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Kingswood announces half yearly results and continued progress towards strategic goals

Kingswood Holdings Limited, the international, fully integrated wealth and investment management group, has announced its unaudited interim financial results for the half year ended 30 June 2022.

 David Lawrence, Kingswood Chief Executive Officer, commented: “We delivered record levels of revenue and operating profit in all 3 of our divisions in 2021 and I am delighted to report further growth in the first half of 2022. Whilst the business continues to build momentum through 2022, revenue and operating profit have been impacted by unfavourable market conditions, mainly from lower-than-expected capital market activity in the US.  Despite this, our business continues to grow organically in both the UK and US and our acquisition strategy continues to progress as planned. 

“We have continued to implement our buy, build and grow strategy in the UK, successfully completing the acquisition of 6 UK IFA businesses and have a strong pipeline for future UK acquisitions. I would like to welcome our 6 recently acquired businesses to the Kingswood Group and wish them every success with us moving forwards.  Under the leadership of Mike Nessim, we have also continued to expand our US footprint adding 12 new registered representatives and growing our AUM by $0.2bn. 

“Whilst the external environment is less certain in the short-term, the strategy and trajectory of the business continues as planned.  We have a strong leadership team that is driving tangible results and realising our ambition to become a leading fully integrated international wealth & investment management business and I would like to thank all colleagues and stakeholders for their effort, focus and commitment.”

 Strategic Highlights

  • UK AUM/A increased by £2.2bn to £7.1bn in H1’22 largely driven by inorganic growth and positive net flows of assets under our management and advice (AUM/A)
  • We completed the acquisition of 6 UK IFA businesses in the first half of the year which have been successfully integrated into the Group’s operations within 4 months
  • 8 UK acquisitions are currently in exclusive due diligence, comprising a total of £8.7m annual operating profit and £1.9bn AUM/A. These are expected to conclude in the fourth quarter of 2022
  • Kingswood places the client at the heart of everything we do and we are extremely proud to have 4.8 stars out of 5 on VouchedFor, home to the UK’s most trusted advisers
  • 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 1,300 clients have now 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
  • As we build a business more representative of our society, good progress has been made to address diversity imbalances across the organisation – 60% of UK adviser hires in 2022 were female compared to an adviser community where c.15% of our advisers are female
  • Kingswood US has continued to grow organically through the accelerated recruitment of registered representatives, which supported an 8% increase in AUM/A to $2.7bn
  • The US business continues to build on the exceptional growth experienced in its Investment Banking operating segment during 2021, recruiting two new high quality IB groups in H1’22 focussed on mid-market equity capital markets

Financial Highlights

  • Group revenue of £80.4m increased by £18.8m, or 31%, compared to H1’21 reflecting the impact of acquisitions and healthy organic growth across both the UK and US
  • Wealth Planning revenue of £12.9m increased by 55% compared to H1’21 reflecting the impact of our recent acquisitions and organic revenue growth from higher new volumes of new business. Investment Management revenue of £3.6m also increased by 55% compared to the prior year due to the acquisition of IBOSS Asset Management, with positive net inflows also seen in our Fixed Income business
  • US revenue of £63.9m increased by 26% compared to H1’21. Recurring revenues increased from 7% in 2021 to 13% in H1 2022.  The Registered Investment Adviser (RIA) and Independent Broker Dealer (IBD) business reported revenue was £8.0m, 189% higher than H1’21, as an increase in the number of registered representatives by 12 to 223 supported growth in AUM by $0.2bn to $2.7bn.  Investment Banking (IB) revenue of £55.9m increased by 16% compared to H1’21 reflecting a strong performance in the first quarter. IB revenue in the second quarter fell by 20% year-over-year as macro-economic headwinds and market volatility led to a slowdown in capital market activity, as demonstrated by a fall in the number of IPOs in the Americas region by 73% compared to H1’21. On a like for like currency basis, US revenue increased by 17% to $82.7m compared to H1’21
  • Operating Expenditure of £15.6m increased by 46% compared to H1’21 largely reflecting the impact of acquisitions in the UK (£2.9m) and higher costs in Kingswood US (£1.5m) due to higher legal, compliance and regulatory costs. Central costs increased by (£0.5m) to £2.8m reflecting investment to support a growing business and higher professional fees
  • Operating Profit of £4.5m was £1.5m higher than H1’21 reflecting the additional contributions from the recently acquired businesses. 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 was a Loss of £1.7m reflecting a net £6.3m acquisition related deferred consideration release offset by £1.9m amortisation and depreciation, £1.5m finance (interest related) costs, £2.8m business re-positioning and transaction costs and a goodwill adjustment of £6.4m
  • The Group had £20.7m of cash as at June 2022, a decrease of £22.2m since December 2021, largely driven by acquisition related payments in the UK and timing of the settlement of Investment Banking commission payments in the US

£’000 (unless otherwise stated)

H1’22

H1’21

Change %

Wealth Management

12,864

8,307

55%

Investment Management

3,588

2,312

55%

Kingswood US

63,937

50,922

26%

Total Revenue

80,389

61,541

31%

Recurring Revenue

28%

19%

n/a

Kingswood UK (WM + IM)

5,810

2,830

105%

Kingswood US

1,529

2,519

(39)%

Division Operating Profit

7,339

5,349

37%

Central Costs

(2,834)

(2,294)

24%

Operating Profit

4,505

3,055

47%

 

 

 

 

£’000 (unless otherwise stated)

H1’22

FY’21

Change %

Total Equity

75,608

76,898

(2)%

Total Cash

20,693

42,933

(52)%

Key Metrics

   AUM/A (£m)

9,288

6,772

37%

   # of UK Advisers

87

70

24%

   # of US RIA/IBD reps

223

211

6%

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