Tavistock has posted an operating profit of £1.23m in the year to March 2021, after it brought forward a "long-planned" group reorganisation project thanks to a £2.13m coronavirus loan.
In its results to the year ending in March 2021, out today (September 7), the business said it had undergone a £1.2m reorganisation which was anticipated to reduce its overhead costs by £750,000 a year.
It had benefitted from a one-year capital repayment holiday on a historic £1.4m loan from NatWest and secured a precautionary £2.13m through the government's Coronavirus Business Interruption Loan Scheme to fund the project.
It had also recognised £223,000 in respect of government grant income for employees furloughed in the financial year.
The 2020 financial year saw the firm make a £5.47m loss but the reorganisation saw it return to £1.23m in profit.
Tavistock cut its office footprint from 11 to 6 buildings, cut overheads from £3.91m to £974,000, as well as cut a number of its staff.
Chairman Oliver Cooke wrote: "At the start of the financial year, during the first wave of the coronavirus pandemic, before vaccines had been developed and the entire country had been placed into lockdown, the board negotiated a one-year capital repayment holiday on a historic £1.4m term loan from NatWest.
"[It also] secured a precautionary £2.13m Coronavirus Business Interruption Loan Scheme facility. This enabled the board to bring forward the launch of a long-planned group reorganisation project.
"This project has proved particularly effective and is anticipated to reduce the group’s overhead costs by approximately £750,000 in a full year. A provision of £1.2m to cover the one-off cost of the project has been charged to the profit and loss account as an exceptional item."
The firm's advisory businesses reaped a six-fold (508 per cent) increase in earnings before interest, taxes, depreciation, and amortisation in the year to March 31.
Last year, it posted Ebitda of £375,000 but this year that figure rose to £2.28m.
The firm nodded to three subsidiaries in particular - Tavistock Private Client Limited, The Tavistock Partnership and Tavistock Partners Limited - each of which it said “now make a significantly greater contribution to the group’s profitability”.
Road to profitability
Tavistock had made its first ever pre-tax profit in the year to March 2018, the same year it sold its network business, Tavistock Financial, to Sanlam. The following year it made a loss of £118,000, which deepened to £5.5m by March 2020.
Since sealing its latest results, Tavistock has made another sale. This time, it sold its discretionary fund management arm to Titan Asset Management for £40m, £20m of which it had received upfront.
“Our future prospects have been transformed by continued strong financial performance and entry into the strategic partnership with Titan Wealth," chief executive Brian Raven said today (7 September).
"The sale of Tavistock Wealth to Titan for up to £40m in cash plus a ten-year earn-out vindicates our belief that the value we have built within the business remains largely unrecognised.