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

Oliver Cooke

Brian Raven

 

Tel: 01753 867000

Allenby Capital Limited (Nominated adviser and broker)

Corporate Finance: Nick Naylor, Nick Athanas, Freddie Wooding

Sales and Corporate Broking: Tony Quirke

 

Tel: 020 3328 5656

Powerscourt

Gilly Lock

Roxane Girard 

Tel: 07711 380 007

        020 7250 1446



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

(excluding TWL)

6 Months ended

6 Months ended

Movement

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

19th 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

30 September 2022

6 months ended                  30 September 2021


£'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

(Plc)

Investment Management

Advisory

Business

Unaudited 30 September 2022

Unaudited 30 September 2021

 


£'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 receipts

(1,499)





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







(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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