TIDMTAVI
RNS Number : 5274A
Tavistock Investments PLC
26 September 2022
Tavistock Investments Plc
("Tavistock" or the "Company")
Final Results for the year ended 31 March 2022
26 September 2022
Tavistock is pleased to announce its financial results for the
year ended 31 March 2022.
Financial highlights
-- Most successful year in Company's history with gross revenues
up 18% to GBP34 million (year ended 31 March 2021: GBP29
million)
-- Strong performance from Advisory business:
-- Advisory business gross revenues up 35% to GBP31.3 million
(year ended 31 March 2021: GBP23.2 million), and 9% above the gross
revenues of the entire Group the year prior (2021: Group revenues
GBP28.7 million)
-- EBITDA contribution of GBP4.1 million, a 64% increase in
contribution to the Group's results (2021: GBP2.5 million)
-- Average revenue contribution per adviser improved by 22%
(2022: GBP210,000, 2021: GBP176,000)
-- Disposal of Tavistock Wealth to Titan Wealth in August 2021
for a consideration of up to GBP40 million, with GBP20 million paid
in cash upon completion, representing a value of up to 13.9x the
original acquisition cost in 2014
-- Adjusted EBITDA of GBP1.37 million (year ended 31 March 2021:
GBP3.12 million) - reduction driven by disposal of Tavistock Wealth
and removal of this as a contributor to earnings, but with
transaction resulting in an exceptional one-off profit
-- Earnings per share significantly increased, to 5.02p (year ended 31 March 2021: 0.13p)
-- Operating profit of GBP30.67 million (2021: GBP1.47 million)
reflecting profit from disposal of Tavistock Wealth and after
accounting for provisions related to the Group restructuring and
challenging regulatory backdrop
-- Successful acquisition of the assets of Chater Allan
Financial Services, with the business contributing positively to
growth
-- Post balance sheet events include acquiring a 21% stake in
LEBC Holdings Limited in April 2022 and the purchase of LEBC
Hummingbird Limited in May 2022, utilising proceeds from sale of
Tavistock Wealth
-- Initial proceeds from Tavistock Wealth disposal enabled Company to pay down all bank debt
Operational highlights
-- Client proposition enhanced through the roll out of the
Tavistock Platform, providing a low-cost platform service to
advisory and investment clients
-- Market-leading approach to managing compliance risk designed
and introduced via the use of tailored scorecards for each adviser
assessing their required oversight based on adviser experience,
track record, product type recommended and product risk rating;
updated in real-time from end October 2022
-- Recruitment of dedicated Risk Manager
-- Multi-phase project to improve operational efficiency in data
management and business intelligence already delivering significant
results
-- Supporting colleagues most impacted by the rising cost of
living, with one-off payments of GBP1,000 to all staff who earn the
full-time equivalent of GBP30,000 or less per annum
Share buy backs and dividends
-- Strategic buy back of shares in September 2021 (representing
4.75% of the then issued share capital, at a price of 4.7p per
share) and February 2022 (representing 3.67% of the then issued
share capital, at a price of 5.85 pence per share), resulting in
the earnings per share attributable to the shares remaining in
issue being enhanced by each transaction
-- Interim dividend of 0.05p per share paid in October 2021,
five times higher than 2019 maiden dividend of 0.01p per share
-- Further interim dividend of 0.07p per share paid in July
2022, after the year end date - 40% higher than in October 2021
Looking ahead
The Board is focused on the following objectives:
-- Continue to grow the business and further enhance its commercial performance
-- Increase scale through continued organic growth and selective
acquisitions; curtail unprofitable projects and move away from
higher risk, lower margin activities
-- Enter formal stakeholder arrangements with selected firms
within the Company's appointed representative network; terminate
agreements with members with higher risk and lower reward
profile
Brian Raven, Group Chief Executive, said : "The past financial
year has been our most successful and demonstrates the strength and
further growth potential in the business. With substantial cash
resources, and a further GBP20 million receivable from Titan, the
Company is well placed to enter the next stage of its
development.
"We aim to continue the rapid expansion of our advisory business
and accelerate the growth of investment management assets. We
continue to assess and engage with potential acquisition targets,
alongside our focus on sustained organic growth, to ensure we
deliver enhanced value to shareholders.
"The advisory business trades profitably in its own right, with
high levels of recurring income allowing for confidence in future
revenues. The work undertaken to improve operational efficiency is
already bearing fruit, and further steps are being taken to improve
profitability and deliver further value."
A full copy of the Financial Statements can be found below.
For further information
Tavistock Investments Plc Tel: 01753 867000
Oliver Cooke
Brian Raven
Allenby Capital Limited Tel: 020 3328 5656
(Nominated adviser and broker)
Corporate Finance:
Nick Naylor, Nick Athanas, Freddie
Wooding
Sales and Corporate Broking:
Tony Quirke
Powerscourt Tel: 07711 380 007
Gilly Lock 020 7250 1446
Roxane Girard
TAVISTOCK INVESTMENTS PLC
CHAIRMAN'S STATEMENT
FOR THE YEARED 31 MARCH 2022
I am pleased to report that this has been the most successful
year in the Company's history.
HIGHLIGHTS
Disposal of Tavistock Wealth and Distribution Partnership
In August 2021, the Company announced the disposal of Tavistock
Wealth to Titan Wealth for a consideration of up to GBP40 million.
GBP20 million was paid in cash on completion and the balance of up
to GBP20 million (linked to the maintenance of an agreed level of
gross revenue) is payable in cash in three equal annual
instalments.
Tavistock Wealth had been developed from a business that the
Company acquired in 2014. The consideration paid was GBP3.6 million
settled by the issue of Tavistock shares at 7.5p per share, a 25%
premium to the then Market price of 6p. This equated to a net
consideration of GBP2.88 million and this transaction represents a
return of up to 13.9 times that initial investment. The
consideration for the disposal was also equivalent to almost twice
the Company's then market capitalisation.
The Company also obtained confirmation that the transaction
qualified for Substantial Shareholding Exemption and consequently
no tax charge would arise on the disposal of this business. Without
this exemption the transaction would have resulted in a tax charge
of approximately GBP7 million.
Simultaneously, the Company entered a ten-year strategic
partnership with Titan Wealth under the terms of which Tavistock
continues to distribute the funds acquired by Titan and Titan
manages Tavistock's range of risk progressive model portfolios.
This relationship is overseen by Tavistock Asset Management which
manages the range of investment solutions provided to Tavistock's
advised customers.
Thus, the Company successfully realised a substantial return on
an investment made seven years earlier, maintained the Group's
fully integrated (financial advisory and investment management)
client proposition and secured its long-term future as a
distribution business.
Financial Advice Business
The Company's financial advice business has continued to grow
strongly.
In June 2021 the Company announced the acquisition of the
business of Chater Allan Financial Services LLP, an independent
advisory business based in Cambridge. This business has contributed
positively to the growth experienced during the year under review,
with gross revenues of GBP532k and an EBITDA contribution to the
Group of GBP372k.
Gross revenues of GBP31.3 million, were 35% higher than in the
previous year (year ended 31 March 2021: GBP23.2 million) and 9%
higher than the gross revenues of the entire Group that year (2021:
Group revenues GBP28.7 million).
The advisory business also delivered an EBITDA contribution of
GBP4.1 million, a 64% increase in contribution to the Group's
results (2021: GBP2.5 million).
The average revenue contribution per adviser was improved by
22%, from GBP176,000 in 2021 to GBP210,000 in 2022.
The initial proceeds from the Tavistock Wealth disposal have
enabled the Company to repay all bank borrowings, to pay an interim
dividend five times larger than the previous dividend and to embark
on an acquisitive growth strategy.
FINANCIAL RESULTS
Revenue
The Company has reported gross revenues for the year under
review of GBP34 million, an increase of 18% over the prior year
(2021: GBP29 million). 92% of these revenues (GBP31.3 million) were
generated by the Group's advisory business, where the level of
recurring income exceeds 80%. The remainder was generated by the
Group's investment management business.
Adjusted EBITDA
Adjusted EBITDA is 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. The Board
considers adjusted EBITDA, rather than Operating Profit, to be the
best measure of the Company's underlying performance.
The Company's adjusted EBITDA has increased every year since
inception, until this last financial year. The reduction was caused
by the disposal of Tavistock Wealth, thereby removing the largest
EBITDA contributor from the Group. However, the transaction
generated an exceptional one-off profit. Consequently, the EBITDA
contribution from the advisory business has been left to cover the
full central overhead burden of the Group, for the time being.
The Company acquired a 21% stake in LEBC Holdings Limited
("LEBC") in April 2022 and purchased LEBC Hummingbird Limited
("Hummingbird") in May 2022. Details of consideration paid are
included in note 20.
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 c.GBP4.2
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.
Hummingbird is an unregulated business that sells research on
the asset class allocations for risk-based portfolios to third
party managers.
Operating profit
The Company is reporting an Operating Profit of GBP30.67 million
(2021: GBP1.47 million). This result reflects the exceptional
profit arising on the disposal of Tavistock Wealth and after making
provisions totalling GBP1.4 million (net) to cover potential costs
arising from the increasingly challenging regulatory environment
and further provisions totalling GBP3.05 million to cover the
anticipated one-off costs relating to planned Group restructuring,
and new costs incurred as a consequence of past restructuring.
The regulatory provisions referred to above include a
precautionary provision of GBP3.8 million made in compliance with
the FCA guidelines that were issued in anticipation of a mandatory,
industry-wide, review of past British Steel Pension Fund transfer
cases. This provision is matched in part by the debtor provision
referred to in Note 11, entitled Trade and Other Receivables. The
unmatched element of GBP0.93m has been charged to the Statement of
Comprehensive Income as an exceptional cost.
In addition, the provisions include a prudent GBP0.5 million to
cover costs associated with the resolution of the Bartlett fraud
case, which may result from the prejudicial approach being adopted
by the FOS (the Financial Ombudsman's Service) in relation to
claims referred to it.
The determinations so far produced by the FOS contain a familiar
and depressing mixture of loose analysis and selective
interpretation of legal precedent established through cases settled
through the Courts with the objective of assisting complainants to
recover their losses regardless of where the responsibility for
those losses lies. Over the past year, the FOS has also taken it
upon itself to split several individual claims into multiple
claims, thereby increasing the Company's potential exposure. It
would be unreasonable to assume that Tavistock is the only firm in
the industry being subjected to this apparent abuse of process. For
this reason, potential remedial actions are being explored with the
assistance of the Company's lawyers.
The restructuring provisions are made up of three principal
components.
Firstly, a provision of GBP366,000 to cover additional costs
associated with the disposal of offices no longer being used by the
Company.
Secondly, a provision of GBP225,000 to cover anticipated costs
associated with the closure of the Company's RAIF (Reserve
Alternative Investment Fund) which is currently quoted on the
Luxembourg Stock Exchange.
Uncertainties resulting from Brexit together with concerns
regarding inflation and an impending recession have undermined the
Company's attempts to establish the RAIF on a commercially
attractive basis. This has led to a decision to close the fund
which is not anticipated to adversely impact any external third
parties.
The third and largest provision relates to new costs arising as
a consequence of past restructuring. A provision of GBP2.25 million
has been made to cover additional payments in future years to meet
potential claims arising from advice given by appointed
representative firms whilst they operated under the Company's
regulatory umbrella, prior to being exited from the Group. Some may
consider this to be overly prudent, but the Board consider it is
preferable to err on the side of caution.
The Company's share price is a key component in the calculation
of the share-based payment charge for the year. The recent rises in
the Company's share price, whilst welcome in all other respects,
have had an adverse impact on the charge for the year under
review.
The Group's financial performance can be summarised as follows.
Adjusted EBITDA is highlighted as management consider this to be
the most useful performance indicator.
31 Mar 2022 31 Mar 2021 Movement
GBP'000 GBP'000
Gross Revenues 34,003 28,712 18% increase
------------ ------------ --------------
Adjusted EBITDA 1,372 3,115 52% decrease
------------ ------------ --------------
Depreciation & amortisation (1,051) (727) 45% increase
------------ ------------ --------------
Share based payments (1,010) 282*
------------ ------------ --------------
(Loss)/Profit from Operations- before
exceptional items (689) 2,670
------------ ------------ --------------
Disposal of subsidiary 35,778 -
------------ ------------ --------------
Regulatory provisions (1,372) -
------------ ------------ --------------
Provision for one-off reorganisation
costs (800) (1,200) 154% increase
------------ ------------ --------------
Provision for new costs as a consequence (2,250) -
of past reorganisation
------------ ------------ --------------
Reported Profit from Operations 30,667 1,470
------------ ------------ --------------
Earnings per share 5.00p 0.13p
------------ ------------ --------------
Net assets at year end 43,477 15,733 176% increase
------------ ------------ --------------
Cash Resources at year end 15,274 4,457 242% increase
------------ ------------ --------------
*Credit resulting from cancellation of certain historic share
options.
Share buy-backs and dividends
In September 2021, in accordance with a mandate given by
shareholders, the Board arranged the buy-back of 28,898,378 of the
Company's ordinary shares of 1p each, representing 4.75% of the
then issued share capital, at a price of 4.7p per share.
Later in the financial year, in February 2022, the Board
arranged the buy-back of a further 21,219,847 of the Company's
ordinary shares of 1p each, representing 3.67% of the then issued
share capital, at a price of 5.85 pence per share.
In each instance, the earnings per share attributable to the
shares remaining in issue was enhanced by the transaction.
In October 2021, the Company paid an interim dividend of 0.05p
per share, which was five time higher than the maiden dividend paid
by the Company in 2019.
In July 2022, after the year end date, the Company paid a
further interim dividend of 0.07p per share, which was 40% higher
than the dividend paid in October 2021.
OTHER MATTERS
I am proud to report that we have successfully built a Group
based on traditional values and care for investors. We have set
industry leading standards for adviser support and oversight, as
well as for capable investment management.
The Company's success has only been possible with the hard work,
dedication and loyalty of colleagues within the business, and I
would like to take this opportunity to thank each of them for their
unstinting support, which has been greatly appreciated.
We recognise the importance of every member of our team and in
doing so, we have acknowledged that the recent sharp increases in
the cost of living have had a disproportionate impact on those on
more modest salaries. I am therefore pleased to advise that in
order to mitigate the worst of this impact the Company has made one
off payments of GBP1,000 to each of our colleagues who earn the
full-time equivalent of GBP30,000 or less per annum.
The Board is also conscious of the Company's environmental
responsibility and of the need to make a positive contribution
towards the achievement of a net zero economy. I am pleased
therefore to advise that we have now introduced a subsidised cycle
to work scheme, and a subsidised electric vehicle purchase scheme,
both of which have been well received.
FUTURE PROSPECTS
It remains the Board's objective to build a larger and more
profitable business. To this end it has compiled a qualified list
of potential acquisition targets with which it is engaged.
With cash resources of GBP15 million at the year-end date and
with a further GBP20 million receivable from Titan over the coming
years, the Company is well placed to enter the next stage of its
development.
I look forward to updating you further.
Oliver Cooke
Chairman
23 September 2022
TAVISTOCK INVESTMENTS PLC
STRATEGIC REPORT
FOR THE YEARED 31 MARCH 2022
In keeping with the obligation placed upon Directors by S172 of
the Companies Act 2006, the Board, both individually and
collectively, has continued to act in a manner which they consider,
in good faith, to be most likely to promote the ongoing success of
the Company for the benefit of its members.
In doing so they have, amongst other matters, given regard to
the following:
-- the likely long-term consequences of their decisions
-- the interests of the Company's employees
-- the need to foster the Company's relationships with its external partners
-- the impact of the Company's operations on both the community and the environment
-- the desirability of maintaining the Company's reputation for
high standards of business conduct, and
-- the need to act fairly between members of the Company.
During the year under review, the Board's focus was on achieving
three principal objectives.
-- Improve the commercial performance of the business
-- Reduce risk and improve the operational efficiency of the business
-- Deliver value to shareholders.
Improve the commercial performance of the business
As has been referred to in the Chairman's statement, this has
been the most successful trading year in the Company's history.
The most significant achievement in the period was the disposal
of the Group's investment management business, Tavistock Wealth,
for a consideration equivalent to twice the Company's then market
value and up to 13.9 times the original cost of the business when
it was acquired in 2014.
The initial proceeds received from the disposal enabled the
Company to pay down all bank debt and to begin the process of
seeking out suitable acquisition targets with a view to increasing
the scale and profitability of the business and improving its
self-sufficiency in terms of new business generation.
Steps were also taken during the year under review to
streamline, or remove, established practices that were acting as a
barrier to the conduct of new business. This contributed to the 22%
increase in the level of gross revenue generated per adviser,
(2022: GBP210,000, 2021: GBP176,000). The steps taken are addressed
in more detail below.
The purchase of books of business from retiring advisers and
their reallocation to other advisers on more advantageous
commercial terms, also contributed to the 64% increase in the
advisory business' contribution to the Group's results (2022:
GBP4.1 million, 2021: GBP2.5 million).
The Company's client proposition was also enhanced through the
roll out of a proprietary low-cost platform service and the
negotiation of lower platform fees from certain larger external
providers.
Reduce risk and improve the operational efficiency of the
business
During the year, a detailed review of the advisory business'
compliance and file checking regime was undertaken. This concluded
that the system was providing a high level of untargeted
protection, which was an inefficient approach and in certain
instances a deterrent to advisers conducting new business.
To improve the efficacy of the system, the Company designed and
introduced a market-leading approach to the on-going management of
compliance risk via the use of tailored scorecards for each
adviser. Scorecards assess the performance of each adviser based on
their experience, track record, business processed by product type
and risk ratings by product type. Currently, updated scorecards are
provided monthly to each adviser, manager, and business leader.
The new system allows each business to risk manage the levels of
pre-sale and post-sale file checking both by adviser and by product
type. Certain higher risk products such as pension transfers, VCTs
and equity release will always require pre-sale checking. However,
for most products, the level and frequency of oversight is adjusted
in real-time based on individual adviser performance risk.
In 2021, Tavistock retained an external consultant, Sempre
Analytics, to improve the Company's operational efficiency (data
management and business intelligence) by enabling management to
extract all relevant client and operational data from the wide
range of systems in use across the Group (Intelligent Office,
Finplan, spreadsheets, Sage, Outlook email etc) and to store this
information in a single data warehouse from which Group-wide MI
(management information) requirements can be specified and
automated. This multi-phase project is already beginning to deliver
significant results.
A project was also undertaken to make the Company's software
systems more robust and to strengthen the level of the Company's
data security.
A dedicated Risk Manager has also been recruited. Their role is
identify, monitor and report on all aspects of risk faced by the
business. This enables the Board to consider these, to determine
the level of the Company's risk appetite and to take steps in
mitigation where appropriate.
Deliver value to shareholders
Earnings per share have increased greatly over the period, from
0.13p in 2021 to 5.02p in 2022.
The largest contributing factor to this growth in earnings was
the exceptional profit realised from the disposal of Tavistock
Wealth. However, the Company's buy-back and cancelation of
approximately 50 million of its own shares also contributed to the
growth in the earnings per share of those shares remaining in
issue.
The proceeds received from the disposal of Tavistock Wealth
enabled the Board to resume the payment of dividends to
shareholders.
In October 2021, the Company paid an interim dividend of 0.05p
per share. This dividend was five time higher than the maiden
dividend paid by the Company in 2019.
In July 2022, after the year end date, the Company paid a
further interim dividend of 0.07p per share, which was 40% higher
than the dividend paid in October 2021.
Current Objectives
In the current year the Board's objectives are to continue to
grow the business and to further enhance its commercial
performance.
Increased scale will be achieved both through continued organic
growth and by making selective acquisitions. The Board will also
look to curtail unprofitable projects and to move away from higher
risk, lower margin activities.
The Board plans to enter formal partnership arrangements with a
small number of the firms currently within the Company's appointed
representative network. A controlling equity interest in these
firms would give the Company greater control over the activities of
the firms, assist them to grow more rapidly and generate higher
margins for the Group. Other network members, over which the
Company has a more indirect level of control and from which it
earns lower fees, are being given notice under their agreements to
quit the Group, as the level of regulatory risk that they represent
outweighs the potential commercial reward that they offer.
Financial Review
Details of the Company's trading performance during the year
under review can be found in the Chairman's Statement.
Risks and Uncertainties
The Company faces the usual risks of operating within an
increasingly hostile regulatory environment. To mitigate these
risks, the Board has introduced a new risk-based file checking
score card for each individual adviser and has enhanced the
Company's compliance oversight and risk management regimes. The
Board actively promotes an ethos of acting at all times with
honour, dependability and vigilance, and a culture within which the
client is placed at the centre of everything that the Company
does.
The Company also faces the challenge of replacing the lost
contribution to its profitability resulting from the disposal of
Tavistock Wealth. It expects to do this with the contribution to be
received from the continued organic growth of its advisory
business, from selective acquisitions and from the further
development of Tavistock Asset Management over the short term.
Given the GBP15 million of cash resources at the year-end date
and the GBP20 million of deferred consideration receivable from
Titan over the coming years, the Board remains confident that the
business has sufficient cash resources to meet its working capital
requirements and to justify use of the going concern assumption as
the appropriate basis on which to prepare the Group's accounts.
Corporate Governance
Our activities in relation to Corporate Governance are set out
separately within the Corporate Governance Report on pages 10 to
15.
Future Prospects
It remains the Board's objective to build a larger and more
profitable business. To this end it has compiled a qualified list
of potential acquisition targets with which it is engaged.
The Company is well placed to enter the next stage of its
development.
Approved by the Board of Directors and signed on its behalf
by
Oliver Cooke
Chairman
23 September 2022
TAVISTOCK INVESTMENTS PLC
CORPORATE GOVERNANCE REPORT
FOR THE YEARED 31 MARCH 2022
The Board believes that good corporate governance reduces risk
within the business, can promote confidence and trust amongst its
stakeholders and underpins the effectiveness of the Company's
management framework.
The Directors look to the Quoted Companies Alliance Corporate
Governance Code (the "QCA Code"), as being the basis of the
Company's governance framework, and consider that the Company
complies with the QCA Code so far as is practicable having regard
to the size, nature and current stage of the Company's
development.
The QCA Code includes ten broad principles that the Company
holds in mind as it seeks to deliver growth to its shareholders in
the medium and long-term. These principles and the manner in which
the Company seeks to comply with them can be summarised as
follows:
Principle 1:
Establish a strategy and business model which promote long-term
value for shareholders
-- The Board acknowledges the increased interest in
consolidation activity in the financial services sector.
-- The Board's strategy is to build a large and profitable
financial advisory and fund distribution business, which will
increase its value to potential consolidators and will thereby
create the potential for shareholders to achieve significant value
from their investment in the Company.
-- The disposal of Tavistock Wealth to Titan Wealth Management
accelerated receipt of the adjusted EBITDA contribution that would
have been generated by this business. The Company is also
continuing to derive income from this area of activity.
-- Consequently, the Company now has at its disposal the
resources required to more rapidly expand its advisory business and
to accelerate the growth of investment management assets.
-- The Group's advisory business has grown rapidly and trades
profitably in its own right. Steps are being taken to further
improve the efficiency and profitability of its operations.
-- With shareholder support, the Board will continue to arrange
for the Company to make market purchases of its own shares. Any
shares purchased in this manner will be cancelled which will reduce
the number of shares that the Company has in issue and will further
increase the earnings per share of those shares remaining in
issue.
-- The combination of an increase in the commercial value of the
business and a reduction in the number of shares in issue, will
lead to a long-term improvement in shareholder value.
-- Key risks have been addressed in the Strategic Report.
Principle 2:
Seek to understand and meet shareholder needs and
expectations
-- The Board welcomes constructive engagement with shareholders.
-- The Company believes that shareholder expectations are most
effectively managed through the release of regulatory announcements
and through discussion with shareholders at the Company's Annual
General Meeting.
-- The Executive Directors regularly engage with the Company's
major shareholders and ensure that the views expressed by them are
communicated fully to the Board.
-- Board members make themselves available to meet with
shareholders and with potential investors as and when required.
Principle 3:
Take into account wider stakeholder and social responsibilities
and their implications for long-term success
-- The Board places great emphasis on the safety, wellbeing and
mental health of all of the Company's employees and has engaged in
a number of initiatives to improve each of these.
-- The Board recognises the importance of every member of the
Tavistock team and in doing so, has acknowledged that the recent
sharp increases in the cost of living have had a disproportionate
impact on those on more modest salaries. In order to mitigate the
worst of this impact the Company has made one off payments of
GBP1,000 to each member of the team who earns the full-time
equivalent of GBP30,000 or less per annum.
-- The Company also recognises the importance of engagement with
its stakeholder groups, which, in addition to its employees,
include investors, clients, strategic partners and the relevant
authorities. The Board seeks to treat each of these groups in a
fair and open manner.
-- The Company has continued to support a national charity, the
Clock Tower Foundation, and to encourage the involvement of staff
in various local and national fund-raising events.
-- The Company endeavours to take account of, and to respond to,
feedback received from stakeholders.
-- Environmental responsibility and sustainability are important
to the Company, and a number of initiatives have been pursued to
improve the recycling of paper, to reduce the use of plastics and
to reduce carbon footprint through the greater use of online
meeting technology and a reduction in the number of office
premises.
-- As a contribution to the achievement of a net zero economy,
the Company has now introduced both a subsidised cycle to work
scheme, and a subsidised electric vehicle purchase scheme, both of
which have been well received.
Principle 4:
Embed effective risk management throughout the organisation,
considering both opportunities and threats
-- During the year, a detailed review of the advisory business'
compliance and file checking regime was undertaken. This concluded
that the system was providing a high level of untargeted
protection, which was an inefficient approach and in certain
instances a deterrent to advisers conducting new business.
-- To improve the efficacy of the system, the Company designed
and introduced a market-leading approach to the on-going management
of compliance risk via the use of tailored scorecards for each
adviser. Scorecards assess the performance of each adviser based on
their experience, track record, business processed by product type
and risk ratings by product type. Currently, updated scorecards are
provided monthly to each adviser, manager, and business leader.
-- The new system allows each business to risk manage the levels
of pre-sale and post-sale file checking both by adviser and by
product type. Certain higher risk products such as pension
transfers, VCTs and equity release will always require pre-sale
checking. However, for most products, the level and frequency of
oversight is adjusted in real-time based on individual adviser
performance risk.
-- A project was also undertaken to make the Company's software
systems more robust and to increase the level of the Company's data
security.
-- A dedicated Risk Manager has been appointed and a separate
Risk Committee established. The Risk Manager role is to identify,
monitor and report on all aspects of risk faced by the business.
This enables the Board to determine the level of the Company's risk
appetite and to take steps in mitigation where appropriate.
-- Commercial risks and opportunities are considered by the
Board and by the Group's Leadership Board, which is comprised of
the Executive Directors and the heads of all major Group functions.
The Leadership Board meets formally on a monthly basis.
Principle 5:
Maintain the board as a well-functioning, balanced team led by
the chair
-- The composition, roles and responsibilities of the Board and
of the various Committees are set out on page [14] of the Report
and Accounts. The number of meetings held and Directors' attendance
are also detailed.
-- To enable the Board to discharge its duties in an effective
manner, all Directors receive appropriate and timely information.
The Agenda for each meeting is determined by the Chairman who
arranges for briefing papers to be distributed to all participants
for consideration ahead of meetings. All meetings are minuted and
the accuracy of the minutes is confirmed at the subsequent meeting
before approval and signatured by the Chairman.
-- Both the Chairman, Oliver Cooke, and the Chief Executive,
Brian Raven, have considerable experience of operating at board
level in public and in private companies. The Chairman is a
qualified Chartered Accountant and has served as finance director
on the boards of various public companies. The Chief Executive has
held a number of sales, operational and leadership roles at board
level within public companies. The Non-Executive Directors, Roderic
Rennison and Peter Dornan, both have extensive sector knowledge and
experience and come from strong regulatory backgrounds.
-- The Executive Directors devote the whole of their time to the
business of the Group. The Non-Executive Directors devote one to
two days per month to their duties.
-- Under the terms of their contracts, the Non-Executive
Directors are required to obtain the prior written consent of the
Board before accepting additional commitments that might conflict
with the interests of the Group or impact the time that they are
able to devote to their role as a Non-Executive Director of the
Company.
-- The Company does not currently have a separate Nominations
Committee as this is considered unnecessary given the Company's
size and stage of development. The need for such a committee will
be kept under review by the Board as the Company develops.
Principle 6:
Ensure that between them the directors have the necessary
up-to-date experience, skills and capabilities
-- The Chairman complies with the continuing professional
development requirements of the Institute of Chartered Accountants
in England and Wales, of which he is a long-standing member. The
Chief Executive Officer, in conjunction with other members of the
executive team, ensures that the Directors' knowledge is kept up to
date on key issues and developments pertaining to the Company, its
operational environment and to the Directors' responsibilities as
members of the Board. During the course of the year, Directors have
consulted and received advice as well as updates from the Company's
nominated advisor, company secretary, legal counsel and various
other external advisers on a number of matters, including corporate
governance. From time to time, members of the Board also
participate in industry forums.
-- Biographies for each of the Directors can be found in the Directors' Report.
Principle 7:
Evaluate board performance based on clear and relevant
objectives, seeking continuous improvement
-- The Group has established separate Remuneration and Audit
Committees through which the Non-Executive Directors are able to
monitor and assess the performance of the Executive Directors and
to hold them to account.
-- The respective Board members periodically review and
cross-evaluate the Board's performance and effectiveness in the
Company. It remains the intention of the Board, in due course, to
create a more formal process that will focus more closely on
objectives and targets for improving performance.
-- Directors' performance is open to assessment by shareholders
and all Directors are subject to re-election by the shareholders at
least once every three years.
Principle 8:
Promote a corporate culture that is based on ethical values and
behaviours
-- The Company's ethos is, to act at all times with honour,
dependability and vigilance. The Board also actively promotes a
culture in which the client is placed at the centre of everything
that the Company does.
-- The Board places great emphasis on the wellbeing of the
Company's employees and on providing a safe and secure environment
for them. The Company's Employee Handbook provides a guideline for
employees on the day-to-day operations of the Company.
-- The Company is similarly committed to a transparent, flexible
and open culture promoting family values and avoiding
discrimination on the basis of gender, religious belief, age,
ethnicity or sexual orientation.
-- The Company is mindful of the need for, and is committed to,
environmental responsibility and sustainability.
Principle 9:
Maintain governance structures and processes that are fit for
purpose and support good decision-making by the board
-- Good decision making requires information, consideration,
discussion, and challenge followed by action, communication and the
acceptance of collective responsibility. This is accomplished
through the employment of Directors who have the confidence to
express their views, through the prior circulation of briefing
papers allowing adequate time for their proper consideration ahead
of meetings. Board meetings are openly conducted, with the accurate
minuting of outcomes and the wider communication of those outcomes
as appropriate.
-- The avoidance of conflicts of interest, through the
delegation of responsibility for certain areas to specialist
committees, such as audit and remuneration, has strengthened the
governance structure within the Company.
Principle 10:
Communicate how the Company is governed and is performing by
maintaining a dialogue with shareholders and other relevant
stakeholders
-- Information on the Company's commercial progress and its
financial performance is disseminated to shareholders and to the
market through the announcement of its full-year and half-year
results, the posting of such announcements onto the Company's
website in a timely manner and by mailing copies of the Annual
Report and Accounts to shareholders. These are also made available
for discussion with shareholders at the Company's AGM.
-- Departmental heads liaise regularly and meet formally on a
monthly basis to share and review information on the Company's
progress and to discuss progress within their specific areas of
responsibility.
-- Other members of staff are briefed informally on an ad-hoc
basis and formally through emails from the Chief Executive and
other senior management as appropriate, as well as a series of
presentations delivered at the Annual Company Day. During the year,
on-line meetings were used when practical to replace physical ones
thereby reducing the level of unnecessary business travel.
BOARD OF DIRECTORS AND BOARD COMMITTEES
The Board is responsible for formulating, reviewing and
approving the Group's strategy, budgets and corporate actions. The
Board is also responsible for ensuring a healthy corporate culture.
The Board currently comprises two Executive Directors and two
Non-Executive Directors.
The Executive Directors are:
Oliver Cooke Chairman
Brian Raven Chief Executive Officer
The Non-Executive Directors are:
Roderic Rennison
Peter Dornan
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 judgement to issues brought before the
Board.
The Board meets at least ten times per year and more frequently
where necessary to approve specific decisions. In the year under
review the Board met 15 times with no apologies for absence being
recorded. Directors are free to take independent professional
advice as they consider appropriate at the Company's expense.
The Board has established two Committees with clearly defined
terms of reference and detailed below are the members of the
Committees and their duties and responsibilities.
Audit Committee
The Audit Committee has primary responsibility for monitoring
the quality of internal controls and ensuring that the financial
performance of the Group is properly measured and reported. It
receives reports from the Group's management, the Company's Risk
Committee and the Company's auditors relating to the interim and
annual accounts and the accounting and internal control systems in
use throughout the Group.
The members of the Audit Committee are as follows:
Peter Dornan (Non-Executive Director) Committee Chairman
Roderic Rennison (Non-Executive Director)
Oliver Cooke (Chairman)
The Committee approves the appointment and determines the terms
of engagement of the Company's auditors and, in consultation with
the auditors, the scope of the audit. The Audit Committee has
unrestricted access to the Company's auditors.
During the year under review the Audit Committee met twice and
all members of the Committee were in attendance.
Remuneration Committee
The Remuneration Committee is comprised of the two Non-Executive
Directors, Roderic Rennison and Peter Dornan, and is chaired by
Roderic Rennison.
The Remuneration Committee reviews the performance of the
Executive Directors and approves any proposed changes to their
remuneration packages, terms of employment and participation in
share option schemes and other incentive schemes.
No Director may vote in connection with any discussions
regarding their own remuneration.
For the year under review, three Remuneration Committee meeting
were held, and both members of the Committee were in
attendance.
Nomination Committee
The Directors do not consider it necessary, or appropriate, at
present to establish a Nomination Committee given the size of the
Company. This will be kept under review as the Company
develops.
TAVISTOCK INVESTMENTS PLC
DIRECTORS' REPORT
FOR THE YEARED 31 MARCH 2022
Principal Activities, Review of the Business and Future
Developments
The principal activity of the Group during the year was the
provision of support services to a network of financial advisers.
The key performance indicators recognised by management are gross
revenues and operating profit, as represented by adjusted
EBITDA.
An overall review of the Group's performance during the year and
its future prospects is given in the Chairman's Statement and in
the Strategic Report.
Substantial shareholdings
The Company has been advised of the following interests in more
than 3% of its ordinary share capital as at 23 September 2022:
Name Number % of
of Ordinary Shares
Shares
Brian Raven 70,007,932 12.60%
Andrew Staley 55,950,204 10.07%
Oliver Cooke 30,600,000 5.51%
Lighthouse Group 30,487,805 5.49%
Hugh Simon 30,000,000 5.40%
Paul Millott 28,432,106 5.12%
Kevin Mee 28,241,858 5.09%
Directors
Details of the Directors of the Company who served during the
period are as follows:
Oliver Cooke
Chairman, aged 67
Oliver has over 40 years of financial and business development
experience gained in a range of quoted and private companies
including over twenty-five years' experience as a public company
director. He has considerable experience in the fields of corporate
finance, strategic transformation, acquisitions, disposals and
fundraisings. Oliver is a Chartered Accountant and a Fellow of the
Association of Chartered Certified Accountants.
Brian Raven
Group Chief Executive, aged 66
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 GBP100 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
67
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 the Retail
Distribution Review, for which he chaired the professionalism and
reputation work stream.
Peter Dornan
Non-Executive Director, Chairman of Audit Committee, aged 66
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.
Diversity
Tavistock is an equal opportunities employer and does not
discriminate against staff on the basis of disability, age,
religious belief, gender, ethnicity or sexual orientation.
Greenhouse gas emissions
The Group currently has minimal greenhouse gas emissions to
report from its operations and does not have responsibility for any
other emission producing sources, as defined by the Companies Act
2006 (Miscellaneous Reporting) Regulations 2018. As a consequence,
it has not published a GHG Emissions Statement.
Communication with shareholders
The Board welcomes constructive engagement with shareholders.
Each shareholder receives a copy of 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
Given the GBP15 million of cash resources at the year-end date
and the GBP20 million of deferred consideration receivable from
Titan over the coming years, the Board remains confident that the
business has sufficient cash resources to meet its working capital
requirements for the foreseeable future, being at least twelve
months from the date of approval of financial statements, and to
justify use of the going concern assumption as the appropriate
basis on which to prepare the Group's accounts.
Financial instruments
Details of the use of financial instruments by the Group are
contained in Note 15 of the financial statements.
Share capital
During the year the Company bought back and cancelled
approximately 50 million of its own shares. Full details of the
changes to share capital during the year are summarised in Note 16
to the accounts.
Charitable and Political Donations
The Group made GBP23,800 in charitable donations in the year
(2021: GBPNil).
Investment
In June 2021 the Company acquired the business of Chater Allan
Financial Services LLP, an independent advisory business based in
Cambridge. This business has contributed positively to the growth
experienced by the Company's advisory business during the year
under review.
Post Balance Sheet Events
In April 2022 the Company received regulatory approval from the
FCA and completed the acquisition of a 21% stake in LEBC Holdings
Limited ("LEBC").
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 c.GBP4.2
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.
In May 2022 the Company purchased LEBC Hummingbird Limited
("Hummingbird"). Hummingbird is an unregulated business that sells
research on the asset class allocations for risk-based portfolios
to third party managers.
Dividends
In October 2021, the Company paid an interim dividend of 0.05p
per share. This dividend was five time higher than the maiden
dividend paid by the Company in 2019.
In July 2022, after the year end date, the Company paid a
further interim dividend of 0.07p per share, which was 40% higher
than the dividend paid in October 2021.
Auditors
A resolution reappointing Crowe UK LLP 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
conditions of the contract and pay in accordance with contractual
obligations. Trade creditors at 31 March 2022 represented 27 days'
purchases (2021: 24 days).
Internal control
The Group has adopted the QCA's Corporate Governance Code. The
key elements of the internal control 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.
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 accounting standards in conformity
with the requirements of the Companies Act 2006 and in accordance
with UK adopted international accounting standards including
Financial Reporting Standard 101, the Financial Reporting Standard
applicable in the UK and Republic of Ireland 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 judgements and estimates that are reasonable and prudent;
-- for the Group financial statements, state whether they have
been prepared in accordance with international accounting standards
in conformity with the requirements of the Companies Act 2006;
-- for the parent Company financial statements, state whether
applicable UK adopted international accounting standards including
Financial Reporting Standard 101 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.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company 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 Company 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 are as follows:
Ordinary shares of 1p each
31 March 2022 31 March 2021
Share options Shares Share options Shares
Executive Directors:
Oliver Cooke 30,000,000 30,367,756 - 28,959,256
Brian Raven 40,000,000 68,759,362 - 67,422,362
Non-Executive Directors:
Roderic Rennison - 705,398 - 705,398
Peter Dornan - 250,000 - 250,000
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
23 September 2022
TAVISTOCK INVESTMENTS PLC
AUDIT COMMITTEE REPORT
FOR THE YEARED 31 MARCH 2022
On behalf of the Board, I am pleased to present the Audit
Committee report for the financial year ended 31 March 2022.
Principal Responsibilities of the Committee
-- Ensuring the financial performance of the Group is properly reviewed, measured and reported;
-- Monitoring the quality and adequacy of internal controls and
internal control systems implemented across the Group;
-- Receiving and reviewing reports from the Group's management
and auditors relating to the interim and annual accounts;
-- Reviewing reports from the Company's Risk Committee and
considering risk management policies and systems;
-- Advising on the selection, appointment, re-appointment and
remuneration of independent external auditors and scheduling
meetings with external auditors, independent of management where
appropriate, for discussions and reviews; and,
-- Reviewing and monitoring the extent and independence of
non-audit services provided by external auditors.
Members of the Committee
The Committee members are the two Non-Executive Directors, Peter
Dornan (Committee Chairman) and Roderic Rennison, and Oliver Cooke
who is a Chartered Accountant and has previously served as a
partner in public practice.
The Committee met twice during the year, with all members in
attendance.
Audit Process
The audit process commenced with the preparation by the auditors
of an audit plan, which contained information regarding the
proposed audit process, timetable, targeted areas and the general
scope of work and considered any pertinent matters or areas for
special inclusion.
Following the audit, an Audit Findings Report was prepared by
the auditors and submitted to the Audit Committee, and this was
followed by a conference call with the Committee to review and
discuss the contents of the Report. The Audit Committee then
provided a report to the Board together with its recommendations.
For the year ended 31 March 2022, no major areas of concern were
highlighted.
Risk Management and Internal Control
As referred to under Principle 4 of the Corporate Governance
Report, the Group has undertaken a comprehensive overhaul of its
compliance and risk management regimes. It has also appointed a
Risk Manager and established a separate Risk Committee, whose role
is to identify, monitor and report on the risks faced by the
Company. The Audit Committee reviews reports produced by the Risk
Committee from time to time and considers that the framework is
operating effectively.
The Audit Committee approved the reappointment of Crowe UK LLP
as Auditors.
The Audit Committee noted the appointment of Hazlewoods LLP as
the Company's taxation advisers and reviewed the non-audit services
provided by the Company's auditors and considered that there was no
threat to independence in the provision of these services and that
satisfactory controls were in place to ensure this
independence.
Internal Audit
At present, the Group does not have an internal audit function
and the Committee believes that despite this, management is able to
derive assurances as to the adequacy and effectiveness of internal
controls and risk management procedures.
Approved by the Committee and signed on its behalf by
Peter Dornan
Committee Chairman
23 September 2022
TAVISTOCK INVESTMENTS PLC
REMUNERATION COMMITTEE REPORT
FOR THE YEARED 31 MARCH 2022
Compliance
Described below are the principles that the Group has applied in
relation to Directors' remuneration.
The Remuneration Committee
For reasons of independence the only members of the Remuneration
Committee are the Company's two Non-Executive Directors, Roderic
Rennison (Committee Chairman) and Peter Dornan.
The Committee is mindful of the need to attract, retain and
reward key staff. It reviews the scale and structure of the
Executive Directors' and senior employees' remuneration, the terms
of their service agreements and the extent of their participation
in share option schemes and any 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
three times with both members in attendance.
Share options
In April 2021, new options were issued to the Executive
Directors in place of those that had been surrendered by them in
good faith in the previous year. This had been done as part of an
attempt to introduce a new management incentive scheme involving
the use of growth shares, thereby avoiding the adverse impact of
share-based payments charges on the Company's reported results. The
proposal received strong shareholder support but not at a level
sufficient for it to be adopted by the Company. The number of
options issued to them, together with the exercise price, reflected
the loss of the tax benefit accruing to the original options held
by them.
Service contracts
The term of the Directors' service contracts can be summarised
as follows:
Oliver Cooke Start Date: 3 To 31 March 2023, terminable
May 2013 thereafter on twelve months'
notice
Brian Raven Start Date: 12 To 31 March 2023, terminable
May 2014 thereafter on twelve months'
notice
Non-executive Directors
Roderic Rennison Start Date: 12 Initial term 2 years, terminable
May 2014 at any time on three months'
notice
Peter Dornan Start Date: 22 Initial term 2 years, terminable
August 2017 at any time on three months'
notice
Directors' remuneration
Details of each Director's remuneration are provided in Note 6
to the financial statements entitled Staff Costs.
Directors' interest in shares
Details of the Directors beneficial shareholdings as at 31 March
2022 can be found in the Directors Report.
Approved by the Committee and signed on its behalf by
Roderic Rennison
Committee Chairman
23 September 2022
TAVISTOCK INVESTMENTS PLC
INDEPENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF TAVISTOCK
INVESTMENTS PLC
FOR THE YEARED 31 MARCH 2022
Opinion
We have audited the financial statements of Tavistock
Investments Plc (the "Parent Company") and its subsidiaries (the
"Group") for the year ended 31 March 2022, which comprise:
-- the Group consolidated statement of comprehensive income for
the year ended 31 March 2022;
-- the Group consolidated statement of financial position and
Parent company balance sheet as at 31 March 2022;
-- the Group consolidated and Parent Company statements of
changes in equity for the year then ended;
-- the Group consolidated statement of cash flows for the year then ended; and
-- the notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law and
UK-adopted international accounting standards. The financial
reporting framework that has been applied in the preparation of the
Parent Company financial statements is applicable law and United
Kingdom Accounting Standards, including Financial Reporting
Standard 101 Reduced Disclosure Framework (United Kingdom Generally
Accepted Accounting Practice).
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 2022 and of the Group's profit for the year then ended;
-- the Group financial statements have been properly prepared in
accordance with UK-adopted international accounting standards;
-- the Parent Company financial statements have been properly
prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and the financial statements 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
and the Parent Company 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
In auditing the financial statements, we have concluded that the
directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the Group's and Parent
Company's ability to continue to adopt the going concern basis of
accounting included obtaining and reviewing management's assessment
of going concern. This involved gaining an understanding of
managements basis for the identification of events or conditions
that may cast a significant doubt on the ability of the Group and
company to continue as a going concern, and whether a material
uncertainty related to going concern exists.
Furthermore, we performed specific audit procedures around going
concern; whereby we obtained managements forecasts and tested these
for arithmetic accuracy. Furthermore, we assessed and challenged
the assumptions used in Board's assessment of going concern which
included a full assessment of the Group's and parents' financial
resources and working capital forecasts.
We also reviewed actual financial results prior to signing
against budgeted results, assessed the reasonableness of budgets
and forecasts for successive financial years, evaluated the
feasibility of management's plans in respect of going concern as
well as considered whether new facts or information have become
available since management made their assessment.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Group's and Parent Company's ability to continue as a going concern
for a period of at least twelve months from when the financial
statements are authorised for issue.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of
materiality. An item is considered material if it could reasonably
be expected to change the economic decisions of a user of the
financial statements. We used the concept of materiality to both
focus our testing and to evaluate the impact of misstatements
identified.
Based on our professional judgement, we determined overall
materiality for the Group financial statements as a whole to be
GBP235,000 (2021 GBP215,000), based on 0.75% of Total Group
Turnover. Materiality for the Parent Company financial statements
as a whole was set at GBP150,000 (2021: GBP155,000) based on 2% of
net assets excluding intercompany balances.
We use a different level of materiality ('performance
materiality') to determine the extent of our testing for the audit
of the financial statements. Performance materiality is set based
on the audit materiality as adjusted for the judgements made as to
the entity risk and our evaluation of the specific risk of each
audit area having regard to the internal control environment. This
is set at GBP164,500(PY GBP161,500) for the group and GBP105,000
(PY GBP116,250) for the parent.
Where considered appropriate performance materiality may be
reduced to a lower level, such as, for related party transactions
and directors' remuneration.
We agreed with the Audit Committee to report to it all
identified errors in excess of GBP7,050 (2021: GBP10,750). Errors
below that threshold would also be reported to it if, in our
opinion as auditor, disclosure was required on qualitative
grounds.
Overview of the scope of our audit
The Group consists of Tavistock Investments Plc itself and the
subsidiaries as disclosed in Note V to the Company financial
statements. Our Group audit was scoped by obtaining an
understanding of the Group and its environment, including
Group-wide controls, and assessing the risks of material
misstatement at the Group level.
All of the trading subsidiaries, including King Financial
Planning LLP have been subject to a full scope audit. Only material
balances were audited in the Luxembourg domiciled entity; Tavistock
S.a.r.l.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgement, 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) that we identified. These matters included 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.
This is not a complete list of all risks identified by our
audit.
FOR THE YEARED 31 MARCH 2022
Key audit matter How the scope of our audit addressed the
key audit matter
Revenue Recognition
The Group derives its revenue
from fees and commissions * For each company in the Group, we gained an
arising from investment management understanding of its business model and the services
and advisory support services. and products it delivers to its customers;
During the year ended 31
March 2022, the Group recorded
total revenue of GBP34,003k * Based on that understanding, we identified when the
(FY2021: GBP28,712k). performance obligation(s) was satisfied and,
Investment management fees consequently, when revenue is earned;
and commissions are earned
from the provision of investment
management services and account * We selected a sample of contracts to confirm our
for 8% of total revenue. understanding of the principal terms and obligations;
Advisory support services
fees and commissions are
earned from the provision * We gained an understanding of the key systems used to
of support services to a capture and record that income and evaluate any key
network of financial advisers controls;
and account for 92% of total
revenue.
The key revenue recognition * Where the Group utilises third party platforms we
risk is in respect of ensuring evaluated those platforms and the safeguards
revenue is recognised in management have in place to corroborate the output
the year that it has been from those platforms;
earned.
* We performed an overall analytical review and
corroborated the reasons for any large and unusual
variances;
* For a selection of transactions, we confirmed that
the recognition criteria in relation to the income
earned in the period has been met;
* We reviewed and tested the basis for accrued and
deferred income;
* We reviewed aged receivables profile and credit notes
issued after the reporting date; and
* We reviewed and tested revenue cut off procedures.
Carrying value of goodwill and separately identifiable intangible
assets
The Group's investments in
the parent and other intangible * We evaluated, in comparison to the requirements set
assets comprise goodwill out in IAS36, management's assessment (using
arising on consolidation, discounted cash flow models) as to whether goodwill,
customer & adviser relationships, investments and/or intangible assets were impaired.
regulatory approvals & systems
and internally developed
assets. * We tested the arithmetical accuracy of the model,
performed sensitivity analysis on the key assumptions
When assessing the carrying in relation to growth rates and discount rates
value of goodwill, investments utilised within managements impairment assessment.
(including fair value) and
intangible assets, management
make judgements regarding * We performed stress testing where we examined the
the appropriate cash generating change in goodwill value should the growth rate fall
unit, strategy, future trading or if the discount rate were to increase.
and profitability and the
assumptions underlying these.
We considered the risk that * We examined management's evaluation of the fair value
goodwill, investments and/or of investments.
intangible assets were impaired.
* We challenged, reviewed and considered by reference
to external evidence, management's impairment and
fair value models as appropriate and their key
estimates, including the discount rate. We reviewed
the appropriateness and consistency of the process
for making such estimates.
Legal and regulatory environment
Like many firms working in
financial services, from * We obtained client workings for the provisions around
time to time the Group is claims and expected claims.
exposed to claims and potential
claims in relation to work
performed for clients and * To the extent the Group had insurance coverage, we
former clients. As at 31 obtained the insurance documentation to confirm that
March 2022, the carrying the Group is covered for the cases or type of matter,
value of the claims provision and whether it was appropriate to recognise an
in the financial statements insurance asset to offset the claims provision
was GBP7.96m (2021: GBP0.81m).
There is a risk that the
provision is inadequate for * We agreed a sample of insurance proceeds already
the claims which could result recovered to bank receipts, where claims had been
in a material difference settled.
in the value of the claim's
provision.
* We held discussions with the management and
ascertained the financial and other impact of the
status of any action currently in progress
* For the cases in progress, we sought confirmation
from the Group's legal representatives as to their
opinions relating to the likelihood and potential
level of settlement.
* For claims in progress, we reviewed correspondences
relating to claims and assessed independent legal
advice provided which includes a grading of
settlement risk.
* We ensured adequate disclosure has been made for the
provision in the notes to the accounts and
Strategic/Directors' reports.
Our audit procedures in relation to these matters were designed
in the context of our audit opinion as a whole. They were not
designed to enable us to express an opinion on these matters
individually and we express no such opinion.
Other information
The directors are responsible for the other information
contained within the annual report. 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.
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 this
gives rise to a material misstatement in the financial statements
themselves. 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.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion based on the work undertaken in the course of our
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 directors' report have been prepared
in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the group and the
parent company and their 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
where 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 the directors for the financial
statements
As explained more fully in the directors' responsibilities
statement set out on page 19, 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 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.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
We obtained an understanding of the legal and regulatory
frameworks within which the Group and parent company operates. We
also considered and obtained an understanding of the U.K. legal and
regulatory framework which we considered in this context were the
Companies Act 2006 and U.K. taxation legislation along with
Financial Conduct Authority regulatory requirements
We identified the greatest risk of material impact on the
financial statements from irregularities, including fraud, to be
the override of controls by management. Our audit procedures to
respond to these risks included enquiries of management about their
own identification and assessment of the risks of irregularities,
sample testing on the posting of journals and reviewing accounting
estimates for biases including agreeing to supporting evidence
where appropriate.
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the financial statements, even though we have
properly planned and performed our audit in accordance with
auditing standards. We are not responsible for preventing
non-compliance and cannot be expected to detect non-compliance with
all laws and regulations.
These inherent limitations are particularly significant in the
case of misstatement resulting from fraud as this may involve
sophisticated schemes designed to avoid detection, including
deliberate failure to record transactions, collusion or the
provision of intentional misrepresentations.
A further description of our responsibilities is available 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.
John Glasby (Senior Statutory Auditor)
for and on behalf of
Crowe U.K. LLP
Statutory Auditor
55 Ludgate Hill
London
23 September 2022
TAVISTOCK INVESTMENTS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 MARCH 2022
The notes below form part of the Group financial statements.
TAVISTOCK INVESTMENTS PLC Company number: 05066489
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2022
The financial statements were approved by the Board and
authorised for issue on 23 September 2022.
Oliver Cooke
Chairman
The notes below form part of the Group financial statements.
TAVISTOCK INVESTMENTS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MARCH 2022
The notes below form part of the Group financial statements.
TAVISTOCK INVESTMENTS PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 31 MARCH 2022
The notes below form part of the Group financial statements.
TAVISTOCK INVESTMENTS PLC
CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
FOR THE YEARED 31 MARCH 2022
The notes below form part of the Group financial statements.
TAVISTOCK INVESTMENTS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARED 31 MARCH 2022
1. ACCOUNTING POLICIES
Principal accounting policies
Tavistock Investments Plc ("The Company") is a public company
limited by share capital, incorporated in the United Kingdom with
registered company number 05066489 and its registered office is at
1 Queen's Square, Ascot Business Park, Lyndhurst Road, Ascot,
Berkshire, SL5 9FE (from 10 August 2021). 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 consolidated financial statements have been prepared in
accordance with international accounting standards in conformity
with the requirements of the UK adopted international accounting
standards.
Basis of Consolidation
The Group comprises a holding company and several individual
subsidiaries and all of
these have been included in the consolidated financial
statements in accordance with IFRS10 Consolidated Financial
Statements and the principles of acquisition accounting as laid out
by IFRS 3 Business Combinations. Subsidiaries are consolidated from
the date of their acquisition, being the date on which the group
obtains control and continue to consolidate until the date such
control ceases. Control comprises the power to govern the financial
and operating policies of the subsidiary so as to obtain benefit
from its activities
Standards available for early adoption
As per amendments to IAS 1 Classification of liabilities as
current or non-current, Disclosure of Accounting policies and
Definition of Accounting Estimates IAS8 are available for early
adoption. The Group have elected not to adopt as it would not
provide further useful information to the users of the financial
statements. Adoption will be enforced as of 1st January 2023.
Revenue recognition
Revenues within the advisory business are predominantly
comprised of advisory support commissions. Income is recognised and
accrued for when control has transferred, the resulting cash will
then be received at the point the underlying transaction
settles.
Revenues within the investment management business are
calculated as a percentage of funds under management. Income is
calculated daily and is received and recognised monthly. The
charges are collected directly from the assets held and there are
no significant payment terms. All revenues arise over time and are
received in arrears, none are linked to subsequent performance
obligations.
Government grants
Grants from the government are recognised at their fair value
where there is reasonable assurance that the grant will be
received, and the Group will comply with all attached conditions.
Grant income is netted off against the relevant expenses within
these financial statements. There are no unfulfilled conditions or
other contingencies attaching to these grants. The Group did not
benefit directly from any other form of government assistance.
Government grants relating to costs are deferred and recognised in
the profit and loss over the period necessary to match them with
the costs that are intended to compensate.
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.
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 generally
considered to be between 5 and 10 years.
During the year the Group has invested in the development of a
number of key initiatives designed to generate additional FUM
inflows. Where appropriate, this expenditure has been capitalised
as intangible assets.
Intangible assets are initially recognised at cost.
Costs that are directly associated with the production of
identifiable and unique products controlled by the Group and
capable of producing future economic benefits are recognised as
intangible assets. Direct costs include employee costs and directly
attributable overheads. After recognition, under the cost model,
intangible fixed assets are measured at cost less any accumulated
amortisation and any accumulated impairment losses.
Development costs are recognised as assets only if all of the
following conditions are met:
-- an asset is created that can be separately identified;
-- it is probable that the asset created will generate future economic benefits; and
-- the development cost of the asset can be measured reliably.
Client lists, regulatory approvals and systems and internally
developed assets are considered to have a finite useful life and
are only amortised once ready for use. If a reliable estimate of
the useful life cannot be made, the useful life shall not exceed
ten years.
Financial assets
Deferred consideration received, accrued income 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 method.
Financial liabilities
Payments made under leases (net of any incentives received from
the lessor) have been recognised in accordance with IFRS 16 as
follows:
The Group's leases primarily relate to properties. Lease terms
are negotiated on an individual basis and contain a wide range of
different terms and conditions. Property leases will often include
extension and termination options, open market rent reviews, and
uplifts.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the individual lessee company's incremental
borrowing rate taking into account the duration of the lease.
The lease liability is subsequently measured at amortised cost
using the effective interest method, with the finance cost charged
to profit or loss over the lease period to produce a constant
periodic rate of interest on the remaining balance of the
liability.
The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement date, plus
any initial direct costs incurred, less any lease incentives
received. The right-of-use asset is typically depreciated on a
straight-line basis over the lease terms. In addition, the
right-of-use asset may be adjusted for certain remeasurements of
the lease liability, such as market rent review uplifts. Please
refer to Note 9 for further details.
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 17.
Tangible fixed assets
Tangible fixed assets are stated at cost net of accumulated
depreciation and provision for impairment. Depreciation is provided
on all tangible fixed assets, 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 years straight line
Office fixtures, fittings & equipment - 5 years straight line
Motor Vehicles - 5 years straight line
Impairment of Assets
Impairment tests on goodwill are undertaken annually at the
reporting 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 tangible fixed assets 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 Statement of
Financial Position 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 reporting 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.
Provisions
Provisions are recognised when the group has a present legal or
constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the
obligation, and the amount can be reliably estimated. Provisions
are measured at the present value of management's best estimate of
the expenditure required to settle the present obligation at the
end of the reporting period.
Where some or all of the expenditure required to settle a
provision is expected to be reimbursed by another party, the
reimbursement is recognised when, and only when, it is virtually
certain that reimbursement will be received if the Company settles
the obligation. The reimbursement is treated as a separate asset.
The amount recognised for the reimbursement cannot exceed the
amount of the provision.
As referenced in Note 13, settlement in relation to the claims
provision has been made on a case by case basis in respect of the
cost of defending claims and, where appropriate, the estimated cost
of settling claims. Where recovery of the cost of settlement is
expected to be virtually certain, a corresponding asset is
recognised. Any net provision expense is recognised in the Group's
statement of comprehensive income.
2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
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 judgements 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 judgements and estimations is
contained below, as well as in the accounting policies and
accompanying notes to the financial statements.
Impairment of goodwill and other 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 estimated based
on value in use calculations.
In assessing the carrying value of Goodwill the Directors have
used 5 year forecasts which have been discounted by entity over 5
years and then in perpetuity using a discount rate of 15%. The
forecast assumes no annual growth in revenue after year one and a
2% annual increase in costs. Sensitivity analysis was also
performed alongside this to create various scenarios, with
different growth rates. In all scenarios, the recoverable amount
exceeded the carrying value.
Internally Developed Intangible Assets
Included in the amount capitalised in respect of key initiatives
are apportioned staff costs. Staff costs are capitalised where the
relevant staff member is directly involved in the product
development process. Management estimates the amount of time each
employee has spent on each project during the reporting period and
prorate the staff costs accordingly.
Share based payments
The share-based payment charge to the Profit or Loss account is
estimated from the operation of the Black-Scholes Model in respect
of share options granted by the Company as referred to in more
detail in Note 17.
Amortisation of Development costs and other Intangibles
Product development costs are being amortised over 10 years. The
estimated useful economic life of the intangible assets are based
on management's judgement and experience. When management
identifies that the actual useful economic life differ materially
from the estimates used to calculate amortisation, that charge is
adjusted accordingly.
Claims provision
As outlined in Note 13, three provisions have been made in
relation to potential exposure in relation to historic advice.
Business combinations
In line with IFRS 3, the Directors have completed a
concentration test to assess whether the Group has acquired assets
or a business in relation to Tavistock Chater Allan. The criteria
of the concentration test has been met as the assets acquired are
individually identifiable as Client Lists.
SEGMENTAL INFORMATION
3.
A segmental analysis of revenue and expenditure for the year
is:
The segmental analysis above reflects the parameters applied by
the Board when considering the Group's monthly management accounts.
The Directors do not make reference to segmental analysis as part
of the day to day assessment of the business therefore have not
disclosed a segmental consolidated statement of financial position
within the accounts.
During the year under review the Group's revenue was generated
exclusively within the UK.
In calculating the gain on sale of subsidiary, the deferred
consideration of GBP20 million has been discounted by GBP1.5
million to reflect the time cost of money.
GRANT INCOME
4.
The Group has recognised GBPNil (2021: GBP223,000) in respect of
government grant income for employees furloughed during the period
under review. This income was netted off against staff costs within
the financial statements.
The Group secured a precautionary Coronavirus Business
Interruption Loan Scheme (CBILS) facility from NatWest in 2021. The
first year's interest on this facility has been met by the
government and as a consequence the Group has recognised a further
GBP41,000 of grant income which has been netted off against finance
cost expense within the financial statements in the year ended
2021. This facility has been repaid in full during the year ended
2022.
PROFIT FROM OPERATIONS
5.
In calculating the gain on sale of subsidiary, the deferred
consideration of GBP20 million has been discounted by GBP1.5
million to reflect the time cost of money.
STAFF COSTS
6.
The remuneration of the highest paid director was GBP462,284
(2021: GBP435,939). The total remuneration of key management
personnel was GBP2,268,787 (2021: GBP2,080,320).
All pension contributions represent payments into defined
contribution schemes.
Directors' Detailed Emoluments
Details of individual Directors' emoluments for the year are as
follows:
* Denotes non-executive Director.
TAXATION ON PROFIT FROM ORDINARY ACTIVITIES
7.
The tax assessed for the year differs from the standard rate of
corporation tax in the UK applied to profit before
tax.
EARNINGS PER SHARE
8.
Basic earnings per ordinary share has been calculated using the
weighted average number of share 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. In the prior year, the shares
that were exercisable at year end were not in the money as a
consequence and would have had no diluted impact. However, at the
2022 year end date there were 11,615,967 share options that had
vested and were exercisable. This had the impact of diluting the
basic earnings per share of 5.02p to 4.93p.
TANGIBLE FIXED ASSETS
9.
Included in Office fixtures, fittings and equipment are assets
acquired under lease agreements with a net book value of GBP65,218
(2021: GBP158,261).
Included in Computer equipment are assets acquired under lease
agreements with a net book value of GBP6,555 (2021: GBP32,774).
Included in Leasehold property are assets acquired under lease
agreements with a net book value of GBP1,041,733 (2021:
GBP601,000).
Included in Motor Vehicles are assets acquired under lease
agreements with a net book value of GBP28,105 (2021: GBPNil).
Depreciation charged on leased assets was GBP486,998 (2021:
GBP469,285).
INTANGIBLE ASSETS
10.
In June 2021 the Company announced the acquisition of the
business and assets of Chater Allan Financial Services LLP, an
independent advisory business based in Cambridge. The Directors
consider the value of the Client Lists acquired as a part of this
transaction to be GBP1,500k, which sum has been included within the
figure above for Additions made within the year, of GBP2,593k.
Client Lists relate to identifiable relationships between
acquired companies, their adviser network and the associated client
bases.
Internally Developed Assets predominately represent costs
associated with various initiatives including the i-stock app.
GOODWILL
The carrying value of goodwill in respect of each cash generating
unit is as follows:
In assessing the carrying value of Goodwill the Directors have
used 5-year forecasts and discounted the anticipated future
cashflows by entity over 5 years and then in perpetuity using a
discount rate of 15%. In all scenarios, the recoverable amount
exceeded the carrying value.
Tavistock Wealth Limited, the only entity included in the
Investment Management business line of Goodwill, was disposed of in
August 2021 and the carrying value of Goodwill written off against
the gain on disposal within the Statement of Comprehensive
Income.
TRADE AND OTHER RECEIVABLES
11.
Current
Included within other receivables is the sum of GBP1.03m (2021:
GBP692,000) being the estimated amount recoverable from insurers in
connection with the Neil Bartlett provision detailed in Note 13.
Included in other prepayments and accrued income is accrued income
at year end of GBP1,637,583 (2021: GBP1,925,213).
Included within other receivables due within one year is the sum
of GBP6,410,256 (2021: GBPNil) being the amount due within one year
as part of the consideration on the sale of Tavistock Wealth
Limited. The future consideration of GBP20m has been discounted at
a rate of 4% to reflect the time value of money.
Also, included within other receivables is the sum of GBP2.2m
(2021: Nil) being the estimated amount recoverable from insurers
and GBP0.7m being the estimated amount recoverable from advisers in
connection with the British Steel provision detailed in Note
13.
Non-current
Included within other receivables due in more than one year is
the sum of GBP12,090,350 (2021: GBPNil) being the amount due after
one year as part of the consideration on the sale of Tavistock
Wealth Limited.
LIABILITIES
12.
Included within Term Loan in the prior year were two term loan
facilities with NatWest. The first of these was entered into in
November 2018 and was secured by a fixed and floating charge over
the assets of the Group. The second term loan was a Coronavirus
Business Interruption Loan Scheme (CBILS) facility entered into
with NatWest in August 2020. Upon completion of the sale of
Tavistock Wealth Limited both loans were repaid in full and all
charges over the Company's assets were removed.
Included within the GBP180,000 (2021: GBP235,000) Finance Costs
is an amount of GBP17,000 (2021: GBP117,000) related to bank loans.
The remainder of the charge relates to leases and bank charges.
PROVISIONS
13.
There are three main provisions at the year-end date: the
Bartlett provision, the Restructuring Reserve provisions and the
British Steel provision.
Bartlett provision
In December 2018, Mr Neil Bartlett one of the Group's former
advisers was found guilty of fraud and was sentenced to eight years
imprisonment. As a consequence of his actions, the subsidiary
company within the Group with which he was previously associated
has been approached by a number of victims, the majority of whom
were previously unknown to the company, seeking to recover monies
stolen from them by Mr Bartlett.
All steps are being taken by the Group to refute these
approaches and to address them individually in an appropriate
manner. Having consulted with the Company's legal advisers, the
Directors consider it appropriate that a provision of GBP1.45
million is made at the year-end date (2021: GBP692,000). This
provision is matched in part by the provision referred to in Note
11, entitled Trade and Other Receivables. The unmatched element of
the provision has been made in response to the actions of the FOS,
as referred to in the Chairman's Statement.
Restructuring Provisions
The restructuring provisions are made up of three principal
components.
Firstly, a provision of GBP366,000 to cover additional costs
associated with the disposal of offices no longer being used by the
Company.
Secondly, a provision of GBP225,000 to cover anticipated costs
associated with the closure of the Company's RAIF (Reserve
Alternative Investment Fund) which is currently quoted on the
Luxembourg Stock Exchange.
The third and largest provision relates to new costs arising as
a consequence of past restructuring. A provision of GBP2.25 million
has been made to cover additional payments anticipated to arise
over a number of future years to meet potential claims arising from
advice given by appointed representative firms whilst they operated
under the Company's regulatory umbrella, prior to being exited from
the Group.
The first layer of claims protection is provided by the
Company's captive insurance cell. The captive cell provides up to a
maximum of GBP750k of protection in each financial year. Claims
protection above this level is purchased from the traditional
insurance market. The Company is responsible for meeting all costs
associated with the operation of the captive cell. Thus, if the
claims covered by the above provision were to arise over a number
of financial years, and in each year were to amount to GBP750k or
less, the Company would be responsible for providing the captive
cell with the funds required to meet such claims.
British Steel Provision
A precautionary provision of GBP3.8 million (gross) has been
made in compliance with the FCA guidelines that were issued in
anticipation of a mandatory, industry-wide, review of past British
Steel Pension Fund transfer cases.
This provision is matched in part by the provision referred to
in Note 11, entitled Trade and Other Receivables. The unmatched
element of GBP930k has been charged to the Statement of
Comprehensive Income as an exceptional cost.
GBP15,000 has been released from a provision previously held
within Tavistock Private Client that is no longer needed.
Further information regarding the provisions can be found in the
Chairmans Statement on page 4.
DEFERRED TAX
14.
The Directors anticipate that the Deferred tax asset relating
to losses brought forward will be realised within the medium term.
The deferred tax provision comprises:
For taxation purposes, the parent company of the Group,
Tavistock Investments Plc, has to date incurred losses amounting to
GBP9.28million (31 March 2021 GBP3.38million), no deferred tax
asset in connection with these losses has been recognised in the
accounts.
FINANCIAL RISK MANAGEMENT
15.
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 the usual credit risks associated with
use of a mainstream bank headquartered in the UK, NatWest Plc.
However, the Board does not consider it to be necessary to carry a
specific provision against this risk.
The Group is exposed to a credit risk associated with the
deferred consideration due on the disposal of Tavistock Wealth to
Titan. However, the Board does not consider it necessary to carry a
specific provision against this risk as Ares, one of the largest
debt providers to the UK financial services sector, is a Titan
shareholder and is its principle financial backer.
The Group is exposed to a low level of credit risk primarily on
its trade receivables, which are spread over a range of Investment
platforms and advisers. Receivables are broken down as follows:
The table below illustrates the due date of trade
receivables:
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.
The Group 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
Cash at bank comprises Sterling cash deposits held within a
number of banks. There is no cash held on deposit in special
interest bearing accounts.
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.
Capital Disclosures and Risk Management
The Group's management define capital as the Group's equity
share capital and reserves.
The Group has a requirement to maintain a minimal level of
regulatory capital, which in practice means the FCA requires the
Group's core tier one capital, which is composed primarily of
retained earnings and shares, to exceed the requirements as set out
by the FCA. Compliance with minimum regulatory capital is assessed
internally monthly and reported to the FCA on a half yearly basis.
Should additional capital be required management ensure that this
is introduced in a timely manner.
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.
The Group monitors both its operating and overall working
capital with reference to key ratios such as gearing and regulatory
capital requirements.
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.
SHARE CAPITAL AND SHARE PREMIUM
16.
Capital redemption reserve
In September 2021, in accordance with a mandate given by
shareholders, the Board arranged the buy-back of 28,898,378 of the
Company's ordinary shares of 1p each, representing 4.75% of the
then issued share capital, at a price of 4.7p per share. Later in
the financial year, in February 2022, the Board arranged the
buy-back of a further 21,219,847 of the Company's ordinary shares
of 1p each, representing 3.67% of the then issued share capital, at
a price of 5.85 pence per share. These shares were subsequently
cancelled and the nominal value of the shares has been transferred
to the Capital Redemption Reserve.
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.
Capital redemption A statutory, non-distributable reserve into
reserve which amounts are transferred following the
purchase, and cancellation of the company's
own shares out of distributable profits.
17. SHARE BASED PAYMENTS
During the year the Company issued options 76,950,000
(2021:17,425,000) Ordinary shares.
All options outstanding at the year-end date have been valued
using the Black-Scholes pricing model. The weighted average of the
assumptions used in the model are:
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.
In March 2021, the Executive Directors surrendered all of the
58,200,000 share options previously held by them. In April 2021,
new options were issued to the Executive Directors to take the
place of those that had been surrendered by them in good faith. The
number of options issued to them, together with the exercise price,
reflected the loss of the tax benefit accruing to the original
options held by them
The average exercise price of the 11,615,967 options that had
vested and were exercisable at year end was 5.18p and their
weighted contractual life was 10 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 1.87p and their
weighted average contractual life was 3.6 years.
The vesting conditions in relation to management are disclosed
in the Remuneration Report on pages 22 to 23.
18. LEASING COMMITMENTS
19. RELATED PARTY TRANSACTIONS
During the year, Tavistock Wealth Limited received fees of
GBP1,549,955 (2021: GBP3,483,959) 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.
20. POST BALANCE SHEET EVENTS
In April 2022 the Company received regulatory approval from the
FCA and completed the acquisition of a 21% stake in LEBC Holdings
Limited ("LEBC"). Consideration of GBP10m has been agreed, with
GBP6m on initial purchase and an additional GBP4m due in a
year.
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 c.GBP4.2
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.
In May 2022 the Company acquired 100% of LEBC Hummingbird
Limited for GBP1.5m initially, and an additional GBP1.5m later in
the year.
Hummingbird is an unregulated business that sells research on
the asset class allocations for the risk-based portfolios to third
party managers.
TAVISTOCK INVESTMENTS PLC Company number 05066489
COMPANY BALANCE SHEET
AS AT 31 MARCH 2022
These accounts do not include a Cashflow Statement, or a
Financial Instruments note, as permitted by Section 1.8 of FRS
101.
The profit of the parent company for the year was GBP 36,410,000
(2021: loss GBP5,020,000)
The financial statements were approved by the Board and
authorised for issue on 23 September 2022.
Oliver Cooke
Chairman
The notes below form part of the Company financial
statements.
TAVISTOCK INVESTMENTS PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MARCH 2022
The notes below form part of the Company financial
statements.
TAVISTOCK INVESTMENTS PLC
NOTES FORMING PART OF THE COMPANY FINANCIAL STATEMENTS
FOR THE YEARED 31 MARCH 2022
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 and in accordance with Financial Reporting Standard
101 Reduced Disclosure Framework, the Financial Reporting Standard
applicable in the United Kingdom and the Republic of Ireland and
the Companies Act 2006.
The preparation of financial statements in compliance with FRS
101 Reduced Disclosure Framework requires the use of certain
critical accounting estimates. It also requires management to
exercise judgement in applying the Company's accounting policies
(see Note 2 in the Group financial statements).
Advantage has been taken by the Company of the exemptions
provided by Section 5(c) of FRS101 not to disclose Group
transactions in respect of wholly owned subsidiaries.
All accounting policies that are not unique to the Company are
listed on pages 34 to 37. 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, being at least twelve
months from the date of approval of financial statements. On this
basis, they 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. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Impairment of Investments
The Company is required to test, when impairment indicators
exist, whether the carrying value of its investment in its
subsidiaries has suffered any impairment.
In assessing the carrying value of Investments the Directors
have used 5-year forecasts and discounted the anticipated future
cashflows by entity over 5 years and then in perpetuity using a
discount rate of 15%. In all scenarios, the recoverable amount
exceeded the carrying value.
Share based payments
The share-based payment charge to the Profit or Loss account has
been estimated using the Black-Scholes Model in respect of share
options granted by the Company, as referred to in more detail in
Note 17.
III. PROFIT 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
profit for the year was GBP36,410,000 (2021: Loss of GBP5,020,000).
Included within this profit are provisions totalling of
GBP3,050,000 to cover the anticipated one-off costs relating to
planned Group restructuring, and new costs incurred as a
consequence of past restructuring, as described in the Strategic
report on pages 7 to 9.
In October 2021, the Company paid an interim dividend of 0.05p
per share, which was five time higher than the maiden dividend paid
by the Company in 2019. In July 2022, after the year end date, the
Company paid a further interim dividend of 0.07p per share, which
was 40% higher than the dividend paid in October and amounted to
GBP390,863.15.
All Group staff are employed by Tavistock Investments Plc and
their costs are recharged to the relevant subsidiaries. Details of
the Company's staff costs are shown in Note IV.
STAFF COSTS
IV.
During the year the Company incurred an additional GBP8.31
million (2021: GBP5.67 million) of staff costs relating to 144
employees (2021: 111 employees) which were recharged to subsidiary
companies within the Group.
V. INVESTMENTS
At the year end the Company had the following wholly owned
subsidiaries:
The Company owns 100% of King Financial Planning LLP and the
other member is entitled to 50% of the profit share.
TANGIBLE FIXED ASSETS
VI.
Included in Leasehold property are assets acquired under lease
agreements with a net book value of GBP861,000 (2021:
GBP373,000).
Included in Computer equipment are assets acquired under lease
agreements with a net book value of GBP7,000 (2021: GBP33,000).
Included in Office fixtures, fittings and equipment are assets
acquired under lease agreements with a net book value of GBP65,000
(2021: GBP137,000).
VII. INTANGIBLE ASSETS
VIII. DEBTORS: due within one year
Current
Non-current
IX. CASH AND CASH EQUIVALENTS
X. CREDITORS: amounts falling due
within one year
XI. CREDITORS: amounts falling due
after one year
X1I. SHARE CAPITAL
Details of the Company's share capital and the movements in the
year can be found in Note 16 to the consolidated financial
statements.
X1II. SHARE OPTIONS
EMI Share Option Scheme
Details of the share options outstanding at 31 March 2022 can be
found in Note 17 in the consolidated financial statements.
TAVISTOCK INVESTMENTS PLC
ADVISERS
Registrars Share Registrars Limited
3 The Millennium Centre
Crosby Way
Farnham
Surrey
GU9 7XX
Nominated Adviser Allenby Capital
& Broker 5 St Helen's Place
London
EC3A 6AB
Independent Auditors Crowe U.K. LLP
55 Ludgate Hill
London
EC4M 7JW
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September 26, 2022 02:01 ET (06:01 GMT)
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