Tavistock Regulatory News (TAVI)

23nd July 2020

TAVISTOCK INVESTMENTS PLC RESULTS FOR THE YEAR ENDED 31 MARCH 2020

Tavistock Investments Plc ("Tavistock" or "Company") announces its financial results for the year ended 31 March 2020.

Financial highlights:

● 5% increase in revenue to £28.8 million (2019: £27.3 million)

● 24% increase in EBITDA to £1.83 million (2019: £1.48 million)

● 100% increase in cash generated from operations to £2.4 million (2019: £1.2 million)

● Future pre-tax profit to improve by some £1 million per year following a one-off (£5 million) impairment provision - better reflecting the operational performance of the business

● Current year - Q1 trading significantly ahead of the Board's expectation

Operational highlights:

● Funds under management (FUM) increased for the 6th consecutive year - despite the sharp decline in financial markets towards year end:

○ 6% increase in FUM to £1 billion (2019: £945 million)

○ 14% increase in revenue for Tavistock Wealth to £5.6 million (2019: £4.8 million)

● Expansion of protected product range with launch of the ACUMEN ESG Protection Portfolio:

○ Demanding ethical profile

○ Investor protection at 90% of highest ever net asset value (NAV)

○ Partnership with Morgan Stanley & Co. International Plc

○ Excellent performance - NAV declined by less than 1% since December launch, despite the recent crash in financial markets

● Good Performance in Advisory business:

○ Revenue up 4% to £23.3 million (31 March 2019 £22.5 million)

○ Full recovery of equivalent revenues of AR firms exited from Group

○ Enhanced contribution to Group profitability during Q1 of current financial year

● Introduction of strategic investor:

○ 4.94% stake acquired by Hugh Simon, Chairman and owner of Hamon Investment Group

○ Interested in developing a meaningful stake in the UK Wealth Management sector

○ Company and Hamon seeking suitable acquisition targets

○ Strategic partnership provides an opportunity to increase assets invested in Company's funds

Looking ahead to the current financial year:

● The Board is focussed on the following areas:

○ Mitigation of the impact of the pandemic

○ Continued growth in FUM and promotion of the Group's protected funds

○ Expansion of the investment product range

○ Development of further strategic relationships

○ Launch of a low cost, functionally rich, Tavistock platform service

Brian Raven, Group Chief Executive, said: "In the last financial year our team worked incredibly hard to deliver strong performance - significantly increasing EBITDA and growing FUM for the sixth consecutive year.

"The performance of the ACUMEN Protection Portfolios has been exceptional and underpinned the profitability of the investment management business. Our advisory business has also performed particularly well, stepping up to support clients in these challenging times and to mitigate the adverse effect that the lockdown is having on new business.

"We have traded ahead of the Board's expectations for Q1 of the new financial year. Maintaining our focus on tight financial management, we are implementing a Group wide reorganisation that will achieve savings of over £700,000 a year. We remain confident that the business will emerge from the current crisis in good shape."

For further information

TAVISTOCK INVESTMENTS PLC

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 31 MARCH 2020

The strong performance of Tavistock's ACUMEN Protection Portfolios has contributed significantly to the success of this business. Designed specifically to shield clients from sharp and sustained falls in financial markets, they feature an automated algorithmic safeguard. If markets fall, as volatility increases, the algorithm triggers movement out of investment assets and into cash; when markets recover, as volatility decreases, the reverse is triggered, with cash being gradually reinvested into higher risk assets. These funds perform well when used as a bond substitute within clients' investment portfolios.

The newest fund, the ACUMEN ESG Protection Portfolio, has performed particularly effectively since its launch on 5 December 2019, with its NAV (net asset value) having declined by less than 1%. Morgan Stanley & Co International Plc provides the ESG Protection Portfolio with its protection level, set at 90% of its NAV's highest ever value. This protection enables investors to both limit their downside exposure, and lock in 90% of performance upside.

Industry recognition is increasing and Tavistock Wealth has again been shortlisted as a finalist for various awards later in 2020; "Company of the Year" and "Best Discretionary Fund Manager" in the Money Marketing Awards 2020, and "Best DFM" and "Innovation Award" in the Moneyfacts Investment Life & Pensions Awards 2020.

TAVISTOCK INVESTMENTS PLC

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 31 MARCH 2020

Advisory

The Group's advisory business also performed well, generating gross revenues of £23.3 million, 4% ahead of the prior year (£22.5 million). Thus, fully recovering the income previously generated by the poorer performing appointed representative firms that had been removed from the Group.

A number of initiatives have recently been taken to further develop this business and to enhance its contribution to the Group's profitability.

Financial review

Coronavirus Impact, Mitigation and Going Concern and Business Viability Review

Management responded swiftly to the onset of the pandemic, the Government imposed lock-down measures and the markets' reactions to these events. A variety of measures were introduced to mitigate the potential harm to the business, including the rapid adoption of new technology-based work practices and the implementation of business continuity plans, enabling the entire Group to move to home-based working while cost reductions were made. Voluntary salary waivers by all senior management and the significant majority of other staff, together with use of the Government's furlough scheme, have enabled the Company to continue to trade profitably at the adjusted EBITDA level and also to record profits at the pre-tax level during lock-down.

Given the exceptional circumstances, the Board undertook a detailed review of the Group's business to confirm the continued propriety of the going concern assumption as the basis on which to prepare the accounts for the year ended 31 March 2020. As a part of this review process, new budgets were prepared on a worst-case scenario basis, a capital repayment holiday was secured on the Company's NatWest term loan facility and costs were removed from the business where possible.

I am pleased to report that the Board remains confident that the business will now continue to trade profitably at the pre-tax level and as a consequence, the going concern assumption continues to be the appropriate basis on which to prepare the Group's accounts.

Intangible Asset Impairment Review

The Board is conscious that the Group's pre-tax profit performance is adversely impacted each year by amortisation charges relating to the intangible assets, other than Goodwill, held on its balance sheet (predominantly relating to past business acquisitions). These assets are currently being written off over a 5 - 10 year period, in line with the Group's accounting policies on amortisation.

The Board is also mindful of the current uncertainty regarding the long-term consequences of the coronavirus pandemic, as well as the forthcoming recession, and the ultimate impact these may have on the Group's business.

Therefore, in addition to reviewing and confirming the carrying value of Goodwill at the year-end date, the Board has conducted a specific review of the carrying value of the Group's other intangible assets. It has concluded that the acquired value of these assets (being that generated by the former owners of the business units), has been superseded by the input of the Group's current management team. The Board has therefore decided that it would be both prudent and appropriate for the amortisation of these assets to be accelerated so as to write the carrying value down to nil at the year-end date.

Consequently, a one-off impairment provision of some £5 million against the carrying value of these assets has been put through this year's profit and loss account. Having made this provision, the future amortisation charges relating to these assets will be reduced by approximately £1m per annum, which in turn will enable the Group's annual pre-tax profit to better reflect its current operational performance.

TAVISTOCK INVESTMENTS PLC

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 31 MARCH 2020

Gross revenues at £28.8 million were 5% ahead of the prior year (£27.3 million) and gross profit at £11.8 million was 6% ahead of the prior year (£11.1 million). At the year end, as a further consequence of the intangible asset impairment provision, the Group's net assets had reduced from £20 million at 31 March 2019 to £15.4 million.

The Group generated £2.4 million from operations (31 March 2019: £1.2 million) and raised £650,000 of new equity capital. After making £3.4 million of payments (31 March 2019: £2 million) during the year on loan repayments, finance costs, deferred consideration obligations, the purchase of client books and the development of key initiatives, the Group had cash resources at year end of £2.4 million (31 March 2019: £3.1 million).

Adjusted EBITDA is highlighted in the table below. This is considered to be the most appropriate measure of the Group's performance as it removes the distorting effect of one-off gains and losses that arise on acquisitions, as well as the impact of non-cash items.

The financial performance of the Group during the past two years can be summarised as follows:

* See detail above - as a consequence of making this provision, it is anticipated that pre-tax profit will increase by some £1 million per annum in future years.

In March 2020, the Company successfully raised an additional £650,000 of equity capital through the issue of 32,500,000 new ordinary shares of 1p each (the "Placing Shares") at an issue price of 2p per share (the "Placing").

30,000,000 Placing Shares, equivalent to 4.94% of the Company's issued share capital as enlarged by the Placing, were issued to an experienced industry figure, Hugh Simon, and the Board is pleased to welcome him as a significant new investor in the Company.

The balance of the Placing Shares were issued to members of the management team, including Brian Raven and myself.

Hugh Simon is the Chief Executive, and ultimate owner, of the Hamon Investment Group ("Hamon Group"), an asset management Group based in Hong Kong and London. Since being founded by Hugh in 1989, Hamon Group has grown into a multi-asset boutique manager.

In the UK, Hamon Group owns GEM (global emerging market) equity fund manager, Blackfriars Asset Management, which it acquired from BNY Mellon in 2011. Hamon Group is licenced in Hong Kong, Korea, Ireland, and the UK. Blackfriars Asset Management is regulated by the Financial Conduct Authority.

Hugh's interest is to develop a meaningful stake in the UK Wealth Management sector, and he has identified the Company as a cornerstone investment.

The Company and Hamon Group are interested in identifying acquisition opportunities in the wealth and asset management sectors in the UK and Europe. The Board believes that a strategic partnership with Hamon Group provides an opportunity to significantly increase the assets invested in the Company's funds, particularly the 90% Protection Portfolios managed with Morgan Stanley & Co International Plc.  

Post Balance Sheet Events

The Group's available cash resources have been strengthened, after the reporting date, by securing a one year capital repayment holiday on its existing term loan facility with NatWest, and by entering into a new, additional, £2.13 million CBILS (coronavirus business interruption loan scheme) facility. This facility has a six-year term, with a capital repayment holiday and interest paid by the Government in year one, and can, at the Company's discretion, be repaid early at any time without financial penalty.

Trading during the first quarter of the current financial year has been ahead of the Board's expectations. The swift action taken to mitigate the impact of the COVID-19 lockdown has ensured that the Company continues to trade profitably at the adjusted EBITDA level and also to record profits at the pre-tax level. The Company's Chief Investment Officer, Christopher Peel, has stepped down and been replaced by his deputy, John Leiper, who has managed the investment team since joining the business over three years ago.

Future Prospects

The Group's performance during the year is considered particularly satisfying in light of the volatile economic landscape in which it was operating, as it continued the progress it has achieved since inception.

It is, currently, extremely challenging to assess future performance expectations. The long-term consequences of the coronavirus pandemic, the forthcoming recession and the ultimate impact that these might have on the Group's business, are all unknown. However, the Board remains confident that the business will emerge from the current crisis in good shape and will continue to grow and trade profitably.

For reasons of expediency, the Directors chose not to pay a dividend in relation to the current year but intend to take the steps necessary to enable the Company to resume the payment of dividends in the near term (2019: dividend of £57,528).

I would like to take the opportunity to acknowledge the significant contribution made during the year by our excellent staff and to thank them once again for their hard work and dedication, as well as the tremendous support that they have given to the Group during the COVID-19 crisis.

I look forward to updating you further.

Oliver Cooke

Chairman

22 July 2020

TAVISTOCK INVESTMENTS PLC

STRATEGIC REPORT

FOR THE YEAR ENDED 31 MARCH 2020

Business Review

In reviewing the performance of the business, the principle KPIs (Key Performance Indicators) monitored by management are gross revenues, the level of FUM, and adjusted EBITDA.

The Group's prime objective is to increase the level of FUM, as the investment management business has been established to have a predominately fixed overhead base, which enables additional revenues to contribute directly to the Group's profitability as measured by adjusted EBITDA.

Management is also focused on controlling and improving the balance between regulatory risk and commercial return. This is achieved through the judicious increase of operating margins and by eliminating those areas of the business that are deemed incapable of generating an acceptable level of return.

In light of the above, and the explanations given in the attached Corporate Governance Report, the Board considers the Group to be in full compliance with the requirements of s172.

Group

During the year, the Group has reported a 24% increase in the level of adjusted EBITDA to £1.83 million (2019 £1.48 million).

Gross revenues rose by 5% from £27.3 million in 2019 to £28.8 million, this despite the removal of a number of poorer performing appointed representative ("AR") firms from the Group.

The Board consider this to be a creditable performance when viewed against an economic backdrop, that encompassed BREXIT, a general election and most recently, a global pandemic.

In March 2020, the Company successfully raised an additional £650,000 of equity capital through the issue of 32,500,000 new ordinary shares of 1p each at an issue price of 2p per share.

30,000,000 of these shares, equivalent to 4.94% of the Company's enlarged share capital, were issued to an experienced industry figure, Hugh Simon, who is the Chief Executive, and ultimate owner, of the Hamon Group an asset management Group based in Hong Kong and London. The Company and Hamon Group are interested in identifying acquisition opportunities in the asset management sector in the UK and Europe. The Board believes that a strategic partnership with Hamon Group provides an opportunity to significantly increase the flow of funds into the Group's investment management business.

Investment Management

During the year, the business increased gross revenues by 13%, to £5.5 million (2019 £4.9 million).

These revenues are directly linked to the value of FUM which were severely impacted by the pace and severity of the decline in financial markets immediately prior to the year-end. Notwithstanding, the business increased the level of FUM by 6% to over £1 billion (2019 £945 million).

Of particular note, was the strong performance of the Company's Protection Portfolios, which had been designed specifically to protect clients from sharp and sustained falls in financial markets. The newest fund, the ACUMEN ESG Protection Portfolio, had performed particularly effectively since its launch on 5 December 2019, with its NAV having declined by less than 1%.

Advisory Business

The business successfully made up the income previously generated by the "AR" firms that had been removed from the Group and increased gross revenues by 4% to £23.4 million (2019 £22.5 million).

A number of initiatives have recently been taken to further develop this business and to enhance its contribution to the Group's profitability.

The Chairman's Statement contains further details on the impact of the coronavirus pandemic, the measures taken to mitigate the potential harm to the business, and on the progress and financial performance of the Group.

In the current financial year, the Board's focus will be on the following areas:

· further initiatives to mitigate the impact of the pandemic,

· continuing the growth in FUM,

· improving access to the Group's products and services,

· the development of further relationships with strategic channel partners,

· promoting the use of the Group's protected funds, and

· launching a low cost, functionally rich, Tavistock Platform service.

Impairment of Intangible Assets

As outlined in the Chairman's Statement, the Board has conducted a specific review of the carrying value of the Group's intangible assets, other than Goodwill, at the year-end date and the corresponding impact that the amortisation charge has on financial performance. The Board has concluded that it would be both prudent and appropriate for the amortisation of these assets to be accelerated so as to write the carrying value down to nil at the year-end date.

As a consequence, a one-off impairment provision of some £5 million against the carrying value of these assets has been put through this year's profit and loss account. Having made this provision, the amortisation charges relating to these assets in future years will be reduced by approximately £1m per annum, which in turn will enable the Group's annual pre-tax profit to better reflect its current operational performance.

Financial Review

Adjusted EBITDA rose by 24% to £1.83 million on gross revenue of £28.8 million, equivalent to 6.4% (year ended 31 March 2019: adjusted EBITDA of £1.48 million on gross revenue of £27.3 million, equivalent to 5.4%). Having made the impairment provision referred to above, the reported Operating Loss was £5.5 million (2019 Operating profit £156,000) and at the year-end the Group's net assets were £15.4 million (31 March 2019: £20 million).

The Group generated £2.4 million from operations (2019: £1.2 million) and raised £650,000 of new equity capital. After making £3.4 million of payments during the year on loan repayments, finance costs, deferred consideration obligations, the purchase of client books and the development of key initiatives, the Group had cash resources at the year-end of £2.4 million (31 March 2019: £3.1 million).

Risks and Uncertainties

The most immediate risks facing the business are the unknown long-term consequences of the coronavirus pandemic and the widely anticipated recession.

Having conducted a detailed review of the Group's business to confirm the continued propriety of the going concern assumption as the basis on which to prepare the accounts for the year ended 31 March 2020, the Board remains confident that the business will continue to trade profitably. As a consequence, the going concern assumption continues to be the appropriate basis on which to prepare the Group's accounts.

Operationally, the principal commercial risk facing the business relates to the continued growth in the level of FUM. The Group is actively promoting the use of its protected funds, which have performed well in the current economic environment and is continuing to build relationships with strategic channel partners to assist with the distribution of its fund range.

Mindful of the need to protect client data and to prevent unauthorised access being made to its systems, the Group has subjected its systems to external review, conducted independent third-party penetration tests and installed additional email filtering software.

The Group continues to face the usual risks of operating within a regulated environment, but to mitigate these risks the Board continues to actively promote an ethos of acting at all times with honour, dependability and vigilance, and a culture in which the client is placed at the centre of everything that the Group does.

After the reporting date, the Company secured a one-year capital repayment holiday on its existing term loan facility, and has entered into a new £2.13 million, Government backed, Coronavirus Business Interruption Loan Scheme Facility with its bankers, NatWest. In light of the Group's available cash resources, the Board is confident that the Group has sufficient working capital for its current needs.

Future Prospects

The Company responded swiftly to the onset of the coronavirus pandemic and to the need to move the entire Group to home-based working. It successfully implemented significant cost saving measures and is introducing a number of other initiatives to mitigate the potential impact on the business. These factors, when taken together with the strong performance and suitability of the Group's protected funds in the current economic environment, give the Board confidence that the Company will emerge from the crisis in good shape.

For reasons of expediency, the Directors chose not to pay a dividend in relation to the current year but intend to take the steps necessary to enable the Company to resume the payment of dividends in the near term.

I look forward to updating you on our progress.

Approved by the Board of Directors and signed on its behalf by

Oliver Cooke

Chairman

22 July 2020

TAVISTOCK INVESTMENTS PLC

CORPORATE GOVERNANCE REPORT

FOR THE YEAR ENDED 31 MARCH 2020

The Directors, in acknowledgement of the importance of good corporate governance, have adopted the Quoted Companies Alliance Corporate Governance Code (the "QCA Code"), as 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 Board recognises that good corporate governance can reduce risks within the business, can promote confidence and trust amongst its stakeholders and underpins the effectiveness of the Company's management framework.

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 management of retail investors' funds on a discretionary basis, delivering an institutional quality service at a fair value price, lies at the heart of the Group's operations. The basis upon which the Group's investment management business has developed its funds, and the manner in which those funds are managed, have been designed to ensure, as far as it is practical to do so, that this business operates with a substantially fixed cost base. Once this cost base has been exceeded and the investment management business becomes profitable, which it has already achieved, the incremental revenues earned from additional inflows of FUM flow directly through to its bottom line and enhance the profitability both of the investment management business and of the Group. The business has achieved a very high level of asset retention.

· The Group's funds are designed to be both relevant and attractive to its customer base. For example, within the Group's current fund range are three Protection Portfolios designed specifically to shield clients from sharp and sustained falls in financial markets, such as those that have occurred recently and are anticipated to recur with the onset of a recession or in the event of further waves of the coronavirus. Morgan Stanley & Co International Plc provides these funds with their protection levels, set at between 85-90% of their net asset value's highest level.

· The Group's advisory business trades profitably in its own right and in addition, represents a channel for the distribution of the Group's funds, subject to their being suitable for each client's individual circumstances.

· The Board's focus is on managing the regulatory risks associated with the operation of advisory and investment businesses and on developing other distribution channels capable of generating fund inflows, thereby enhancing the Group's profitability.

· Key risks have been addressed in the Strategic Report.

Principle 2:

Seek to understand and meet shareholder needs and expectations

· To ensure that its strategy, operational results and financial performance are clearly understood, the Company is committed to engaging with and updating its shareholders through its regulatory announcements, and practices two-way communication with both its institutional and private investors. From time to time it also attends investor events at which shareholders and potential shareholders are able to engage with the Company's Executive Directors.

· 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. All Board members endeavour to attend the AGM in person.

· The Executive Directors meet regularly 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 Company recognises the importance of engagement with its stakeholder Groups, which, in addition to investors, include its employees, clients, strategic partners and the relevant authorities. It also seeks to treat each of these Groups in a fair and open manner.

· The Company supports a national charity, the Clock Tower Foundation, and the involvement of staff in various local and national fund-raising events.

· The Company endeavours to take account of feedback received from these stakeholders, and where appropriate to revise and improve its working arrangements.

· 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 its carbon footprint through the greater use of online meeting technology and through a reduction in the number of office premises retained for use by its staff.

Principle 4:

Embed effective risk management, considering both opportunities and threats, throughout the organisation

· The principal risks and uncertainties facing the Group are summarised in the Strategic Report.

· The Company has in place a robust and effective Compliance department and regime, as it is required to do by Regulation. Regular reports are prepared by this department and are submitted for review by the Board.

· The Group has also established a separate Risk Committee, which examines and assesses the risks associated with all aspects of the Group's operations. This committee has recently been strengthened through the recruitment of an experienced professional risk manager. Regular reports are prepared by this committee and are submitted to the Board. These reports are also reviewed by the Audit Committee.

· The Group's IT systems have been subjected to third party review, to independent penetration testing and have been enhanced through the installation of additional email filtering software.

· Commercial risks and opportunities are considered by the Board and by the Group's management board, which is comprised of the Executive Directors and the heads of all major Group functions. The management board liaises regularly and meets formally on a quarterly 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 below in the Report and Accounts. The number of meetings held, and Directors' attendance is 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 being approved and signed 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

· Biographies for each of the Directors can be found in the Directors' Report.

· 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 advisors, brokers, 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.

Principle 7:

Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

· The Group has established separate Remuneration and Audit Committees and through their operation 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 in every three years.

Principle 8:

Promote a corporate culture that is based on ethical values and behaviours

· The Company actively promotes a culture in which the client is placed at the centre of everything that the Company does. Its ethos is, to act at all times with honour, dependability and vigilance.

· The Company is also committed to providing a safe and secure environment for its employees, with its policies and procedures enshrined in the Company's Employee Handbook, which 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 within the Company 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, through the open conduct of Board meetings 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, such as audit and remuneration, to specialist committees, 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 on-line and meet formally on a quarterly basis to be briefed on the Company's progress to discuss progress within their areas of responsibility.

· Other members of staff are briefed informally on an ad-hoc basis and more formally through a series of presentations delivered to them at the annual Company Day.

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 judgment to issues brought before the Board.

The Board meets at least ten times per year and more frequently where necessary to approve specific decisions. In the year under review the Board met 16 times with a total 2 apologies. 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 on. It receives reports from the Group's management 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 of 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 his own remuneration.

For the year under review, one Remuneration Committee meeting was held, and all 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.

TAVISTOCK INVESTMENTS PLC

DIRECTORS' REPORT

FOR THE YEAR ENDED 31 MARCH 2020

Principal Activities, Review of the Business and Future Developments

The principal activities of the Group during the year were the provision of investment management services and the provision of support services to a network of financial advisers. The key performance indicators recognised by management are gross revenues, operating profit, as represented by adjusted EBITDA, and the level of funds under management by the Group.

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 22 July 2020:

Directors

Details of the Directors of the Company who served during the period are as follows:

Oliver Cooke

Chairman, aged 65

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 64

Brian has been involved in the financial services sector since 2010. He has a wide range of business experience, having held many sales and general management posts at senior management and board level, including running public companies on both AIM and the Official List. Most notably, in 1991 Brian founded Card Clear Plc, subsequently renamed Retail Decisions plc, a business engaged in combating the fraudulent use of plastic payment cards. He led the company until 1998 by which time it was an international Group, listed on AIM, with a market capitalisation of some £100 million. As a principal, Brian has been responsible for identifying, negotiating and integrating numerous acquisitions, as well as for delivering organic growth.

Peter Dornan

Non-Executive Director, Chairman of Audit Committee, aged 64

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 (Strategic Report and Directors' Reports) Regulations 2013. As a consequence, it has not published a GHG Emissions Statement.

Communication with shareholders

The Chairman and the Chief Executive are available to meet with institutional shareholders and to answer questions from private shareholders. The Board is open to receiving constructive input from shareholders. Each shareholder receives 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

In light of the coronavirus pandemic the Board undertook a detailed review of the Group's business to confirm the continued propriety of the going concern assumption as the basis on which to prepare the accounts for the year ended 31 March 2020. Having completed this review, the Board remains confident that the business will now continue to trade profitably at the pre-tax level and as a consequence, the going concern assumption continues to be the appropriate basis on which to prepare the Group's accounts.

Adoption of IFRS16

The Group has for the first time adopted IFRS16 which has changed the accounting treatment of operating leases, such as leases on office premises. Further details of this policy and of its impact on the reported results can be found in Note 1 to the financial statements.

Financial instruments

Details of the use of financial instruments by the Group are contained in Note 14 of the financial statements.

Share capital

Changes to share capital during the year are given in Note 15 to the accounts.

Charitable and Political Donations

The Group did not make any political donations in the year but made charitable donations totalling £16,372 (2019: £10,500).

Post Balance Sheet Events

After the reporting date, the Company increased its available cash resources by entering into a new £2.13 million CBILS loan facility with its bankers, NatWest Plc. The loan is repayable over a six-year period with no repayments in year 1. The interest rate is fixed at 2.9% and under the terms of the facility, interest during the first year will be paid by the Government. There is no penalty for the early repayment of the facility.

Dividends

For reasons of expediency, the Directors chose not to pay a dividend in relation to the current year but intend to take the steps necessary to enable the Company to resume the payment of dividends in due course (2019: dividend of £57,528).

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 2020 represented 22 days' purchases (2019: 21 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.

In preparing the financial statements, the Directors are required to:

· select suitable accounting policies in accordance with IAS 8 Accounting Policies, changes in Accounting Estimates and Errors and then apply them consistently;

· present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and

· state that the Group has complied with IFRSs, subject to any material departures disclosed and explained in the financial statements, and make judgments and estimates that are reasonable and prudent.

Directors' responsibilities

The Directors are responsible for preparing the annual report and financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial period. Under that law the Directors have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the Company financial statements in accordance with UK Generally Accepted Accounting Principles ("UK GAAP") including Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland and applicable law. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period.

The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.

In preparing these financial statements, the Directors are required to:

· select suitable accounting policies and then apply them consistently;

· make judgments and estimates that are reasonable and prudent;

· for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the European Union;

· for the parent Company financial statements, state whether applicable UK GAAP including Financial Reporting Standard 102 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:

Full details of the share options held by the Executive Directors are given in the Remuneration Report.

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

22 July 2020

TAVISTOCK INVESTMENTS PLC

AUDIT COMMITTEE REPORT

FOR THE YEAR ENDED 31 MARCH 2020

On behalf of the Board, I am pleased to present the Audit Committee report for the financial year ended 31 March 2020.

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;

· Receive and review reports from the Group's management and auditors relating to the interim and annual accounts;

· Reviewing 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 2020, 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 in place a robust and effective Compliance department and regime. It has also established a separate Risk Committee which examines and assesses the risks associated with all aspects of the Group's operations. 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 rotation of the Company's auditors and the appointment of Crowe UK LLP in response to the longevity of the previous firm's tenure.

The Audit Committee also considered the non-audit services provided by them 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

22 July 2020

TAVISTOCK INVESTMENTS PLC

REMUNERATION REPORT

FOR THE YEAR ENDED 31 MARCH 2020

Compliance

Described below are the principles that the Group has applied in relation to Directors' remuneration.

The Remuneration Committee

The only members of the Remuneration Committee are the two independent 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 twice with both members in attendance.

Share options

The share options granted to the Directors under the Company's EMI (Enterprise Management Incentive) Share Option Scheme or as unapproved options can be summarised as follows.

The market price of the shares at 31 March 2020 was 1.5 pence (2019: 3.08 pence) and the range during the financial year was 1.4 pence to 3.3 pence.

Service contracts

The term of the Directors' service contracts can be summarised as follows:

Directors' remuneration

Details of each Director's remuneration are provided in Note 5 to the financial statements entitled Staff Costs.

Directors' interest in shares

Details of the Directors beneficial shareholdings can be found in the Directors Report.

Approved by the Committee and signed on its behalf by

Roderic Rennison

Committee Chairman

22 July 2020

TAVISTOCK INVESTMENTS PLC

INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF TAVISTOCK INVESTMENTS PLC

FOR THE YEAR ENDED 31 MARCH 2020

Opinion

We have audited the financial statements of Tavistock Investments plc (the "Company") and its subsidiaries (the "Group") for the year ended 31 March 2020, which comprise:

· the Group consolidated statement of comprehensive income for the year ended 31 March 2020;

· the Group consolidated and Company statements of financial position as at 31 March 2020;

· the Group and 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 a summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the Parent company financial statements is applicable law and UK Accounting Standards, including Financial Reporting Standard 101 ("FRS 101") Reduced Disclosure Framework, the Financial Reporting Standard applicable in the UK and Republic of Ireland (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 Company's affairs as at 31 March 2020 and of the Group's loss for the year then ended;

· the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;

· the Parent company financial statements have been properly prepared in accordance with UK GAAP; 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 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, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you when:

· the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

· the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group's or the Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

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 £215,000 (FY2019: £200,000), based on 0.75% of Total Group Turnover (FY2019: % of Total Group turnover not reported).

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.

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 Board of Directors to report to it all identified errors in excess of £10,750 (FY2019: £10,000). 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 IV to the Company financial statements.

All of the trading subsidiaries, excluding the non-UK registered entities and King Financial Planning LLP, have been subject to a full scope audit.

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.

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. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion based on the work undertaken in the course of 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 the directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Group and the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

· adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or

· the 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 below, 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 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 Company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

John Glasby

(Senior Statutory Auditor)

for and on behalf of

Crowe U.K. LLP

London

22 July 2020

TAVISTOCK INVESTMENTS PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2020

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 2020

The financial statements were approved by the Board and authorised for issue on 22 July 2020.

Oliver Cooke

Chairman

The notes below form part of the Group financial statements.

TAVISTOCK INVESTMENTS PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2020

*On 15 May 2019, having filed unaudited interim accounts at Companies House confirming the availability of distributable reserves, the Company announced that it would, on 12 July 2019, pay a maiden interim dividend in relation to the 2019 financial year of 0.01p per share to all shareholders on the Company's share register at the close of business on Friday 28th June 2019.

The notes below form part of the Group financial statements.

TAVISTOCK INVESTMENTS PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 MARCH 2020

Reconciliation of net cashflow to movement in net debt: Year ended Year ended

31 March 2020 31 March 2019

£000 £000

Net (decrease)/increase in cash and cash equivalents (700) 5

New loans - (2,000)

New lease liability (757) -

Lease repayments 446 (173)

Repayment of loans 323 2,173

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

Movement in net debt in the year (688) 5 

Net debt at 1 April 2019 782 777

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

Net Debt at 31 March 2020 94 782

========= =========

The net debt comprises:

The notes below form part of the Group financial statements.

TAVISTOCK INVESTMENTS PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2020

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 at 1 Bracknell Beeches, Old Bracknell Lane, Bracknell, Berkshire RG12 7BW. 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 Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs") and those parts of the Companies Act 2006 which apply to companies preparing their financial statements under IFRSs.

IFRS 16

The Group has adopted the IFRS 16 modified retrospective approach from 1 April 2019 but has not restated comparatives for the 2019 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening statement of financial position on 1 April 2019.

The Group previously classified leases as operating or finance lease based on its assessment of whether the lease transferred substantially all the risks and rewards of ownership. Under IFRS 16, the Group recognises right-of-use assets and the corresponding lease liabilities for most leases by recording them on the balance sheet.

In applying IFRS 16 on transition, the Group has used the following practical expedients permitted by the standard:

· The Group has elected not to reassess whether a contract is or contains a lease as defined in IFRS 16 at the date of initial application. For contracts entered into before the transition date, the Group relied on its assessment made when applying IAS 17 and IFRIC 4.

· For the majority of leases, reliance has been placed on previous assessments of whether leases are onerous under IAS 37 Provisions, Contingent Liabilities and Contingent Assets. For leases where the right-of-use asset has been determined as if IFRS 16 had been applied since the lease commencement date, this expedient has not been taken.

· Accounting for operating leases with a remaining lease term of less than 12 months as at 1 April 2019 as short-term leases.

The Group has elected not to recognise the right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less or leases that are of low value (£5,000). Lease payments associated with these leases are expensed on a straight-line basis over the lease term.

At inception or on assessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease and non-lease component based on their relative stand-alone prices. However, for leases of properties, the Group elected not to separate non-lease components and will instead account for the lease and non-lease component as a single lease component.

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. It is remeasured when there is a change in future lease payments arising from a change in

index or rate, or if the Group changes its assessment of whether it will exercise an extension or termination option. The lease liability is recalculated using a revised discount rate if the lease term changes as a result of a modification or re-assessment of an extension or termination option.

The right-of-use 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 indexation and market rent review uplifts. Please refer to Note 8 for further details.

The Group comprises a holding company and a number of individual subsidiaries and all of these have been included in the consolidated financial statements in accordance with the principles of acquisition accounting as laid out by IFRS 3 Business Combinations.

Revenue recognition

Revenues within the advisory business are predominantly comprised of advisory support commissions. Revenues within the investment management business are predominantly comprised of commissions related to the level of funds under management. All revenues arise over time and are received in arrears, none are linked to subsequent performance obligations. Costs directly attributable with fulfilment of a contract with a customer are recognised in the income statement in line with the revenue profile of that contract, resulting in prepayments where appropriate.

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. However, as outlined in the Chairman's Statement, the Board has conducted a specific review of the carrying value of the Group's intangible assets, other than Goodwill, at the year-end date and for the reasons outlined has concluded that the amortisation of these assets should be accelerated so as to write their carrying value down to nil at the year-end date.

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.

All intangible 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. Expenditure not capitalised as an intangible asset has been treated as a prepayment and will be released to the profit and loss account over the three year life of that initiative.

See below for Impairment of Assets in the financial year.

Financial assets

Loans and receivables: These assets are deemed to be non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (trade receivables), but also incorporate other types of contractual monetary asset. They are carried at amortised cost using the effective interest method.

Cash and cash equivalents: These include cash in hand and deposits held at call with UK banks.

Financial liabilities

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

Payments made under operating leases (net of any incentives received from the lessor) have been recognised in accordance with IFRS 16 as described below.

Where the Group enters into a lease an asset and corresponding liability are recognised as the future minimum value of lease payments and amortised using the effective rate of interest.

Share based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the statement of comprehensive income on a straight-line basis over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of options expected to vest at each statement of financial position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

Fair value is calculated using the Black-Scholes model, details of which are given in Note 16.

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 - 3-7 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.

As referred to in the Chairman's Statement the Board has conducted a specific review of the carrying value of the Group's intangible assets, other than Goodwill, at the year-end date, and concluded that it would be both prudent and appropriate  that the amortisation of these assets should be accelerated so as to write their carrying value down to nil at the year-end date. As a consequence, a one-off impairment provision of some £5 million against the carrying value of these assets has been put through this year's profit and loss account (see Note 9).

Taxation and deferred taxation

Corporation tax payable is provided on taxable profits at prevailing rates.

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance sheet differs from its tax base, except for differences arising on:

· the initial recognition of goodwill; and

· the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit.

Recognition of deferred tax assets is restricted to those instances where it is probable that future taxable profit will be available against which the asset can be utilised. The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the 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 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 to offset the provision. Any net provision is recognised in the Group's statement of comprehensive income.

2. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of these financial statements has required management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. These judgments and estimates are based on management's best knowledge of the relevant facts and circumstances, having regard to prior experience, but actual results may differ from the amounts included in the financial statements. Information about such judgments and estimations is contained below, as well as in the accounting policies and accompanying notes to the financial statements.

Impairment of goodwill and 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 a Group level discounted cashflow over 5 years and then in perpetuity. This consideration included reference to anticipated future cashflows of the Group. It is also assumed a discount rate of 15%. It is considered that any reasonably possible changes in the key assumptions (including 0% growth rate and an increased discount rate of 20%) would not result in an impairment of the present carrying value of the goodwill. In all scenarios, the recoverable amount exceeded the carrying value.

As referred to in the Chairman's Statement the Board has conducted a specific review of the carrying value of the Group's intangible assets, other than Goodwill, at the year-end date, and concluded that it would be both prudent and appropriate  that the amortisation of these assets should be accelerated so as to write their carrying value down to nil at the year-end date. As a consequence, a one-off impairment provision of some £5 million against the carrying value of these assets has been put through this year's profit and loss account (see Note 9).

Revenue recognition

In applying the accounting policy 'revenue recognition' below the Group have made the judgement to only recognise income that have been contracted and earnt. Accrued income represents revenue that has been earnt but not yet received.

Deferred tax

Where the Group has recognised a deferred tax asset it is in the Directors' judgement, supported by internally generated forecasts, that this will ultimately be realised. The timing and size of anticipated taxable profits is subject to uncertainty and therefore the asset recognised is subject to estimates made by the Directors around the size and timing of taxable profits.

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 estimate 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 16.

Amortisation of Development costs and other Intangibles

Product development costs are being amortised over 10 years. The estimated useful economics lives of the intangible assets are based on management's judgement and experience. When management identifies the actual useful economic lives differ materially from the estimates used to calculate amortisation, that charge is adjusted prospectively. Key initiative costs capitalised have not been amortised in the current year as they were not ready for use.

Contract fulfilment costs

Certain costs included in the development of key initiatives have been judged as a prepayment and will be released to the Profit or Loss account over the three year life of that initiative.

Claims provision

As outlined in Note 12, having sought legal advice the Directors have judged it appropriate to make a provision for potential liabilities arising as a consequence of the fraudulent activities of a former adviser. An equivalent receivable provision has also been made (see Note 10) as the Directors believe that any liability that might ultimately arise is fully covered by the professional indemnity insurance policies that the Group has in place.

3. SEGMENTAL INFORMATION

A segmental analysis of revenue and expenditure for the year is:

Included in Investment Management Administrative Expenses of £2.932 million is £741,685 in relation to the impairment of Other Intangible Assets. Included in Advisory Support Administrative Expenses of £8.64 million is £1.58 million in relation to the impairment of Intangible Assets. Included in Unallocated Group Costs of £5.66 million is £3.02 million in relation to the impairment of Intangible Assets. See Note 9.

Also included in Unallocated Group Costs of £5.66 million is £460,000 in relation to acquisition costs on previously acquired subsidiaries.

The segmental analysis above reflects the parameters applied by the Board when considering the Group's monthly management accounts. The Directors do not consider a division of the consolidated statement of financial position to be appropriate or useful for the purposes of understanding the financial performance and position of the Group.

During the year under review the Group's revenue was generated exclusively within the UK.

The remuneration of the highest paid director was £288,552 (2019: £289,043). The total remuneration of key management personnel was £1,771,867 (2018: £1,597,789).

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

The tax assessed for the year differs from the standard rate of corporation tax in the UK applied to profit before tax.

Tavistock Investments Plc operates as a non-trading holding company, incurring costs but with no external revenues against which to offset these costs. For taxation purposes, it has to date incurred losses amounting to £3.57 million (31 March 2019 £3.57m), and it is considered unlikely that it will be able to offset these losses against future taxable profits, for which reason no deferred tax asset in connection with these losses has been recognised in the accounts.

Loss per ordinary share has been calculated using the weighted average number of shares in issue during the relevant financial periods. IAS 33 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease earnings per share or increase the loss per share. There would be no dilutive impact were the share options to be exercised.

Included in Office fixtures, fittings and equipment are assets acquired under lease agreements with a net book value of £339,000 (2019: £426,000).

In line with the accounting standard IFRS16 the Group has capitalised its historic operating lease agreements in the financial year. See accounting policy below for full description of the new recognition. Included in Leasehold property are assets acquired under lease agreements with a net book value of £446,000 (2019: £Nil). Depreciation charged on leased assets was £426,000 (2019: £85,000).