REG - Tavistock Investment - Interim Results
Tavistock Investments Plc
("Tavistock" or the "Company")
Interim Accounts
10 November 2020
Tavistock Investments Plc (AIM:TAVI) announces its unaudited interim results for the six months ended 30 September 2020.
Financial highlights
● 25% increase in the level of adjusted EBITDA compared to the same period last year
● Higher operating profit from lower gross revenues with adjusted EBITDA of £1.3 million on gross revenues of £13.4 million
Operational highlights
● The leadership team is well advanced with a comprehensive Group-wide reorganisation expected to deliver more than £750,000 of annual cost savings
● Investments
- Tavistock Wealth increased contribution to the Group's adjusted EBITDA by 32% to £2.0 million
- Level of FUM (funds under management) remained steady at £1.1 billion
● Protected products
- The Company's newest fund, the ACUMEN ESG Protection Portfolio, has performed particularly well to date, with its NAV (net asset value) dropping by just 1% between inception in December 2019 and the end of October 2020, compared to the FTSE 100 falling by almost 17% over the same period
- The fund won the Innovation Award at the 2020 Moneyfacts Investment Life & Pension Awards, beating competition from other much larger nominees
● Advisory
- Increased contribution to the Group's adjusted EBITDA by 344% to £964,000, predominantly resulting from the eradication of losses previously experienced by two entities.
Brian Raven, Chief Executive of Tavistock Investments, said: "In a year of unprecedented pressure on our business, I am delighted by our Group's performance and by how well our management team has adapted. We have undertaken a comprehensive cost saving exercise and are accelerating plans to significantly scale up our business. I am confident that these initiatives will enable us to deliver greater value to our shareholders and look forward to managing a growing dividend for their benefit."
Post-period update
● The Company is about to launch a new low-cost platform service, the Tavistock Platform, for use by the clients of the Group's advisers. The Group will then be delivering all aspects of the financial services value chain to retail clients - financial advice, investment management and the platform service that provides for the administration and custodianship of clients' assets.
● It is currently difficult to assess precisely how the Group will perform in the second half of its financial year, given the variable possibilities with regard to the Brexit outcome, the Government's public health policy and the impact on markets of the US Presidential election result. However, the Directors are confident that the initiatives underway will enable the Company to continue to increase operating profit and recommence the payment of a dividend.
Ends
Enquiries
Tavistock Investments Plc
Oliver Cooke
Brian Raven
Tel: 01753 867000
Allenby Capital Limited
Nick Naylor, Nick Athanas, Liz Kirchner
Corporate Finance
Tony Quirke
Sales
Tel: 020 3328 5656
Vested
Sophie Paterson
Tel: 07540 496 159
TAVISTOCK INVESTMENTS PLC
CHAIRMAN'S STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020
I am pleased to report that the business has performed particularly well in the face of the pandemic, the related Government imposed restrictions, and their impact on both customer confidence and the market value of investment assets. The Directors are now turning their focus to the development of a substantially larger business.
The Government's imposition of a national lock-down took the population by surprise. However, the leadership team reacted swiftly and successfully transitioned the business to home-working and the use of new technology. They also moved quickly to reduce the Group's operating costs in response to what was then seen as an unquantifiable threat to the business.
As a consequence of these decisive actions, the Company has been able to report an increase of 25% in the level of adjusted EBITDA (earnings before interest tax depreciation and amortisation) compared to the same period last year and is well positioned to deal with the second lock-down.
The leadership team has also undertaken a detailed review of business operations and is well advanced with a comprehensive Group-wide reorganisation exercise. Upon completion, this is expected to deliver over £750,000 of annual cost savings.
The reorganisation includes a reduction in the number of offices being occupied by the Group, from eleven to six, the loss of some senior as well as junior staff, and the withdrawal from less productive areas of business activity. One such activity was the Group's association with the Law Society which both parties agreed to terminate amicably, once it became apparent that the relationship was unlikely to deliver an appropriate level of return to Tavistock.
The Government's response to the emergence of a second wave of the pandemic, the imminence of the UK's departure from the European Union and the consequences of the US Presidential election result are all factors that make it difficult to assess the Company's likely performance in the second half of the financial year.
However, the leadership team is confident that the business will continue to perform well over the medium and long term. In addition to focusing on the optimisation of the Group's facilities, the containment of costs and the improvement of operational efficiency, they are progressing with plans to deliver greater value to shareholders.
Investment Management
During the period, Tavistock Wealth increased its contribution to the Group's adjusted EBITDA by 32% from £1.5 million in the six months to 30 September 2019, to £2.0 million.
The level of FUM (funds under management) remained steady at £1.1 billion (30 September 2019 £1.1 billion) despite the recent blows to customer confidence and the sudden and sustained falls in the market value of investment assets.
The Company's newest fund, the ACUMEN ESG Protection Portfolio, has performed particularly well to date and won the Innovation Award at the 2020 Moneyfacts Investment Life & Pension Awards, beating off competition from other much larger nominees including 7IM, Standard Life, Brooks McDonald, Investec and Legal & General.
The fund's NAV (net asset value) dropped by just 1% between inception in December 2019 and the end of October 2020. By comparison, the FTSE 100 fell by almost 17% over the same period.
Advisory
During the period, the Advisory business increased its contribution to the Group's adjusted EBITDA by an impressive 344%, from £217,000 to £964,000. This predominantly resulted from the eradication of the losses previously experienced by two entities.
New business levels are heavily influenced by advisers' ability to meet with clients and recurring revenue levels are linked to the underlying value of the clients' investment assets. Both have been adversely impacted in the short-term by recent events. During the six months to 30 September 2020, the overall level of Advisory gross revenue fell by 8% in comparison with last year, from £11.6 million to £10.7 million.
Financial Performance
During the period, the Directors delivered higher operating profit from lower gross revenues, enabling the Group to report adjusted EBITDA of £1.3 million on gross revenues of £13.4 million (comparative period, EBITDA of £1.0 million on gross revenues of £14.3 million).
At the end of the period the Group had available cash resources of £4.0 million (31 March 2020 £2.4 million).
Cash resources were boosted by the draw-down of a CBILS loan facility and by £785,000 of cash generated from operations (comparative period £1.0 million). During the period the Group spent some £101,000 on the purchase of fixed assets, much of which was to facilitate the move to home-working, £687,000 on payments toward the purchase of client books and £257,000 on key initiatives. Debt and finance obligations were also reduced by £392,000.
At 30 September 2020, the Group had net assets of some £15.0 million (31 March 2020 £15.4 million) with the reduction from 30 September 2019 resulting from the £5.0 million provision against the carrying value of acquired intangible assets that was made in the Group's audited accounts for the financial year ended 31 March 2020. However, as a consequence of having made this provision, the amortisation charge in the period under review was some £390,000 lower than in the equivalent period last year.
During the period, the Group established a reorganisation reserve of £1.2 million to meet the one-off costs of the exercise referred to above. Given the £750,000 of anticipated annual savings, full payback will be achieved in less than two years.
The Group's results for the period can be summarised as follows:
6 Months ended
30 Sept '20
£'000s
6 Months ended
30 Sept '19
£'000s
Movement
Gross Revenues
13,380
14,311
7% decrease
Reported adjusted EBITDA
1,260
1,006
25% increase
Depreciation &
Amortisation
(326)
(755)
57% decrease
Share based payments
(13)
(131)
90% decrease
Profit from operations before reorganisation reserve, investment write off and minority interest
921
120
668% increase
Reorganisation provision
(1,200)
-
-
Investment write off
-
(133)*
-
Minority interest
(22)
-
-
Reported Loss from operations
(301)
(13)
-
Loss per share
0.07p
0.01p
-
*Write-off of investment in strategic relationship with Lighthouse Group Plc.
Future Prospects
The Directors plan to deliver greater value to shareholders through the resumption of dividend payments this year and other developments that they expect will lead to increases in the Company's share price.
Distributable reserves are a prerequisite for the payment of dividends, and these have now been created through the successful completion of a Court sanctioned process. The Directors look forward both to the resumption of dividend payments and to the management of a growing dividend stream for the benefit of shareholders.
The Group is about to launch a new low-cost platform service, the Tavistock Platform, for use by the clients of the Group's advisers. The Group will then be delivering all aspects of the financial services value chain to retail clients - financial advice, investment management and the platform service that provides for the administration and custodianship of clients' assets.
At that point, the Company will have established a solid, commercially successful base upon which to develop a much more substantial business.
The Directors consider that the Company is chronically undervalued with a market capitalisation of some £10.0 million and have confirmed this view in discussions with independent experts. At its current microcap scale, the Company's share price is susceptible to volatile movements based upon extremely low trading volumes and values. For example, in the month of October 2020 there were just 55 trades, for a total of 868,000 shares at an aggregate value of less than £14,000. This represents less than 0.15% of the Company's issued share capital. Yet this very low level of activity resulted in a 30% adverse movement in the share price.
The Directors believe that such disproportionate volatility can only be eliminated effectively through the development of a much larger, dividend paying business with a higher proportion of the Company's shares in public hands. This would be best achieved by combining continued organic growth with an accelerated, acquisition-led growth strategy. The Directors are actively focused on how best to achieve such a strategy in a manner that delivers value to shareholders before rewarding the leadership team. I look forward to updating you in due course.
It is currently difficult to assess precisely how the Group will perform in the second half of the financial year, given the variable possibilities with regard to the Brexit outcome, the Government's public health policy and the impact on markets of the US Presidential election result. However, the Directors are confident that the initiatives highlighted in this report will enable the Company to continue to increase operating profit and recommence the payment of a dividend.
I look forward to updating you on progress.
Oliver Cooke
Chairman
10th November 2020
TAVISTOCK INVESTMENTS PLC
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020
Unaudited
Unaudited
6 months ended
6 months ended
30 September
30 September
2020
2019
Note
£'000
£'000
Revenue
2
13,380
14,311
Cost of sales
(7,660)
(8,500)
------------
------------
Gross profit
5,720
5,811
Administrative expenses
(6,021)
(5,824)
--------------
--------------
Loss from operations
(301)
(13)
Memorandum:
Adjusted EBITDA
1,260
1,006
Depreciation & amortisation
(326)
(888)
Restructuring provision
(1,200)
-
Share Based Payment
(13)
(131)
Minority interest
(22)
-
--------------
--------------
Loss from operations
(301)
(13)
Finance costs
(115)
(119)
------------
------------
Loss before taxation and attributable to equity holders of the parent
(416)
(132)
Taxation
-
54
------------
------------
Loss after taxation and attributable to equity holders of the parent and total comprehensive income for the period
(416)
(78)
======
======
Loss per share
Basic
3
(0.07)p
(0.01)p
======
======
TAVISTOCK INVESTMENTS PLC
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2020
Unaudited
Audited
30 September 2020
31 March 2020
£'000
£'000
£'000
£'000
ASSETS
Non-current assets
Tangible fixed assets
774
915
Intangible assets
4
17,576
16,907
-----------------
-----------------
Total non-current assets
18,350
17,822
Current assets
Trade and other receivables
6,025
4,998
Cash and cash equivalents
3,974
2,416
-----------------
-----------------
Total current assets
9,999
7,414
-----------------
-----------------
Total assets
28,349
25,236
LIABILITIES
Current liabilities
(5,659)
(4,994)
Non-current liabilities
Loan & Lease liability
(3,620)
(1,396)
Payments due regarding purchase of client lists
(927)
(1,234)
Provisions
(3,062)
(2,115)
Deferred taxation
(93)
(93)
------------------
------------------
Total liabilities
(13,361)
(9,832)
------------------
------------------
Total net assets
14,988
15,404
=========
=========
Capital and reserves attributable to owners
of the parent
Share capital
5
13,426
13,426
Share premium
6,001
6,001
Retained earnings
(4,439)
(4,023)
------------------
------------------
Total equity
14,988
15,404
=========
=========
TAVISTOCK INVESTMENTS PLC
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020
Share capital
Share premium
Retained earnings
Total equity
£'000
£'000
£'000
£'000
31 March 2019
13,101
5,681
1,214
19,996
Loss after tax and total comprehensive income
-
-
(67)
(67)
Equity settled share based payments
-
-
131
131
Dividend payment
-
-
(58)
(58)
-------------
--------------
---------------
--------------
30 September 2019
13,101
5,681
1,220
20,002
--------------
--------------
--------------
--------------
Issue of shares
325
325
-
650
Cost of share issue
-
(5)
-
(5)
Loss after tax, adjustments and total comprehensive income
-
-
(5,341)
(5,341)
Equity settled share based payments
-
-
98
98
--------------
--------------
--------------
--------------
31 March 2020
13,426
6,001
(4,023)
15,404
--------------
--------------
--------------
--------------
Loss after tax and total comprehensive income
-
-
(429)
(429)
Equity settled share based payments
-
-
13
13
--------------
--------------
--------------
--------------
30 September 2020
13,426
6,001
(4,439)
14,988
--------------
--------------
--------------
--------------
TAVISTOCK INVESTMENTS PLC
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020
Unaudited
Unaudited
6 months ended 30 September 2020
6 months ended 30 September 2019
£'000
£'000
£'000
£'000
Cash flows from operating activities
Loss before tax
Adjustments for:
(416)
(132)
Share based payments
13
131
Depreciation on fixed assets
233
272
Amortisation of intangible assets
93
483
Impairment
-
133
Restructuring reserve
1,200
-
Net finance costs
115
119
-----------------
-----------------
Cash flows from operating activities before changes
1,238
1,006
in working capital
Increase in trade and other receivables
(2,328)
(1,384)
Increase in trade and other payables
1,875
1,386
-----------------
-----------------
Cash used in operations
785
1,008
Investing activities
Purchase of fixed assets
(101)
(856)
Purchase of intangible assets
(762)
(2,661)
Payments due regarding purchase of clients lists
505
1,622
Deferred consideration payments
(687)
(520)
-----------------
-----------------
Net cash generated from investing activities
(1,045)
(2,415)
Financing activities
Finance costs
(115)
(119)
New loans
2,130
-
Leases
(135)
676
Loan repayments
(62)
(230)
Dividend payment
-
(58)
-----------------
-----------------
Net cash from financing activities
1,818
269
-----------------
-----------------
Net increase/(decrease) in cash and cash equivalents
1,558
(1,138)
Cash and cash equivalents at beginning of the period
2,416
3,116
------------------
------------------
Cash and cash equivalents at end of the period
3,974
1,978
=========
=========
TAVISTOCK INVESTMENTS PLC
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2020
1. ACCOUNTING POLICIES
Basis of preparation
The interim condensed consolidated financial statements have been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRS) and IFRIC interpretations issued by the International Accounting Standards Board (IASB) adopted by the European Union.
The accounts have been prepared in accordance with accounting policies that are consistent with the March 2020 Report and Accounts and that are expected to be applied in the Report and Accounts of the year ended 31 March 2021.
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 2020 have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.
2. SEGMENTAL INFORMATION
A segmental analysis of revenue and expenditure for the period is:
Investment Management
Advisory Support
Unaudited 30 September 2020
Unaudited 30 September 2019
£'000
£'000
£'000
£'000
Revenue
2,704
10,676
13,380
14,311
Cost of Sales
(216)
(7,444)
(7,660)
(8,500)
Administrative Expenses
(804)
(3,034)
(3,838)
(4,674)
Group costs
(2,183)
(1,150)
-------------
-------------
Loss from operations
(301)
(13)
======
======
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 statement of financial position 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 2020
30 September 2019
Loss per share has been calculated using the following:
Loss from continuing operations (£'000)
(416)
(78)
Weighted average number of shares ('000s)
607,796
575,296
--------------
--------------
Basic loss per ordinary share
(0.07)p
(0.01)p
=======
=======
4.
INTANGIBLE ASSETS
Regulatory
Goodwill
Internally
Client
Approvals
Arising on
Developed
Lists
& Systems
Consolidation
Assets
Total
£'000
£'000
£'000
£'000
£'000
Cost
Balance at 1 April 2020 (Audited)
8,408
1,815
14,751
2,249
27,223
Additions
505
-
-
257
762
-------------
-------------
-------------
------------
---------------
Balance at 30 September 2020
8,913
1,815
14,751
2,506
27,985
(Unaudited)
-------------
-------------
------------
------------
---------------
Accumulated amortisation
Balance at 1 April 2020 (Audited)
7,039
1,815
235
1,227
10,316
Amortisation
91
-
-
2
93
------------
------------
-----------
------------
---------------
Balance at 30 September 2020
7,130
1,815
235
1,229
10,409
(Unaudited)
-----------
-----------
------------
------------
---------------
Net Book Value
At 1 April 2020 (Audited)
1,369
-
14,516
1,022
16,907
======
======
======
======
=======
At 30 September 2020
1,783
-
14,516
1,277
17,576
(Unaudited)
======
======
======
======
=======
5.
SHARE CAPITAL
Unaudited
Audited
30 September 2020
31 March
2020
£'000
£'000
Called up share capital
Allotted, called up and fully paid
607,795,801 Ordinary shares of 1 pence each
6,078
6,078
30,450,078 Deferred shares of 9 pence each
2,741
2,741
465,344,739 Deferred "A" shares of 0.99 pence each
4,607
4,607
------------
------------
13,426
13,426
======
======
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