Tavistock Investments PLC (AIM:TAVI) shares surged over 9% after the company announced a sharp rise in its net asset value and a dividend hike for the first half of the year as its performance was boosted by proceeds from the sale of its investment management business Tavistock Wealth Ltd (TWL).
The net asset value (NAV) per share stood at 8.6p per share as at 30 September 2021, up from 3p at end-March.
The investment company raised its interim dividend to 0.05p per share from 0.01p.
During a transformational six months to 30 September 2021, Tavistock entered into a 10-year strategic deal with Titan Wealth Holdings Ltd, as part of which Titan acquired TWL for up to £40mln, together with a ten-year revenue-sharing earn-out.
Tavistock received an initial £20mln of the consideration for TWL in August, which enabled it to repay its £3.53mln outstanding debt and buy back 4.7% of its share capital.
Revenues grew by 27% in the first half to £17mln, while pre-tax profit came in at £35.5mln compared with a loss of £416,000, including the profit from the TWL disposal.
Underlying profit (adjusted EBITDA) totalled £1.1mln, a drop of 13% compared with the same period last year, when the company benefited from £400,000 of staff salary sacrifice and government furlough support, as well as a further £460,000 of revenue from its investment management business.
Tavistock said its business continues to improve on a like-for-like basis.
“The company is now well positioned to increase the scale of its business through both continued organic growth and an accelerated acquisition programme without significant further dilution for shareholders,” it said, adding that it is currently considering several potential acquisitions.
READ: Tavistock avoids tax bill for £40mln wealth arm disposal
The advisory business saw 37% revenue growth in the first six months and full-year revenues are expected to exceed those for 2020. The business contributed £1.3mln to interim underlying profits, a rise of 56% compared with last year.
Commenting on the results, chief executive Brian Raven said the partnership with Titan and sale of TWL has enhanced in shareholder value and given Tavistock firepower to accelerate the growth through acquisitions.
"In addition, our advisory business continues to perform strongly and is already on track to deliver revenues ahead of the entire group revenues in the prior year. We are in a strong position to continue developing a much larger and more profitable distribution and wealth management group, to deliver enhanced value to shareholders."
Shares rose by 9.76% to 4.50p in opening trade.