REG - Tavistock Investment - Interim Results
20/12/2022 07:00
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RNS Number : 2228K Tavistock Investments PLC 20 December 2022
Tavistock Investments Plc
("Tavistock" or the "Company")
Interim Accounts
20 December 2022
Tavistock announces its unaudited interim results for the six months ended 30
September 2022.
Ongoing advisory business highlights:
· Revenue up 16% compared to same period last year and up 59% compared
to same period in 2020 (H1 2022: £17 million, H1 2021: £14.7 million, H1
2020: £10.7 million).
· Contribution to adjusted EBITDA up 56% to £1.4 million (H1 2021:
£0.9 million).
· Continuation of the strategic share buyback programme with 3,300,000
shares purchased during the period.
· An interim dividend of 0.07p per share was paid in July 2022 (40%
higher than the previous dividend in October 2021).
Brian Raven, Tavistock's Chief Executive, said: "We are continuing to achieve
strong organic growth and are well placed to pursue a targeted acquisition
strategy."
"The Group's cash resources have recently been bolstered by receipt of the
first of three deferred consideration payments from Titan Wealth and an offer
from the Bank of Ireland for up to £20 million to assist with executing our
acquisition strategy."
For further information
Tavistock Investments Plc Tel: 01753 867000
Oliver Cooke
Brian Raven
Allenby Capital Limited (Nominated adviser and broker) Tel: 020 3328 5656
Corporate Finance: Nick Naylor, Nick Athanas, Freddie Wooding
Sales and Corporate Broking: Tony Quirke
Powerscourt Tel: 07711 380 007
Gilly Lock 020 7250 1446
Roxane Girard
TAVISTOCK INVESTMENTS PLC
CHAIRMAN'S STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2022
I am pleased to advise that the strong growth within the Company's financial
advisory business, reported for the full year to 31 March 2022, has continued
during the first half of the current financial year.
This area generated increased gross revenues of £17 million during the
period, up 16% on the same period last year (30 September 2021: £14.7
million).
The contribution made to the Company's adjusted EBITDA also increased by 56%
over the same period last year to £1.4 million (30 September 2021: £0.9
million).
Despite this creditable level of organic growth, this remains a period of
transition for the Company with the Board's focus being on replacing the
adjusted EBITDA contribution previously made by the Company's investment
management business, Tavistock Wealth Limited ("TWL"), prior to its sale to
Titan Wealth Holdings Limited ("Titan") in August 2021. This will be achieved
through an acquisition strategy.
Investigating acquisition opportunities and exploring different financing
options, as well as the wider development of the business, is a time-consuming
process involving occasional dead ends at the due diligence stage. However,
the Company is currently engaged in discussions with several well qualified
acquisition targets, which it is well positioned to pursue. The Company's cash
resources have been bolstered by the recent receipt of the first of three
deferred consideration payments from Titan and further strengthened by an
offer from the Bank of Ireland to provide a facility of up to £20 million to
assist with its acquisition strategy.
The Board is also focused on withdrawing from less profitable areas of
activity such as the RAIF (Reserved Alternative Investment Fund) that the
Company established on the Luxembourg Stock Exchange. Market sentiment and
hostile economic conditions have prevented this fund from achieving critical
mass, so it has now been closed with the residual funds being returned to the
original investor. The costs associated with this closure were fully provided
for in the accounts to 31 March 2022.
In the full year accounts to 31 March 2022, I advised that the Company had
acquired a 21% stake in LEBC Holdings Limited ("LEBC") and that the Board were
working with the management of LEBC to maximise the value of this investment
for the benefit of both sets of shareholders. As a part of the arrangements,
the Company had agreed to acquire an unregulated business called Hummingbird
from LEBC, that sells research on the asset class allocations for risk-based
portfolios to third party asset managers. This acquisition was made in part to
provide additional working capital to LEBC. However, as an alternative source
of funding has now been identified by LEBC, the Company has agreed to sell
Hummingbird back to LEBC on the same terms on which it was acquired.
Completion of this transaction was announced by the Company on 1 December
2022.
Financial performance during the period
Adjusted EBITDA (defined as being Earnings before Interest, Taxation,
Depreciation and Amortisation as adjusted to remove the distorting effect of
one-off gains and losses arising on acquisitions/disposals, as well as other
non-cash items) is highlighted as the Board considers this, rather than
Operating Profit, to be the best measure of the Company's underlying
performance.
During the period under review the Company has continued to attract new
investment into its range of risk rated model portfolios. However, despite the
strong relative investment performance of these portfolios, volatile market
conditions have resulted in falls in the value of investment holdings.
The Group's results can be summarised as follows:
RESULTS FROM ONGOING ACTIVITIES 6 Months ended 6 Months ended Movement
(excluding TWL)
30 Sept '22 30 Sept '21
£'000s £'000s
Gross revenues 17,334 14,688 18% increase
Adjusted EBITDA 147 (268) 155% improvement
Depreciation & Amortisation (497) (461) 8% increase
Share based payments (120) (269) 55% decrease
Provision for one-off reorganisation costs - (500) -
Reported Loss from Operations (470) (1,498) 69% improvement
Loss per ordinary share (0.14)p (0.31)p 55% improvement
Net assets at Interim end 42,106 49,817 15% decrease
Cash resources at Interim end 4,151* 17,171 76% decrease
*Immediately following the period end, the Company received the first of three
deferred consideration payments from Titan which took the Group's cash
resources above £10 million.
Share buy backs and dividends
Since 1 April 2022, the Company has in aggregate bought back 3,300,000
ordinary shares of 1 penny each (3,000,000 at 9.35p per share and 300,000 at
7.00p per share). In each instance, the shares so purchased have been
cancelled, which has enhanced the earnings per share attributable to the
shares remaining in issue.
In July 2022, the Company paid an interim dividend of 0.07p per share, which
was 40% higher than the dividend that was paid in October 2021.
Future prospects
The Board's focus is on maximising shareholder value. It intends to accomplish
this, inter alia, by growing the dividend stream, completing further share buy
backs and by building a much larger and more profitable business.
I look forward to updating shareholders in due course.
Oliver Cooke
Chairman
19(th) December 2022
TAVISTOCK INVESTMENTS PLC
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2022
Unaudited Unaudited
6 months ended 6 months ended
30 September 30 September
2022 2021
£'000 £'000
Revenue 17,334 17,043
Cost of sales (11,577) (10,455)
------------ ------------
Gross profit 5,757 6,588
Administrative expenses (6,227) (6,536)
-------------- --------------
(Loss)/Profit from operations before disposal (470) 52
Gain on sale of subsidiary - 35,786
-------------- --------------
(Loss)/Profit from Total Operations (470) 35,838
Adjusted EBITDA 147 1,288
Depreciation & Amortisation (497) (467)
Share Based Payment (120) (269)
Provision for new costs as a consequence of past reorganisation - (500)
-------------- --------------
(Loss)/Profit from operations before disposal (470) 52
Finance costs (58) (115)
LLP members' remuneration charged as an expense (277) (241)
------------ ------------
(Loss)/Profit before taxation (805) 35,482
Taxation - -
------------ ------------
(Loss)/Profit after taxation (805) 35,482
Minority interest in LEBC (58) -
------------ ------------
Profit after taxation and attributable to equity holders of the Parent and
total comprehensive income for the period
(863) 35,482
====== ======
(Loss)/Profit per share
Basic (0.14)p 5.85p
====== ======
Diluted (0.13)p 5.85p
====== ======
TAVISTOCK INVESTMENTS PLC
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2022
Unaudited Audited
30 September 2022 31 March 2022
£'000 £'000 £'000 £'000
ASSETS
Current assets
Trade and other receivables 15,741 13,039
Cash and cash equivalents 4,151 15,274
----------------- -----------------
Total current assets 19,892 28,313
Non-current assets
Tangible fixed assets 1,656 1,733
Intangible assets 21,536 18,309
Investments in associates 10,002 -
Trade and other receivables 12,090 12,090
----------------- -----------------
Total non-current assets 45,284 32,132
----------------- -----------------,
Total assets 65,176 60,445
LIABILITIES
Current liabilities (7,683) (6,722)
Non-current liabilities
Loan & Lease liability (571) (731)
Payments due regarding purchase of client lists (6,715) (1,298)
Provisions (7,839) (7,955)
Deferred taxation (262) (262)
------------------ ------------------
Total liabilities (23,070) (16,968)
------------------ ------------------
Total net assets 42,106 43,477
========= =========
Capital and reserves
Share capital 5,556 5,578
Share premium 1,553 1,541
Capital redemption reserve 531 501
Retained earnings 34,466 35,857
------------------ ------------------
Total equity 42,106 43,477
========= =========
The unaudited interim condensed consolidated financial statements were
approved by the Board and authorised for issue on 19th December 2022.
TAVISTOCK INVESTMENTS PLC
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2022
Share capital Share premium Capital redemption reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000
31 March 2021 6,079 1,541 - 8,114 15,734
Profit after tax and total comprehensive income - - - 35,482 35,482
Equity settled share based payments - - - 269 269
Buy back of shares (287) - 287 (1,365) (1,365)
Dividend payment - - - (302) (302)
------------- -------------- ------------- --------------- --------------
Unaudited 30 September 2021 5,792 1,541 287 42,198 49,817
-------------- -------------- ------------- -------------- --------------
Loss after tax and total comprehensive income - - - (5,842) (5,842)
Equity settled share based payments - - - 745 745
Buy back of shares (214) - 214 (1,244) (1,244)
-------------- -------------- -------------- -------------- --------------
31 March 2022 5,578 1,541 501 35,858 43,477
-------------- -------------- ------------- -------------- --------------
Loss after tax and total comprehensive income - - - (863) (863)
Equity settled share based payments - - - 120 120
Buy back of shares (30) - 30 (282) (282)
Acquisition of LEBC Hummingbird Limited - - - 25 25
Issue of shares 8 12 - - 20
Dividend payment - - - (391) (391)
-------------- -------------- -------------- -------------- --------------
Unaudited 30 September 2022 5,556 1,553 531 34,466 42,106
-------------- -------------- -------------- -------------- --------------
TAVISTOCK INVESTMENTS PLC
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2022
Unaudited Unaudited
6 months ended 6 months ended 30 September 2021
30 September 2022
£'000 £'000 £'000 £'000
Cash flows from operating activities
(Loss)/Profit from normal Operations (805) 35,482
Adjustments for:
Share based payments 120 269
Depreciation on tangible fixed assets 303 337
Amortisation of intangible assets 194 130
Movement on one-off reorganisation provision - 500
Finance costs 58 115
Gain on sale of subsidiary - (35,786)
----------------- -----------------
Cash flows (used in)/generated from operating activities (130) 1,047
before changes in working capital
Increase in trade and other receivables (2,707) (727)
Increase in trade and other payables 1,832 961
----------------- -----------------
Cash (used in)/generated from Operations (1,005) 1,281
Investing activities
Intangible assets - client lists and internally developed assets (334) (837)
Purchase of tangible fixed assets (276) (870)
Sale of client lists 100 -
Purchase of subsidiary (1,515) -
Purchase of share in associate (6,060) -
Deferred consideration payments (1,054) (1,082)
Cash received on sale of subsidiary - 19,288
----------------- -----------------
Net cashflow (used in)/generated from investing activities (9,139) 16,499
Financing activities
Finance costs (58) (115)
Leases (152) 304
Loan Repayments - (3,588)
Buy back of shares (281) (1,365)
Dividend payment (391) (302)
----------------- -----------------
Net cashflow used in financing activities (882) (5,066)
----------------- -----------------
Net change in cash and cash equivalents (11,026) 12,714
Cash at start of period 15,177 4,457
------------------ ------------------
Cash at end of period 4,151 17,171
========= =========
TAVISTOCK INVESTMENTS PLC
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2022
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 UK.
The accounts have been prepared in accordance with accounting policies that
are consistent with the March 2022 Report and Accounts and that are expected
to be applied in the Report and Accounts of the year ending 31 March 2023.
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 2022 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:
Group Investment Management Advisory Unaudited 30 September 2022 Unaudited 30 September 2021
(Plc) Business
£'000 £'000 £'000 £'000 £'000
Revenue 174 543 16,617 17,334 17,043
Cost of sales (144) (128) (11,305) (11,577) (10,455)
------------- ------------- ------------- ------------- -------------
Gross profit 30 415 5,312 5,757 6,588
------------- ------------- ------------- ------------- -------------
Attributed Expenses (1,761) (398) (3,948) (6,107) (5,768)
Other Administrative Expenses
Share based payments (120) (268)
Provision for one off reorganisation costs - (500)
------------- -------------
(Loss)/Profit from operations before disposal (470) 52
====== ======
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)/EARNINGS PER SHARE
Unaudited Unaudited
6 months ended 6 months ended
30 September 2022 30 September 2021
(Loss)/Earnings per share has been calculated using the following:
(Loss)/Profit after taxation (£'000) (805) 35,482
Weighted average number of shares ('000s) 557,443 606,208
-------------- --------------
(Loss)/Earnings per ordinary share (0.14)p 5.85p
====== ======
Weighted average number of shares and share options 638,239 606,208
that were exercisable at period end ('000s)
-------------- --------------
(Loss)/Earnings per diluted share (0.13)p 5.85p
====== ======
(Loss)/Earnings per ordinary share has been calculated using the weighted
average number of shares in issue during the relevant financial periods. IAS
33 requires presentation of diluted EPS when a company could be called upon to
issue shares that would decrease earnings per share or increase the loss per
share. There would be dilutive impact were the share options to be
exercised.
4. DISPOSAL OF SUBSIDIARY UNDERTAKINGS
During the previous financial period, the Group disposed of its interest in
Tavistock Wealth Limited ("TWL") to Titan Wealth Holdings Limited ("Titan")
for a consideration of up to £40 million in cash, with the deferred
proportion of the overall consideration linked to the achievement and
maintenance of an average of £6 million of gross revenues per annum within
TWL.
The calculation of the profit arising from this transaction can be summarised
as follows.
Unaudited
30 September 2021
£'000 £'000
Initial Consideration 20,000
Less:
Write off of the goodwill and net assets associated with Tavistock Wealth (2,349)
Transaction costs (359)
Balance sheet deficit as defined by the SPA (7)
-------------
(2,715)
Deferred Consideration 20,000
Less: Discount at average cost of funds to reflect the current value of future (1,499)
receipts
-------------
(1,499)
-------------
Reported Gain 35,786
======
In calculating the gain summarised above, the Directors exercised the
following material judgements and assessments:
· the initial consideration received is non-refundable,
· based upon the aggregate of the assets introduced by Tavistock to Titan
as a part of the transaction, the additional assets anticipated to be
introduced in the future from Tavistock's ongoing activities and the assets
that will either be introduced as a consequence of Tavistock's planned
acquisition strategy or otherwise, the Directors are confident that TWL's
gross annual revenues will exceed the £6 million performance benchmark
referred to in the sale and purchase agreement entered into with Titan. Based
upon this judgement, it has been assumed that the deferred consideration will
be received in full,
· a discount rate of 4% per annum has been applied to the deferred
consideration to reflect that point's present day value.
5. INTANGIBLE ASSETS
Customer Goodwill Internally
and Adviser Arising on Developed
Relationships Consolidation Assets Total
£'000 £'000 £'000 £'000
Cost
Balance at 1 April 2022 (Audited) 4,862 12,600 1,587 19,049
Additions 331 3,024 166 3,521
Disposals (100) - - (100)
------------- ------------- ------------ ---------------
Balance at 30 September 2022 (Unaudited) 5,093 15,623 1,753 22,470
------------- ------------ ------------ ---------------
Accumulated amortisation
Balance at 1 April 2022 (Audited) 707 - 33 740
Amortisation 177 - 17 194
------------ ----------- ------------ ---------------
Balance at 30 September 2022 (Unaudited) 884 - 50 934
----------- ------------ ------------ ---------------
Net Book Value
------------ ------------ ------------ ------------
Balance at 30 September 2022 (Unaudited) 4,209 15,623 1,703 21,536
====== ====== ====== =======
Balance At 31 March 2022 (Audited) 4,155 12,600 1,554 18,309
====== ====== ====== =======
6. INVESTMENT IN ASSOCIATES
In April 2022, the Company received regulatory approval from the FCA and
completed the acquisition of a 21% stake in LEBC Holdings Limited ("LEBC") for
a consideration of £10 million.
LEBC is an independent national business providing financial advice to retail
clients and employee benefits advice to corporate clients. LEBC is estimated
to have c.78,000 clients with £4.2 billion of assets under advice. The Board
is working closely with the management of LEBC to maximise the value of this
investment for the benefit of both sets of shareholders.
As a part of the arrangements, the Company also agreed to acquire an
unregulated business called LEBC Hummingbird Limited ("Hummingbird") that
sells research on asset class allocations for risk-based portfolios to third
party managers, for a consideration of £3 million. The acquisition was made
in part to provide additional working capital to LEBC. However, as an
alternative source of funding has now been identified by LEBC, the Company
agreed to sell Hummingbird back to LEBC on the same terms on which it was
acquired. Completion of this transaction was announced by the Company on 1
December 2022.
7. SHARE CAPITAL
Unaudited Audited
30 September 2022 31 March
2022
£'000 £'000
Called up share capital
Allotted, called up and fully paid
5,555,212 Ordinary shares of 1 pence each 5,556 5,578
(31 March 2022: 557,677,576)
Capital redemption reserve 531 501
====== ======
6,087 6,079
Share premium 1,553 1,541
------------ ------------
7,640 7,620
====== ======
During the period, the Company has bought back 3,000,000 ordinary shares of 1p
for 9.35p each. The shares purchased have been cancelled, which enhanced the
earnings per share attributable to the shares remaining in issue. Also, during
the period, 755,000 of share options have been exercised and added to share
capital.
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