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Tavistock Investments: THE INVESTMENT CASE
INVESTMENT OVERVIEW

Tavistock Investments expects growth to continue after bumper year

With an optimistic outlook on future earnings, the company expects to recommend its first dividend in the second half of the current financial year.
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INVESTMENT OVERVIEW: TAVI The Big Picture
Funds under management has risen for 14 consecutive quarters

Tavistock Investment PLC’s (LON:TAVI) funds under management and profits soared in fiscal year 2018 and the company is positive this trend will continue as it invests in the business.

In June, the financial services company reported a 132% surge in underlying EBITDA to £894,000 for the year ended March 30 from £384,000 in 2017 and a maiden pre-tax profit of £221,000.

FuM rose 44% to £866mln at the end March 2018 from £603mln a year ago.

Total revenue jumped 47% to £28.8mln from £19.5mln, with growth across its advisory services and wealth management businesses.

Revenue in the advisory division increased 41% to £25.2mln while revenue in the Tavistock Wealth business soared 125% to £3.6mln.

New products and services ‘key drivers’ for Tavistock

FuM has risen for 14 consecutive quarters with 23 firms outside the group’s ownership now signed up to use Tavistock Wealth's investment services.

"We are continuing to deliver increases in funds under management and to develop our advisory business,” said chief executive Brian Raven.

“The strong organic growth we have seen this year is recognition of the trust our clients, advisers and strategic partners are placing in our business.”

“Our commitment to develop new products and services that respond to evolving investors' needs, such as greater capital protection, will continue to be a key driver for the group.”

Investing in the wealth business

Last year Tavistock launched three new funds under the Acumen brand - ACUMEN Bond Portfolio, the ACUMEN Equity Portfolio and the ACUMEN Strategic Portfolio

It also launched a range of US dollar and euro denominated share classes to facilitate the introduction of funds from overseas investors.

This year in May, the group started another two funds - the ACUMEN Capital Protection Portfolio (ACPP) and the ACUMEN Income-Protection Portfolio (AIPP).

“These funds provide capital guarantees to investors, ensuring that the value of the ACPP can never fall below 90% of its highest ever price, and the AIPP (which takes slightly more risk) below 85%,” chairman Oliver Cooke said.

Cooke said initial reaction to the new capital protection products has been positive. Once the funds become available to investors on more platforms, he expects demand to grow rapidly.

“The group continues to make significant investment in initiatives to increase the level of FUM as this is the key driver of its profitability,” Cooke said.

Tavistock confident about future growth prospects

Looking ahead, the company said it is confident about its future growth prospects.

The group has a “high degree of earnings visibility” and expects to report a “significantly improved” performance for the current financial year, according to Cooke.

“Whilst there can be no certainty as to the level, or timing, of future fund inflows, any continued growth in the level of FUM will further enhance those results,” he said.

Initial dividend

With an optimistic outlook on future earnings, the company expects to recommend its first dividend in the second half of the current financial year.

“The payment of an initial dividend and the subsequent management of a dividend stream for the benefit of shareholders remains one of the Board's prime objectives,” Cooke said. 

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