KINGSWOOD HOLDINGS
LIMITED
("Kingswood", the "Company" or the "Group")
2024 Half year
Report
Kingswood Holdings Limited (AIM:
KWG), the international, fully integrated wealth and investment
management group, is pleased to announce its unaudited interim
financial results for the half year ended 30 June 2024.
Financial Highlights
Continuing Operations:
·
Group Assets under Advice and Management
(AUA&M) increased to £12.9bn up c8.2% on the prior
year.
o UK & Ireland (UK&I) Assets under Advice (AUA) at the
period end were £6.0bn benefiting from the acquisition of BasePlan
completed in February 2024.
o UK&I Assets under Management (AUM) at the period end were
£3.7bn.
o US AuA was £3.2bn.
·
Group Revenue from continuing operations in the
period was £40.6m, an increase of 14% on the restated prior year
(H1'23: £35.6m).
o UK&I revenue increased by £0.3m to £23.4m, or 1%,
compared to the restated period last year, of which 81% is
recurring in nature.
o US revenue increased by £4.8m to £17.2m, a 38% rise compared
to the restated period last year, driven by growth in authorised
representatives.
·
H1 2024 Group Operating Profit
from continuing operations increased to £6.1m, a £1.1m or 21%
increase compared to restated H1 2023, reflecting the benefit of
acquisitions in the current period.
o UK&I Operating Profit was £7.9m increased by £0.2m or
3%;
o US Operating profit grew by 95% to £1.3m (2023: £0.7m), as a
result of higher margins in Investment Banking revenues and
increased Broker Dealer and Advisory revenues, supported by
favourable macroeconomic conditions.
·
The statutory loss before tax
for the period was £5.9m, an improvement of £3.9m against the
restated comparable period last year (H1'23: loss before tax of
£9.7m). The statutory loss before tax is stated after:
o £4.5m of finance costs incurred by the Group during the
period on debt facility drawdowns, reflective of the Group's
strategy to use leverage as an accelerant for growth;
o £1.6m of non-recurring costs, including broker fees on
M&A transactions and costs incurred to reposition the business;
and
o Non-cash impacting items of £5.9m included amortisation of
intangible assets, finance costs recognised on the unwinding of
deferred consideration and preference share dividends.
|
Continuing
operations:
|
H1 2024
|
H1 2023*
|
Change %
|
|
£000's
(unless otherwise stated)
|
|
|
|
|
Total
Revenue
|
40,628
|
35,593
|
14%
|
|
Group
Recurring Revenue %
|
42%
|
33%
|
27%
|
|
Operating
Profit
|
6,117
|
5,055
|
21%
|
|
Loss
before tax
|
(5,895)
|
(9,747)
|
40%
|
|
Total
Equity
|
50,904
|
64,806
|
(21)%
|
|
AuM
(£m)
|
3,731
|
3,686
|
1%
|
|
AuA
(£m)
|
9,118
|
8,192
|
11%
|
|
Number
of Advisers - UK
& Ireland
|
107
|
116
|
(8)%
|
|
Number
of Authorised Representatives - US
|
265
|
239
|
11%
|
** The
Group results for the six months ending 30 June 2023 are restated
due to US subsidiary classified as discontinued - see Note 3 and
refer to the 2023 Annual Report - Note 1: Presentation of financial
statements.
Discontinued Operations:
As previously announced at
the time of the Group's final results on 28 June 2024, the sale of
US subsidiary Benchmark Investments, LLC (BMI), that was completed
on 9 November 2023, qualified as a discontinued operation. As a
result, BMI's financial results for 2022 and 2023 were reclassified
and reported separately from continuing operations in the Group
annual financial statements for 31 December 2023. To ensure and
provide a consistent and comparable view of the Group's financial
performance, the H1 2023 financial results have been similarly
restated to reflect BMI as a discontinued operation. As such, BMI's
H1 2023 revenues, expenses, assets, and liabilities have been
reclassified to discontinued operations.
For H1 2023, BMI generated £27m in
revenue and had an operating and net loss before tax of £0.1m and
£0.2m respectively. The full impact of this restatement is detailed
in the Group's interim consolidated financial statements below. No
items have been presented as discontinued in H1 2024.
Peter Coleman, Kingswood Chief Executive
Officer, commented:
"I am pleased to share our interim
financial results for the 6 month period to 30 June 2024. I
am particularly pleased with our strong revenue growth and in
particular the growth in recurring revenues, demonstrating that our
acquisitions are beginning to mature. Quite rightly our focus
is on providing a first-class experience to all of our clients,
with the use of our excellent advice community, technology and
range of award investment propositions. In particular I am
pleased with the ongoing development of our IBOSS range of model
portfolios and our in-house DFM both of which continue to flourish
within the group. Our operating profit continues to grow,
enabling our continued investment in people, propositions and
processes all focussed on delivering a market-leading proposition
for our clients. In UK&I we continue to be acquisitive
with the addition of BasePlan, and we will continue to identify
opportunities that enhance our growing business in this
market.
"In the US we continue to expand
with the momentum of advisor recruitment and banking growing
exponentially".
H1'24 - Strategic Highlights:
·
In February 2024, UK&I successfully completed
the purchase of BasePlan, a long established and leading financial
advisory firm which has been providing client led financial and
retirement planning and wealth management services based in Dublin
with €130m AuA.
·
To support the Group's capital
and growth agenda, the Group obtained a new unsecured debt facility
from funds managed by Pollen Street Capital Limited. £11m of the
facility was received in H1 2024 and was utilised to meet the
Group's immediate capital needs and to satisfy deferred payment
obligations from previous acquisitions. Post period end, the Group
obtained an additional £6.0m facility from funds managed by Pollen
Street Capital.
·
As announced on 31 May 2024, the Convertible
Preference Shares issued by the Group to HSQ Investment Limited
("HSQ"), a wholly owned indirect subsidiary of funds managed and/
or advised by Pollen Street Capital Limited, were converted into
469,263,291 new Ordinary Shares in the Company at the agreed
conversion price of 16.5 pence per Ordinary Share. The conversion
makes for a clearer capital structure which the Group hopes will be
welcomed by investors.
· Despite AuA outflows in the UK following the departure of
some wealth advisers, UK&I AuA increased by £0.2bn compared to
December 2023 reflecting the completion of the BasePlan acquisition
and positive market movements. A swift, diligent recruitment
process has replenished our wealth advisory team including the
addition of a fourth regional manager to support growth across the
London and South-East region.
·
Further progress has been made across the
UK&I in driving organic growth across our key focus
areas:
ü 6 new
IFA firms were onboarded onto IBOSS, in line with 2023 levels over
the comparable period
ü Institutional growth of c£0.2bn AuM in H1 2024
·
81% of UK revenue is recurring in nature,
providing a strong, annuity-style fee stream. Investment Banking
fees are a larger proportion of Kingswood US revenues, and
transactional in nature, which means that recurring revenue for the
Group was 42% up from 33% in 2023.
· Our US footprint further expanded in the first half of the
year adding 26 new authorised representatives and supporting growth
in our total AuA in Kingswood US to £3.1bn.
·
Kingswood US has continued to grow its registered
investment advisor/broker dealer (RIA/BD) business organically
through the introduction of Kingswood Investments (KI) in Q2 2023,
an in-house investment banking and capital markets division to
support investment banking capabilities. This addition, combined
with the existing teams, positions Kingswood as a comprehensive
provider of investment banking services in the US.
·
H1 saw three new appointments to the Executive
team of Bryan Parkinson, MD of Wealth Planning, Vinoy Nursiah, CFO
and Peter Coleman, CEO. The combination of the new joiners with the
incumbents of Rachel Bailey, CPO, Paul Hammick, CRO and Lucy
Whitehead, CCO has already demonstrated its effectiveness and
capability by delivering the following to date: in-person
presentations of next strategic phase at all UK locations, delivery
of a major project to enhance regulatory performance and
efficiency, design and implementation of a new service operating
model to improve client and advisor experience, and the creation of
five fundamental focus areas to align efforts across the Group.
Additionally a major finance transformation project commenced
in July and is on track to complete as scheduled in Q4.
The Kingswood Board believes
Operating Profit is the most appropriate indicator to explain the
underlying performance of the Group. The definition of
Operating Profit is profit before finance costs, amortisation and
depreciation, gains and losses, and exceptional costs (business
re-positioning and transaction costs)
|
£'000 (unless otherwise
stated)
|
H1'24
|
H1'23
(restated)*
|
Change %
|
Change £
|
|
|
|
|
|
|
|
Total Group Revenue
|
40,628
|
35,593
|
14%
|
5,035
|
|
Wealth Planning
|
15,313
|
16,715
|
(8)%
|
(1,402)
|
|
Investment Management
|
4,141
|
3,917
|
6%
|
224
|
|
Kingswood Ireland
|
3,970
|
2,533
|
57%
|
1,437
|
|
Kingswood US
|
17,204
|
12,428
|
38%
|
4,776
|
|
|
|
|
|
|
|
Group Recurring Revenue
|
42%
|
33%
|
|
|
|
|
|
|
|
|
|
Division Operating Profit:
|
|
|
|
|
|
Kingswood UK&I
|
7,961
|
7,729
|
3%
|
232
|
|
Kingswood US
|
1,331
|
681
|
95%
|
650
|
|
|
9,292
|
8,410
|
10%
|
882
|
|
Central Costs
|
(3,175)
|
(3,355)
|
5%
|
180
|
|
Total Group Operating Profit
|
6,117
|
5,055
|
21%
|
1,062
|
|
|
|
|
|
|
|
£'000 (unless otherwise
stated)
|
H1'24
|
H1'23
(restated)
|
Change %
|
Change £
|
|
Total Equity
|
55,910
|
64,806
|
14%
|
(8,986)
|
|
Total Cash
|
15,459
|
22,939
|
(33)%
|
(7,480)
|
|
|
|
|
|
|
|
Key
Metrics
|
|
|
|
|
|
AuM (£m)
|
3,731
|
3,686
|
1%
|
45
|
|
AuA (£m)
|
9,118
|
8,192
|
11%
|
926
|
|
|
|
|
|
|
|
# of UK&I
Advisers
|
107
|
116
|
(8)%
|
(9)
|
|
# of US RIA/IBD
reps
|
265
|
239
|
11%
|
26
|
*
The Group results for the six months ending 30 June 2023 are
restated due to US subsidiary classified as discontinued - see Note
3 and refer to the 2023 Annual Report - Note 1: Presentation of
financial statements.
Outlook
In our 2023 Annual Report we
stated that in the medium term, we had a strategic objective to
grow the Group so as to target Group operating profit of £25m with
AuM/A of £20bn. Despite difficult conditions, we have made strong
progress against this objective and at 30 June 2024 our AUM/A
stands at £12.8bn with AuA at £9.1bn (£8.8bn at December 2023) and
AuM at £3.7bn (£3.5bn at December 2023).
We remain confident in the success
of our ambitious long-term growth strategy, grounded in supporting
our clients to protect and grow their wealth. We also continue to
invest in a range of lead generation and digital tools to widen
reach to new and younger demographics.
In the UK and Ireland, our
strategic focus continues to be on five key areas:
1. Market-leading
client service ("always put clients first")
2. Organic growth
("look after more of our clients needs")
3. Operational
excellence ("make it easy to do business")
4. Recruitment,
development and retention of best in class people ("happy and
productive colleagues")
5. Have a sustainable
and successful commercial business.
In the US, our strategic focus is
on:
1. Continuing the
growth trajectory through expansion of RIA/ BD activity including
additional activities approved by FINRA. This includes expanding
employment and office operations and engaging in research
activities.
2. Leveraging
technology integration to increase market presence and strengthen
capabilities.
3. Increasing
opportunities within investment banking operations and pursuing
selective acquisitions
For further details, please contact:
|
Kingswood Holdings Limited
|
+44 (0)20 7293 0730
|
|
Peter
Coleman
|
www.kingswood-group.com
|
|
Cavendish Capital Markets Limited Ltd (Nomad
& Broker)
Marc Milmo / Abigail
Kelly
|
+44 (0)20 7220 0500
|
|
GreenTarget (for Kingswood
media)
Jamie Brownlee /
Ellie Basle
|
+44 (0)20 7324 5498
Jamie.Brownlee@greentarget.co.uk
|
Group Review:
The Group has continued to build
momentum in 2024 and revenue and operating profit have grown due to
favourable market conditions, despite higher levels of adviser and
consequently client attrition. Our business continues to grow
organically in both the UK and US and our acquisition activity is
slowing down, as planned. We have a new strong
leadership team that is driving tangible results and realising our
ambition to become a leading fully integrated international wealth
& investment management business.
Finance
Review:
Our focus is to maximise
shareholder returns through Operating Profit growth combined with
minimising our weighted average cost of capital. We also continue
to maintain a strong discipline in how we think about the
businesses we acquire, ensuring that the multiples we pay are
within our risk appetite and funding profile.
Kingswood's financial performance
remained resilient in H1'24 against a continued backdrop of market
volatility and at 30 June 2024 our AuA now stands at £9.1bn (£8.8bn
at December 2023) and AuM £3.7bn (£3.5bn at December 2023)
respectively.
Group revenue for the period was
£40.6m, reflecting a 14% year-on-year increase. In the UK&I a
modest 1% revenue growth was achieved, despite outflows from the
Company's UK Assets under Advice following the departure of several
wealth advisors. This was offset by positive market performance and
an increase in Assets under Advice in Ireland, driven by our first
"bolt-on acquisition," Baseplan which completed in February 2024.
In the US, our footprint further expanded in the first half of the
year adding 26 new registered representatives and supporting growth
in our total AuA in Kingswood US to £3.1bn. Investment Banking
revenues in the US also rose due to the in-house Investment Banking
and Capital Markets division launched in the previous year, which
is now delivering measurable impact.
Operating Profit of £6.1m is 10%
higher than 2023, driven by a £0.7m increase in US profits and
continued acquisition and organic growth in the UK&I.
Central costs have decreased by 5%
reflecting continued prudence across the Group in the
management of its cost base in.
The overall result for H1'24 was a
loss before tax of £5.9m reflecting £0.7m of acquisition-related
deferred consideration expenses, £2.6m amortisation and
depreciation, £7.2m finance costs and £1.5m business re-positioning
and transaction costs.
The Group had £15.5m of cash as at
H1'24, a decrease of £7.5m since 31 December 2023 mostly due to
cash outflows to satisfy finance costs and deferred payment
obligations on previous acquisitions undertaken by the
Company.
In the medium term, we continue to
target a Group operating profit of £25m with AuM/A of £20m. Despite
difficult conditions, we have made strong progress against this
objective and on 30 June 2024 our AUM/A stands at £12.8bn with AuA
at £9.1bn (£8.8bn at December 2023) and AuM at £3.7bn (£3.5bn at
December 2023).
We remain confident in our
long-term growth strategy, focused on helping clients protect and
grow their wealth. We continue to invest in lead generation and
digital tools to expand our reach to new and younger
demographics.
Highlights - UK &
Ireland:
We have continued to build
momentum on our strategic growth plans over the first half of the
year, following the acquisition of our first "bolt-on
acquisition," Baseplan. A retirement planning advice firm based in Dublin, Ireland,
following regulatory approval in February 2024. Based
in Dublin, Ireland, BasePlan is a long established and leading
financial advisory firm which has been providing client led
financial and retirement planning and wealth management services
for over 30 years. The BasePlan acquisition increased the Group's
assets under management by €130m during the period
and its contribution in
the period was c.£0.25m. MMPI's
acquisition of BasePlan formed an expected part of Kingswood's
acquisition of MMPI in March 2023 and is a highly strategic acquisition for the Group providing
access to the attractive Irish wealth management market whilst also
offering diverse new avenues for growth.
In UK&I, our strategy centres
on five focal areas: always putting clients first; looking after
more of our clients needs; making it easy to do business; happy and
productive clients, and; having a sustainable and successful
commercial business.
Highlights -
US:
The US business continues to place
a strong emphasis on maintaining a robust recruitment pipeline for
new advisers, with a specific focus on cultivating reliable and
recurring revenue streams through the management of c$3.9 billion
of client assets. The first half of 2024
marked another period of growth and business expansion for
Kingswood US, with the addition of 26 new authorised
representatives, which further expanded our U.S.
footprint.
In H1 2024, US revenue grew by
£4.8m, a 38% increase compared to the same period last year. This
was fuelled by an 11% growth in the number of authorised
representatives, contributing an additional c$0.8bn in AuA. AuA in
the US at 30 June 2024 was £3.2bn (2023: £3.1bn). Operating profit
surged by 95% year-on-year to £1.3m (2023: £0.7m), driven by higher
profit margins earned on Investment Banking revenues and healthy
increases in both Broker Dealer and Advisory Revenues supported by
to more favourable macroeconomic conditions in H1 2024 compared to
H1 2023.
We continued to expand our
in-house Investment Banking offering, which focuses primarily on
providing access to capital for mid-market businesses that are
undergoing varying degrees of operational, financial or
market-driven change. As a result, we have seen the profitability
on the deals closed increase in H1 2024 and we see this trend
continuing as we continue to build our investment banking team and
deal flow through to the end of 2024.
The expansion of our team of
seasoned professionals, all of whom bring relevant industry
relationships and a broad network of
internal and external operating resources has strengthen client
businesses and enhanced value. Streamlined back-office processes
and regulatory oversight while delivering an improved experience to
advisors and their clients have been a contributing factor to
increased profit margins.
KINGSWOOD
HOLDINGS LIMITED
CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE
PERIOD ENDED 30 JUNE 2024