Tavistock Investments PLC (LON:TAVI) has signalled its intention to begin paying a maiden dividend at the end of the 2019 fiscal year on a solid performance and bright outlook for the business.
The company has delivered continued organic growth in both its investment management and financial advisory businesses despite recent economic uncertainty.
In the six months to September 30, earnings (EBITDA) surged 276% to £516,000 compared to a year ago and revenue increased 13% to £14.03mln.
The investment management arm, Tavistock Wealth, saw funds under management jump 26% over the last year to £941mln at the end of September even as investors exercised more caution during market falls in recent months. Tavistock Wealth generated £2.4mln in revenue in the period.
Tavistock said its disciplined approach to investment diversification and judicious use of currency hedging meant its funds performed better than others in a more subdued market.
New protected products well received
In May the group launched two new protected funds, including the ACUMEN Capital Protection Portfolio (ACPP) and the ACUMEN Income Protection Portfolio (AIPP). The funds are protected by contractual guarantees provided by Morgan Stanley & Co.
High watermark capital guarantees ensure that the value of the ACPP can never fall below 90% of its highest ever value. For the higher risk AIPP, the value can’t fall below 85%.
Tavistock said the products are unique to the UK market, are keenly priced and offer investors daily liquidity. The funds have been well-received, having attracted more than £65mln of inflows.
The launch of the protected funds allows the group to push ahead with plans to partner with large scale companies capable of generating significant fund inflows. The group has a partnership with the Law Society, a 200-year-old institution with some 197,000 members.
Tavistock Law has been established and formally endorsed by the Law Society as the preferred provider of investment advice to its members in the fields of trusts and court of protection awards.
Smartphone app to launch in early 2019
Following a positive response to the new protected products, Tavistock plans to launch a smartphone app for consumers. The app, called i-stock, will allow consumers to open both ISA and investment accounts to invest in a portfolio that benefits from a 90% capital guarantee from Morgan Stanley.
Client accounts will be very low cost (possibly free of charge) without any administration, dealing, entry, exit or other fees.
The firm expects to launch the app in early 2019.
The group's advisory businesses now has about 200 individual advisors with some £3.5bn of assets under advice. The division delivered a 7% rise in revenue to £11.6bn in the first half.
Tavistock positive on outlook
“Our outlook for growth remains positive, particularly given the early success of the new protected products and the endorsement by the Law Society,” said chief executive Brian Raven.
“We believe that these results pave the way for greater momentum throughout 2019, with a predicted continuation of growth for the Tavistock Investments group."
Strategic alliance with Lighthouse
The company is well funded after receiving a £1mln cash injection from affinity specialist Lighthouse in November as part of a strategic alliance.
The two companies will develop a range of investment products for Lighthouse’s clients under its Luceo brand.
Lighthouse will make Tavistock’s Acumen capital protected products available to its customer base. There is also the possibility of more of Tavistock’s funds being included within Lighthouse’s model portfolio.
The £1mln investment was part of a total fundraising of £1.25mln by Tavistock at 3.28p.
Following the cash injection, Tavistock intends to replace a £2mln debt facility with a new one that will be £100,000 per year cheaper.
Raven said: "The establishment of a strategic relationship between Lighthouse and Tavistock is a significant development for both groups.
“Its selection of Tavistock as its partner to further develop its Luceo range of investment solutions is a strong endorsement of our expertise in this field.”