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Tavistock Investment posts profit as funds under management surge higher

The launch of three new funds under its Acumen brand helped the amount under management rise by 130%

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Revenues and funds under management are surging higher

Tavistock Investments PLC (LON:TAVI) swung into profit and forecast more to come as funds under its management more than doubled.

The launch of three new funds under its Acumen brand (to make seven) helped the amount under management rise by 130% to £745mln.

WATCH: Tavistock Investments profits to soar after first half that 'couldn't have gone much better'

READ: Tavistock Investments launches three new funds

Revenues in the discretionary business, which fully manages investors’ money, was £1.52mln in the first half compared to £1.66mln for the whole of the previous year.

This half year to September, interim revenues jumped by 40% to £12.4mln with underlying profits [EBITDA] of £297,000 compared to a loss of £42,000.

On a statutory basis, Tavistock broke even after a comparable loss of £795,000.

Oliver Cooke, Tavistock’s executive chairman, said the half-year progress had been extremely good and prospects were excellent.

Most of the growth in funds under management (FUM) had been organic, he said, and this was boosting Tavistock’s earnings.

The group's investment management business has a relatively fixed overhead base and, as a consequence, the revenue resulting from increased levels of FUM has a direct impact on group profitability.

READ: Tavistock Investments at an inflection point as it generates operating profits and cash

“The company enjoys a high retention rate of FUM. Similarly, it enjoys a high level of recurring income within its advisory businesses.

“This combination gives the business a very high degree of revenue visibility."

“Given this visibility, and because the Group is making rapid progress, it is useful to illustrate the potential profitability of the business model.

“For example, if the FUM managed by Tavistock Wealth were to increase to £1.5bn and the continuing Group's underlying cost base were to remain unchanged, the EBITDA produced on an annualised basis would be over £5mln.”

Shares rose 13% to 3.38p.

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Price: 1.8 GBX

AIM:TAVI
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Market Cap: £10.94 m
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