TIDMKWG
RNS Number : 8316M
Kingswood Holdings Limited
24 September 2021
Half-year Report
Kingswood Holdings Limited ("Kingswood") remains in a strong
position and has delivered significant growth in the first half of
2021, with a robust foundation to deliver further growth
o A period of consolidation and growth for the business, with
the Group reporting GBP61.5m revenues, GBP3.1m Operating Profit and
assets under advice/management of GBP6.2bn. UK and US Divisional
Operating Profit for the period is GBP5.3m
o Kingswood continues to build a leading international
integrated wealth and investment management business and was
delighted to recently complete the acquisition of Admiral Wealth
Management in the UK in August 2021. Inorganic growth remains a key
focus and Kingswood has signed Heads of Terms, and is in exclusive
discussions, with a further 9 UK businesses and 3 businesses
outside the UK
o The UK Wealth Management and Investment Management Division
delivered GBP10.6m revenue and GBP2.8m Operating Profit in the
first six months of 2021, with Operating Profit growing 173% year
over year
o The US Wealth and Investment Management Division delivered
GBP50.9m revenues and GBP2.5m Operating Profit in the first six
months of 2021
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 2021.
David Hudd, Kingswood Group Chairman said: "We are pleased with
the performance of the business in the first half of 2021. It has
been a period of consolidation which has seen both the UK and US
Divisions report material improvements to Operating Profit. Since I
have been acting Chairman, I have been impressed with the
dedication and commitment of our employees and leadership team. Not
only have we minimised the effect of COVID-19 on the Group, but we
are also making tremendous progress on our strategic priorities. I
would like to place on record my thanks to Kenneth "Buzz" West, our
former chairman, for his contribution to the business and also to
welcome Mike Biggin and the Admiral team to Kingswood."
Market Update
Strategic Highlights
-- Kingswood has 16 UK regional network offices across the country with 64 client facing advisory colleagues and
assets under advice/management of GBP4.5bn from c.8,000 active clients.
-- Positioning for growth is a key focus following the successful integration of Regency Investment Services
completed at the end of August.
-- Flows into the Kingswood Discretionary Investment Management proposition continue to grow. MPS reported
GBP186.5m assets under management as at June 2021 (June 2020: GBP41.9m) across our Core, Passive, ESG and Income
portfolios, all of which exhibit a track record of performance above benchmark.
-- Kingswood's institutional business continues to deliver solid revenue growth supporting university and other
clients with cash management and treasury needs in a period of extreme volatility.
-- An extensive pipeline of potential UK M&A opportunities is under evaluation with nine transactions currently
under exclusive due diligence including opportunities in key preferred markets across the UK.
-- Since completing the acquisition of 50.1% of the US business in mid-November 2020, which represents a controlling
interest, we now consolidate the financial performance of Kingswood US into our Group results.
-- Significant progress has been made in the US which has reported revenue of GBP50.9m and Operating Profit of
GBP2.5m (H1 2020 GBP(0.03)m). The Independent Broker Dealer (IBD) and Registered Investment Adviser (RIA)
businesses h as delivered significant organic growth through the recruitment of Independent Advisors. EF Hutton
Investment Banking services was a particular driver of revenue growth which benefitted from strong capital market
activity completing over 41 transactions raising $1.8bn for its clients.
-- The US team now comprises of 207 Authorised Representatives, represented in 11 States across the country, with 3
key hubs in New York, Atlanta and San Diego and will continue to recruit new Reps throughout H2. We have an
extensive pipeline of potential M&A opportunities that can deliver significant inorganic growth to the business
and are in exclusive negotiations with 2 wealth management businesses
Gary Wilder, Group CEO commented : "Kingswood continues to make
major forward steps in achieving its strategy to build a
best-in-class international wealth management business for the mass
affluent market. We are now benefiting from our acquisition
strategy and successful entry and consolidation of our position in
the attractive high growth US market. The financial results for the
first half of 2021 are very pleasing - we have been able to deliver
growth across all our divisions in Wealth Planning, Investment
Management, and the US, under the superb leadership of David
Lawrence in the UK and Mike Nessim in the US, supported by all of
our wonderful and committed staff on both sides of the Atlantic.
Kingswood remains focussed on building its long-term value
strategy, centred around vertical complementary growth business
lines in the international independent retail wealth and investment
management sectors. With the acquisition of Admiral Wealth
Management in the UK in August and a strong pipeline of UK and
international acquisition opportunities, the second half of 2021
promises to be another busy and exciting period for the Group. With
the financial and strategic support of Pollen Street Capital and
KPI, Kingswood will continue to capitalise on the consolidation,
acquisition and integration opportunities across international
wealth and investment management markets."
Financial Highlights
-- Total Group revenue for the period was GBP61.5m, a 646% increase on prior year reflecting the impact of
acquisitions and growth in the US.
-- Wealth Planning revenues of GBP8.3m grew 78% year over year reflecting the successful acquisitions of Sterling
Trust and Regency Investments. Investment Management revenues of GBP2.3m grew 8% year over year through
Kingswood's institutional business and new Managed Portfolio Service.
-- US revenues of GBP50.9m performed exceptionally well. EF Hutton Investment Banking revenues were GBP41.8m in the
period and benefitted from strong capital market activity. The Broker Dealer and Advisor business delivered
revenues of GBP9.1m, reporting healthy double digit growth year over on a like for like basis.
-- 86% of the UK's revenue is recurring in nature providing a strong, annuity-style fee stream. Investment Banking
Fees are a larger portion of Kingswood US revenues, and transactional in nature, which mean that recurring
revenue in the US is 5% (29% excluding Investment Banking). Combined, group recurring revenue is 19%.
-- Operating Expenditure was GBP58.5m (H1 2020: GBP9.5m). The increase in expenditure was mainly due to an increase
in US Investment Banking cost of sales. In addition, operating costs increased in UK Wealth Management as a
result of the 2 acquisitions in 2020. Central costs of GBP2.3m remained flat year over year (2020: GBP2.3m)
through careful cost management.
-- Operating Profit for the period to 30 June 2021 was GBP3.1m, an improvement of GBP4.3m over the six months to 30
June 2020 (H1 2020: Operating Loss GBP(1.3)m). The results reflect solid underlying business dynamics and the
impact of acquisitions.
-- 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).
-- Profit before Tax for the period to 30 June 2021 was a Loss of GBP(3.7)m reflecting GBP4.1m of acquisition
related deferred consideration expense, GBP1.1m amortisation and depreciation, GBP0.8m finance costs and GBP0.7m
business re-positioning and transaction costs.
-- The Group had GBP24.7m of cash as at June 2021, an increase of GBP20.8m since 31 December 2020. This is largely
driven by further investment from our private equity partners at Pollen Street Capital and GBP5.7m cashflow
generated from operating activities, partly offset by investment activities and lease payments.
-- Net Equity as at 30 June 2021 was GBP43.3m and the company has no debt. Equity includes GBP37.6m of irredeemable,
convertible preference shares issued under the Pollen Street Capital subscription agreement.
-- Kingswood's financial strategy is to maintain a robust and disciplined balance sheet, ensuring no deferred
liabilities relating to acquisition activities remain uncovered from a funding perspective.
GBP'000 (unless otherwise
stated) 2021 2020 Change %
--------------------------- --------- -------- ---------
Wealth Management 8,307 4,678 78%
Investment Management 2,312 2,135 8%
Kingswood US 50,922 * 1,438 3441%
Total Revenue 61,541 8,251 646%
Recurring Revenue 19% ** 84%
Kingswood UK (WM + IM) 2,830 1,035 173%
Kingswood US 2,519 (28)
Division Operating Profit 5,349 1,007 431%
Central Costs (2,294) (2,274) 1%
Operating Profit 3,055 (1,267) n/a
Total Equity 43,315 32,886 32%
AUA/AUM (GBP millions) 6,172 4,718 31%
# of UK Advisers 64 30 34
* GBP41.8m Investment Banking Fees and GBP9.1m Wealth Management
Revenues. ** 60% excl. Inv. Bank Fees
The interim report will be available to be viewed or downloaded
from the Company's website.
For further details, please contact:
Kingswood Holdings Limited
Gary Wilder / David Lawrence
+44 (0)20 7293 0730
www.kingswood-group.com
Peel Hunt LLP (Nomad and Broker)
James Britton / Rishi Shah
+44 (0)20 7418 8900
Greentarget (for Kingswood media)
Jamie Brownlee / Alice Gasson / Ellie Basle
+44 (0)20 7324 5498
Jamie.Brownlee@greentarget.co.uk
About Kingswood
Kingswood Holdings Limited (trading as Kingswood) is an
AIM-listed (AIM: KWG) international fully integrated wealth
management group, with around 8,000 active clients and GBP6.2bn of
Assets under Advice and Management. It has a growing network of
offices in the UK including Abingdon, Beverley, Darlington, Derby,
Grimsby, Hull, Lincoln, London, Maidstone, Newcastle, Sheffield
(2), Worcester and York with offices in Johannesburg, South Africa
and Atlanta, New York and San Diego in the US.
Kingswood offers a range of trusted investment solutions to its
clients, which range from private individuals to some of the UK's
largest universities and institutions, including investment advice
and management, personal and company pensions and wealth planning.
Kingswood is focused on becoming a leading player in the wealth and
investment management market through targeted acquisitions in the
UK and US, creating a global business through strategic
partnerships.
Company Registration No. 42316 (Guernsey)
KINGSWOOD HOLDINGS LIMITED
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIODED 30 JUNE 2021
KINGSWOOD HOLDINGS LIMITED
CONTENTS
Page
Financial and Operational Review 1 - 2
Interim Consolidated Statement of Comprehensive Income 3 - 4
Interim Consolidated Statement of Financial Position 5 - 6
Interim Consolidated Statement of Changes in Equity 7 - 8
Interim Consolidated Statement of Cash Flows 9
Notes to the Interim Consolidated Financial Statements 10 - 30
KINGSWOOD HOLDINGS LIMITED
FINANCIAL AND OPERATIONAL REVIEW
FOR THE SIX MONTH PERIODED 30 JUNE 2021
Group Review: Gary Wilder Kingswood Group CEO
After such disruption to personal and professional lives throughout
2020 and the beginning of 2021 it is pleasing to see that the re-opening
of the global economy remains on track as COVID-19 vaccination rates
climb. I, like all of us, hope that current vaccines continue to
prevent the spread of more contagious COVID-19 variants. At a macro-economic
level, the global economy in 2021 is set to expand at its strongest
post-recession pace in 80 years with sharp re-bounds in both the
UK and US economies. Equities in the US, UK, and Europe have returned
double digit growth year to date in 2021.
With this backdrop, Kingswood has delivered an exceptional first
half performance. In David Lawrence and Mike Nessim and their teams,
we have leadership that is driving tangible results and executing
our long-term strategy to be a leading participant in wealth & investment
management in the UK, US and Internationally. The UK advice market
remains ripe for ongoing consolidation, and we have built a health
pipeline of acquisition opportunities in the UK, the US and further
afield.
Financial Performance
During the period, total Group revenue was GBP61.5m, a 646% increase
on prior year. Wealth Planning revenues of GBP8.3m grew 78% year
over year and Investment Management revenues of GBP2.3m grew 8%
year over year. US revenues of GBP50.9m performed well mainly from
EF Hutton Investment Banking services which benefitted from strong
capital market activity.
Operating Profit for the period to 30 June 2021 was GBP3.1m, an
improvement of GBP4.3m over the six months to 30 June 2020 (H1 2020:
Operating Loss GBP(1.3)m). The results reflect solid underlying
business dynamics and the impact of acquisitions.
Net Equity as at 30 June 2021 was GBP43.3m and the company has no
debt. Equity includes GBP37.6m of irredeemable, convertible preference
shares issued under the Pollen Street Capital subscription agreement.
Backed by the growth equity commitment from Pollen Street Capital,
we are fully conscious of the need to drive enhanced, organic financial
performance from the up-scaled business.
Kingswood's financial strategy is to maintain a robust and disciplined
balance sheet, ensuring no deferred liabilities relating to acquisition
activities remain uncovered from a funding perspective, and a disciplined
approach to expense management. Our focus is to maximise shareholder
returns through Operating Profit growth combined with minimising
our weighted average cost of capital.
UK Key Highlights: David Lawrence Kingswood UK Chief Executive Officer
My first nine months as the UK CEO for Kingswood have been spent
consolidating progress built in 2020 whilst also charting a course
in 2021 and beyond to become a leading UK wealth management business.
We have made key investments in our colleague proposition as we
strive to make Kingswood a great place to work. I am also delighted
to have appointed Lucy Whitehead to a new role as Chief Client Officer,
to ensure we have a single-minded client focus across our core propositions
and to improve the overall customer experience. I am similarly delighted
to welcome Jon Millam as our new CFO, who joined Kingswood in early
August.
By further strengthening my leadership team, and through a number
of other key hires, we are now developing strategies and a technology
roadmap to build a truly client and colleague centric business and
proposition that can actively respond to emerging trends.
Acquisition, integration, and growth are stated imperatives for
us. We have built some great momentum in developing a pipeline of
acquisitions which we hope to convert during the remainder of 2021
and into 2022. The acquisition selection process is rigorous; targets
must be singularly dedicated to servicing their clients with the
Kingswood model designed to free up adviser time to focus more on
clients, and provide a centralised, efficient support infrastructure
to manage the routine but time-consuming tasks required across compliance,
finance, human resources, risk, and technology.
Similarly, we have become well-practised at integrating acquired
businesses, with specialist teams leading this activity, that will
then create a platform for future growth.
I am confident that a combination of investment and proactive management
of our business will serve us well as we go forward. My ambition
is to make Kingswood a magnet business for all, not least for firms
wanting to take their next step in joining a progressive and capable
wealth management business.
US Key Highlights: Mike Nessim Kingswood US Chief Executive Officer
Significant progress has been made in the US and I am pleased to
report revenues of GBP50.9m and an Operating Profit of GBP2.5m.
The Independent Broker Dealer (IBD) and Registered Investment Adviser
(RIA) businesses has delivered significant growth through the first
half of 2021, largely due to the successful execution of several
strategic initiatives, with a particular focus on driving organic
growth through the recruitment of Independent Advisors. The team
now comprises 207 Authorised Representatives managing $2.3bn of
client monies across the US.
Additionally, investment in a robust technology infrastructure has
provided advisors with a superior integrated wealth management platform
enabling the IBD & RIA to offer a much wider range and more diverse
selection of products. Kingswood US has also delivered significant
organic growth in recurring revenue streams through the build out
of the full-service RIA which currently has 21 advisors managing
over $800m.
We have an extensive pipeline of potential M&A opportunities that
can deliver significant inorganic growth to the business. I am particularly
focused on acquiring small to mid-sized RIAs and IBDs where Kingswood
can create margin accretion through synergies. Currently, two transactions
are under exclusive due diligence, representing +$10bn in Assets
Under Management.
The EF Hutton Investment Banking services was a particular driver
of revenue growth which benefitted from strong capital market activity.
EF Hutton, a global full-service middle market investment bank,
now has 30 bankers and 10 support staff and is headquartered in
NYC. In the first half of 2021, EF Hutton completed over 41 transactions
and raised $1.8bn.
24 September 2021
KINGSWOOD HOLDINGS LIMITED
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIODED 30 JUNE 2021
Six months Six months Year ended
to to
30 Jun 2021 30 Jun 2020 31 Dec 2020
(unaudited) (unaudited) (audited)
restated
Notes GBP'000 GBP'000 GBP'000
Revenue 4 61,541 8,251 25,477
Direct expenses (47,824) (1,938) (8,471)
Gross profit 13,717 6,313 17,006
Operating staff costs (7,631) (5,426) (11,148)
Other operating costs (3,031) (2,154) (5,052)
Total operating costs (10,662) (7,580) (16,200)
Share of post-tax profits
of equity accounted associates - - 56
Operating profit / (loss) 3,055 (1,267) 862
Non-operating costs:
Business re-positioning
costs (407) (661) (1,801)
Finance costs (840) (81) (554)
Acquisition-related adjustments:
Amortisation and depreciation (1,117) (785) (1,822)
Other (losses) / gains 5 - (10) 1,744
Remuneration charge (deferred
consideration) 12 (4,145) (3,059) (7,254)
Transaction costs (274) (203) (1,855)
Loss before tax (3,728) (6,066) (10,680)
Tax 3 - (60)
Loss after tax (3,725) (6,066) (10,740)
Other comprehensive gain
/ (loss) 368 - (855)
Total comprehensive loss (3,357) (6,066) (11,595)
KINGSWOOD HOLDINGS LIMITED
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(CONTINUED)
FOR THE SIX MONTH PERIODED 30 JUNE 2021
Loss after tax is attributable
to:
- Owners of the parent
company (4,857) (6,066) (11,000)
- Non-controlling interests 1,132 - 260
Total comprehensive loss is
attributable to:
- Owners of the parent
company (4,489) (6,066) (11,855)
- Non-controlling interests 1,132 - 260
Loss per share:
- Basic loss per share 6 GBP (0.02) GBP (0.03) GBP (0.05)
- Diluted loss per share 6 GBP (0.02) GBP (0.03) GBP (0.05)
The notes on pages 10 - 30 form an integral part of the financial
statements
KINGSWOOD HOLDINGS LIMITED
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
30 Jun 2021 30 Jun 2020 31 Dec 2020
(unaudited) (unaudited) (audited)
restated
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 7 915 576 927
Right-of-use assets 8 2,583 2,586 2,828
Goodwill and other intangible
assets 9 / 19 46,943 41,702 47,616
Investments 10 20 416 -
Deferred tax asset 392 387 392
50,853 45,667 51,763
Current assets
Trade and other receivables 5,067 2,764 24,204
Cash and cash equivalents 24,733 1,945 3,899
29,800 4,709 28,103
Total assets 80,653 50,376 79,866
Current liabilities
Trade and other payables 19 20,077 6,920 12,955
12 /
Deferred consideration payable 19 900 2,197 836
20,977 9,117 13,791
Non-current liabilities
12 /
Deferred consideration payable 19 3,810 2,685 3,232
Other non-current liabilities 19 9,834 5,688 10,802
Deferred tax liability 1,889 - 1,889
Total liabilities 36,510 17,490 29,714
Net assets 44,143 32,886 50,152
Equity
Share capital 13 10,846 10,846 10,846
Share premium 13 8,224 8,224 8,224
14 /
Preference share capital 19 37,550 14,985 37,550
Deferred share capital - - -
Other reserves (459) 56 (519)
Foreign exchange reserve (487) - (855)
Retained (loss) / earnings 19 (12,359) (1,225) (6,159)
Equity attributable to the owners of the
Parent Company 43,315 32,886 49,087
Non-controlling interests 828 - 1,065
Total equity 44,143 32,886 50,152
The notes on pages 10 - 30 form an integral part of the financial
statements
The financial statements of Kingswood Holdings Limited (registered
number 42316) were approved and authorised for issue by the Board
of Directors, and signed on its behalf by:
Chairman
Date:
KINGSWOOD HOLDINGS LIMITED
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 30 JUNE 2021
Share Deferred Preference Other Foreign Retained Equity Non-controlling Total
capital share share reserves exchange earnings attributable interests
and capital capital reserve to the
share owners
premium of the
parent
Company
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1
January 2020
(audited) 19,070 - 4,586 (296) - 4,841 28,201 - 28,201
Loss for the
period - - - - - (6,066) (6,066) - (6,066)
Issue of share
capital - - - - - - 10,399 - 10,399
Issue of
preference
share capital - - 10,399 - - - - - -
Foreign exchange
reserve - - - 2 - - 2 - 2
Share based
remuneration - - - 350 - - 350 - 350
Restated balance
at 30 June
2020
(unaudited) 19,070 - 14,985 56 - (1,225) 32,886 - 32,886
(Loss) / profit
for the period - - - - - (4,934) (4,934) 260 (4,674)
Amounts
attributable to
non-controlling
interests - - - - - - - 805 805
Issue of
preference
share capital - - 22,565 - - - 22,565 - 22,565
Share based
remuneration - - - (573) - - (573) - (573)
Foreign exchange
loss - - - (2) (855) - (857) - (857)
Balance at 31
December 2020
(audited) 19,070 - 37,550 (519) (855) (6,159) 49,087 1,065 50,152
KINGSWOOD HOLDINGS LIMITED
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(CONTINUED)
FOR THE PERIODED 30 JUNE 2021
(Loss) / profit for
the period - - - - - (4,857) (4,857) 1,132 (3,725)
Amounts attributable
to non-controlling
interests - - - - - - - (32) (32)
Elimination of local
goodwill
on consolidation - - - - - (1,343) (1,343) (1,337) (2,680)
Share based
remuneration - - - 60 - - 60 - 60
Foreign exchange gain - - - - 368 - 368 - 368
Balance at 30 June
2021 (unaudited) 19,070 -37,550 (459) (487) (12,359) 43,315 828 44,143
Note 13 provides further details of, and the split between, Share Capital
and Share
Premium.
Additional reserves consist of foreign exchange translation, other reserves including
share-based
remuneration and expenses charged against reserves.
The notes on pages 10 - 30 form an integral part of the financial statements
KINGSWOOD HOLDINGS LIMITED
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIODED 30 JUNE 2021
Six months Six months Year ended
to to
30 Jun 2021 30 Jun 2020 31 Dec 2020
(unaudited) (unaudited) (audited)
restated
Notes GBP'000 GBP'000 GBP'000
Net cash generated from
/ (used in) operating activities 15 5,654 3,909 (1,575)
Investing activities
Property, plant and equipment
purchased (529) (394) (796)
Acquisition of investments - (12,068) (10,579)
Remuneration charge (deferred
consideration) (3,975) (3,953) (5,153)
Net cash used in investing
activities (4,504) (16,415) (16,528)
Financing activities
Proceeds from issue of
shares 20,000 12,622 20,243
Interest paid (12) (3) (17)
Lease payments (304) (174) (421)
New loans received / loans
repaid - - 255
Net cash generated from
financing activities 19,684 12,445 20,060
Net increase/(decrease)
in cash and cash equivalents 20,834 (61) 1,957
Cash and cash equivalents at beginning
of Period 3,899 2,006 2,006
Effect of foreign
exchange rates - - (64)
Cash and cash equivalents
at end of Period 24,733 1,945 3,899
The notes on pages 10 - 30 form an integral part of the financial
statements
KINGSWOOD HOLDINGS LIMITED
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE PERIODED 30 JUNE 2021
1 Accounting policies
General information
Kingswood Holdings Limited is a company incorporated in Guernsey
under The Companies (Guernsey) Law, 2008. The shares of the Company
are traded on the AIM market of the London Stock Exchange (ticker
symbol: KWG). The nature of the Group's operations and its principal
activities are set out in the Strategic Report. Certain subsidiaries
in the Group are subject to the FCA's regulatory capital requirements
and therefore required to monitor their compliance with credit,
market and operational risk requirements, in addition to performing
their own assessment of capital requirements as part of the ICAAP.
1.1 Basis of accounting
The Group's interim condensed consolidated financial statements
are prepared and presented in accordance with IAS 34 'Interim
Financial Reporting'. The accounting policies adopted by the
Group in the preparation of its 2021 interim report are consistent
with those disclosed in the annual financial statements for the
year ended 31 December 2020 except for those that relate to new
standards and interpretations effective for the first time for
periods beginning on (or after) 1 January 2021, and will be adopted
in the 2021 annual financial statements.
The information relating to the six months ended 30 June 2021
and the six months ended 30 June 2020 do not constitute statutory
financial statements and have not been audited. The interim condensed
consolidated financial statements do not include all the information
and disclosures required in the annual financial statements and
should be read in conjunction with the Group's most recent annual
financial statements for the year ended 31 December 2020.
1.2 Changes in significant accounting policies
The Group has applied the same accounting policies and methods
of computation in its interim consolidated financial statements
as in its 2020 annual financial statements.
There are a number of standards and interpretations which have
been issued by the International Accounting Standards Board that
are effective for periods beginning subsequent to 31 December
2021 (the date on which the company's next annual financial statements
will be prepared up to) that the Group has decided not to adopt
early. The Group does not believe these standards and interpretations
will have a material impact on the financial statements once
adopted.
1.3 Significant accounting policies
Going concern
The Directors review the going concern position of the Group
on a regular basis as part of the monthly reporting process which
includes consolidated management accounts and cash flow projections
and have, at the time of approving the financial statements,
a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future.
Accordingly the Directors continue to adopt the going concern
basis of accounting in preparing the financial statements.
Revenue recognition
Performance obligations and timing of revenue recognition
The majority of the Group's UK revenue, being investment management
fees and ongoing wealth advisory, is derived from the value of
funds under management / advice, with revenue recognised over
the period in which the related service is rendered. This method
reflects the ongoing portfolio servicing required to ensure the
Group's contractual obligations to its clients are met. This
also applies to the Group's US Registered Investment Advisor
("RIA") business.
1 Accounting policies
For certain commission, fee-based and initial wealth advisory
income, revenue is recognised at the point the service is completed.
This applies in particular to the Group's US Independent Broker
Dealer ("IBD") services, and its execution-only UK investment
management. There is limited judgement needed in identifying
the point such a service has been provided, owing to the necessity
of evidencing, typically via third-party support, a discharge
of pre-agreed duties.
The US division also has significant Investment Banking operations,
where commission is recognised on successful completion of the
underlying transaction.
Determining the transaction price
Most of the Group's UK revenue is charged as a percentage of
the total value of assets under management or advice. For revenue
earned on a commission basis, such as the US broker dealing business,
a set percentage of the trade value will be charged. In the case
of one-off or ad hoc engagements, a fixed fee may be agreed.
Allocating amounts to performance obligations
Owing to the way in which the Group earns its revenue, which
is largely either percentage-based or fixed for discrete services
rendered, there is no judgement required in determining the allocation
of amounts received. Where clients benefit from the provision
of both investment management and wealth advisory services, the
Group is able to separately determine the quantum of fees payable
for each business stream.
Further details on revenue, including disaggregation by operating
segment and the timing of transfer of service(s), are provided
in note 4 below.
2 Critical accounting judgements and key sources of estimation
uncertainty
In the application of the Group's accounting policies, which
are described in note 1, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets
and liabilities that are not readily apparent from other sources.
The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
Critical judgements in applying the Group's accounting policies
The following are the critical judgements that the Directors
have made in the process of applying the Group's accounting policies
that had the most significant effect on the amounts recognised
in the financial statements.
Assessment of control
Control is considered to exist where an investor has power over
an investee, or else is exposed, and has rights, to variable
returns. The Group determines control to exist where its own
direct and implicit voting rights relative to other investors
afford KHL - via its board and senior management - the practical
ability to direct, or as the case may be veto, the actions of
its investees. KHL holds 50.1% of voting rights in MHC and its
subsidiaries, as well as a majority stake in the US division's
advisory board when grouped with affiliated entities. The Group
has thus determined that the Company has the practical ability
to direct the relevant activities of MHC and its subsidiaries,
and has consolidated the sub-group as subsidiaries with a 49.9%
non-controlling interest.
2 Critical accounting judgements and key sources of estimation
uncertainty
Estimates and Assumptions
Intangible assets:
Expected duration of client relationships
The Group makes estimates as to the expected duration of client
relationships to determine the period over which related intangible
assets are amortised. The amortisation period is estimated with
reference to historical data on account closure rates and expectations
for the future. During the period, client relationships were
amortised over a 10-20 year period.
Goodwill
The amount of goodwill initially recognised as a result of a
business combination is dependent on the allocation of the purchase
price to the fair value of the identifiable assets acquired and
the liabilities assumed. The determination of the fair value
of the assets and liabilities is based, to a considerable extent,
on management's judgement. Goodwill is reviewed annually for
impairment by comparing the carrying amount of the CGUs to their
expected recoverable amount, estimated on a value-in-use basis.
Share-based remuneration:
Share based payments
The calculation of the fair value of share-based payments requires
assumptions to be made regarding market conditions and future
events. These assumptions are based on historic knowledge and
industry standards. Changes to the assumptions used would materially
impact the charge to the Statement of Comprehensive Income.
Deferred tax:
Recoverability of deferred tax assets
The amount of deferred tax assets recognised requires assumptions
to be made to the financial forecasts that probable sufficient
taxable profits will be available to allow all or part of the
asset to be recovered.
Leases:
Estimating the incremental borrowing rate
The Group cannot readily determine the interest rate implicit
in leases where it is the lessee, therefore, it uses its incremental
borrowing rate to measure lease liabilities. This is the rate
of interest that the Group would have to pay to borrow over a
similar term, and with a similar security, the funds necessary
to obtain an asset of a similar value to the right-of-use asset
in a similar economic environment.
The incremental borrowing rate therefore reflects what the Group
'would have to pay', which requires estimation when no observable
rates are available or when they need to be adjusted to reflect
the terms and conditions of the lease (for example, when leases
are not in the subsidiary's functional currency). The Group estimates
the incremental borrowing rate using observable inputs (such
as market interest rates) when available and is required to make
certain entity-specific estimates (such as the subsidiary's stand-alone
credit rating).
2 Critical accounting judgements and key sources of estimation
uncertainty
Deferred consideration:
Payment of deferred consideration
The Group structures acquisitions such that consideration is
split between initial cash or equity settlements and deferred
payments. The initial value of the contingent consideration is
determined by EBITDA and/or revenue targets agreed on the acquisition
of each asset. It is subsequently remeasured at its fair value
through the Statement of Comprehensive Income, based on the Directors'
best estimate of amounts payable at a future point in time, as
determined with reference to expected future performance. Forecasts
are used to assist in the assumed settlement amount.
3 Significant events and transactions
On 16 June 2021, Kingswood signed definitive agreements to acquire
100% of the shares in Admiral Wealth Management, an independent
financial advisory firm with a client base primarily in Lincolnshire
and Yorkshire. Following regulatory approval, the business will
be acquired for cash consideration of GBP4.0 million, payable
over a 2-year period. GBP2.0 million will be paid at closing
and the balance paid on a deferred basis, some of which is subject
to the achievement of pre-agreed performance targets.
Regulatory approval was received, and this deal formally completed,
on 17 August 2021.
4 Business and geographical segments
Information reported to the Group's Non-Executive Chairman for
the purposes of resource allocation and assessment of segment
performance is focused on the category of customer for each type
of activity.
The Group's reportable segments under IFRS 8 are as follows:
investment management, wealth planning and US operations.
The Group has disaggregated revenue into various categories in
the following table which is intended to depict how the nature,
amount, timing and uncertainty of revenue and cash flows are
affected by economic date and enable users to understand the
relationship with revenue segment information provided below.
The following is an analysis of the Group's revenue and results
by reportable segment for the six month period to 30 June 2021.
The table below details six months worth of revenue and results
for the principal business and geographical divisions, which
has then reconciled to the results included in the Statement
of Comprehensive Income:
Investment Wealth US Group Total
management planning operations
Six months Six months Six months Six months Six months
to to to to to
30 Jun 2021 30 Jun 2021 30 Jun 2021 30 Jun 2021 30 Jun 2021
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Continuing operations: GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue (disaggregated by
timing):
Point in time 513 953 48,162 - 49,628
Over time 1,799 7,354 2,760 - 11,913
External sales 2,312 8,307 50,922 - 61,541
Direct expenses (790) (460) (46,574) - (47,824)
Gross profit 1,522 7,847 4,348 - 13,717
Operating profit
/ (loss) 56 2,774 2,519 (2,294) 3,055
Business re-positioning
costs (76) (112) (184) (35) (407)
Finance costs - (50) 5 (795) (840)
Amortisation and
depreciation - (522) (15) (580) (1,117)
Remuneration charge
(deferred consideration) - (2,128) - (2,017) (4,145)
Transaction costs - (8) - (266) (274)
(Loss) / profit before
tax from continuing
operations (20) (46) 2,325 (5,987) (3,728)
Tax - - (40) 43 3
(Loss) / profit after
tax from continuing
operations (20) 46 2,285 (5,944) (3,725)
4 Business and geographical segments
Investment Wealth US Group Total
management planning operations
Six months Six months Six months Six months Six months
to to to to to
30 Jun 2020 30 Jun 2020 30 Jun 2020 30 Jun 2020 30 Jun 2020
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
restated restated restated restated restated
Continuing operations: GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue (disaggregated by
timing):
Point in time 586 558 1,207 - 2,351
Over time 1,549 4,120 231 - 5,900
External sales 2,135 4,678 1,438 - 8,251
Direct expenses (461) (228) (1,249) - (1,938)
Gross profit 1,674 4,450 189 - 6,313
Operating (loss)
/ profit (329) 1,364 (28) (2,274) (1,267)
Business re-positioning
costs - - - (661) (661)
Finance costs (1) (8) - (72) (81)
Amortisation and
depreciation - (81) - (704) (785)
Other losses - - - (10) (10)
Remuneration charge
(deferred consideration) - (2,413) - (646) (3,059)
Transaction costs - - - (203) (203)
(Loss) / profit before
tax from continuing
operations (330) (1,138) (28) (4,570) (6,066)
Tax - - - - -
(Loss) / profit after
tax from continuing
operations (330) 1,138 (28) (4,570) (6,066)
4 Business and geographical segments
Investment Wealth US Group Total
management planning operations
Year ended Year ended Year ended Year ended Year ended
31 Dec 2020 31 Dec 2020 31 Dec 2020 31 Dec 2020 31 Dec 2020
(audited) (audited) (audited) (audited) (audited)
Continuing operations: GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue (disaggregated by
timing):
Point in time 1,071 1,595 7,299 - 9,965
Over time 3,169 11,320 1,023 15,512
External sales 4,240 12,915 8,322 - 25,477
Direct expenses (1,158) (643) (6,670) - (8,471)
Gross profit 3,082 12,272 1,652 - 17,006
Operating (loss)
/ profit (107) 4,380 543 (3,954) 862
Business re-positioning
costs - - - (1,801) (1,801)
Finance costs (3) (48) (3) (500) (554)
Amortisation and
depreciation (10) (835) (3) (974) (1,822)
Other gains - - - 1,744 1,744
Remuneration charge
(deferred consideration) - - - (7,254) (7,254)
Transaction costs - - - (1,855) (1,855)
Share of profit from
associates - - - - -
(Loss) / profit before
tax from continuing
operations (120) 3,497 537 (14,594) (10,680)
Tax - (2) (101) 43 (60)
(Loss) / profit after
tax from continuing
operations (120) 3,495 436 (14,551) (10,740)
5 Other (losses) / gains
Six months Six months Year ended
to to
30 Jun 2021 30 Jun 2020 31 Dec 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Net unrealised (loss) / gain on
investments - (10) 1,744
- (10) 1,744
Unrealised losses and gains on investments relate to the US
acquisitions.
6 Earnings per share
Six months Six months Year ended
to to
30 Jun 2021 30 Jun 2020 31 Dec 2020
(unaudited) (unaudited) (audited)
restated
GBP'000 GBP'000 GBP'000
Loss from continuing operations
for the purposes of basic loss
per share, being net loss attributable
to owners of the Group (4,857) (6,066) (11,000)
Number of shares
Weighted average number of ordinary
shares for the purposes of basic
loss per share 216,920,719 216,920,719 216,920,719
Effect of dilutive potential ordinary
shares:
Share options - - -
Convertible preference shares
in issue - - -
Weighted average number of ordinary
shares for the purposes of diluted
loss per share 216,920,719 216,920,719 216,920,719
Basic loss per share GBP(0.02) GBP(0.03) GBP(0.05)
Diluted loss per share GBP(0.02) GBP(0.03) GBP(0.05)
7 Property, plant and equipment
Fixtures
and equipment
GBP'000
Cost
At 1 January 2020 564
Additions 393
At 30 June 2020 957
Additions 423
At 31 December 2020 1,380
Additions 79
At 30 June 2021 1,459
Depreciation and impairment
At 1 January 2020 343
Depreciation charged in the Period 38
At 30 June 2020 381
Depreciation charged in the Period 72
At 31 December 2020 453
Depreciation charged in the Period 91
At 30 June 2021 544
Net book value
At 30 June 2021 915
At 31 December 2020 927
At 30 June 2020 576
8 Right-of-use assets
Land and
buildings
GBP'000
Cost
At 1 January 2020 1,335
Additions 1,705
At 30 June 2020 3,040
Additions 529
At 31 December 2020 3,569
Additions 65
At 30 June 2021 3,634
Accumulated depreciation
At 1 January 2020 234
Depreciation charged in the Period 220
At 30 June 2020 454
Depreciation charged in the Period 287
At 31 December 2020 741
Depreciation charged in the Period 310
At 30 June 2021 1,051
Net book value
At 30 June 2021 2,583
At 31 December 2020 2,828
At 30 June 2020 2,586
9 Goodwill and other intangible assets
Goodwill Other intangible Total
assets
GBP'000 GBP'000 GBP'000
Cost
At 1 January 2020 16,384 17,655 34,039
Additions 4,735 8,287 13,022
At 30 June 2020 (restated) 21,119 25,942 47,061
Additions 4,565 2,026 6,591
At 31 December 2020 25,684 27,968 53,652
Additions 35 - 35
At 30 June 2021 25,719 27,968 53,687
Accumulated amortisation
At 1 January 2020 2,202 2,629 4,831
Amortisation charged for the Period 77 451 528
At 30 June 2020 (restated) 2,279 3,080 5,359
Amortisation charged for the Period - 677 677
At 31 December 2020 2,279 3,757 6,036
Amortisation charged for the Period - 708 708
At 30 June 2021 2,279 4,465 6,744
Net book value
At 30 June 2021 23,440 23,503 46,943
At 31 December 2020 23,405 24,211 47,616
At 30 June 2020 (restated) 18,840 22,862 41,702
10 Investments
GBP'000
Cost
At 1 January 2020 416
Additions -
At 30 June 2020 416
Additions 1,101
Net movement on equity accounting of associate (16)
Investment de-recognised on gain of control (1,501)
At 31 December 2020 -
Additions 20
At 30 June 2021 20
On 25 May 2019, Kingswood acquired a 7% interest in US-based
Manhattan Harbor Capital, LLC ("MHC") for an initial consideration
of GBP416,435 (US$525,000), comprising a cash payment of GBP263,742
(US$332,500) and a share component of GBP152,693 (US$192,500)
which was satisfied through the issuance of 1,654,787 new ordinary
shares in the Company.
On 12 August 2020, Kingswood acquired an additional 17% interest
in MHC for total cash consideration of GBP1,101,362 (US$1,438,158).
In the period during which Kingswood held 24% interest in MHC,
equity accounting was applied and Kingswood's unrealised gain
on investment during this period equalled GBP57,349 (US$75,563).
On 23 November 2020, Kingswood acquired a controlling 50.1% share
in MHC and its subsidiaries for consideration of GBP3,841,268
(US$5,106,582), comprising a cash payment of GBP832,392 (US$1,106,582),
a deferred cash payment of GBP752,219 (US$1,000,000) and the
contribution of a 49.9% non-controlling interest in Kingswood
Capital Partners, LLC and Kingswood Wealth Advisors, LLC, together
valued at GBP99,210 (US$131,890).
The carrying value of Kingswood's 24% share of MHC immediately
prior to acquiring control, from which was MHC and its subsidiaries
was consolidated, was GBP2,334,365 (US$3,103,304). This investment
is no longer recognised in the consolidated financial statements
at 30 June 2021, with Kingswood instead fully consolidating MHC
and its subsidiaries.
11 Lease liabilities
The lease liabilities are included in trade and other payables
and other non-current liabilities in the statement of financial
position.
Land and buildings
GBP'000
At 1 January 2020 1,151
Additions 1,693
Interest expense 28
Lease payments (173)
At 30 June 2020 2,699
Additions 701
Interest expense 82
Lease payments (248)
At 31 December 2020 3,234
Additions 65
Interest expense 92
Lease payments 315
At 30 June 2021 3,076
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is initially
measured at cost, and subsequently at cost less any accumulated
depreciation and impairment losses and adjusted for certain
re-measurements of the lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement
date, discounted using the Group's incremental borrowing rate.
The lease liability is subsequently increased by the interest
cost on the lease liability and decreased by lease payment made.
The Group has applied judgement to determine the lease term
for some lease contracts in which it is a lessee that includes
renewal options. The assessment of whether the Group is reasonably
certain to exercise such options impacts the lease term, which
significantly affects the amount of lease liabilities and right-of-use
assets recognised.
12 Deferred consideration payable
30 Jun 2021 30 Jun 2020 31 Dec 2020
(unaudited) (unaudited) (audited)
restated
GBP'000 GBP'000 GBP'000
Deferred consideration payable on acquisitions: 4,710 4,882 4,068
- falling due within one year 900 2,197 836
- due after more than one year 3,810 2,685 3,232
The deferred consideration payable on acquisitions is due to
be paid in cash.
The deferred consideration liability is contingent on performance
requirements during the deferred consideration period. The value
of the contingent consideration is determined by EBITDA and/or
revenue targets agreed on the acquisition of each asset, as defined
under the respective Business Purchase Agreement. As at the reporting
date, the Group is expecting to pay the full value of its deferred
consideration as all acquisitions are on target to meet the requirements,
and therefore no gains or losses have arisen from this during
the year.
During the period, deferred consideration expensed as remuneration
through profit or loss was GBP4,145,000 (year ended 31 Dec 2020:
GBP7,253,510; six month period ended 30 Jun 2020: GBP3,059,173).
13 Share capital
Six months Six months Year ended Six months Six months Year ended
to to to to
30 Jun 2021 30 Jun 2020 31 Dec 2020 30 Jun 2021 30 Jun 2020 31 Dec 2020
Shares Shares Shares GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Ordinary shares issued:
Fully paid 216,920,719 216,920,719 216,920,719 10,846 10,846 10,846
216,920,719 216,920,719 216,920,719 10,846 10,846 10,846
Share capital and share premium
Number of Par value Share premium Total
ordinary
shares
'000 GBP'000 GBP'000 GBP'000
At 1 January 2020 216,921 10,846 8,224 19,070
Issued during year - - - -
At 30 June 2020 216,921 10,846 8,224 19,070
Issued during year - - - -
At 31 December 2020 216,921 10,846 8,224 19,070
Issued during year - - - -
At 30 June 2021 216,921 10,846 8,224 19,070
Ordinary shares have a par value of GBP0.05 per share. They entitle
the holder to participate in dividends, and to share in the proceeds
of winding up the company in proportion to the number of, and
amounts paid on, shares held. On a show of hands, every holder
of ordinary shares present at a meeting in person or by proxy,
is entitled to one vote and upon a poll each share is entitled
to one vote.
Kingswood Holdings Limited does not have a limit on the amount
of authorised capital.
14 Preference share capital
Six months Six months Year ended Six months Six months Year ended
to to to to
30 Jun 2021 30 Jun 2020 31 Dec 2020 30 Jun 2021 30 Jun 2020 31 Dec 2020
Shares Shares Shares GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Convertible preference shares
issued:
Fully paid 44,828,443 18,350,043 44,828,443 37,550 18,350 37,550
44,828,443 18,350,043 44,828,443 37,550 18,350 37,550
Preference share capital movements
are as follows:
Number of Par value
shares
'000 GBP'000
At 1 January 2020 5,728 5,728
Issued during year 12,622 12,622
At 30 June 2020 18,350 18,350
Issued during year 26,478 26,478
At 31 December 2020 44,828 44,828
Issued during year - -
At 30 June 2021 44,828 44,828
Six months Six months Year ended
to to
30 Jun 2021 30 Jun 2020 31 Dec 2020
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
restated
Equity component 37,550 14,985 37,550
Liability component 7,469 3,395 7,365
45,019 18,380 44,915
14 Preference share capital
On 12 September 2019, Kingswood Holdings Limited entered into
a subscription agreement with HSQ INVESTMENT LIMITED, a wholly
owned indirect subsidiary of funds managed and/or advised by
Pollen Street, to subscribe for up to 80 million irredeemable
convertible preference shares, at a subscription price of GBP1
each (the Subscription). Pollen Street is a global, independent
alternative asset investment management company, established
in 2013 with currently over GBP2.6 billion gross AUM across private
equity and credit strategies, focused on the financial and business
services sectors, with significant experience in specialty finance.
All irredeemable convertible preference shares convert into new
ordinary shares at Pollen Street Capital's option at any time
from the earlier of an early conversion trigger or a fundraising,
or automatically on 31 December 2023. Preferential dividends
on the irredeemable convertible preference shares accrue daily
at a fixed rate of five per cent per annum from the date of issue.
15 Notes to the cash flow statement
Cash and cash equivalents comprise cash and cash equivalents
with an original maturity of three months or less. The carrying
amount of these assets is approximately equal to their fair value.
Cash and cash equivalents are detailed in note .
Six months Six months Year ended
to to
30 Jun 2021 30 Jun 2020 31 Dec 2020
GBP'000 GBP'000 GBP'000
(unaudited) (unaudited) (audited)
restated
GBP'000 GBP'000 GBP'000
Loss before tax (3,728) (6,066) (10,680)
Adjustments for:
Depreciation and amortisation 1,117 785 1,822
Finance costs 840 218 554
Remuneration charge (deferred consideration) 4,145 3,059 7,254
Share-based payment expense 60 350 (223)
Other (losses) / gains - 10 (1,744)
Foreign exchange gain 4 (47) (22)
Tax paid (40) - (103)
Share of post-tax profits of equity
accounted associates - - (56)
Operating cash flows before movements
in working capital 2,398 (1,691) (3,198)
(Increase)/decrease in receivables (863) (449) (1,893)
Increase/(decrease) in payables 4,119 6,049 3,516
Net cash inflow / (outflow) from operating
activities 5,654 3,909 (1,575)
16 Financial instruments
The following table states the classification of financial instruments
and is reconciled to the Statement of Financial Position:
30 Jun 2021 30 Jun 2020 31 Dec 2020
Carrying Carrying Carrying
amount amount amount
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Financial assets measured at amortised
cost
Trade and other receivables 3,790 889 23,048
Cash and cash equivalents 24,733 1,945 3,899
Financial liabilities measured at amortised
cost
Trade and other payables (17,495) (4,512) (10,483)
Other non-current liabilities - - (794)
Lease liability (3,076) (2,699) (3,234)
Preference share liability (7,469) (3,395) (7,365)
Financial liabilities measured at fair
value through profit and loss
Deferred consideration payable (4,710) (4,882) (4,068)
(4,227) (12,654) 1,003
Financial instruments not measured at fair value includes cash
and cash equivalents, trade and other receivables, trade and
other payables, and other non-current liabilities.
Due to their short-term nature, the carrying value of cash and
cash equivalents, trade and other receivables, and trade and
other payables approximates fair value.
Item Fair value Valuation technique Fair value
hierarchy
level
GBP'000
Deferred 4,710 Fair value of Level 3
consideration deferred
payable consideration
payable
is estimated by
discounting the
future cash
flows
using the IRR
inherent
in the company's
acquisition
price.
The potential profit or loss impact in relation to deferred
consideration payable of a reasonably possible change to the
discount rate is as follows:
Profit or (loss)
impact
Assumption Reasonably Increase Decrease
possible
GBP'000 GBP'000
Discount rate change (+ / - 5%) (64) 66
17 Related party transactions
Remuneration of key management personnel
The remuneration of the Directors, who are the key management
personnel of the Group, is set out below in aggregate for each
of the categories specified in IAS 24 Related Party Disclosures.
Six months Six months Year ended
to to
30 Jun 2021 30 Jun 2020 31 Dec 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Short-term employee benefits 371 338 898
Share based payments 34 260 68
405 598 966
Other related parties
During the period, KHL incurred fees of GBP62,500 (30 June 2020:
GBP62,500; 31 December 2020: GBP125,000) from KPI (Nominees)
Limited in relation to Non-Executive Director remuneration. At
30 June 2021, GBP37,500 of these fees remained unpaid (30 June
2020: GBPnil; 31 December 2020: GBP112,500).
Fees received from Moor Park Capital Partners LLP, in which Gary
Wilder holds a beneficial interest, relating to property related
services provided by KHL totalled GBP23,708 for the period ended
30 June 2021 (30 June 2020: GBP20,000; 31 December 2020: GBP20,000),
of which GBPnil (30 June 2020: GBPnil; 31 December 2020: GBPnil)
was outstanding at 30 June 2021.
Fees paid for financial and due diligence services to Kingswood
LLP and Kingswood Corporate Finance Limited, in which Gary Wilder
and Jonathan Massing hold a beneficial interest, totalled GBP201,829
for the period to 30 June 2021 (30 June 2020: GBP38,900; 31 December
2020: GBP184,426), of which GBP5,430 (30 June 2020: GBP12,132;
31 December 2020: GBP29,280) was outstanding at 30 June 2021.
18 Ultimate controlling party
As at the date of approving the financial statements, the ultimate
controlling party of the Group was KPI (Nominees) Limited.
19 Restatement of prior periods
Deferred consideration
In 2020, the Group restated its accounting treatment regarding
business combinations and deferred consideration to conform with
the required treatment of deferred consideration under IFRS 3.
Previously all deferred consideration payable on acquisitions
was recorded as a deferred liability and included in the fair
value of the consideration of the business acquired. However,
in circumstances where the payment of deferred consideration
is contingent on the seller remaining within the employment of
the Group during the deferred period, the contingent portion
of deferred consideration should not have been included in the
fair value of consideration paid, rather is treated as remuneration
and accounted for as a charge against profits over the deferred
period.
This has therefore required the restatement of prior years and
the reclassification of certain deferred payments as remuneration.
The following restatement covers the share purchase acquisition
of Marchant McKechnie in 2018 and the asset purchases of WFI
and Thomas & Co in 2019.
(a) Statement of Comprehensive Income (extract)
Six months Increase Six months
to 30 Jun / (decrease) to 30 Jun
2020 2020
(restated)
GBP'000 GBP'000 GBP'000
Finance charge 218 (137) 81
Amortisation charge 807 (279) 528
Remuneration charge (previously deferred
consideration) - 3,059 3,059
Total comprehensive loss (3,424) (2,642) (6,066)
Earnings per share - basic and diluted GBP(0.02) GBP(0.01) GBP(0.03)
19 Restatement of prior periods
(b) Statement of Financial Position (extract)
30 Jun 2020 Increase 30 Jun 2020
/ (decrease)
(restated)
GBP'000 GBP'000 GBP'000
Intangible assets and goodwill 58,664 (16,962) 41,702
Total non-current assets 62,619 (16,952) 45,667
Trade and other payables 4,801 2,119 6,920
Deferred consideration payable in
less than 1 year 10,006 (7,809) 2,197
Total current liabilities 15,212 (6,095) 9,117
Deferred consideration payable in
more than 1 year 9,890 (7,205) 2,685
Other non-current liabilities 2,294 3,394 5,688
Total liabilities 27,396 (9,906) 17,490
Net assets 39,932 (7,046) 32,886
Retained earnings 2,456 (3,681) (1,225)
Preference share capital 18,350 (3,365) 14,985
Total equity 39,932 (7,046) 32,886
20 Events after the reporting date
Regulatory approval for the acquisition of 100% of the shares
in Admiral Wealth Management was received on 17 August 2021.
Full details can be found in note 3.
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