REG - Tavistock Investment - Results For Year Ended 31 March 2018
RNS Number : 6736STavistock Investments PLC27 June 2018TAVISTOCK INVESTMENTS PLC RESULTS FOR THE YEAR ENDED 31 MARCH 2018
27 JUNE 2018
Tavistock Investments Plc ("Tavistock" or "Company") announces its financial results for the year ended 31 March 2018.
Financial highlights:
● 47% increase in total revenues to £28.8 million (2017: £19.5 million)
● 132% increase in underlying EBITDA to £894,000 (2017: £384,000)
● Maiden pre-tax profit of £221,000
Operational highlights:
● Continued growth in funds under management, for the 14th consecutive quarter
○ 44% increase in discretionary FUM to £866 million (2017: £603 million)
○ Tavistock Wealth achieved revenue of £3.6 million (2017: £1.6m million)
● Continued improvement of the profile and performance of the advisory business
○ 41% increase in revenues generated by ongoing advisory business to £25.2 million (2017: £17.9 million)
○ 23 firms outside of the Group's ownership have now signed up to use Tavistock Wealth's investment services
● Product range enhancement
○ The Company widened its product range through the launch of three new ACUMEN funds
○ The Company introduced US Dollar and Euro denominated share classes to facilitate the introduction of funds from overseas investors
● Disposal of network subsidiary Tavistock Financial Limited ("TFL")
○ Significantly reduced the Group's regulatory capital obligation and added £1 million of cash
○ The Company retained 58 advisers, transferred into The Tavistock Partnership prior to disposal
● Revenue reserve account
○ The Company utilised £23 million of its share premium account to expunge the negative balance
○ The Company created distributable reserves, a prerequisite for the future payment of dividends
Post-period highlights:
● Funds launch
○ In May 2018, the company launched two new protected funds with capital guarantees provided to investors by Morgan Stanley & Co, one of the world's largest investment companies.
Brian Raven, Group Chief Executive, said: "We are continuing to deliver increases in funds under management and to develop our advisory business. The strong organic growth we have seen this year is recognition of the trust our clients, advisers and strategic partners are placing in our business. Our commitment to develop new products and services that respond to evolving investors' needs, such as greater capital protection, will continue to be a key driver for the Group. I am very proud of what the team has achieved this year and confident in our future growth prospects."
For further information:
Tavistock Investments plc Tel: 01753 867000
Oliver Cooke, Chairman
Brian Raven, Group Chief Executive
Arden Partners Plc Tel: 020 7614 5900
Paul Shackleton
Allenby Capital Limited Tel: 020 3328 5656
Nick Naylor
Nick Athanas
Vested EMEA Tel: 020 3890 8120
Elspeth Rothwell
Paul Andrieu
CHAIRMAN'S STATEMENT
FOR THE YEAR ENDED 31 MARCH 2018
The Group has made significant progress during the year in both its investment management and advisory businesses.
Investment Management
The provision of discretionary investment management services lies at the heart of the Group's commercial activities. Funds under management (FUM) continued to grow rapidly and I am pleased to report an increase of £263 million (44%), from £603 million at the start of the financial year to £866 million at 31 March 2018. Indeed, FUM have now increased in each of the 14 consecutive quarters, since the Tavistock Wealth service was launched.
http://www.rns-pdf.londonstockexchange.com/rns/6736S_1-2018-6-26.pdf
Tavistock Wealth achieved revenue of £3.6 million (prior year £1.6 million) and improved the average gross revenue generated on FUM by 14%, from 0.44% to 0.5% of FUM.
In June 2017, Tavistock Wealth launched three new ACUMEN funds; the ACUMEN Bond Portfolio, the ACUMEN Equity Portfolio and the ACUMEN Strategic Portfolio. Later in the year, it launched a range of US Dollar denominated and Euro denominated share classes to facilitate the introduction of funds from overseas investors.
The Group's investment approach of managing globally diversified, multi-asset portfolios, with currency hedging protecting nvestors against excessive risk and unexpected adverse performance, has continued to work well. I am also delighted to advise that Tavistock Wealth was a finalist in the 'Best Investment Fund Group' category at the Money Market Awards 2018.
The Group continues to make significant investment in initiatives to increase the level of FUM as this is the key driver of its profitability. This may have an impact on its reported performance in the short-term. Twenty three firms outside of the Group's ownership have now signed up to use Tavistock Wealth's services and several affinity (joint marketing) relationships are being developed.
In May 2018, after the year end date, the Company launched two new funds; the ACUMEN Capital Protection Portfolio ("ACPP") and the ACUMEN Income-Protection Portfolio ("AIPP"). These funds provide capital guarantees to investors, ensuring that the value of the ACPP can never fall below 90% of its highest ever price, and the AIPP (which takes slightly more risk) below 85%. The guarantees are provided by Morgan Stanley & Co, one of the world's largest investment companies.
The willingness of world scale institutions, such as BlackRock and Morgan Stanley, to partner with the Group's investment business is a significant endorsement of the skill and expertise within Tavistock Wealth.
Advisory
Gross revenues generated by the ongoing advisory business rose by 41% from £17.9 million to £25.2 million.
No further acquisitions have been made in the year and 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. This transaction had the additional benefit of reducing the Group's regulatory capital obligation, as on a stand-alone basis this business' requirement would have been in excess of £500,000. During the period, this now discontinued operation had gross revenues of £7.7 million and a loss of £25,000.
TFL resulted from the acquisition of Standard Financial Group ("SFG") in February 2015. Acquiring this business was a relatively inexpensive means of the Group attaining critical mass and establishing itself as a national operator, at an early stage in its development.
The Company invested a little under £1.2 million in acquiring and restructuring 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 another 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.
Financial Performance
During the year, the Group's ongoing businesses generated EBITDA of £894,000, before one-off re-organisation costs of £160,000, and it is reporting a maiden pre-tax profit of £221,000, on gross revenue of £28.8 million (year to 31 March 2017, EBITDA £384,000, pre-tax loss of £1.2 million, gross revenue £19.5 million). At the year end, the Group had net assets of £18.7 million (31 March 2017: £18.1 million) and having disposed of TFL for £1 million, settled over £2 million of deferred consideration obligations and repaid a £250,000 loan facility, it had cash resources of £3.1 million (31 March 2017: £4.5 million).
EBITDA is highlighted in the table below. This is considered to be the most appropriate measure of the Group's performance as it removes the distorting effect of one-off gains and losses that arise on acquisitions, and the impact of non-cash items.
The financial performance of the Group's ongoing business during the year can be summarised as follows:
6months ended
30 Sept 2017
H1
£'000
6 months
ended
31 Mar 2018
H2
£'000
Year ended
31 Mar 2018
Full Year
£'000
Gross Revenues
12,361
16,451
28,812
Underlying EBITDA
297
597
894
Reorganisation costs
160
-
160
Reported EBITDA
137
597
734
Depreciation & amortisation
(484)
(487)
(971)
Share based payments
(134)
(1)
(135)
Gain on disposals and exceptional costs
471
390
861
Profit from Operations
(10)
499
489
The financial performance of the Group's ongoing business during the past two years can be summarised as follows:
Year ended
31 Mar 2017
£'000
Year ended
31 Mar 2018
£'000
Movement
Gross Revenues
19,539
28,812
47% increase
Underlying EBITDA
384
894
132% increase
Reorganisation costs
-
160
Reported EBITDA
384
734
91% increase
Depreciation & amortisation
(774)
( 971)
25% increase
Share based payments
(306)
(135)
56% decrease
Exceptional (costs)/ income
(308)
861
Profit / (Loss) from Operations
(1,004)
489
Earnings / (Loss) per share
(0.13)p
0.05p
Net assets at year end
18,181
18,690
3% increase
Cash Resources at year end
4,558
3,111
32% decrease
Group Matters
In February 2018, with the approval of shareholders and the consent of the Courts, the Company utilised £23 million of its share premium account to expunge the negative balance on its revenue reserve account. This created distributable reserves which are a prerequisite for the future payment of dividends, as and when Directors consider it prudent to do so.
Future Prospects
The Group has now made the breakthrough of reporting a pre-tax profit and its future prospects are excellent.
The table above and the two graphs below illustrate the considerable strides that the Company has made over the past few years.
http://www.rns-pdf.londonstockexchange.com/rns/6736S_2-2018-6-26.pdf
http://www.rns-pdf.londonstockexchange.com/rns/6736S_3-2018-6-26.pdf
The Group benefits from a high degree of earnings visibility and based upon the anticipated revenue to be generated on existing FUM from the start of the current year, and upon the Group's current cost base, it would be reasonable to anticipate that the Company will report significantly improved performance for the current financial year.
Whilst there can be no certainty as to the level, or timing, of future fund inflows, any continued growth in the level of FUM will further enhance those results.
Initial reaction to the newly introduced capital protection products has been positive and once these funds are available to investors on more platforms, we expect demand to grow rapidly.
The payment of an initial dividend and the subsequent management of a dividend stream for the benefit of shareholders remains one of the Board's prime objectives. It is currently anticipated that the first opportunity for the payment of a dividend will be in the second half of the current financial year.
I would like to take the opportunity to acknowledge the significant contribution made by our excellent staff and to thank them, and in particular the management team, for their hard work and dedication over the past year.
I look forward to updating you further.
Oliver Cooke
Chairman
26 June 2018
TAVISTOCK INVESTMENTS PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2018
BUSINESS REVIEW
As has been stated in the Chairman's Statement, the provision of investment management services on a discretionary basis lies at the heart of the Group's commercial activities and the Company's prime objective is to continue to grow the level of funds under management. Another important strategic objective is the continued improvement of the profile and the performance of the Group's advisory business, ensuring that regulatory risk is minimised as far as possible and that it is appropriately matched to potential commercial reward.
The performance of the investment management business was enhanced through the achievement of strong organic growth in the level of FUM. The business also widened its product range through the launch of three new ACUMEN funds and the introduction of new US Dollar and Euro denominated share classes. After the year end date, the Company launched a new range of capital protected products with daily liquidity, and with capital guarantees being provided by one of the World's largest investment companies, Morgan Stanley. It also continued to encourage advisory firms outside of the ownership of the Group to make use of the Group's investment management services.
The profile of the Group's advisory business was improved by disposing of a traditional network operation that no longer fitted with the Group's strategy, Tavistock Financial Limited, to Sanlam UK Limited for £1,000,000. Ahead of the disposal, 58 members who are keen to develop a closer working relationship with the Group had transferred into another network business, The Tavistock Partnership Limited. The transaction strengthened the Group's cash resources and simultaneously reduced its regulatory capital obligations.
The performance of the Group's ongoing advisory business improved significantly during the year with gross revenues rising by 41%, from £17.9 million in the previous year, to £25.2 million.
In addition, the Board continued to take steps to invest in future growth. The Chairman's Statement contains further details on the progress and performance of the Group.
In the current financial year, the Board's focus will be on the following areas:
· continuing the growth in FUM,
· launching new funds where appropriate to meet perceived market needs
· improving access to the Group's products and services
· the development of affinity relationships with strategic partners
· encouraging the use of the Group's investment management services by advice firms outside of the Group's ownership,
· developing an overseas operation,
· refining the profile of the advisory business
· continuing organic growth through the recruitment of additional advisers, and
· potentially, through further selective acquisitions.
Risks and Uncertainties:
The principal commercial risks facing the business relate to the continued growth in the level of FUM and continued recruitment of advisors.
There can be no certainty that the rapid pace at which FUM have grown historically will continue into the future or that the business will continue to attract new advisers at the same pace. However, the newly introduced capital protected products have been well received thus far and a number of other initiatives targeting the introduction of additional funds are being pursued. The Board remains confident that good progress will continue.
The nature of the final BREXIT arrangements and the consequential economic impact remain unknown and the gradual decline in the level of quantitative easing in international financial markets is causing interest rates to begin a gradual rise. During this period of transition, the Group's investment approach, of hedging against currency exposures and targeting globally diversified multi-asset portfolios, should continue to serve the investor well.
The Group continues to face the usual risks of operating within a regulated environment, but to mitigate these risks the Board actively promotes an ethos of acting at all times with honour, dependability and vigilance, and a culture in which the client is placed at the centre of everything that the Company does.
The Board considers that the Group has sufficient working capital for its current needs.
Future Prospects:
The Group has reported a profit at the pre-tax level for the first time and its future prospects are considered to be excellent.
The Group benefits from a high degree of earnings visibility and the level of funds under management at the start of the current fiscal year and the management team's track record for attracting additional funds, leads the Board to anticipate the reporting of improved performance over the coming year.
I look forward to updating you on our progress.
Approved by the Board of Directors and signed on its behalf by
Oliver Cooke
Chairman
26 June 2018
TAVISTOCK INVESTMENTS PLC
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 MARCH 2018
The Directors are pleased to present their report on the audited financial statements of the Group for the year ended 31 March 2018.
Principal Activities, Review of the Business and Future Developments
The principal activities of the Group during the period were the provision of investment management services and the provision of support services to a network of financial advisers. The key performance indicators recognised by management are operating profit, as represented by underlying EBITDA, and the level of funds under management by the Group.
An overall review of the Group's trading performance and future prospects is given in the Chairman's Statement and the Strategic Report. The Group is not materially impacted by environmental matters and as a consequence does not offer comment on them.
Substantial shareholdings
The Company has been advised of the following interests in more than 3% of its ordinary share capital as at 26 June 2018:
Name
Number of shares
% of Ordinary shares
Brian Raven
63,855,712
11.89%
Andrew Staley
52,294,667
9.73%
City Financial
Christopher Peel
48,333,333
29,618,627
9.00%
5.51%
Kevin Mee
27,066,666
5.04%
Paul Millott
27,000,000
5.03%
Malcolm Harper
Oliver Cooke
26,400,000
26,188,556
4.91%
4.88%
Directors
The Directors of the Company during the period were:
Executives:
Oliver Cooke
Brian Raven
Non - Executives:
Roderic Rennison
Philip Young (resigned 31 July 2017)
Peter Dornan (appointed 22 August 2017)
Oliver Cooke
Chairman, aged 63
Oliver has over 35 years of financial and business development experience gained in a range of quoted and private companies including over fifteen years' experience as a public company director. He has considerable experience in the fields of strategic transformation, acquisitions, disposals and fundraisings. Oliver is a Chartered Accountant and a Fellow of the Chartered Association of Certified Accountants.
Brian Raven
Group Chief Executive, aged 62
Brian has been involved in the financial services sector since 2010. He has a wide range of business experience, having held many sales and general management posts at senior management and board level, including running public companies on both AIM and the Official List. Most notably, in 1991 Brian founded Card Clear Plc, subsequently renamed Retail Decisions plc, a business engaged in combating the fraudulent use of plastic payment cards. He led the company until 1998 by which time it was an international group, listed on AIM, with a market capitalisation of some £100 million. As a principal, Brian has been responsible for identifying, negotiating and integrating numerous acquisitions, as well as for delivering organic growth.
Roderic Rennison
Non-Executive Director, Chairman of Remuneration Committee, aged 63
Roderic has more than 40 years of experience in financial services encompassing a variety of roles including sales, strategy, product development, proposition, operations and latterly acquisitions, mergers, and integrations together with corporate affairs, risk and regulatory matters. He provides consultancy services in the sector to a range of providers, fund managers and intermediaries and particularly specialises on RDR, for which he chaired the professionalism and reputation work stream.
Peter Dornan
Non-Executive Director, Chairman of Audit Committee, aged 62
Peter has spent more than 40 years in the financial services industry. Having joined AEGON in 1981 as a sales consultant he progressed through a series of sales and general management positions to being appointed to the executive management board in 1999. He had executive responsibility for post-acquisition integration of a number of businesses including Guardian Assurance, Positive Solutions and Origen. Peter was also responsible for Scottish Equitable International in Luxembourg from 1996 until 2002 and was appointed chairman of AEGON Ireland when it was launched in 2002. Since 2012, Peter has acted as a consultant to a number of businesses within the financial services sector with a particular emphasis on governance, risk management and financial controls.
Corporate Governance
The Board confirms that the Group has had regard, throughout the accounting period, to the provisions set out in the UK Corporate Governance Code which was issued by the Financial Reporting Council in April 2016. Whilst not required to do so the Directors, as a matter of best practice, have voluntarily endeavoured to comply with those of the provisions which they consider to be relevant to a company of this size.
The Board does not consider the Group to be sufficiently large to warrant the establishment of a dedicated internal audit function.
Diversity
Tavistock is an equal opportunities employer and does not discriminate against staff on the basis of disability, gender, ethnicity or sexual orientation.
The Board of Directors
The Board currently comprises two executive Directors and two non-executive Directors.
The non-executive Directors have a strong compliance background and are considered to be independent. All Directors are required to stand for re-election at least once in every three years.
All members of the Board are equally responsible for the management and proper stewardship of the Group. The non-executive Directors are independent of management and free from any business or other relationship with the Company or Group and are thus able to bring independent judgment to issues brought before the Board.
The Board meets at least ten times per year and more frequently where necessary to approve specific decisions. Directors may take independent professional advice at the Company's expense.
The Audit Committee
The Audit Committee is comprised of the Chairman, who is a Chartered Accountant and has been a partner in a public practice, and the independent non-executive Directors. It determines the terms of engagement of the Company's auditors and, in consultation with the auditors, the scope of the audit. The Audit Committee receives and reviews reports from management and the Company's auditors relating to the interim and annual accounts and the accounting and internal control systems in use throughout the Company. The Audit Committee has unrestricted access to the Company's auditors.
During the year under review the Audit Committee met twice.
The Nomination Committee
The Directors do not consider it necessary for a company of this size to have a separate Nomination Committee.
Communication with shareholders
The Chairman and the Chief Executive are available to meet with institutional shareholders and to answer questions from private shareholders. The Board is open to receiving constructive input from shareholders. Each shareholder receives the annual report, which contains the Chairman's Statement. The annual and interim reports, together with other corporate press releases are made available on the Company's website www.tavistockinvestments.com. The Annual General Meeting provides a forum for shareholders to raise issues with the Directors. The Notice convening the meeting is issued with 21 clear days' notice. Separate resolutions are proposed on each substantially separate issue.
Going concern
The Directors confirm that they are satisfied the Group has adequate resources to continue its business for the foreseeable future and on this basis, they continue to adopt the going concern basis in preparing the accounts.
Financial instruments
Details of the use of financial instruments by the Group are contained in Note 14 of the financial statements.
Share capital
Changes to share capital during the period are given in Note 15 to the accounts.
Charitable and Political Donations
The Group did not make any political donations in the period but made charitable donations totalling £9,975 (2017: £13,843).
Dividends
The Directors do not propose a final dividend (2017: £Nil)
Auditors
A resolution reappointing haysmacintyre will be proposed at the Annual General Meeting in accordance with S489 of the Companies Act 2006.
Supplier payment policy
The Group's policy is to agree terms of payment with suppliers when entering into a transaction, ensure that those suppliers are aware of the terms of payment by including them in the terms and condition of the contract and pay in accordance with contractual obligations. Trade creditors at 31 March 2018 represented 27 days' purchases (2017: 14 days).
Internal control
The Directors are aware of the UK Corporate Governance Code which was issued by the Financial Reporting Council in April 2016. The key elements of the systems, which have regard to the size of the Group, are that the Board meets regularly and takes the decisions on all material matters, the organisational structure ensures that responsibilities are defined and authority only delegated where appropriate, and that regular management accounts are presented to the Board to enable the financial performance of the Group to be analysed.
The Directors acknowledge that they are responsible for the system of internal control which is established in order to safeguard the assets, maintain proper accounting records and ensure that financial information used within the business or published is reliable. Any such system of control can, however, only provide reasonable, not absolute, assurance against material misstatement or loss.
In preparing the financial statements, the Directors are required to:
· select suitable accounting policies in accordance with IAS 8 Accounting Policies, changes in Accounting Estimates and Errors and then apply them consistently;
· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and
· state that the Group has complied with IFRSs, subject to any material departures disclosed and explained in the financial statements, and make judgments and estimates that are reasonable and prudent.
Directors' responsibilities
The Directors are responsible for preparing the annual report and financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial period. Under that law the Directors have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice United Kingdom Accounting Standards and applicable law. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period.
The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgments and estimates that are reasonable and prudent;
· for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the European Union;
· for the parent company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will continue in business.
Directors' responsibilities (continued)
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.
Directors' interests
The Directors beneficial interests in the Ordinary Share Capital and options to purchase such shares were as follows:
Ordinary shares of 1p each
31 March 2018
31 March 2017
Share options
Shares
Share options
Shares
Executive Directors:
Oliver Cooke
11,600,000
26,188,556
1,600,000
25,388,556
Brian Raven
11,600,000
63,855,712
1,600,000
62,319,379
Non-executives Directors:
Roderic Rennison
Peter Dornan
-
-
250,000
-
-
-
250,000
-
Phillip Young
-
-
-
500,000
Research and Development
The Group is continuing to develop a software system for use by its advisers but has not undertaken any other any research and development activities
Directors' statement as to disclosure of information to auditors
The Directors have taken all of the steps required to make themselves aware of any information needed by the Group's auditors for the purposes of their audit and to establish that the auditors are aware of that information.
The Directors are not aware of any audit information of which the auditors are unaware.
Approved by the Board of Directors and signed on its behalf by
Oliver Cooke
Chairman
26 June 2018
TAVISTOCK INVESTMENTS PLC
REMUNERATION REPORT
FOR THE YEAR ENDED 31 MARCH 2018
Compliance
Described below are the principles that the Group has applied in relation to Directors' remuneration.
The Remuneration Committee
The Remuneration Committee comprises the non-executive Directors. Mindful of the need to attract, retain and reward key staff, the Committee reviews the scale and structure of the executive Directors' and senior employees' remuneration and the terms of their service or employment contracts, including share option schemes and other bonus arrangements.
The remuneration of, and the terms and conditions applying to, the non-executive Directors are determined by the entire Board.
During the year under review, the Remuneration Committee met twice, and all members attended.
Share options
The share options granted to the Directors under the Company's EMI (Enterprise Management Incentive) Share Option Scheme or as unapproved options can be summarised as follows.
Number at start of period
Issued in the period
EMI / Unapproved
Exercise price
(pence)
Number at end of period
Vesting
Condition
Date from
which exercisable
Expiry
date
Executive Directors
Oliver Cooke
800,000
-
EMI
5.25
800,000
Oct 2017
Oct 2024
Oliver Cooke
800,000
-
EMI
5.25
800,000
Oct 2019
Oct 2024
Oliver Cooke
5,000,000
EMI
5.25
5,000,000
£5 mill pre-tax
Apr 2017
Apr 2027
Oliver Cooke
5,000,000
Unapproved
5.25
5,000,000
£1.5Bn FUM
Apr 2017
Apr 2027
Brian Raven
800,000
-
EMI
5.25
800,000
Oct 2017
Oct 2024
Brian Raven
800,000
-
EMI
5.25
800,000
Oct 2019
Oct 2024
Brian Raven
5,000,000
EMI
5.25
5,000,000
£5 mill pre-tax
Apr 2017
Apr 2027
Brian Raven
5,000,000
Unapproved
5.25
5,000,000
£1.5Bn FUM
Apr 2017
Apr 2027
The market price of the shares at 31 March 2018 was 3.06 pence (2017: 2.625 pence) and the range during the financial period was 2.625 pence to 4.00 pence.
After the balance sheet date, on 1 April 2018, the Company announced that it had inter alia, granted unapproved options over an additional two tranches of 7,500,000 shares each, total 15,000,000 shares, to Oliver Cooke and over an additional two tranches of 10,000,000 shares each, total 20,000,000 shares, to Brian Raven. In each case, the exercise price of the first tranche was 6p per share, representing a premium of 97% over the then market price with vesting being conditional upon the Company's achievement of £1.8 billion of FUM. The exercise price of the second tranche was 6.5p per share, representing a premium of 113% over the then market price with vesting being conditional upon the Company's achievement of £7 million of pre-tax profit in a single financial year.
Service contracts
The term of the Directors' service contracts can be summarised as follows:
Executive Directors
Commencement date
Term
Oliver Cooke
3 May 2013
Fixed to 31 March 2020, terminable thereafter on twelve months' notice
Brian Raven
12 May 2014
Fixed to 31 March 2020, terminable thereafter on twelve months' notice
Non-executive Directors
Roderic Rennison
12 May 2014
Initial term 2 years, terminable at any time on three months' notice
Peter Dornan
22 August 2017
Initial term 2 years, terminable at any time on three months' notice
Directors' remuneration
Details of each Director's remuneration are provided in Note 5 to the financial statements entitled Staff Costs.
On behalf of the Board
Oliver Cooke
Chairman
26 June 2018
TAVISTOCK INVESTMENTS PLC
INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF TAVISTOCK INVESTMENTS PLC
FOR THE YEAR ENDED 31 MARCH 2018
Opinion
We have audited the financial statements of Tavistock Investments Plc (the 'parent company') and its subsidiaries (together the 'Group') for the year ended 31 March 2018 which comprise Consolidated Statement of Comprehensive Income, Consolidated and Company Statements of Financial Position, Consolidated Statement of Cash Flows, Company and Consolidated Statements of Changes in Equity and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, UK Generally Accepted Accounting Principles ("UK GAAP") including Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland and the provisions of the Companies Act 2006.
In our opinion, the financial statements:
• give a true and fair view of the state of the Group's and of the parent company's affairs as at 31 March 2018 and of the group's profit for the year then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union in the case of the Group financial statements and UK GAAP including Financial Reporting Standard 102 in the case of the Company financial statements; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
• the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group's or the parent company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Valuation of deferred consideration
The Group has significant deferred consideration liabilities recognised in its Statement of Financial Position arising from acquisitions of subsidiary entities in prior financial periods. There is a risk that variations to arrangements or performance may result in the liabilities being materially misstated.
Our audit work included but was not restricted to a review of payments made during the year, together with a review of management's assessment of amounts payable as at 31 March 2018 in conjunction with supporting audit evidence.
Valuation of intangible assets
The Group has significant intangible assets that have arisen as a result of the acquisition of subsidiary entities in prior financial periods. These assets include goodwill arising on consolidation and intangible assets recognised at fair value on acquisition. There is a risk that on consolidation, the valuation of intangible assets including goodwill are overstated.
Our audit work included but was not restricted to a consideration of impairment reviews prepared by management and scrutiny of associated calculations and forecasts used in determining expected future results. Our review was performed using recent financial performance and our understanding of the Group's business model.
FCA regulations
A number of the Group's subsidiaries are regulated by the Financial Conduct Authority ("the FCA") and there is a risk that instances of non-compliance may result in the Group's inability to continue as a going concern.
Our audit work included but was not restricted to a review of correspondence and regulatory filings with the FCA to consider whether any indications of non-compliance or disciplinary action existed.
Our application of materiality
The scope and focus of our audit was influenced by our assessment and application of materiality. We define materiality as the magnitude of misstatement that could reasonably be expected to influence the readers and the economic decisions of the users of the financial statements. We use materiality to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the financial statements as a whole.
Materiality for the Group Financial Statements as a whole was set at £300,000, determined with reference to the turnover of the Group on a consolidated basis. We report to the Audit Committee any corrected or uncorrected misstatements arising exceeding £15,000.
Performance materiality was set at £225,000, being 75% of materiality.
An overview of the scope of our audit
Our audit scope included all components and was performed to component materiality. Our audit work therefore covered 100% of group revenue, group profit and total group assets and liabilities. It was performed to the materiality levels set out above.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors' remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement set out on page 11, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an Auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Simon Wilks (Senior Statutory Auditor) 10 Queen Street Place
For and on behalf of haysmacintyre, Statutory Auditors London
26 June 2018 EC4R 1AG
TAVISTOCK INVESTMENTS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2018
Year ended
Year ended
31 March
31 March
2018
2017
Note
£'000
£'000
Revenue - continuing operations
3
28,812
19,539
Cost of sales - continuing operations
(18,332)
(13,502)
------------
------------
Gross profit
10,480
6,037
Administrative expenses- continuing operations
(9,991)
(7,041)
--------------
--------------
Profit/(Loss) from Operations
4
489
(1,004)
Memorandum:
Adjusted EBITDA
734
384
Depreciation & amortisation
(971)
(774)
Gain on disposals
905
41
Share based payments
(135)
(306)
Acquisition related costs and exceptional items
(44)
(349)
--------------
--------------
Profit/(Loss) from Operations
489
(1,004)
Finance costs
(268)
(203)
------------
------------
Profit/(Loss) before taxation and attributable to equity holders of the parent
221
(1,207)
Taxation
6
29
552
------------
------------
Profit/(Loss) from continuing operations
Discontinued operations (net of tax)
Profit/(Loss) after taxation and attributable to equity holders of the parent and total comprehensive income for the period
250
25
------------
275
(655)
79
------------
(576)
======
======
Earnings/(Loss) per share (continuing operations)
Basic and diluted
7
0.05p
(0.13)p
======
=======
TAVISTOCK INVESTMENTS PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2018
31 March 2018
31 March 2017
£'000
£'000
£'000
£'000
ASSETS
Non-current assets
Property, plant and equipment
8
490
381
Intangible assets
9
19,136
19,954
-----------------
-----------------
Total non-current assets
19,626
20,335
Current assets
Trade and other receivables
10
3,334
2,149
Cash and cash equivalents
3,111
4,558
-----------------
-----------------
Total current assets
6,445
6,707
-----------------
-----------------
Total assets
26,071
27,042
LIABILITIES
Current liabilities
11
(4,703)
(5,319)
Non-current liabilities
Other payables
11
-
(1,100)
Loans
11
(2,233)
(2,000)
Provisions
12
(40)
(46)
Deferred taxation
13
(405)
(396)
------------------
------------------
Total liabilities
(7,381)
(8,861)
------------------
------------------
Total net assets
18,690
18,181
=========
=========
Capital and reserves attributable to owners
of the parent
Share capital
15
12,720
12,685
Share premium
4,882
27,818
Retained earnings/(deficit)
1,088
(22,322)
------------------
------------------
Total equity
18,690
18,181
=========
=========
The financial statements were approved by the Board and authorised for issue on 26 June 2018.
Oliver Cooke
Chairman
TAVISTOCK INVESTMENTS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2018
Share capital
Share premium
Retained (deficit)/ earnings
Total equity
£'000
£'000
£'000
£'000
31 March 2016
10,262
20,688
(22,052)
8,898
--------------
--------------
--------------
--------------
Issue of shares
2,423
7,130
-
9,553
Loss after tax and total comprehensive income
-
-
(576)
(576)
Equity settled share based payments
-
-
306
306
--------------
--------------
--------------
--------------
31 March 2017
12,685
27,818
(22,322)
18,181
--------------
--------------
--------------
--------------
Issue of shares (net)
35
64
-
99
Profit after tax and total comprehensive income
-
-
275
275
Equity settled share based payments
-
-
135
135
Reduction of share premium
-
(23,000)
23,000
-
--------------
--------------
--------------
--------------
31 March 2018
12,720
4,882
1,088
18,690
--------------
--------------
--------------
--------------
On 27 February 2018, the Group reduced its share premium account by £23m by special resolution, resulting in a corresponding transfer of this balance to retained earnings.
TAVISTOCK INVESTMENTS PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2018
Year ended
31 March 2018
Year ended
31 March 2017
£'000
£'000
£'000
£'000
Cash flows from operating activities
Profit/(Loss) before tax
Adjustments for:
246
(1,128)
Share based payments
135
306
Depreciation on property plant and equipment
147
93
Amortisation of intangible assets
824
681
Gain on disposal of subsidiary
(905)
-
Net Finance costs
268
204
-----------------
-----------------
Cash flows from operating activities before changes
in working capital
715
156
(Increase)/Decrease in trade and other receivables
(1,245)
2,068
Increase/(Decrease) in trade and other payables
713
(2,556)
Corporation tax paid
(46)
(161)
-----------------
-----------------
Cash generated/used in operations
137
(493)
Investing activities
Finance income
-
1
Development of intangible assets
-
(199)
Purchase of property, plant and equipment
(291)
(180)
Proceeds on disposals
965
50
Cash on acquisition
-
2,009
Cash on disposal
(164)
Acquisition of subsidiaries
(2,002)
(4,839)
-----------------
-----------------
Net cash absorbed from investing activities
(1,492)
(3,158)
Financing activities
Finance costs
(276)
(205)
New loans and finance leases
334
2,000
Loan Repayments
(250)
Issue of new share capital (net of costs)
100
3,029
-----------------
-----------------
Net cash from financing activities
(92)
4,824
-----------------
-----------------
Net (decrease)/increase in cash and cash equivalents
(1,447)
1,173
Cash and cash equivalents at beginning of the period
4,558
3,385
------------------
------------------
Cash and cash equivalents at end of the period
3,111
4,558
=========
=========
Reconciliation of net cashflow to movement in net debt: Year ended Year ended
31 March 2018 31 March 2017
£000 £000
Net (decrease)/increase in cash and cash equivalents (1,447) 1,173
New loans and finance leases (334) (2,000)
Repayment of loans 250 -
----------------- -----------------
Movement in net debt in the year (1,531) (827)
Net debt at 1 April 2,308 3,135
----------------- ------------------
Net Debt at 31 March 777 2,308
========= =========
TAVISTOCK INVESTMENTS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2018
1. ACCOUNTING POLICIES
Principal accounting policies
The Company is a public company incorporated and domiciled in the United Kingdom. The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs") and those parts of the Companies Act 2006 which apply to companies preparing their financial statements under IFRSs.
Changes in accounting policies
Amendments to IFRS 2 Share-Based Payment (effective for accounting years beginning on or after 1 January 2018),
IFRS 15 Revenue from Contracts with Customers (effective for accounting years beginning on or after 1 January 2018) and IFRS 16 Leases (effective for accounting years beginning on or after 1 January 2019).
The implementation of these standards is not expected to have any material effect on the Group's financial statements, with the exception of IFRS 16. Specifically, the Group has assessed the impact of implementing IFRS 15 and the impact on the financial statements for the current or prior years is £nil. The impact that the implementation IFRS 16 will have on the financial statements is currently being assessed.
Basis of Consolidation
The Group comprises a holding company and a number of individual subsidiaries and all of these have been included in the consolidated financial statements in accordance with the principles of acquisition accounting as laid out by IFRS 3 Business Combinations.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. All such revenue is reported net of discounts and Value Added Tax. Revenue represents either gross Independent Financial Adviser ("IFA") income or investment management fees receivable in respect of the period. This revenue is recognised as and when it is earned and is calculated on a monthly basis.
Intangible assets
Intangible assets include goodwill arising on the acquisition of subsidiaries and represents the difference between the fair value of the consideration payable and the fair value of the net assets that have been acquired. The residual element of Goodwill is not being amortised but is subject to an annual impairment review.
Also included within intangible assets are various assets separately identified in business combinations (such as FCA permissions, established systems and processes, adviser and client relationships and brand value) to which the Directors have ascribed a commercial value and a useful economic life. The ascribed value of these intangible assets is being amortised on a straight-line basis over their estimated useful economic life, which is considered to be between 5 and 10 years.
Internally generated intangible assets
Internally generated assets are capitalised when the technical feasibility of completing the asset so that it will be available for use is confirmed, there is a demonstrable ability to use the asset and probable future economic benefits will flow from it. Internally generated intangible assets are measured at cost and amortised over a useful life of 5 years.
Financial assets
Loans and receivables: These assets are deemed to be non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (trade receivables), but also incorporate other types of contractual monetary asset. They are carried at amortised cost using the effective interest rate method.
Cash and cash equivalents: These include cash in hand and deposits held at call with UK banks.
Financial liabilities
Other financial liabilities include trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.
Share based payments
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income on a straight-line basis over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of options expected to vest at each statement of financial position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
Fair value is calculated using the Black-Scholes model, details of which are given in Note 16.
Property, plant and equipment
Property, plant and equipment are stated at cost net of accumulated depreciation and provision for impairment. Depreciation is provided on all property plant and equipment, at rates calculated to write off the cost less estimated residual value, of each asset on a straight-line basis over its expected useful life. The residual value is the estimated amount that would currently be obtained from disposal of the asset if the asset were already of the age and in the condition expected at the end of 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 asset 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 (2017: £Nil).
3. SEGMENTAL INFORMATION
A segmental analysis of revenue and expenditure for the period is:
Investment Management
Advisory
Support
2018
Investment Management
Advisory
Support
2017
£'000
£'000
£'000
£'000
£'000
£'000
REVENUE
Fees and Commissions
3,635
25,177
28,812
1,660
17,879
19,539
Cost of Sales
(304)
(18,028)
(18,332)
(278)
(13,224)
(13,502)
Administrative Expenses
(1,492)
(5,978)
(7,470)
(909)
(3,329)
(4,238)
Group costs
(2,521)
(2,803)
-------------
-------------
Profit/(Loss) from operations
489
(1,004)
======
======
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's revenue was generated exclusively within the UK.
4.
LOSS FROM OPERATIONS
2018
2017
£'000
£'000
This is arrived at after charging:
Staff costs (see note 5)
6,524
4,164
Depreciation
147
93
Amortisation of intangible fixed assets
824
681
Operating lease expense - property
358
254
Auditors' remuneration in respect of the Company
9
8
Audit of the Group and subsidiary undertakings
51
62
Auditors' remuneration - non-audit services -interim
2
2
Auditors' remuneration - non-audit services -taxation
12
13
-------------
-------------
74
85
======
======
5.
STAFF COSTS
2018
2017
£'000
£'000
Staff costs for all employees, including Directors consist of:
Wages, fees and salaries
5,511
3,358
Social security costs
645
356
Pensions
233
144
-----------
-----------
6,389
3,858
Share based payment charge
135
306
-----------
-----------
6,524
4,164
=====
=====
2018
2017
The average number of employees of the group during the year
Number
Number
was as follows:
Directors and key management
8
7
Operations and administration
125
89
-----------
-----------
133
96
======
======
The remuneration of the highest paid director was £230,310 (2017: £192,391). The total remuneration of key management personnel was £1,284,693 (2017: £933,259).
Directors' Detailed Emoluments
Details of individual Directors' emoluments for the year are as follows:
Salary & fees
Benefits in kind & allowances
Pension contributions
Total
2018
Total
2017
£
£
£
£
£
O Cooke
160,000
28,185
24,000
212,185
179,788
B Raven
175,000
29,060
26,250
230,310
192,391
P Dornan*
14,583
-
-
14,583
-
R Rennison*
25,000
-
-
25,000
25,000
P Young*
10,417
-
-
10,417
25,000
----------------
----------------
--------------
----------------
----------------
385,000
57,245
50,250
492,495
422,179
========
=======
=======
=======
=======
* Denotes non-executive Director
All pension contributions represent payments into defined contribution schemes.
6.
TAXATION ON LOSS FROM ORDINARY ACTIVITIES
2018
2017
£'000
£'000
Current tax credit
(6)
(19)
Deferred tax credit
(23)
(509)
------------
------------
Tax credit for the year
(29)
(528)
======
======
The tax assessed for the period differs from the standard rate of corporation tax in the UK applied to loss before tax.
2018
2017
£'000
£'000
Profit/(loss) on ordinary activities before tax - continuing Operations
221
(1,207)
Profit on ordinary activities before tax - discontinued Operations
25
103
------------
------------
Total Profit/(loss) on ordinary activities before tax
246
(1,104)
======
======
Profit/(loss) on ordinary activities at the standard rate of corporation tax in the UK of 19% (2017: 20%)
47
(221)
Effects of:
Unutilised losses
-
100
Expenses not deductible for tax purposes
56
107
Other timing differences
-
(456)
Differences between capital allowances and depreciation
(46)
10
Adjustments to prior periods
(6)
-
Non-taxable income
(399)
(27)
Adjust closing deferred tax to average rate of tax
(5)
(41)
Deferred tax not recognised
324
-
-----------
-----------
Tax credit for the year
(29)
(528)
======
======
7.
EARNINGS PER SHARE
2018
2017
£'000
£'000
Earnings/(Loss) per share has been calculated using the following:
Earnings/(Loss) (£'000)
275
(576)
Weighted average number of shares ('000s)
536,951
418,662
--------------
--------------
Basic profit/(loss) per ordinary share
0.05p
(0.13)p
=======
=======
Earnings/(Loss) 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. The exercise price of the outstanding share options is significantly more than the average and closing share. Therefore, as per IAS33 the potential ordinary shares are disregarded in the calculation of diluted EPS.
8.
TANGIBLE FIXED ASSETS
Motor
Computer
Office fixtures fittings and
Vehicles
equipment
equipment
Total
£'000
£'000
£'000
£'000
Cost
Balance at 1 April 2017
28
299
584
911
Additions
-
148
141
289
Disposals
-
(160)
(127)
(287)
---------
---------
--------------
---------------
Balance at 31 March 2018
28
287
598
913
---------
---------
--------------
---------------
Accumulated depreciation
Balance at 1 April 2017
15
207
308
530
Depreciation charge
4
50
93
147
Disposals
-
(141)
(113)
(254)
---------
---------
--------------
---------------
Balance at 31 March 2018
19
116
288
423
---------
---------
--------------
---------------
Net Book Value
At 31 March 2018
9
171
310
490
=====
=====
=====
=====
At 31 March 2017
13
92
276
381
=====
=====
=====
======
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 2017
5,415
1,815
14,751
474
22,455
Additions
-
-
-
6
6
-------------
-------------
-------------
------------
---------------
Balance at 31 March 2018
5,415
1,815
14,751
480
22,461
-------------
-------------
------------
------------
---------------
Accumulated amortisation
Balance at 1 April 2017
1,730
566
205
-
2,501
Amortisation
491
222
-
111
824
------------
-----------
-----------
------------
---------------
Balance at 31 March 2018
2,221
788
205
111
3,325
-----------
------------
------------
------------
---------------
Net Book Value
At 31 March 2018
3,194
1,027
14,546
369
19,136
======
======
======
======
=======
At 31 March 2017
3,685
1,249
14,546
474
19,954
======
======
======
======
=======
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 cash generating unit is as follows:
31 March
2018
31 March 2017
£'000
£'000
Financial Advisory business
12,631
12,631
Investment Management business
1,915
1,915
-------------
-------------
14,546
14,546
======
=======
In assessing the carrying value of goodwill the Directors have given consideration to the anticipated performance of each of these cash generating units as part of a value in use calculation. This consideration included reference to a generally accepted future medium term (five year) growth rate of 10%, followed by a long-term rate of 3%. It is also assumed a discount rate of 15%. It is considered that any reasonably possible changes in the key assumptions would not result in an impairment of the present carrying value of the goodwill.
10.
TRADE AND OTHER RECEIVABLES
31 March 2018
31 March 2017
£'000
£'000
Trade receivables
2,018
748
Prepayments and accrued income
1,180
942
Other receivables
136
459
-------------
-------------
3,334
2,149
======
======
11.
LIABILITIES
31 March 2018
31 March 2017
£'000
£'000
Current liabilities
Trade payables
2,101
1,095
VAT and social security liabilities
222
250
Accruals
829
803
Deferred consideration on acquisitions
1,100
2,002
Other payables
350
870
Corporation tax payable
-
49
Loans and finance leases
101
250
-------------
-------------
4,703
5,319
======
======
Non-current liabilities
Loans and finance leases
Deferred consideration
2,233
-
2,000
1,100
-----------
------------
2,233
3,100
======
======
In 2016 the Company entered into a three-year, £2 million debt facility with Assetz SME Capital Ltd which is secured by a charge in favour of Assetz SME Capital Ltd over the Group's shares in Tavistock Partners (UK) Ltd. Interest on the facility, at the rate of 9% per annum, is paid monthly and repayment of the principal sum is due in April 2019. The facility can be extended at the Company's discretion for a further period of up to two years.
12.
PROVISIONS
Total
£'000
Balance at 1 April 2017
46
Payments to settle claims
16
Provisions released
(22)
-------------
Balance at 31 March 2018
40
=======
13.
DEFERRED TAX
Total
£'000
Balance at 1 April 2017
(396)
Deferred tax credit in the year
23
Transferred on disposal
(32)
-------------
Balance at 31 March 2018
405
=======
The deferred tax provision comprises:
31 March 2018
31 March 2017
£'000
£'000
Accelerated capital allowances
-
(17)
Unutilised tax losses
(321)
(419)
Deferred tax on intangibles
726
832
-------------
-------------
405
396
======
======
14. 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 2018
31 March 2017
£'000
£'000
Loans and receivables
Trade receivables
2,018
748
Other receivables
136
459
======
======
The table below illustrates the due date of trade receivables:
31 March 2018
31 March 2017
£'000
£'000
Current
2,018
697
31 - 60 days
-
-
61 - 90 days
-
-
91 - 120 days
-
-
121 and over
-
51
-------------
-----------
2,018
748
======
======
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.
Other than the loans referred to in Note 11, 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 2018
31 March 2017
£'000
£'000
At the year end the Group had the following cash balances:
3,111
4,558
======
======
Cash at bank comprises Sterling cash deposits held within a number of banks. At 31 March 2018, £197,000 (2017: £252,000) 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.
31 March 2018
£'000
31 March 2017
£'000
Financial liabilities at amortised cost
Trade payables
2,101
1,095
Accruals
829
803
======
======
The table below illustrates the ageing of trade payables:
31 March 2018
31 March 2017
£'000
£'000
Current
1,950
1,092
31 - 60 days
65
3
61 - 90 days
-
-
91 - 120 days
-
-
121 and over
86
-
----------------
---------------
2,101
1,095
========
========
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 its ability to continue as a going concern, so that in due course it can 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.
15.
SHARE CAPITAL
31 March 2018
31 March 2017
£'000
£'000
Called up share capital
Allotted, called up and fully paid
537,186,045 Ordinary shares of 1 pence each
(2017: 533,614,920 shares of 1 pence each)
5,371
5,336
30,450,078 Deferred shares of 9p each
2,742
2,742
465,344,739 Deferred "A" shares of 0.99 pence each
4,607
4,607
------------
------------
12,720
12,685
======
======
On 24 April 2017, 3,571,125 new Ordinary shares of 1p were issued at an issue price of 2.8p to an existing shareholder.
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 earnings 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 64,461,500 Ordinary shares.
These options have been valued using the Black- Scholes pricing model. The weighted average of the assumptions used in the model are:
31 March 2018 31 March 2017
Share price at grant
2.92p 3.32p
Exercise price
5.25p 5.25p
Expected volatility
62% 112%
Expected life
5 years 7 years
Risk free rate
1.1% 1.2%
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.
31 March 2018
31 March 2017
Weighted
Weighted
average price
average price
(pence)
Number
(pence)
Number
Outstanding at the beginning of the year
5.18
21,220,000
2.84
18,450,000
Granted during the year
Lapsed during the year
5.25
5.25
64,461,500 (10,252,401)
5.25
4.08
7,720,000 (4,950,000)
-------------------
-------------------
Outstanding at the end of the period
5.23
75,429,099
5.18
21,220,000
=========
=========
The exercise price of options outstanding at the end of the year, 2,050,000 of which had vested and were exercisable, was 5.23p and their weighted contractual life was 5.67 years.
There were no options over Ordinary shares exercised in the period. The weighted average fair value of each option granted during the current period was assessed as being 1.10p and their weighted average contractual life was 5 years.
17.
LEASING COMMITMENTS
31 March 2018
31 March 2017
£'000
£'000
The Group's future minimum lease payments fall due as follows:
Not later than 1 year
286
252
Later than 1 year and not later than 5 years
629
324
-------------
-------------
915
576
=====
=====
18. RELATED PARTY TRANSACTIONS
Payments of £37,000 (2017: £56,000) were made to threesixty Support LLP in relation to compliance services, a firm in which Philip Young, who served for part of the year as a Non-Executive Director of the Company, also served as Managing Director during the year.
During the period, Tavistock Wealth Limited received fees of £3,290,000 (2017: £1,163,000) under the terms of an agreement entered into with Investment Fund Services Limited ("IFSL"). IFSL is a company of which Andrew Staley, a significant shareholder in Tavistock Investments Plc, is a director.
TAVISTOCK INVESTMENTS PLC Company number 05066489
COMPANY BALANCE SHEET
AS AT 31 MARCH 2018 - PREPARED UNDER UK GAAP
At 31 March 2018
At 31 March 2017
£'000
£'000
£'000
£'000
Fixed assets
Investments
III
22,110
22,360
Tangible fixed assets
IV
312
281
Intangible fixed assets
V
370
474
-----------------
-----------------
22,792
23,115
Current assets
Debtors
VI
964
1,377
Cash at bank and in hand
VIII
278
1,089
-----------------
-----------------
1,242
2,466
Creditors: amounts falling due within
one year
IX
(4,265)
(4,738)
----------------
----------------
Net current liabilities
(3,023)
(2,272)
Debtors: amounts falling due after one year
VII
299
299
Creditors: amounts falling due after one year
X
(2,000)
(3,100)
---------------
---------------
Total assets less total liabilities
18,068
18,042
=======
=======
Capital and reserves
Called up share capital
XI
12,720
12,685
Share premium account
4,882
27,818
Retained reserves
466
(22,461)
------------------
------------------
Shareholders' funds
18,068
18,042
=========
=========
The loss of the parent company for the year was £73,000 (2017: £671,000)
The financial statements were approved by the Board and authorised for issue on 26 June 2018.
Oliver Cooke
Chairman
TAVISTOCK INVESTMENTS PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2018 - PREPARED UNDER UK GAAP
Share
Capital
Share
Premium
Retained reserves
Shareholder
funds
£'000
£'000
£'000
£'000
31 March 2016
10,262
20,688
(22,790)
8,160
Issue of shares
2,423
7,130
-
9,553
Loss before and after tax
-
-
(671)
(671)
Dividends received
-
-
1,000
1,000
-------------
-------------
-------------
-------------
31 March 2017
12,685
27,818
(22,461)
18,042
-------------
--------------
--------------
-------------
Issue of shares
35
64
-
99
Loss after tax
-
-
(73)
(73)
Reduction of share premium
-
(23,000)
23,000
-
-------------
--------------
---------------
--------------
31 March 2018
12,720
4,882
466
18,068
-------------
--------------
--------------
-------------
TAVISTOCK INVESTMENTS PLC
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2018
I. ACCOUNTING POLICIES
The principal accounting policies applied are summarised below.
Basis of preparation
The financial statements have been prepared under the historical cost convention as modified by the revaluation of Tangible Assets and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland and the Companies Act 2006.
FRS 102 is mandatory for accounting periods beginning on or after 1 January 2015.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the company's accounting policies (see note 2 in the Group financial statements).
These accounts do not include a Cashflow Statement or a Financial Instruments note as these are disclosed in the Group financial statements.
All accounting policies that are not unique to the company are listed on pages 23-25. All additional accounting policies have been applied as follows:
Going concern
The Directors' are of the opinion that the Company has sufficient working capital for the foreseeable future and on this basis, consider it appropriate that the accounts have been prepared on a going concern basis.
Valuation of investments
Investments held as fixed assets are stated at cost less any provision for impairment in value.
II. LOSS FOR THE FINANCIAL PERIOD
The Company has taken advantage of the exemption allowed under s408 of the Companies Act 2006 and has not presented its own profit and loss account in these financial statements. The Company's loss for the year was £73,000 (2017: Loss of £671,000).
The average number of employees of the company during the year was 10 (2017: 8) and total staff costs were £1,427,000 (2017: £1,209,000).
III.
FIXED ASSET INVESTMENTS
31 March 2018
31 March 2017
£'000
£'000
Subsidiary undertakings
Cost
Balance at 1 April 2017
22,687
12,024
Additions
-
10,663
Disposals
(250)
--------------
--------------
Balance at 31 March 2018
22,437
22,687
Provisions
Balance at 1 April 2017
(327)
(327)
--------------
--------------
Balance at 31 March 2018
(327)
(327)
--------------
--------------
Carrying value of investments
22,110
22,360
=======
=======
At the year end the Company had the following wholly owned subsidiaries
Registered Office Address
Name
Holding
1 Bracknell Beeches, Old Bracknell Lane, Bracknell, RG12 7BW
Tavistock Wealth Limited
Direct
Tavistock Partners Limited
Direct
Sterling McCall Limited
Indirect
Tavistock Partners (UK) Ltd
Direct
Duchy Independent Financial Advisers Limited
Direct
Price Bailey Financial Services Limited
Direct
Tavistock Private Client Limited
Indirect
Cheviot Financial Planning Limited
Indirect
The Tavistock Partnership Limited
Direct
Tavistock Direct Limited
Direct
1, The Cornerstone Market Place, Kegworth, Derby DE74 2EE
Cornerstone Asset Holdings Limited
Direct
26 Upper Pembroke Street, Dublin 2, Ireland
Tavistock Wealth (Global) Limited
Indirect
IV.
TANGIBLE FIXED ASSETS
Office fixtures
Computer
fittings and
equipment
equipment
Total
£'000
£'000
£'000
Cost
Balance at 1 April 2017
100
279
379
Additions
25
97
122
---------
--------------
---------------
Balance at 31 March 2018
125
376
501
---------
--------------
---------------
Accumulated depreciation
Balance at 1 April 2017
45
53
98
Depreciation charge
20
71
91
---------
--------------
---------------
Balance at 31 March 2018
65
124
189
---------
--------------
---------------
Net Book Value
At 31 March 2018
60
252
312
=====
=====
=====
At 31 March 2017
55
226
281
=====
=====
======
V.
INTANGIBLE FIXED ASSETS
Total
£'000
Software Cost
Balance at 1 April 2017
474
Additions
16
---------------
Balance at 31 March 2018
490
---------------
Accumulated amortisation
Balance at 1 April 2017
-
Amortisation charge
120
---------------
Balance at 31 March 2018
120
---------------
Net Book Value
At 31 March 2018
370
=====
At 31 March 2017
474
======
VI.
DEBTORS: due within one year
31 March 2018
31 March 2017
£'000
£'000
Amounts owed by subsidiary undertakings
609
1,150
Trade debtors
15
74
Other debtors
96
52
Prepayments and accrued income
244
101
------------
------------
964
1,377
=====
=====
VII.
DEBTORS: due after one year
31 March 2018
31 March 2017
£'000
£'000
Deferred tax asset
299
299
------------
------------
299
299
=====
=====
VIII. CASH AND CASH EQUIVALENTS
31 March 2018
31 March 2017
£'000
£'000
Cash at bank and in hand
278
1,089
-------------
-------------
278
1,089
======
======
IX.
CREDITORS: amounts falling due within one year
31 March 2018
31 March 2017
£'000
£'000
Term loan
-
250
Trade creditors
237
202
Accruals
225
167
Other tax and social security
114
76
Other creditors
310
233
Deferred consideration
1,130
2,002
Amounts owed to subsidiary undertakings
2,249
1,808
------------
------------
4,265
4,738
======
======
X.
CREDITORS: amounts falling due after one year
31 March 2018
31 March 2017
£'000
£'000
Term loans
Deferred consideration
2,000
-
2,000
1,100
-------------
------------
2,000
3,100
======
======
XI. SHARE CAPITAL
Details of the Company's share capital and the movements in the period can be found in Note 15 to the consolidated financial statements.
XII. SHARE OPTIONS
EMI Share Option Scheme
Details of the share options outstanding at 31 March 2018 can be found in Note 16.
XIII. RELATED PARTY TRANSACTIONS
Advantage has been taken by the Company of the exemptions provided by Section 33.1A of FRS102 not to disclose group transactions in respect of wholly owned subsidiaries.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDFR BLGDLUUDBGIL
Recent 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