Tavistock Investments Plc
Annual Report 2023

Plain-text annual report

Report and Financial Statements For the year ended 31 March 2023Company Number: 05066489Contents 4 9 12 18 23 25 26 32 33 34 35 38 60 61 62 67 Chairman’s Statement Strategic Report Corporate Governance Report Directors’ Report Audit Committee Report Remuneration Report Independent Auditor’s Report Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes forming part of the Consolidated Financial Statements Company Statement of Financial Position Company Statement of Changes in Equity Notes forming part of the Company Financial Statements Advisers Chairman’s Statement For the year ended 31 March 2023 Chairman’s Statement (continued) For the year ended 31 March 2023 I am pleased to report that over the last year Tavistock has been developed into a leaner, more efficient business COMMERCIAL DEVELOPMENT with a clear vision and excellent prospects. The Board’s principal commercial objectives have been to continue the organic growth of the Group’s The Board has focused on the strategic and commercial development of the business, together with key areas of advice business and to replace by way of acquisition the profit contribution generated by Tavistock operational significance. The progress achieved is summarised below. Wealth, prior to its sale in August 2021. STRATEGIC DEVELOPMENT Organic Growth The principal recent objective has been to develop a self-sustaining business model involving three Reported gross revenues from the Group’s advisory activities rose by 4.5% over the period under review specific initiatives. The first is to attract and develop new advisers both from within the industry and from elsewhere. The Tavistock Academy has been launched to enable the career development of existing staff (administrators to paraplanning, paraplanners to desk-based advice, improvement of adviser qualifications) and the recruitment of newcomers to the industry, such as university graduates and apprentices. (31 March 2023: £32.7 million, 31 March 2022: £31.3 million). The gross profit contribution rose by 6% (31 March 2023: £10.6 million, 31 March 2022: £10.0 million). Given the challenging market conditions and the related falls in asset values during the year under review, the achievement of this level of organic growth was creditable. Acquisition Strategy The Company has also created a desk-based advice team to filter new business leads and look after less complex The Group is well placed to pursue its acquisition strategy, as it has up to a further £14 million of deferred clients, passing more complex ones to the face-to-face teams. These new facilities enable the development of consideration receivable from the sale of Tavistock Wealth, as well as a £50 million debt funding facility fully qualified financial advisers from scratch with the added benefit of being able to instil best practice from from the Bank of Ireland. the outset. The identification and investigation of acquisition opportunities is a time-consuming business and A customer-centric culture is already embedded across the business and Tavistock’s infrastructure for adviser inevitably, some transactions fail at the due diligence stage. However, in April 2023, the Company support, real-time oversight, risk management and embedded governance helps all the Company’s advisers to completed the first significant acquisition in the next phase of its growth plan with the purchase of fulfil their full potential. Precise Protect Limited (“Precise Protect”). The second initiative has been to increase the sources of new business leads. Tavistock now has numerous Precise Protect is a profitable and fast-growing UK wide protection business based in Bangor, Northern distribution partners, commercial partners, affinity relationships and corporate relationships that provide new Ireland. The Company has a network of over 200 advisers working with more than 30,000 UK clients. business enquiries, as does the Company’s website. Additional business enquiries are expected to flow from Precise Protect offers clients a wide range of products including life and critical illness cover, personal the forthcoming launch of the “Tell Me How” financial information and advice portal that will be freely available injury and income protection and private medical insurance, several of which have been developed in- to employees of all of the above organisations at tellmehow.tavistockinvestments.com. The recently acquired house and are unique to the firm. In the year ended 31 October 2022, Precise Protect reported a profit protection network, Precise Protect (see below), will provide well-qualified advice leads from its 30,000+ clients. before taxation of £1.45 million on turnover of £6.5 million and net assets of £1.23 million. The third initiative has been a significant and on-going investment in technology to support the scalability of the Tavistock now has more than 400 advisers and other business introducers looking after over 110,000 business, the speed with which acquisitions can be integrated, the flow of business intelligence (management private clients with estimated assets of £6 billion, as well as 350 corporate and affinity clients with some information) and the efficiency of operations to enable advisers to spend more time servicing clients. 16,000 employees. A data warehouse has been created collating data from the Company’s numerous systems, logs and Precise Protect is led by an experienced and dedicated specialist team and the Board believes that the spreadsheets to facilitate the automated production of management information, oversight of advice provision business will be a major contributor to the profitability of the Group. and control of risk management. This has improved operational effectiveness and decision making, as well as reduced costs. By way of example, the data warehouse has enabled the automation of much adviser oversight and risk management, giving Tavistock a real-time regulatory oversight regime. Individual adviser scorecards are updated in real-time based on the results of every pre-sale and post-sale file check. This enables the automated adjustment of both adviser oversight settings and, if appropriate, the risk categorisation of product types. This approach also accelerates the orderly integration of newly acquired businesses. The Board is unaware of any other company in the sector with the same level of sophistication in terms of adviser oversight and risk management. Key integration opportunities include: • a significant increase in mortgage business, • a pool of 30,000+ clients providing leads for Tavistock’s desk based and face-to-face financial advice teams; and • the potential to upskill Precise Protect’s advisers to become independent financial advisers through the Tavistock Academy. 4 5 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLCChairman’s Statement (continued) For the year ended 31 March 2023 Chairman’s Statement (continued) For the year ended 31 March 2023 Investment in LEBC In April 2022, the Company acquired a 21% stake in LEBC Holdings Limited (“LEBC”) details of which are included in Note 11. LEBC is an independent national business providing financial advice to retail clients and employee benefits There has also been a sector-wide requirement for firms to conduct a review of British Steel Defined Benefit Pension Transfer cases. Tavistock has fewer than fifty such cases and the Company’s pension transfer processes are of a high standard. All pension transfer activity is covered by the Group’s professional indemnity insurance cover. advice to corporate clients. The Group also agreed to acquire one of LEBC’s subsidiaries, Hummingbird Limited, to Shareholder Value assist LEBC with its funding requirements. However, as an alternative source of funds was subsequently identified, this company was sold back to LEBC for the same consideration as was originally paid for it. OTHER SIGNIFICANT MATTERS Board Appointment Johanna Rager has been promoted to the Board in the role of Group Finance and Operations Director. Johanna joined Tavistock four years ago and has been a strong contributor to the Leadership Board throughout that period. Her promotion is well-deserved. Cost Reduction The Board has pursued several initiatives intended to enhance shareholder value. These include share buy-backs and applications for Research and Development tax credits. In August 2022, the Company bought back 3,000,000 of its ordinary shares of 1p each at a price of 9.35p per share and in November 2022, the Company bought back a further 300,000 shares at a price of 7p per share. In each instance the shares were subsequently cancelled to enhance subsequent earnings per share, and thus the value, attributable to each share remaining in issue. During the year, applications have been submitted to HMRC for Research and Development tax credits in connection with various capital projects undertaken over recent years. £360,000 of tax credits has been applied for so far which would be of significant future value. Management has continued with the planned withdrawal from loss making or low margin areas of activity. This included the closure of the Luxembourg RAIF (Reserve Alternative Investment Fund), which had failed to achieve New Auditors critical mass. The Group’s low margin appointed representative network has also been downsized through the managed exit of member firms and the transfer of selected others to Group entities that achieve higher margins. Industry Awards The high standard of Tavistock Private Client’s advisory activities continues to be recognised by the industry and this company won several industry awards throughout the year: • SME News Finance Awards 2022 - Best Financial Planning & Tax Led Investing Firm • AI Worldwide Finance Awards 2022 - Best Independent Financial & Investment Planning Firm East of England • Lawyer International Legal 100 2023 - Best Boutique IFA Firm of the Year and Most Outstanding in Tax Efficient Investing – UK • Corporate LiveWire Innovation & Excellence Awards 2023 - Financial Planning Firm of the Year. Our congratulations go to the management and staff within that business. PII Renewal The high standard of the Group’s operational and compliance procedures has also been recognised by the insurance industry. In a tough and increasingly expensive insurance market, the Group has secured the renewal of its professional indemnity insurance cover, on the same terms and at the same premium as last year, with no increase either in excess levels or in restrictions on the scope of cover. This is a particular tribute to the Group’s risk management and compliance team. Regulatory Regime The Board recognises the benefits of an appropriate level of independent scrutiny and challenge from the Company’s auditors. However, it is at the same time mindful of the need to obtain value for money on behalf of shareholders. Thus, despite having enjoyed a good working relationship with the Company’s previous auditors, Crowe U.K. LLP, it was decided to appoint a new firm, RPG Crouch Chapman LLP, to the role for the current year. FINANCIAL RESULTS Revenue The Company has reported gross revenues for the year under review of £34 million (2022: £34 million). 96% of these revenues (£32.7 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 model portfolio service and its brief ownership of Hummingbird Limited. 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 has reported adjusted EBITDA of £0.14 million (2022: £1.37 million). The reduction followed the disposal of Tavistock Wealth, which removed the largest EBITDA contributor from the Group, leaving the EBITDA contribution from the advisory businesses to cover the Group’s full central overhead. Steps have been taken to remedy this position, as described above. Operating Profit Two new, industry wide, regulatory obligations have impacted the Group during the year. The Company is reporting an Operating loss for the year to 31 March 2023 of £0.94 million (31 March 2022: profit £30.67 million, including an exceptional gain on the sale of Tavistock Wealth of £35.78 million and one-off The first, has been the introduction of a new wide-ranging Consumer Duty regime. This seeks to ensure that all provisions of £4.42 million). clients are treated both fairly and equally, that the charges levied for services provided are transparent and that recommended products both provide value for money and are appropriate for each client’s individual needs and circumstances. I am pleased to advise that Tavistock is on-track with the implementation of its new Consumer Duty obligations. 6 7 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLCChairman’s Statement (continued) For the year ended 31 March 2023 Strategic Report For the year ended 31 March 2023 The year under review has been a period of transition for the Group and its financial performance is In keeping with the obligation placed upon Directors by S172 of the Companies Act 2006, the Board, both summarised below: Revenues Adjusted EBITDA Depreciation & amortisation Share based payments (Loss) from Operations - before exceptional items Provision for one off reorganisation costs Provision for new costs as a consequence of past reorganisation Regulatory provisions Exceptional costs Gain on sale of subsidiary Reported (Loss)/Profit from Operations (Loss)/Earnings per share Net Assets at year end Cash Resources at year end 31 Mar 2023 31 Mar 2022 Movement In doing so they have, amongst other matters, given regard to the following: 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. £’000 33,954 141 (1,244) (107) (1,210) - - 342 (69) - (937) (0.25)p 41,770 9,733 £’000 34,003 1,372 90% decrease (1,051) 18% increase (1,010) 89% decrease (689) 76% increase (800) (2,250) (1,372) - 35,778 30,667 5.01p 43,477 4% decrease 15,274 36% decrease • 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. Against this background, the Board’s focus has been on the strategic and commercial development of the business together with key areas of operational significance. Strategic Development As referred to in the Chairman’s Statement, Tavistock has, over the last year, been developed into a leaner and more efficient business. The principal objective in the year under review has been to develop a self-sustaining business model involving three specific initiatives. The first being to attract and develop new advisers both from within the industry and from elsewhere. To achieve this, management launched the Tavistock Academy and created desk-based advice teams to filter new business The Directors are confident that the results for the current financial year (ending on 31 March 2024) will show a leads and to look after less complex clients. These facilities create a career progression path for existing staff and more positive outcome and reflect the steps that have been taken to drive the Company forward. enable new entrants, such as graduates and apprentices, to be developed into fully qualified financial advisers. Dividends In July 2022, the Company disbursed an interim dividend of 0.07p per share, representing a notable 40% increase compared to the dividend issued in October 2021. The Company is issuing a subsequent interim dividend of the same value, 0.07p. OUTLOOK The Company is now ready to operate on a much larger scale and has embarked on the next phase of its growth plan. A great deal has been accomplished over the last year through the hard work of our excellent staff. I would like to acknowledge their dedication and support and to thank them for their considerable contribution. The Board looks forward to the coming year with confidence and I will update you in due course. Oliver Cooke Chairman 19 September 2023 8 The second being to increase the sources of new business leads. Relationships with a number of new business introducers were established during the year and the Company will shortly be launching the “Tell Me How” financial information and advice portal which is also expected to generate new business enquiries, as will Precise Protect’s client base (see below). The third initiative is a significant and on-going investment in technology to support the scalability of the business, the speed with which acquisitions can be integrated, the flow of business intelligence (management information) and the efficiency of operations to enable advisers to spend more time servicing clients. Commercial Development The Board’s principal commercial objective has been to replace the profit contribution generated by Tavistock Wealth, prior to its sale in August 2021, by way of acquisition and to continue the organic growth of the Group’s advice business. Acquisition Strategy The Group is well placed to pursue its acquisition strategy, as it has a further £14 million of deferred consideration receivable from the sale of Tavistock Wealth and has now secured access to a £50 million debt funding facility from the Bank of Ireland. The Company has made one acquisition of note, Precise Protect Limited, a profitable and fast-growing UK wide protection business based in Bangor, Northern Ireland. 9 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLCStrategic Report (continued) For the year ended 31 March 2023 Strategic Report (continued) For the year ended 31 March 2023 Organic Growth Shareholder Value The Group’s advisory activities reported a 4.5% rise in gross revenues and a 6% rise in gross profit contribution. During the year the Board pursued several initiatives intended to enhance shareholder value. These include the Given the challenging market conditions and the related falls in asset values during the year under review, the buy-back and cancellation of 3.3 million of the Company’s shares which enhanced subsequent earnings per achievement of this level of organic growth is considered to be creditable. share, and thus the value, attributable to the shares remaining in issue. Investment in LEBC In April 2022, the Company acquired a 21% stake in LEBC Holdings Limited. LEBC is an independent national business providing financial advice to retail clients and employee benefits advice to corporate clients. They also submitted applications to HMRC for Research and Development tax credits in connection with various capital projects undertaken over recent years. The value of tax credits applied for to date is £360,000, and these credits will reduce the amount of corporation tax that will be paid by the Company in future years. The Board has been working closely with the management of LEBC to maximise the value of this investment. New Auditors OTHER SIGNIFICANT MATTERS Board Appointment During the year the Board appointed RPG Crouch Chapman LLP to serve as the Group’s auditors in place of Crowe U.K. LLP. In the Directors’ opinion, the periodic rotation of the Group’s auditors is desirable as it ensures an appropriate level of independent scrutiny and challenge and at the same time offers an opportunity to secure Johanna Rager, who joined Tavistock four years ago and has been a strong contributor to the Group’s Leadership Board throughout that period, has been promoted to the Board in the role of Group Finance and Operations Director. Her promotion is well-deserved. Cost Reduction Management has continued with the planned withdrawal from loss making or low margin areas of activity. This included the closure of the Luxembourg RAIF (Reserve Alternative Investment Fund), which had failed to achieve critical mass. greater value for money on behalf of shareholders. Current Objective In the current year the Board’s objectives are to: • extract further operational benefits from the ongoing data mining project, • complete the integration of Precise Protect, • reap the rewards from its membership of the Group, and The Group’s low margin appointed representative network has also been downsized through the managed exit • continue to develop the Group through the completion of further acquisitions. of member firms and the transfer of selected others to Group entities that operate with higher gross margins. Financial Performance External Recognition The Company’s financial performance is addressed in more detail in the Chairman’s Statement. The high standard of Tavistock Private Client’s advisory activities continues to be recognised by the industry and I am pleased to advise that during the year this company won several industry awards, further details of which can Corporate Governance be found in the Chairman’s Statement. Corporate Governance activities are set out separately within the Corporate Governance Report on pages 12 to 17. The high standard of the Group’s operational and compliance procedures has also been recognised by the insurance industry. I am pleased to advise that the Group has secured the renewal of its professional indemnity insurance cover, on the same terms and at the same premium level as the last year, with no increase either in excess levels or in restrictions on the scope of cover. This is an unusual achievement in a tough and increasingly expensive, insurance market and is a particular tribute to the Group’s risk management and compliance team. Regulatory Regime The Company faces the usual risks associated with operating in a highly regulated environment, however, during the year two new industry wide regulatory obligations have impacted the Company. These are the introduction of a new wide-ranging Consumer Duty regime, and a sector-wide requirement for firms to conduct a review of British Steel Defined Benefit Pension Transfer cases. Each of these is covered in more detail in the Chairman’s Statement and I am pleased to advise that Tavistock is well placed to address both requirements without material adverse impact on the Group’s future performance. Future Prospects It remains the Board’s objective to build a larger and more profitable business. To this end, much has been done to enable the Company to operate more efficiently and on greater scale. The Board has compiled a qualified list of potential acquisition targets with which it is engaged. The Company is well placed to progress the next stage of its development. Approved by the Board of Directors and signed on its behalf by Oliver Cooke Chairman 19 September 2023 10 11 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLCCorporate Governance Report For the year ended 31 March 2023 Corporate Governance Report (continued) For the year ended 31 March 2023 The Board continues to believe that good corporate governance reduces risk within the business, can Principle 3: 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 ongoing interest in consolidation activity within 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 Board is also focused on the development of a self-sustaining business model, improving the recruitment and development of advisers, maximising the sources of business enquiries and using technology to improve operational efficiency and regulatory oversight. • 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. 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 improved communication through the launch of a Tavistock intranet site, enhanced existing maternity pay arrangements and now provides every member of staff with death in service insurance cover. • 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 continues 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 continues to offer both a subsidised cycle to work scheme, and a subsidised electric vehicle purchase scheme, both of which have been well received. The Company has also installed a number of charging points for use by staff driving hybrid or fully electric vehicles. Principle 4: Embed effective risk management throughout the organisation, considering both opportunities and threats • Last year, to improve the efficacy of its risk management systems, 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. The updating of these scorecards has now been automated and they can be provided to each adviser, manager, and business leader in real time. • The 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 risk management function has been established with a dedicated Risk Manager and a separate Risk Committee. The Risk Manager’s 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. • 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. • 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 • Board members make themselves available to meet with shareholders and with potential investors as and meets formally on a monthly basis. when required. 12 13 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLCCorporate Governance Report (continued) For the year ended 31 March 2023 Corporate Governance Report (continued) For the year ended 31 March 2023 Principle 5: Principle 7: Maintain the board as a well-functioning, balanced team led by the chair Evaluate board performance based on clear and relevant objectives, seeking continuous improvement • The composition, roles and responsibilities of the Board and of the various Committees are set out on • The Group has established separate Remuneration and Audit Committees through which the pages 16 and 17 of the Report and Accounts. The number of meetings held and Directors’ attendance are Non-Executive Directors are able to monitor and assess the performance of the Executive Directors and to also detailed. hold them to account. • To enable the Board to discharge its duties in an effective manner, all Directors receive appropriate and • The respective Board members periodically review and cross-evaluate the Board’s performance and timely information. The Agenda for each meeting is determined by the Chairman who arranges for effectiveness in the Company. Each member of the Board is subject to an annual fitness and suitability briefing papers to be distributed to all participants for consideration ahead of meetings. All meetings are assessment overseen by the Group’s Human Resources department. In due course, the scope of this minuted and the accuracy of the minutes is confirmed at the subsequent meeting before approval and assessment will be enhanced to focus more closely on objectives and targets for improving performance. signature by the Chairman. • Directors’ performance is open to assessment by shareholders and all Directors are subject to re-election by • The Chairman, Oliver Cooke, the Chief Executive, Brian Raven, and the Group Finance & Operations the shareholders at least once every three years. Director, Johanna Rager, 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 Group Finance & Operations Director has held senior positions within a number of international companies. The Non-Executive Directors, Roderic Rennison and Peter Dornan, both have extensive sector knowledge and experience and come from strong regulatory backgrounds. • The Chairman devotes a minimum of two days per week and the other 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. 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: • The Company does not currently have a separate Nominations Committee as this is considered Maintain governance structures and processes that are fit for purpose and support good decision-making by unnecessary given the Company’s size and stage of development. The need for such a committee will be the board 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 other Executive Directors, in conjunction with other members of the executive team, ensure that their 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, • 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. • Operational effectiveness and decision making has been improved with the creation of a data warehouse collating data from the Company’s numerous systems, logs and spreadsheets to facilitate the automated production of management information. company secretary, legal counsel and various other external advisers on a number of matters, including • The avoidance of conflicts of interest, through the delegation of responsibility for certain areas to corporate governance. From time to time, members of the Board also participate in industry forums. specialist committees, such as audit and remuneration, has strengthened the governance structure within • Biographies for each of the Directors can be found in the Directors’ Report. the Company. • The Company’s auditors are rotated on a periodic basis to ensure that the Company and the Board are subjected to an appropriate level of independent scrutiny and challenge. 14 15 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLCCorporate Governance Report (continued) For the year ended 31 March 2023 Corporate Governance Report (continued) For the year ended 31 March 2023 Principle 10: Audit Committee Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders The Audit Committee has primary responsibility for monitoring the quality of internal controls and ensuring that 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 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. of such announcements onto the Company’s website in a timely manner and by mailing copies of the Annual The members of the Audit Committee are as follows: 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. Peter Dornan (Non-Executive Director) Committee Chairman Roderic Rennison (Non-Executive Director) Oliver Cooke (Chairman) • Other members of staff are briefed informally on an ad-hoc basis via the Tavistock intranet and formally The Committee approves the appointment and determines the terms of engagement of the Company’s auditors through emails from the Chief Executive and other senior management as appropriate. In addition, a series and, in consultation with the auditors, the scope of the audit. The Audit Committee has unrestricted access to the of presentations are delivered at the Annual Company Day. On-line meetings are used whenever practical to Company’s auditors. replace physical ones thereby reducing the level of unnecessary business travel. During the year under review the Audit Committee met twice and all members of the Committee were BOARD OF DIRECTORS AND BOARD COMMITTEES in attendance. The Board is responsible for formulating, reviewing and approving the Group’s strategy, budgets and corporate Remuneration Committee actions. The Board is also responsible for ensuring a healthy corporate culture. The Board currently comprises three Executive Directors and two Non-Executive Directors. The Executive Directors are: Oliver Cooke Chairman Brian Raven Chief Executive Officer Johanna Rager Group Finance & Operations Director 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. 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 meetings 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. 16 17 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Directors’ Report For the year ended 31 March 2023 Directors’ Report (continued) For the year ended 31 March 2023 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 Johanna Rager Group Finance & Operations Director, aged 53 advisers. The key performance indicators recognised by management are gross revenues and operating profit, as Johanna is an accomplished Finance Director with 20+ years of professional achievement in multinational 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 companies. She has a track record of delivering strategic, commercial and operational solutions across global organisations, including the implementation of complex mergers and acquisitions. Johanna has proven ability to deliver top and bottom lines and adapt to ever-changing business environments while focusing on talent development and lean processes. Roderic Rennison The Company has been advised of the following interests in more than 3% of its ordinary share capital as at 31 Non-Executive Director, Chairman of Remuneration Committee, aged 68 Number of Shares % of Ordinary Shares sales, strategy, product development, proposition, operations and latterly acquisitions, mergers, and integrations Roderic has more than 40 years of experience in financial services encompassing a variety of roles including August 2023: Name Brian Raven Andrew Staley Oliver Cooke Lighthouse Group Hugh Simon Paul Millott Kevin Mee Directors 70,007,932 55,950,204 30,600,000 30,487,805 30,000,000 28,432,106 28,241,858 12.49% 9.98% 5.46% 5.44% 5.35% 5.07% 5.04% Details of the Directors of the Company who served during the period are as follows: Oliver Cooke Chairman, aged 68 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 67 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 67 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. 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 Communication with shareholders running public companies on both AIM and the Official List. Most notably, in 1991 Brian founded Card Clear Plc, The Board welcomes constructive engagement with shareholders. Each shareholder receives a copy of the subsequently renamed Retail Decisions plc, a business engaged in combating the fraudulent use of plastic annual report, which contains the Chairman’s Statement. The annual and interim reports, together with other payment cards. He led the company until 1998 by which time it was an international Group, listed on AIM, with a corporate press releases are made available on the Company’s website www.tavistockinvestments.com. market capitalisation of some £100 million. As a principal, Brian has been responsible for identifying, negotiating The Annual General Meeting provides a forum for shareholders to raise issues with the Directors. The Notice and integrating numerous acquisitions, as well as for delivering organic growth. convening the meeting is issued with 21 clear days’ notice. Separate resolutions are proposed on each substantially separate issue. 18 19 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Directors’ Report (continued) For the year ended 31 March 2023 Directors’ Report (continued) For the year ended 31 March 2023 Going concern Given the Company’s cash resources at the year-end date and the £14 million of deferred consideration receivable from the sale of Tavistock Wealth in 2021, the Board remains confident that the business has sufficient cash resources to meet its working capital requirements for the foreseeable future, being at least 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. twelve months from the date of approval of financial statements, and to justify use of the going concern Directors’ responsibilities assumption as the appropriate basis on which to prepare the Group’s accounts. The Directors are responsible for preparing the annual report and financial statements in accordance with Financial instruments applicable law and regulations. Details of the use of financial instruments by the Group are contained in Note 16 of the financial statements. Company law requires the Directors to prepare financial statements for each financial period. Under that law the Share capital During the year the Company bought back and cancelled 3.3 million of its own shares. It also issued 2.48 million new shares upon the exercise of share options. Full details of the changes to share capital during the year are summarised in Note 17 to the accounts. Charitable and Political Donations The Group made £3,790 in charitable donations in the year (2022: £23,800). Investment In April 2023, the Company acquired the business of Precise Protect Limited, a profitable and fast-growing protection business based in Bangor, Northern Ireland. This business is expected to contribute significantly to the Company’s growth in the current financial year. Dividends In July 2022, the Company disbursed an interim dividend of 0.07p per share, representing a notable 40% increase compared to the dividend issued in October 2021. The Company is issuing a subsequent interim dividend of the same value, 0.07p. Auditors In February 2023, the Company appointed RPG Crouch Chapman LLP to serve as the Company’s auditors. A resolution reappointing RPG Crouch Chapman 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 2023 represented 28 days’ purchases (2022: 27 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. 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. 20 21 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLCDirectors’ Report (continued) For the year ended 31 March 2023 Audit Committee Report For the year ended 31 March 2023 Directors’ interests On behalf of the Board, I am pleased to present the Audit Committee report for the financial year ended The Directors’ beneficial interests in the Ordinary Share Capital and options to purchase such shares are as follows: 31 March 2023. Principal Responsibilities of the Committee Ordinary shares of 1p each 31 March 2023 31 March 2022 • 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 Share options Shares Share options Shares across the Group; Executive Directors: Brian Raven Oliver Cooke Johanna Rager Non-Executive Directors: Roderic Rennison Peter Dornan 40,000,000 70,007,932 40,000,000 68,759,362 30,000,000 30,600,000 30,000,000 30,367,756 5,000,000 2,276,000 - - 705,398 250,000 - - - - 705,398 250,000 Date of Grant Weighted Average Exercise Price No. as at 31st March 2022 No. granted during the year No. as at 31st March 2023 • 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 Executive Directors: Brian Raven Oliver Cooke 14/06/2021 14/06/2021 Johanna Rager 04/01/2023 5.25p 5.25p 6.65p 40,000,000 30,000,000 - - 40,000,000 30,000,000 in public practice. The Committee met twice during the year, with all members in attendance. 4,000,000 1,000,000 5,000,000 Audit Process Directors’ statements as to disclosure of information to auditors 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 The Directors have taken all of the steps required to make themselves aware of any information needed by the and considered any pertinent matters or areas for special inclusion. Group’s auditors for the purposes of their audit and to establish that the auditors are aware of that information. Following the audit, an Audit Findings Report was prepared by the auditors and submitted to the Audit The Directors are not aware of any audit information of which the auditors are unaware. Committee, and this was followed by a conference call with the Committee to review and discuss the Approved by the Board of Directors and signed on its behalf by Oliver Cooke Chairman 19 September 2023 contents of the Report. The Audit Committee then provided a report to the Board together with its recommendations. For the year ended 31 March 2023, 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 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 rotation of the Company’s auditors and oversaw the selection and appointment of RPG Crouch Chapman LLP as auditors. The Audit Committee reviewed the non-audit services provided by the Company’s auditors and considered that there was no threat to their independence in the provision of these services and that satisfactory controls were in place to ensure this independence. 22 23 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLCAudit Committee Report (continued) For the year ended 31 March 2023 Remuneration Committee Report For the year ended 31 March 2023 Internal Audit Compliance At present, the Group does not have an internal audit function and the Committee believes that despite this, Described below are the principles that the Group has applied in relation to Directors’ remuneration. 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 19 September 2023 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. Service contracts The term of the Directors’ service contracts can be summarised as follows: Oliver Cooke Start Date: 3 May 2013 Terminable on six months’ notice Brian Raven Start Date: 12 May 2014 To 31 March 2024, terminable thereafter on twelve months’ notice Johanna Rager Start Date: 19 August 2019 To 31 December 2024, terminable thereafter on twelve months’ notice Non-Executive Directors Roderic Rennison Start Date: 12 May 2014 Initial term 2 years, terminable at any time on three months’ notice Peter Dornan Start Date: 22 August 2017 Initial term 2 years, terminable at any time on three months’ notice Directors’ remuneration Details of each Director’s remuneration are provided in Note 6 to the financial statements entitled Staff Costs. Directors’ interest in shares Details of the Directors beneficial shareholdings as at 31 March 2023 can be found in the Directors Report. Approved by the Committee and signed on its behalf by Roderic Rennison Committee Chairman 19 September 2023 24 25 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Independent Auditor’s Report to the Shareholders of Tavistock Investments Plc For the year ended 31 March 2023 Independent Auditor’s Report to the Shareholders of Tavistock Investments Plc (continued) For the year ended 31 March 2023 Opinion We have audited the financial statements of Tavistock Investments Plc (the ‘Company’) and its subsidiaries (the ‘Group’) for the year ended 31 March 2023 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the 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 Tavistock Investments Plc’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. Consolidated Statement of Cash Flows, the Company Statement of Financial Position, the Company Statement Our responsibilities and the responsibilities of the directors with respect to going concern are described in the of Changes in Equity and the related notes to the financial statements, including a summary of significant relevant sections of this report. accounting policies. Our approach to the audit The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International Financial Reporting Standards as adopted in the United Kingdom (IFRS). The Company financial statements have been prepared in accordance with applicable law and United Kingdom Accounting Standards, including FRS 101 Reduced Disclosure Framework (UK GAAP). In planning our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates. As in all of our audits, we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk In our opinion: of material misstatement due to fraud. • 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 We tailored the scope of our audit to ensure that we performed sufficient work to be able to issue an opinion March 2023 and of the Group’s loss for the year then ended; • the Group financial statements have been properly prepared in accordance with IFRS; • the 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 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 on the financial statements as a whole, taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which they operate. We performed full-scope audits of the material components of the Group. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement we identified (whether or not due to fraud), including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. Each matter identified was 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. The key audit matters identified are listed below. responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is Carrying value of intangible assets sufficient and appropriate to provide a basis for our opinion. At the year-end, the Group held £19.6 million (2022: Our work included: Conclusions relating to going concern In auditing the financial statements, we have concluded that the director’s 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 entity’s ability to continue to adopt the going concern basis of accounting included: • Review budgets and cash flows projections up to 31 March 2026; • Comparison of budget to past performance; • Sensitise cash flows for variations in trading performance and working capital requirements; • Consider if there is any other information brought to light during the audit that would impact on the going concern assessment; and • Review of working capital facilities and assess headroom available in the projections. £18.3 million) of intangible assets, of which £12.6 million relates to goodwill, £4.9 million to client lists, and £2.1 million to internally generated assets. • Reviewing the initial goodwill calculation, agreeing consideration paid to the purchase agreement and the net assets acquired to the company balance In accordance with IAS 36 Impairment of Assets, sheet at the date of acquisition; entities are required to conduct annual impairment tests for certain intangible assets. • Reviewing management’s goodwill impairment review and considering this for reasonableness, Given the subjectivity of estimates involved, we including challenging key assumptions in the model consider the carrying value of goodwill to be a key and using sensitivity analysis where relevant; and audit matter. • Reviewing the individual books of business across the companies and the impairment review prepared by management, flexing these accordingly to review for any indicators of impairment. 26 27 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLCIndependent Auditor’s Report to the Shareholders of Tavistock Investments Plc (continued) For the year ended 31 March 2023 Independent Auditor’s Report to the Shareholders of Tavistock Investments Plc (continued) For the year ended 31 March 2023 • Performing analytical procedures by month and opinion on the financial statements does not cover the other information and, except to the extent otherwise between each business unit, investigating significant explicitly stated in our report, we do not express any form of assurance conclusion thereon. Revenue recognition Revenue recognition has a presumed risk of fraud Our audit work included: under International Auditing Standards. • Performing detailed walkthroughs to verify the The majority of fees are in relation to initial and operation of controls in place; ongoing services in terms of revenue recognised. • Testing a sample of transactions throughout the Given the significant judgements in the estimated year to agree to external supporting documents; outcomes of open contractual positions at the period end and unsettled at the date of approval of the financial statements, we consider revenue recognition to be a key audit matter. fluctuations; and • Performing cut off testing to ensure revenue has been recorded in the correct period and reviewed the accuracy of accrued income at the year-end. Legal and provisions As the Group operates in the regulated area of Our audit work included: financial services, it is exposed to the risk of claims with respect to current and historic work performed for clients. At the year-end, the Group recognised provisions of £6.0 million (2022: £8.0 million) with • Reviewing reasonableness of the provisions brought forward; • Vouching expected claims/workings through to respect to such claims. documentation; Under IAS 37, provisions must be recognised when it • Tracing claims completed in the year through to is probably that an outflow of cash or other economic bank statements; resource will be required to settle the provision. • Discussions with management about any open We agreed with the Audit Committee that we would report on all differences in excess of 5% of materiality relating to the Group financial statements. We also report to the Audit Committee on financial statement disclosure matters identified when assessing the overall consistency and presentation of the consolidated financial statements. 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 In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit: • the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and • the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. Given the subjective nature of the estimates involved, cases and claims; Matters on which we are required to report by exception we consider the carrying value of legal provisions to be a key audit matter. • Reviewing and considering the adequacy of the disclosure within the financial statements. In the light of the knowledge and understanding of the Group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the 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, 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 nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their • we have not received all the information and explanations we require for our audit. effect on the financial statements as a whole. We have based materiality on 2% of revenue for the operating components. This benchmark is considered to be the most significant determinant of the Group’s financial performance used by the users of the financial statements. Overall materiality for the Group as a whole was set at £0.7 million. For each component, the materiality was set at a lower level. The Company materiality was set at £0.5 million, based on 2% of gross assets, capped at 75% of group materiality as that is considered the most appropriate measure for a holding company. 28 29 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLCIndependent Auditor’s Report to the Shareholders of Tavistock Investments Plc (continued) For the year ended 31 March 2023 Independent Auditor’s Report to the Shareholders of Tavistock Investments Plc (continued) For the year ended 31 March 2023 Responsibilities of Directors Use of our report As explained more fully in the statement of Directors’ responsibilities on page 19, the Directors are responsible This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the for the preparation of the financial statements and for being satisfied that they give a true and fair view, Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members and for such internal control as the Directors determine is necessary to enable the preparation of financial those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest statements that are free from material misstatement, whether due to fraud or error. 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. Mark Wilson MA, FCA Senior Statutory Auditor for and on behalf of RPG Crouch Chapman LLP Chartered Accountants and Registered Auditors 5th Floor, 14-16 Dowgate Hill London EC4R 2SU 19 September 2023 RPG Crouch Chapman LLP is a limited liability partnership registered in England and Wales with registered number OC375705. In preparing the financial statements, the Directors are responsible for assessing the Group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not 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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the 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 Company/Group operates focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The laws and regulations we considered in this context were the Companies Act 2006 and relevant taxation legislation. • 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. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. 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. 30 31 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Consolidated Statement of Comprehensive Income For the year ended 31 March 2023 Consolidated Statement of Financial Position For the year ended 31 March 2023 Company number: 05066489 Revenue Cost of sales Gross profit Administrative expenses Gain on sale of subsidiary (Loss)/Profit from Total Operations Year ended Year ended 31 Mar 2023 31 Mar 2022 Note £’000 £’000 3 3 3 4 33,954 34,003 (22,717) (22,053) 11,237 11,950 (12,174) (17,061) - 35,778 (937) 30,667 MEMORANDUM ONLY - Adjusted EBITDA 141 1,372 9 & 10 (1,244) (1,051) Depreciation & Amortisation Share Based Payments Provision for one off reorganisation costs Provision for new costs as a consequence of past reorganisation Regulatory provisions Exceptional costs Gain on sale of subsidiary (Loss)/Profit from Operations Finance income/(costs) LLP members remuneration charged as an expense Share of loss in associate (Loss)/Profit before taxation Taxation (Loss)/Profit after taxation and attributable to equity holders of the parent and total comprehensive income for the year (Loss)/Profit per share Basic Diluted No other comprehensive income during the year (2022 - £Nil) 14 14 14 7 8 8 (107) (1,010) - (800) - (2,250) 342 (1,372) (69) - - 35,778 (937) 30,667 139 (144) (551) (519) (219) - (1,568) 30,004 173 (363) (1,395) 29,641 Assets Non-current assets Tangible fixed assets Intangible assets Investment in associates Trade and other receivables Total non-current assets Current assets Trade and other receivables Cash and cash equivalents Total current assets Total assets Liabilities Current liabilities Non-current liabilities Loan & Lease Liability Payments due regarding purchase of client lists Provisions Deferred taxation Total liabilities Total net assets Capital and Reserves Share Capital Share Premium Capital Redemption Reserve Retained Earnings 31 Mar 2023 31 Mar 2022 Note £’000 £’000 £’000 £’000 9 10 11 12 1,971 19,560 10,035 8,740 40,306 1,732 18,309 - 12,090 32,131 12 10,473 9,733 13,039 15,274 20,206 60,512 28,313 60,445 13 (10,726) (6,722) 13 13 14 15 17 17 17 (999) (923) (6,004) (89) (732) (1,298) (7,955) (262) (18,741) (16,968) 41,771 43,477 5,567 1,614 534 34,056 5,578 1,541 501 35,857 41,771 43,477 (0.25)p 5.01p Total equity (0.25)p 4.40p The financial statements were approved by the Board and authorised for issue on 19 September 2022. Oliver Cooke Chairman 32 33 The notes on pages 38 – 58 form part of the Group financial statements.The notes on pages 38 – 58 form part of the Group financial statements.TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Consolidated Statement of Changes In Equity For the year ended 31 March 2023 Consolidated Statement of Cash Flows For the year ended 31 March 2023 Share Capital Share Premium Capital Redemption Reserve Retained Earnings Total Equity £’000 £’000 £’000 £’000 £’000 31 March 2021 6,079 1,541 Profit after tax and total comprehensive income - - Equity settled share based payments - Buy-back of shares Dividend payment (501) - - - - - - - 8,114 15,734 29,641 29,641 1,013 1,013 501 (2,607) (2,607) - (304) (304) 31 March 2022 5,578 1,541 501 35,856 43,477 Loss after tax and total comprehensive income Equity settled share based payments Buy-back of shares Dividend received Closure of subsidiary Dividend payment Share options exercised 31 March 2023 - - (33) - - - 22 5,567 - - 73 - - - - - - 33 - - - - (1,395) (1,395) 107 (302) 373 (192) (391) - 107 (230) 373 (192) (391) 22 1,614 534 34,056 41,771 Year ended Year ended 31 Mar 2023 31 Mar 2022 £’000 £’000 Cash flow from operating activities (Loss)/Profit from normal Operations (1,568) 30,004 Adjustments for: Share based payments Depreciation of tangible fixed assets Amortisation of intangible assets Movement on one-off reorganisation provision 107 1,010 681 649 563 402 - 800 Provision for new costs as a consequence of past reorganisation - 2,250 Regulatory provisions Exceptional costs Finance (income)/costs Tax paid Gain on sale of subsidiary (342) 1,372 69 - (139) 144 - (397) - (35,778) Cash flows from operating activities before changes in working capital (629) 456 Decrease/(increase) in trade and other receivables (Decrease)/increase in trade and other creditors 111 (3,318) (1,274) 3,977 Cash (used)/generated in Operations (1,792) 1,115 Investing activities Intangible assets- client lists and internally developed assets Purchase of tangible fixed assets Purchase of associate Deferred consideration payments Cash received on sale of client list Cash paid for subsidiary Cash received on sale of subsidiary entities (732) (434) (1,176) (1,354) (6,060) - (1,621) (1,543) 100 - (1,515) - 7,461 19,288 Net cashflow (used)/generated from investing activities (3,543) 15,957 34 35 The notes on pages 38 – 58 form part of the Group financial statements.The notes on pages 38 – 58 form part of the Group financial statements.TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Consolidated Statement of Cash Flows (continued) For the year ended 31 March 2023 Consolidated Statement of Cash Flows (continued) For the year ended 31 March 2023 Financing activities Finance income/(costs) New leases Lease repayment Loan repayments CBILS repayment Buy-back of shares Dividend payment Exercise of share options Year ended Year ended 31 Mar 2023 31 Mar 2022 £’000 £’000 Reconciliation of net cashflow to movement in net debt: Net (decrease)/increase in cash and cash equivalents 139 (144) 698 863 (445) (476) - (1,493) - (2,094) (302) (2,607) (391) (304) 95 - New lease liability Lease repayment Repayment of loans Movement in net debt in the year (5,794) 14,019 Net debt at 1 April 2022 14,059 40 Year ended Year ended 31 Mar 2023 31 Mar 2022 £’000 £’000 (5,541) 10,817 (698) (861) 445 476 - 3,587 Net cashflow from financing activities (206) (6,255) Net debt at 31 March 2023 8,265 14,059 Net change in cash and cash equivalents (5,541) 10,817 Cash and cash equivalents at start of the year 15,274 4,457 Cash and cash equivalents at end of the year 9,733 15,274 The net debt comprises: Cash Current leases Non-current leases Net debt at 31 March 2023 Reconciliation of net debt: Lease liabilities Long term debt Year ended Year ended 31 Mar 2023 31 Mar 2022 £’000 £’000 9,733 15,274 (469) (483) (999) (732) 8,265 14,059 2022 Cashflows New Leases 2023 1,211 (446) 698 1,463 1,211 (446) 698 1,463 36 37 The notes on pages 38 – 58 form part of the Group financial statements.The notes on pages 38 – 58 form part of the Group financial statements.TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Notes to the Consolidated Financial Statements For the year ended 31 March 2023 Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 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. The principal accounting policies applied in the preparation of these Consolidated Financial Statements are set out below. These policies have been consistently 1. Accounting Policies (continued) 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. applied to all the periods presented, unless otherwise stated. Development costs are recognised as assets only if all of the following conditions are met: Basis of Preparation • an asset is created that can be separately identified, The Consolidated Financial Statements have been prepared in accordance with UK adopted International • it is probable that the asset created will generate future economic benefits; and Financial Reporting Standards (“IFRS”) in conformity with the requirements of the Companies Act 2006. The financial statements are presented in pounds sterling and all values are rounded to the nearest thousandth (£’000), except when otherwise indicated. Basis of Consolidation • 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 10 years. The Group comprises a holding company and several individual subsidiaries and all of these have been included Financial Assets in the Consolidated Financial Statements in accordance with IFRS 10 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. 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. Intangible 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 eases 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 weighted average lessee’s incremental borrowing rate applied to Intangible assets include goodwill arising on the acquisition of subsidiaries and represents the lease liabilities recognised in the statement of financial position at the date of initial application. difference between the fair value of the consideration payable and the fair value of the net assets that have been acquired. 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 Also included within intangible assets are various assets separately identified in business combinations (such as the remaining balance of the liability. 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. 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 During the year the Group has invested in the development of a number of key initiatives designed to generate the lease liability, such as market rent review uplifts. Please refer to Note 9 for further details. additional FUM inflows. Where appropriate, this expenditure has been capitalised as intangible assets. Intangible assets are initially recognised at cost. 38 39 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLCNotes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 1. Accounting Policies (continued) Share Based Payments 1. Accounting Policies (continued) Taxation and Deferred Taxation Where share options are awarded to employees, the fair value of the options at the date of grant is charged to Corporation tax payable is provided on taxable profits at prevailing rates. 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 18. 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 Office fixtures, fittings & equipment Motor vehicles Impairment of Assets - - - 3 years straight line 5 years straight line 5 years straight line 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. In assessing the carrying value of Assets, the Directors have used 5-year forecasts and discounted the anticipated future cashflows by entity and assets class over 5 years and then in perpetuity using a discount rate of 15%. In all scenarios, the recoverable amount exceeded the carrying value. 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. 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 assets or liabilities are expected to be settled or 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 14, 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. 40 41 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 2. Critical Accounting Estimates and Judgements 3. Segmental Information The preparation of these Financial Statements has required management to make estimates and assumptions A segmental analysis of revenue and expenditure for the year is: 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 Group (Plc) Investment Management Advisory Business 2023 Group (Plc) Investment Management Advisory Business 2022 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 Revenue 245 965 32,744 33,954 135 2,550 31,319 34,004 Cost of sales Gross profit Attributed Expenses (336) (276) (22,105) (22,717) (303) (388) (21,362) (22,053) (91) 689 10,639 11,237 (168) 2,162 9,957 11,951 (4,069) (732) (7,539) (12,340) (3,213) (1,069) (7,348) (11,630) to create various scenarios, with different growth rates. In all scenarios, the recoverable amount exceeded the Other Administrative expenses 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 18. 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 differs materially from the estimates used to calculate amortisation, that charge is adjusted accordingly. Claims Provision As outlined in Note 14, three provisions have been made in relation to potential exposure in relation to historic advice. Share based payments Provision for one off reorganisation costs Provision for new costs as a consequence of past reorganisation Regulatory provisions Exceptional costs Gain on sale of subsidiary (Loss)/Profit from operations (107) - - 342 (69) - (937) (1,010) (800) (2,250) (1,372) - 35,778 30,667 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 £20 million has been discounted by £1.5 million to reflect the time cost of money. 42 43 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 4. (Loss)/Profit From Operations 6. Staff Costs This is arrived at after charging: Staff costs (see Note 6) Depreciation on tangible fixed assets Amortisation of intangible fixed assets Lease expense - property Provision for one off reorganisation costs Provision for new costs as a consequence of past reorganisation Regulatory provisions Exceptional costs Gain on sale of subsidiary Auditor's remuneration in respect of the Company Audit of the Group and subsidiary undertakings Auditor's remuneration - non-audit services - Interim 2023 £’000 2022 £’000 8,711 9,322 681 649 563 402 545 414 - 800 - 2,250 (342) 69 1,372 - - 35,778 8 9 58 68 8 3 74 80 Staff costs for all employees, including Directors and key management consist of: Wages, fees and salaries Social security costs Pensions Share based payment charge The average number of employees of the Group during the year was as follows: Directors and key management Operations and administration 2023 £’000 2022 £’000 7,379 7,264 827 721 398 327 8,604 8,312 107 1,010 8,711 9,322 2023 2022 Number Number 12 149 161 11 133 144 5. Business Combinations On 23 May 2022 the Group acquired LEBC Hummingbird Limited, a subsidiary of LEBC Group Limited, obtaining 100% ownership of the ordinary shares. The acquisition carried a value of £3 million, with £1.5 million settled in immediate cash payment, while the remaining £1.5 million was contingent upon deferred cash considerations. During its tenure within the Tavistock Group, Hummingbird Limited showcased strong performance metrics, The remuneration of the highest paid director was £474,769 (2022: £462,284). The total remuneration of key management personnel was £2,438,258 (2022: £2,268,787). Included in this figure are pension costs amounting to £242,535 (2022: £187,748). Outstanding pension commitments included in the balance sheet amounted to £41,173 (2022: £39,592). All pension contributions represent payments into defined contribution schemes. achieving a revenue of £451,000, an EBITDA of £328,000, and a profit of £328,000. Directors’ Detailed Emoluments Hummingbird Limited has specialised in providing research on asset class allocations tailored for utilisation Details of individual Directors’ emoluments for the 2023 are as follows: within funds and model portfolios. Its services are meticulously designed to assist investment managers in aligning their investment solutions with distinct risk profiles, as identified through the administration of “attitude to risk” questionnaires completed by clients. On 17 August 2022, Hummingbird Limited was divested back to LEBC Group Limited under the same terms as the initial acquisition, amounting to £3 million. A sum of £1.5 million in cash was reimbursed to Tavistock in accordance with the established agreement. 44 B Raven O Cooke J Rager** P Dornan* R Rennison* Salary & fees Benefits in kind & allowances Performance bonus Pension contributions £ £ £ £ 322,000 44,469 60,000 48,300 211,369 35,349 24,000 31,680 31,075 2,194 1,828 2,970 30,000 - - - 30,000 - - - 624,444 82,012 85,828 82,950 * Denotes non-executive Director. ** Joined Board on 26th January 2023 Total 2023 £ 474,769 302,398 38,067 30,000 30,000 875,234 45 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 6. Staff Costs (continued) 7. Taxation On (Loss)/Profit From Ordinary Activities Details of individual Directors’ emoluments for the 2022 are as follows: B Raven O Cooke P Dornan* R Rennison* Salary & fees Benefits in kind & allowances Performance bonus Pension contributions £ £ £ £ 280,000 40,284 100,000 42,000 220,000 37,186 50,000 33,000 30,000 - - - 30,000 - - - 560,000 77,470 150,000 75,000 Total 2022 £ 462,284 340,186 30,000 30,000 862,470 * Denotes non-executive Director. Element Purpose and link to strategy Operation Basic Salary To attract, retain and reward Executive Basic salaries are reviewed annually by the Directors of a suitable calibre. independent Remuneration Committee. Corporation tax charge for current year Corporation tax adjustment in respect of previous year Deferred tax (credit)/charge Deferred tax credit in respect of previous period Tax (credit)/charge for the year 2023 £’000 2022 £’000 - 297 - 53 (35) 200 (138) (187) (173) 363 The tax assessed for the year differs from the standard rate of corporation tax in the UK applied to profit before tax. On 10 June 2021, The Finance Bill 2021 received Royal assent. The Bill confirms the increase in the corporation tax rate from 1 April 2023. From this date, the rate will tapper from 19% for businesses of less than £50,000 to 25% with profits of over £250,000. This does not amount to a significant impact on the deferred tax charge for the year. The closing deferred tax balance at 31 March 2023 has been calculated at 25% (2022: 25%) being the substantively enacted tax rate at the balance sheet date. Factors considered by the Committee include, intra alia, individual seniority/ length of service, market comparisons, economic climate, wider staff reviews. Total (Loss)/Profit on ordinary activities before tax BIK and A package of benefits (car allowance, Car allowances are paid to individuals (Loss)/Profit on ordinary activities at the standard rate of corporation tax in the allowances private health cover, death in service via the PAYE system. Insurance cover is UK of 19% (2022: 19%) cover, defined pension contribution) is provided either through membership provided as part of a market competitive of Group Schemes or by payment of Effects of: remuneration package. subscriptions on behalf of the individuals. Expenses not deductible for tax purposes Performance To maximise the benefit of the The maximum potential bonus is set by Other timing differences bonus arrangements for the Company, half of the Remuneration Committee at the start Differences between capital allowances and depreciation the performance bonus is linked to the of each year. Individual performance, and reported results of the Group and the thus bonus entitlement, is assessed and other half is linked to the achievement of determined by the Committee after the other strategic objectives. year end date. Adjustments to prior periods deferred tax Adjustments to prior corporation tax Non-taxable income Pension Defined contributions are made The Company pays defined pension Adjust closing deferred tax to average rate of tax to individual’s nominated pension contributions directly to the nominated providers as part of a market competitive providers. remuneration package. Deferred tax not recognised Tax (credit)/charge for the year 2023 £’000 2022 £’000 (1,568) 30,004 (298) 5,701 52 (231) 1 (2,445) - - (137) 2,885 278 (32) 251 (988) 53 (6,731) (495) 2,326 (173) 363 46 47 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 8. (Loss)/Earnings Per Share 9. Tangible Fixed Assets (continued) (Loss)/Earnings per share has been calculated using the following: (Loss)/Earnings (£'000) Weighted average number of shares ('000s) (Loss)/Earnings per ordinary share Weighted average number of shares and share options that were exercisable at year end ('000s) Diluted Earnings per ordinary share 2023 2022 (1,395) 29,641 556,601 591,916 (0.25)p 5.01p - 81,616 Depreciation Disposals Transfers** (0.25)p 4.40p Balance at 31 March 2023 Basic earnings per ordinary share has been calculated using the weighted average number of share in issue during the relevant financial periods. 9. Tangible Fixed Assets Net Book Value At 31 March 2023 At 31 March 2022 *Right of Use. *ROU Leasehold property Motor vehicles Computer equipment Office fixtures, fittings, and equipment £’000 482 (364) - 797 1,379 1,031 £’000 7 - - 12 21 28 £’000 £’000 76 (113) (45) 129 76 468 157 (231) 45 404 495 205 Total £’000 722 (708) - 1,342 1,971 1,732 *ROU Leasehold property Motor vehicles Computer equipment Office fixtures, fittings, and equipment £’000 £’000 £’000 £’000 Cost Balance at 1 April 2021 1,176 - 340 613 Additions Disposals Transfers Balance at 31 March 2022 872 (338) - 1,710 33 - - 33 329 (37) 47 679 121 (107) 12 639 Additions Disposals Transfers** 819 (353) - - 80 50 - - (113) (231) (441) 441 Balance at 31 March 2023 2,176 33 205 899 Accumulated depreciation Balance at 1 April 2022 575 - Depreciation Disposals Transfers Balance at 31 March 2022 442 (338) - 679 5 114 87 403 172 - (37) (153) - 5 47 12 211 434 Total £’000 2,129 1,355 (482) 59 3,061 949 (697) - 3,313 1,092 706 (528) 59 1,329 **Transfers have been made between categories to correct immaterial brought forward discrepancies. Included in Office fixtures, fittings and equipment are assets acquired under lease agreements with a net book value of £20,350 (2022: £65,218). Included in Computer equipment are assets acquired under lease agreements with a net book value of £Nil (2022: £6,555). Included in ROU Leasehold property are assets acquired under lease agreements with a net book value of £1,380,387 (2022: £1,041,733). Included in Motor vehicles are assets acquired under lease agreements with a net book value of £21,506 (2022: £28,105). Depreciation charged on leased assets was £472,986 (2022: £486,998). 10. Intangible Assets Goodwill Arising on Consolidation Internally Developed Assets Client Lists £’000 £’000 £’000 Total £’000 Cost Balance at 1 April 2021 9,185 14,751 2,481 26,417 Additions Disposals 2,593 - 332 2,925 - (1,916) - (1,916) Balance at 31 March 2022 11,778 12,835 2,813 27,426 Additions Disposals 1,331 - 583 1,914 (100) - - (100) Balance at 31 March 2023 13,009 12,835 3,396 29,240 48 49 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 10. Intangible Assets (continued) 11. Investment in Associates (continued) Accumulated amortisation Balance at 1 April 2021 Amortisation Goodwill Arising on Consolidation Internally Developed Assets Client Lists £’000 £’000 £’000 Total £’000 7,242 235 1,238 8,715 380 - 22 402 Balance at 31 March 2022 7,622 235 1,260 9,117 Amortisation 522 - 41 563 Balance at 31 March 2023 8,144 235 1,301 9,680 Net Book Value At 31 March 2023 At 31 March 2022 4,865 12,600 2,095 19,560 4,156 12,600 1,553 18,309 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. Goodwill The carrying value of goodwill in respect of each cash generating unit is as follows: Financial Advisory business 31 March 31 March 2023 £’000 12,600 12,600 2022 £’000 12,600 12,600 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. 11. Investment in Associates Cost Balance at 31 March 2022 Additions Balance at 31 March 2023 50 Investments in associates £’000 - 10,035 10,035 Net Book Value At 31 March 2023 At 31 March 2022 Investments in associates £’000 10,035 - 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 £10 million has been agreed, with £6 million on initial purchase and an additional £4 million due on the first anniversary. 12. Trade and Other Receivables Current Trade receivables Other prepayments and accrued income Other receivables 31 March 31 March 2023 £’000 2022 £’000 393 109 2,228 2,136 7,852 10,794 10,473 13,039 Included within other receivables is the sum of £49k (2022: £1.03 million) being the estimated amount recoverable from insurers in connection with the Neil Bartlett provision detailed in Note 14. Included in other prepayments and accrued income is accrued income at year end of £1,360,977 (2022: £1,637,583). Included within other receivables due within one year is the sum of £4,056,333 (2022: £6,410,256) being the amount due within one year as part of the consideration on the sale of Tavistock Wealth Limited. The remaining consideration of £13.33 million has been discounted at a rate of 4% to reflect the time value of money. Also, included within other receivables is the sum of £2.2 million (2022: £2.2 million) being the estimated amount recoverable from insurers and £0.7 million being the estimated amount recoverable from advisers in connection with the British Steel provision detailed in Note 14. Non-current Deferred consideration due 31 March 31 March 2023 £’000 2022 £’000 8,740 12,090 8,740 12,090 Included within deferred consideration due in more than one year is the sum of £8,739,583 (2022: £12,090,350) being the amount due after one year as part of the consideration on the sale of Tavistock Wealth Limited. 51 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 13. Liabilities 14. Provisions (continued) Current liabilities Trade payables Accruals Commissions payable VAT and social security liabilities Other payables Payments due regarding purchase of client lists Deferred consideration owed Leases Non-current liabilities Payments due regarding purchase of client lists Leases 14. Provisions Balance at 1 April 2022 Additions Payments to settle claims Provisions utilised Balance at 31 March 2023 31 March 31 March 2023 £’000 2022 £’000 1,754 1,730 1,371 1,520 907 919 352 252 619 310 1,254 1,508 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 £132k is made at the year-end date (2022: £1.45 million). This provision is matched in part by the provision referred to in Note 12, entitled Trade and Other Receivables. Restructuring Provisions The restructuring provisions are made up of three principal components. Firstly, a provision of £113,673 to cover additional costs associated with the disposal of offices no longer being used by the Company. Secondly, a provision of £120,698 to cover anticipated costs associated with management restructure costs. The third and largest provision relates to new costs arising as a consequence of past restructuring. A provision of £1.6 million has been made to cover additional payments anticipated to arise over a number of future years to 4,000 - meet potential claims arising from advice given by appointed representative firms whilst they operated under 469 483 the Company’s regulatory umbrella, prior to being exited from the Group. 10,726 6,722 The first layer of claims protection is provided by the Company’s captive insurance cell. The captive cell provides 31 March 31 March 2023 £’000 2022 £’000 923 1,298 999 732 1,922 2,030 Total £'000 7,955 388 (150) (2,189) 6,004 up to a maximum of £750k 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 £750k 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 £3.8 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 12, entitled Trade and Other Receivables. The unmatched element of £930k has been charged to the Statement of Comprehensive Income as an exceptional cost in the prior year. 15. Deferred Tax Balance at 1 April 2022 Adjustment in respect of previous period Deferred tax credit in the year Balance at 31 March 2023 Total £'000 (262) 138 35 (89) The Directors anticipate that the Deferred tax asset relating to losses brought forward will be realised within the medium term. 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. 52 53 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 15. Deferred Tax (continued) The deferred tax provision comprises: Deferred tax on intangibles 31 March 31 March 2023 £’000 2022 £’000 (89) (262) (89) (262) For taxation purposes, the parent company of the Group, Tavistock Investments Plc, has to date incurred losses amounting to £10.75 million (31 March 2022 £9.28 million), no deferred tax asset in connection with these losses has been recognised in the accounts. 16. Financial Risk Management The Group is exposed to risks that arise from its use of financial instruments. These financial instruments are within the current assets and current liabilities shown on the face of the Statement of Financial Position and comprise the following: Credit risk The Group is exposed to 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. 16. Financial Risk Management (continued) The table below illustrates the due date of trade receivables: Current 31-60 days 61-90 days 91-120 days 121 and over Liquidity risk 31 March 31 March 2023 £’000 2022 £’000 195 18 174 36 3 5 - 2 21 48 393 109 Liquidity risk rises 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 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 placed with a reputable bank. Cash at bank and cash equivalents 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: At the year end the Group had the following cash balances: 31 March 31 March 2023 £’000 2022 £’000 9,733 15,274 Deferred consideration due, accrued income and receivables Trade receivables Accrued income Other receivables 31 March 31 March 2023 £’000 2022 £’000 Cash at bank comprises Sterling cash deposits held within a number of banks. There is no cash held on deposit in 393 109 special interest bearing accounts. 1,361 1,638 16,591 22,885 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. 54 55 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 16. Financial Risk Management (continued) 16. Financial Risk Management (continued) 31 March Due within Due within Interest Rate Risk Financial liabilities at amortised cost Trade payables Accruals Commissions payable VAT and social security liabilities Other payables Payments due regarding purchase of client lists Leases Financial liabilities at amortised cost Trade payables Accruals Commissions payable VAT and social security liabilities Other payables Payments due regarding purchase of client lists Leases 2023 £’000 1,754 1,371 907 352 619 2,177 1,467 8,647 1 year £’000 1-5 years £’000 1,754 - 1,371 907 352 619 1,254 468 6,725 - - - - 923 999 1,922 31 March Due within Due within 2022 £’000 1,730 1,520 919 252 310 2,806 1,215 8,752 1 year £’000 1-5 years £’000 1,730 1,520 919 252 310 2,479 724 7,934 - - - - - 327 491 818 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 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. 17. Share Capital and Share Premium Called up share capital Allotted, called up and fully paid 556,857,576 Ordinary shares of 1 pence each (2022: 557,677,576 shares of 1 pence each) Capital Redemption Reserve Share Premium Capital Redemption Reserve 31 March 31 March 2023 £’000 2022 £’000 5,567 5,578 534 6,101 1,614 7,715 501 6,079 1,541 7,620 In August 2022, in accordance with a mandate given by shareholders, the Board arranged the buy-back of 3,000,000 of the Company’s ordinary shares of 1p each, representing 0.54% of the then issued share capital, at a price of 9.35 pence per share. Later in the financial year, in November 2022, the Board arranged the buy-back of a further 300,000 of the Company’s ordinary shares of 1p each, representing 0.05% of the then issued share capital, at a price of 7 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 Share Capital Share Premium Description and purpose Amount subscribed for share capital at nominal value. 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 Reserve A statutory, non-distributable reserve into which amounts are transferred following the purchase, and cancellation of the company's own shares out of distributable profits. 56 57 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 Notes to the Consolidated Financial Statements (continued) For the year ended 31 March 2023 18. Share Based Payments 19. Leasing Commitments During the year the Company issued options 8,100,000 (2022: 76,950,000) Ordinary shares. The Group’s future minimum lease payments fall due as follows: 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: 31 March 31 March 2023 6.72p 7.67p 117% 2022 4.76p 5.24p 59% Not later than 1 year Later than 1 year and not later than 5 years 3.8 years 3.6 years year and not later than 5 years. 3.4% 0.7% The interest expense in relation to Right of Use leasing commitments due within 1 year is £38k, and £34k due Included in the above is £452k of Right of Use leasing commitments due within 1 year, and £982k due later than 1 31 March 31 March 2023 £’000 468 999 2022 £’000 465 784 1,467 1,249 Share price at grant Exercise price Expected volatility Expected life Risk free rate 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. later than 1 year and not later than 5 years. 20. Related Party Transactions 31 March 2023 31 March 2022 Weighted average price Weighted average price During the year ended 31 March 2022 the former subsidiary Tavistock Wealth Limited received fees of £1,549,955 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. (pence) Number (pence) Number 21. Post Balance Sheet Events Outstanding at the beginning of the year Granted during the year Exercised during the year Lapsed during the year 1.45 6.22 2.50 0.24 124,405,967 8,100,000 0.76 51,520,983 1.87 76,950,000 (2,480,000) - - (8,901,400) 0.47 (4,065,016) Outstanding at the end of the year 1.85 121,124,567 1.45 124,405,967 The average exercise price of the 81,445,067 options that had vested and were exercisable at year end was 5.25p and their weighted contractual life was 4 years. The weighted average fair value of each option granted during the current period was assessed as being 6.22p and their weighted average contractual life was 10 years. The range in exercise prices of share options outstanding at the end of the year is 2.35p to 7.75p (2022: 2.35p to 7.25p) and their weighted average contractual life was 3.8 years (2022: 3.6 years). The vesting conditions in relation to management are disclosed in the Remuneration Report on pages 25. In April 2023, the Company acquired the business of Precise Protect Limited, a profitable and fast-growing protection business based in Bangor, Northern Ireland. This business is expected to contribute significantly to the Company’s growth in the next financial year. The company has a network of over 200 advisers working with more than 37,000 UK clients. In the year ended 31 October 2022, Precise Protect reported a profit before taxation of £1.45 million on turnover of £6.5 million and net assets of £1.23 million. 58 59 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Company Statement of Financial Position As at 31 March 2023 Company number: 05066489 Company Statement of Changes in Equity For the year ended 31 March 2023 Assets Non-current assets Investments Tangible fixed assets Intangible assets Trade and other receivables Total non-current assets Current assets Trade and other receivables Cash and cash equivalents Total current assets Total assets Liabilities Current liabilities Non-current liabilities 31 March 2023 31 March 2022 Note £’000 £’000 £’000 £’000 V VI VII VIII 27,249 1,586 555 8,740 38,130 VIII IX 10,875 3,038 14,943 7,884 13,913 52,043 X (17,458) (10,096) 16,008 1,355 74 12,090 29,527 22,827 52,354 Share Capital Share Premium Capital Redemption Reserve Retained Earnings Total Equity £’000 £’000 £’000 £’000 £’000 At 31 March 2021 6,079 1,541 - (497) 7,123 Buy-back of shares (501) - 501 (2,607) (2,607) Equity settled share based payments - - - 1,010 1,010 Dividend payment Profit after tax - - - (304) (304) - - - 36,410 36,410 At 31 March 2022 5,578 1,541 501 34,012 41,632 Buy-back of shares (33) 73 33 (303) (230) Equity settled share based payments - - - 107 107 Share options exercised 22 - - - 22 Dividend payment Dividend received Loss after tax - - - (391) (391) - - - 373 373 - - - (7,813) (7,813) At 31 March 2023 5,567 1,614 534 25,985 33,700 Creditors: amounts falling due after more than one year XI (885) (626) Total liabilities Total net assets Capital and reserves Share Capital Share Premium Capital Redemption Reserve Retained Earnings Total equity XII (18,343) (10,722) 33,700 41,632 5,567 1,614 534 25,985 5,578 1,541 501 34,012 33,700 41,632 These accounts do not include a Cashflow Statement, or a Financial Instruments note, as permitted by Section 1.8 of FRS 101. The loss of the parent company for the year was £7,442,147 (2022: profit £36,410,000). The financial statements were approved by the Board and authorised for issue on 19 September 2023. Oliver Cooke Chairman 60 61 TAVISTOCK INVESTMENTS PLCThe notes on pages 61 to 65 form part of the Company Financial Statements.The notes on pages 61 to 65 form part of the Company Financial Statements.TAVISTOCK INVESTMENTS PLC Notes Forming Part of The Company Financial Statements For the year ended 31 March 2023 Notes Forming Part of The Company Financial Statements (continued) For the year ended 31 March 2023 I. Accounting Policies III. Loss for The Financial Period (continued) The principal accounting policies applied are summarised below. All Group staff are employed by Tavistock Investments Plc and their costs are recharged to the relevant Basis of Preparation The Financial Statements have been prepared under the historical cost convention and in accordance with Financial Reporting Standard 101 (FRS 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 FRS 101 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 38 to 41. 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 subsidiaries. Details of the Company’s staff costs are shown in Note IV. IV. Staff Costs Staff costs for all employees, including Directors consist of: Wages, fees and salaries Social security costs Pensions The average number of employees of the Company during the year was as follows: Directors and key management Operations and administration 2023 £’000 2,348 289 163 2022 £’000 1,732 176 66 2,800 1,974 2023 2022 Number Number 7 31 38 4 16 20 During the year the Company incurred an additional £8.6 million (2022: £8.31 million) of staff costs relating to 161 employees (2022: 144 employees) which were recharged to subsidiary companies within the Group. V. Investments anticipated future cashflows by entity over 5 years and then in perpetuity using a discount rate of 15%. In all Subsidiary and Associate Undertakings 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 18. III. Loss for The Financial Period Cost Balance at 1 April 2022 Additions Release on disposal Balance at 31 March 2023 The Company has taken advantage of the exemption allowed under s408 of the Companies Act 2006 and has not presented its own Profit and Loss Account in these Financial Statements. The Company’s loss for the year Provisions for impairment was £7,442,147 (2022: profit £36,410,000). Included within this loss are provisions totalling of £Nil (2022: £3,050,000) 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 9 to 11. Balance at 1 April 2022 Impairment charge Minority interest in associate Balance at 31 March 2023 In July 2022, the Company disbursed an interim dividend of 0.07p per share, representing a notable 40% increase compared to the dividend issued in October 2021. The Company is issuing a subsequent interim dividend of the Carrying value of investments same value, 0.07p. 62 31 March 31 March 2023 £’000 2022 £’000 20,667 14,485 (3,025) 31,127 4,659 - 219 4,878 23,292 350 (2,975) 20,667 5,309 (650) - 4,659 27,249 16,008 63 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Notes Forming Part of The Company Financial Statements (continued) For the year ended 31 March 2023 Notes Forming Part of The Company Financial Statements (continued) For the year ended 31 March 2023 V. Investments (continued) VI. Tangible Fixed Assets (continued) At the year end the Company had the following wholly owned subsidiaries: Included in ROU Leasehold property are assets acquired under lease agreements with a net book value of £1,129,689 (2022: £861,000). Included in Computer equipment are assets acquired under lease agreements with a net book value of Nil (2022: £7,000). Included in Office fixtures, fittings and equipment are assets acquired under lease agreements with a net book Registered Office Address Name 1 Queens Square, Lyndhurst Road, Tavistock Private Client Limited Ascot, Berkshire, SL5 9FE Tavistock Partners Limited Tavistock Partners (UK) Ltd The Tavistock Partnership Limited Tavistock Estate Planning Services Limited Tavistock Chater Allan LLP King Financial Planning LLP* Tavistock Asset Management Limited Tavistock Holdings Limited Tavistock Services Limited Asset Lab Limited ** Tavistock Select LLP** Holding Indirect Direct Direct Direct Direct Indirect Direct Direct Direct Direct Direct Indirect Duchy Independent Financial Advisers Limited** Direct Cornerstone Asset Holdings Limited** Direct *The Company owns 50% of King Financial Planning LLP. **Dormant subsidiary during the year that is exempt from preparing individual accounts by virtue of s394A of value of £20,350 (2022: £65,000). VII. Intangible Assets Software cost Balance at 1 April 2022 Additions Balance at 31 March 2023 Accumulated amortisation Balance at 1 April 2022 Amortisation charge Balance at 31 March 2023 Net book value At 31 March 2023 Companies Act 2006. VI. Tangible Fixed Assets Cost Balance at 1 April 2022 Additions Disposals Balance at 31 March 2023 Accumulated depreciation Balance at 1 April 2022 Depreciation charge Disposals Balance at 31 March 2023 Net book value At 31 March 2023 At 31 March 2022 *Right of use 64 *ROU Leasehold property Computer equipment Office fixtures, fittings, and equipment Total £’000 £’000 £’000 £’000 At 31 March 2022 1,391 757 (280) 1,868 531 399 (280) 650 1,218 860 404 16 (99) 321 116 28 (99) 45 276 288 534 25 (116) 443 327 140 (116) 351 92 207 2,329 798 (495) 2,632 974 567 (495) 1,046 1,586 1,355 VIII. Trade and Other Receivables Current Trade debtors Prepayments and accrued income Deferred consideration due Amounts owed by subsidiary undertakings Non-current Deferred consideration due Total £’000 75 497 572 1 16 17 555 74 31 March 31 March 2023 £’000 32 237 7,159 3,447 10,875 2022 £’000 23 323 9,586 5,011 14,943 31 March 31 March 2023 £’000 8,740 8,740 2022 £’000 12,090 12,090 65 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC Advisers Registrars Share Registrars Limited 3 The Millennium Centre Crosby Way Farnham Surrey GU9 7XX Nominated Adviser & Broker Allenby Capital Independent Auditors 5 St Helen’s Place London EC3A 6AB RPG Crouch Chapman LLP 5th Floor, 14-16 Dowgate Hill London EC4R 2SU Notes Forming Part of The Company Financial Statements (continued) For the year ended 31 March 2023 IX. Cash and Cash Equivalents Cash at bank and in hand X. Creditors: Amounts falling due within one year Trade creditors Accruals Other tax and social security Leases Provision Deferred consideration owed Amounts owed to subsidiary undertakings XI. Creditors: Amounts falling due after one year Leases XII. Share Capital 31 March 31 March 2023 £’000 3,038 3,038 2022 £’000 7,884 7,884 31 March 31 March 2023 £’000 306 460 353 386 5,638 4,000 6,315 17,458 2022 £’000 434 768 252 381 6,664 - 1,597 10,096 31 March 31 March 2023 £’000 885 885 2022 £’000 626 626 Details of the Company’s share capital and the movements in the year can be found in Note 17 to the Consolidated Financial Statements. XIII. Share Options EMI Share Option Scheme Details of the share options outstanding at 31 March 2023 can be found in Note 18 in the Consolidated Financial Statements. 66 67 TAVISTOCK INVESTMENTS PLCTAVISTOCK INVESTMENTS PLC For more information about Tavistock Investments Plc or our investment products please write to the address below or email us at investments@tavistockinvestments.comTavistock Investments PLC 1 Queen’s Square, Lyndhurst Road Ascot, Berkshire, SL5 9FE United Kingdom 01753 867000Tavistock Investments PLC is registered in England and Wales with company number 05066489.Registered Office as above.

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