TIDMKWG
RNS Number : 9844S
Kingswood Holdings Limited
15 March 2023
15 March 2023
KINGSWOOD HOLDINGS LIMITED
("Kingswood" or the "Group")
Trading Update
Kingswood Holdings Limited (AIM: KWG), the international, fully
integrated wealth and investment management group, provides an
update on trading for the year ended 31 December 2022 ("FY2022")
and outlook for the year ended 31 December 2023 ("FY2023").
Trading update:
Kingswood continues to make exceptional progress against its
strategic objectives and its medium-term targets.
Subject to audit, the Group expects to report total revenue of
approximately GBP143.6m for FY2022, a decrease of GBP6.1m or 3.9%
year on year.
UK revenues increased to approximately GBP33.8m, a 54% increase
year on year, reflecting resilience to market headwinds and the
benefit of acquisitions in the current and prior periods.
The US business (in which KHL has a 50.1% interest and the US
financials are consolidated into Group reporting) expects to report
revenues of approximately GBP110m, a decrease of 14% year on year,
due to lower than expected capital markets activity affecting US
investment banking revenues and the timing of a large one-off, high
margin US transaction that was expected to be reported in 2022 and
that will now be recognised in 2023.
The Group expects FY2022 operating profit to be GBP8.5m, an
increase of GBP2.2m or 34% year on year, but below the Board's
expectations.
UK expects to report operating profit of GBP11.3m (a GBP5.2m or
84% increase year on year) and is in line with Board
expectations.
The US business expects to report operating profit of GBP2.8m (a
GBP2.4m or 46% decrease year on year) and below Board
expectations.
Further detail is set out below.
Strategic highlights:
-- Kingswood completed the acquisition of ten businesses in the
UK in 2022. Collectively, these businesses have added GBP1.7bn AuA,
28 advisers and GBP11.8m revenue to the Group in 2022 and will add
a further GBP6.0m incremental revenue in 2023.
-- In Q1 2023 two further acquisitions, Barry Fleming Partners
and Moloney Investments Ltd (MMPI), have completed, adding further
AuA of GBP0.7bn and revenue of GBP8.3m. The acquisition of MMPI is
a highly strategic investment, providing access to the attractive
Irish wealth management market and offering multiple new avenues
for growth.
-- UK AUM/A increased by GBP3.2bn to GBP8.1bn as at 31 December
2022, driven by inorganic growth and positive net flows of assets
under management and advice (AUM/A). AUM/A as at March 2023 is
GBP9.0bn following the acquisitions completed in the Q1 2023.
-- The acquisition of IBOSS has driven increased flows into
Kingswood investment solutions. Vertical Integration of AuA, where
an existing Wealth Planning client chooses a Kingswood Investment
product or service (MPS/PPS), increased to GBP650m by the end of
FY2022.
-- In the H2 2022, the UK business has continued to perform in
line with Board expectations, generating net positive inflows of
client AUM/A inflows and increasing revenue by more than 50% year
on year.
-- In October 2022, Kingswood announced that it had entered into
a debt facility with a leading global financial institution to
provide initial funding of GBP50m with the ability to increase the
commitment to GBP150m. This facility will further enable Kingswood
UK's strategic growth plans.
-- Technology has been successfully deployed in the business to
improve the client experience and productivity. Following the
launch of our market leading 'Kingswood Go' app in March 2022, over
3,300 clients have now been registered providing them with easier
access to their investment portfolio. Further investments in
technology will deliver an enhanced experience for the client
including digital fact finds and new propositions that will provide
both a face to face and a digitally delivered service.
-- Kingswood has launched a new AIM portfolio available for
clients, expanding the investment proposition.
-- Kingswood US has continued to grow its RIA/BD business
organically through the accelerated recruitment of registered
representatives, which supported an 19% increase in AUM/A to
$3.0bn. The US business continued to build its Investment Banking
operating segment, recruiting two new high quality IB groups in H1
2022 focused on mid-market equity capital markets.
Unaudited FY2022 financial highlights
-- The UK division has reported strong performance reflecting
rapid growth in the business. UK revenue will be approximately
GBP33.8m, a 54% year on year increase (2021: GBP21.9m). 87% of the
UK's revenue is recurring in nature, providing a strong,
annuity-style fee stream.
-- The UK division is expected to deliver operating profit of
approximately GBP11m, up 80% year-on-year (2021: GBP6.1m), which is
in line with Board expectations. Growth in operating profit, a
large part of which is driven by acquisitions, is underpinned by
careful cost management and realising synergy benefits from
business integrations to drive margin improvement. Central costs
are expected to be GBP5.6m, GBP0.7m higher year on year, reflecting
investment to support the growing business.
-- US division revenue will be approximately GBP110m, a
year-on-year reduction of 13.9% (2021: GBP127.8m) due to lower
transactional Investment Banking revenues resulting from a slowdown
in capital market activity, the timing of a large one-off
transaction and accordingly is below expectation. However, RIA/BD
revenues, which are recurring in nature and driven by AUM, have
grown 25% year over year on a like for like currency basis.
Operating profit is expected to be GBP2.8m (2021: GBP5.1m)
-- FY2022 Group revenue is therefore expected to be
approximately GBP143.6m, a 3.9% decrease on prior year (2021:
GBP149.7m).
-- FY2022 Group operating profit is expected to be approximately
GBP8.5m, 34% higher than 2021 but below the Board's expectations.
Year on year growth in operating profit was driven by acquisitions
and organic growth in the UK. It is lower than anticipated due to
the impact of lower US Investment Banking revenues and timing of a
large one-off revenue from a transaction in the US that had
expected to be reported in 2022 and will now be recognised in
2023.
-- As at December 2022, Group net assets are expected to be
GBP74.0m (2021: GBP76.9m) comprised of GBP(5.5)m net debt,
GBP(32.8)m deferred consideration and GBP112.3m of other net
assets. As at December 2022 the Group had drawn GBP25m of the debt
facility.
2023 Outlook
Our near-term target remains to build our AUM/A to in excess of
GBP10bn in UK&I and GBP12bn for the Group.
With the full year effect of the acquisitions made to date,
current Group FY2023 run rate operating profit is approximately
GBP14.7m. Through organic growth and further acquisitions through
2023 we are building a pipeline to deliver proforma operating
profit of GBP20m. Further upside should also be expected if markets
recover, but this is not assumed in our plans.
We continue to enjoy a strong and healthy pipeline of
acquisitions and have capacity with our debt facility to support
this. However, we are also considering sources of new capital to
ensure that we have a full range of options available to us. We
currently have four potential acquisitions in exclusivity and a
number of others in advanced negotiations.
In the US, we expect further progress in building out organic
growth in the RIA/BD business and look forward to an improvement in
capital market conditions.
David Lawrence, Kingswood Chief Executive Officer ,
commented:
"I am delighted that our business continues to make progress
across the Group with organic growth and positive net asset flows
complemented by ongoing acquisition activity. It is understandable
that capital markets activity softened in the US in 2022 as a
result of market conditions, with this division of our business
delivering lower operating profit contribution in the year.
However, the strategy and trajectory of the business continues as
planned. Our recent entry into the Irish market is a further
demonstration of Kingswood's progress and commitment to our future
growth. We expect to announce further acquisitions later in
2023."
S
For further details, please contact:
Kingswood Holdings Limited +44 (0)20 7293 0730
David Lawrence www.kingswood-group.com
finnCap Ltd (Nomad & Broker) +44 (0)20 7220 0500
imon Hicks / Abigail Kelly
GreenTarget (for Kingswood media) +44 (0)20 7324 5498
Jamie Brownlee / Ellie Basle 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 circa GBP9 billion of assets under advice and
management. It services circa 19k clients from a growing network of
offices across the UK with overseas offices in US , Ireland and
South Africa.
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 building on its position as a leading
player in the wealth and investment management market through
targeted acquisitions, creating a global business through strategic
partnerships.
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constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
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(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
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END
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