report and Accounts of the year ended 31 March 2018. There are new or revised standards or interpretations that apply to the period beginning 1 April 2017 but they do not have a material effect on the financial statements for the period ended 30 September 2017. 

This report is not prepared in accordance with IAS 34, which is not mandatory. The financial information does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006. Statutory accounts for Tavistock Investments Plc for the year ended 31 March 2017 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. 
Disposal of Subsidiary and Discontinued Operations
On the 10 August 2017, the Company announced the sale of Tavistock Financial Limited ("TFL") to Sanlam UK. The gain on sale recognised in the period represents the consideration receivable less 1) the carrying value of assets sold, and 2) anticipated associated costs
As the entity represents a separate major line of business and was part of a single coordinated plan to sell, the results of TFL have been separately recognised on the statement of financial position as 'discontinued operations'. 
2. SEGMENTAL INFORMATION
 A segmental analysis of revenue and expenditure for the period is:


Investment Management
Advisory
Support
2017
2016


'000
'000
'000
'000






Revenue

1,524
10,837
12,361


8,860






Cost of Sales

(198)
(7,430)
(7,628)


(6,533)






Administrative Expenses

(661)
(2,870)
(3,531)


(1,863)






Group costs



(1,212)


(1,259)




-------------



-------------
(Loss) from continuing operations



(10)


(795)






(Loss)/profit from discontinuing operations



(21)


85




-------------





-------------
Loss from operations



(31)


(710)




======



======
The segmental analysis above reflects the parameters applied by the Board when considering the Group's monthly management accounts. The Directors do not consider a division of the balance sheet to be appropriate or useful for the purposes of understanding the financial performance and position of the Group.
During the period under review the Group operated, and earned revenue exclusively within the UK.
3.
LOSS PER SHARE
Unaudited
Unaudited


6 months ended
6 months ended


30 September 2017
30 September 2016

Loss per share has been calculated using the following:



Loss from continuing operations ('000)
(10)
(795)

Weighted average number of shares ('000s)
536,718
371,955


--------------
--------------

Basic loss per ordinary share
 (0.002)p
(0.213)p


=======
=======
4.
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 2017
5,415
1,815
14,751
474
22,455

Additions
-
-
-
10
10

Disposals
-
-
-
-
-


-------------
-------------
-------------
------------
---------------

Balance at 30 September 2017
5,415
1,815
14,751
484
22,465


-------------
-------------
------------
------------
---------------

Accumulated amortisation






Balance at 1 April 2017
1,730
566
205
-
2,501

Additions
-
-
-
-
-

Amortisation
245
113
-
61
419


------------
-----------
-----------
------------
---------------

Balance at 30 September 2017
1,975
679
205
61
2,920


-----------
------------
------------
------------
---------------

Net Book Value






At 31 March 2017
3,685
1,249
14,546
474
19,954


======
======
======
======
=======

At 30 September 2017
3,440
1,136
14,546
423
19,545


======
======
======
======
=======
5.
SHARE CAPITAL 
Unaudited
Unaudited


30 September 2017
30 September 2016


'000
'000

Called up share capital







Allotted, called up and fully paid







537,186,045 Ordinary shares of 1 pence each



(2016: 395,886,278 shares of 1 pence each)
5,372
3,959





100,000 "G" Ordinary shares of 1 pence each
-
1





30,450,078 Deferred shares of 9 pence each 
2,741
2,741





465,344,739 Deferred "A" shares of 0.99 pence each
4,607
4,607


------------
-------------


12,720
11,308


======
======
6. EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION
On 26th October 2017, the Company completed the sale of Tavistock Financial Limited to Sanlam UK and received total cash consideration of 1 million which will be used by the Group for working capital purposes. 
As a consequence of the transaction, the Group's cash resources have been strengthened and simultaneously its regulatory capital requirement has been reduced.
The board currently anticipates that the transaction will have no material impact on the future profitability of the Group.

This information is provided by RNS
The company news service from the London Stock Exchange
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