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Investors are underestimating Tavistock's rebuild

The financial services group is making bolt-on deals to return to profit
September 20, 2023
  • Annual cash profit down 90 per cent to £0.1mn
  • Operating loss of £0.9mn reflects loss of earnings from Titan Wealth sale
  • Post-period Precise Protect acquisition restores profitability

Shareholders in Aim-traded Tavistock Investments (TAVI:5.25p) should not be alarmed by the 90 per cent fall in group cash profit from £1.4mn to £0.1mn on flat revenue of £34mn in the 12 months to 31 March 2023. The financial services group sold its highly profitable multi-asset manager to discretionary fund manager Titan Wealth in the prior financial year, so is in the process of rebuilding profitability through selective acquisitions and organic growth initiatives.

The group’s advisory business delivered another strong result, increasing revenue by almost 5 per cent to £32.7mn, or 96 per cent of the group total, and lifting its operating profit contribution by 19 per cent to £3.1mn. The unit’s recurring revenue exceeds 80 per cent, so is a reliable performer. However, its contribution is not enough to cover group central overheads of £4mn, hence the reported operating loss of £0.9mn.

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