REG - Kingswood Holdings - 2024 Half-year Report
30/09/2024 07:00
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RNS Number : 1597G Kingswood Holdings Limited 30 September 2024
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 (http://www.kingswood-group.com/)
Cavendish Capital Markets Limited Ltd (Nomad & Broker) +44 (0)20 7220 0500
Marc Milmo / Abigail Kelly
GreenTarget (for Kingswood media) +44 (0)20 7324 5498
Jamie Brownlee / Ellie Basle Jamie.Brownlee@greentarget.co.uk (mailto:Jamie.Brownlee@greentarget.co.uk)
Company Registration No. 42316 (Guernsey)
KINGSWOOD HOLDINGS LIMITED
CONSOLIDATED INTERIM UNAUDITED FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2024
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
Interim Consolidated Statement of Cash Flows 8
Notes to the Interim Consolidated Financial Statements 9 - 28
KINGSWOOD HOLDINGS LIMITED
FINANCIAL AND OPERATIONAL REVIEW
FOR THE PERIOD ENDED 30 JUNE 2024
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
Six months to Six months to Year ended
30 June 2024 30 June 2023 31 Dec 2023
(unaudited) (unaudited) (audited)
(restated)*
Notes £'000 £'000 £'000
Revenue 6 40,628 35,593 86,160
Cost of sales (14,198) (11,851) (35,487)
Gross profit 26,430 23,742 50,673
Administration expenses (20,313) (18,687) (39,857)
Operating profit 6,117 5,055 10,816
Non-operating costs:
Business re-positioning costs (130) (369) (1,894)
Finance costs (7,227) (7,138) (12,966)
Other finance costs (2,634) (2,936) (6,046)
Acquisition-related items:
Other (losses) / gains 8 254 - 131
-
Remuneration charge (deferred consideration) 11 (704) (259) (474)
Transaction cost (1,571) (4,100) (2,828)
Loss before tax (5,895) (9,747) (13,261)
Tax (148) (175) (2,705)
Loss after tax from continuing operations (6,043) (9,922) (15,966)
Loss from discontinued operations - (172) (636)
Total comprehensive loss (6,043) (10,094) (16,602)
Six months to Six months to Year ended
30 June 2024 30 June 2023 31 Dec 2023
(unaudited) (unaudited) (audited)
(restated*)
£'000 £'000 £'000
- Owners of the parent company (6,853) (10,537) (18,233)
- Non-controlling interests 810 443 1,631
Total comprehensive loss is attributable to:
- Owners of the parent company (6,853) (10,537) (18,233)
- Non-controlling interests 810 443 1,631
Loss per share:
- Basic loss per share - continuing operations 9 £ (0.01) £ (0.05) £ (0.08)
- Diluted loss per share - continuing operations 9 £ (0.01) £ (0.01) £ (0.02)
The Basic and diluted loss per share from discontinued operations was £0.00
(2023: £0.00)
* 30 June 2023 results are restated due to a business classified as
discontinued operations - see Note 3
The notes on pages 9 -28 form an integral part of the financial statements.
KINGSWOOD HOLDINGS LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
30 Jun 2024 30 Jun 2023 31 Dec 2023
(unaudited) (unaudited) (audited)
(restated*)
Notes £'000 £'000 £'000
Non-current assets
Property, plant and equipment 606 893 770
Right-of-use assets 2,782 3,298 3,236
Goodwill and other intangible assets 10 149,148 148,658 146,405
Deferred tax asset 2,066 4,492 2,058
154,602 157,341 152,469
Current assets
Short term investments 72 49 72
Assets held for - 3,541 -
sale
Trade and other receivables 10,492 8,049 14,295
Cash and cash equivalents 15,459 22,939 18,704
26,023 34,578 33,071
Total assets 180,625 191,919 185,540
Current liabilities
Trade and other payables 9,363 11,334 15,654
Liabilities associated with assets held for sale - 2,558 -
Deferred consideration payable 11 17,629 15,513 23,905
26,992 29,405 39,559
Non-current liabilities
Deferred consideration payable 11 501 12,559 2,369
Other non-current liabilities 1,982 2,519 2,358
Loans and borrowings 77,611 64,984 62,879
Deferred tax liability 17,629 17,646 17,476
Total liabilities 124,715 122,038 127,113 124,641
88
Net assets 64,806 60,899
55,910 55,910
Equity
Share capital 12 34,309 10,846 10,846
Share premium 12 54,911 8,224 8,224
Preference share capital 13 - 70,150 70,150
Other reserves 18,717 16,168 17,423
Foreign exchange reserve (1,020) (1,087) (1,087) (778)
Retained earnings (56,013) (42,132) (42,132) (49,162) (49,162)
Equity attributable to the owners of the Parent Company 50,904 62,169 56,703
Non-controlling interests (NCI) 5,006 2,637 4,196
Total equity 55,910 64,806 60,899
* 30 June 2023 results are restated due to a business classified as
discontinued operations - see Note 3
The notes on pages 9 - 28 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:
David Hudd
Chairman
Date: 30(th) September 2024
KINGSWOOD HOLDINGS LIMITED
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2024
Equity attributable to the
owners of
Share capital Foreign Non-
and share Preference currency Other Retained the parent controlling
premium share capital reserve reserves earnings Company interests Tota
l
equi
ty
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £
000
Balance at 1 January 2023 19,070 70,150 (422) 14,373 (31,595) 71,576 2,391 73,967
Loss for the period - - - - (10,537) (10,537) 443 (10,094)
Other adjustment - - - - - - (197) (197)
Share based remuneration - - - 498 - 498 - 498
Preference share capital reserve - - - 1,297 - 1,297 - 1,297
Foreign exchange gain - - (665) - - (665) - (665)
At 30 June 2023 19,070 70,150 (1,087) 16,168 (42,132) 62,169 2,637 64,806
(Loss)/profit for the year - - - - (7,696) (7,696) 1,188 (6,508)
Other adjustment - - - - 666 666 371 1,037
Share based remuneration - - - (42) - (42) - (42)
Preference share capital reserve - - - 1,297 - 1,297 - 1,297
Foreign exchange gain/(loss) - - 309 - - 309 - 309
At 31 December 2023 19,070 70,150 (778) 17,423 (49,162) 56,703 4,196 60,899
(Loss)/profit for the year - - - - (6,853) (6,853) 810 (6,043)
Other adjustment - - - - 2 2 - 2
Share based remuneration - - - 131 - 131 - 131
Preference share conversion 70,150 (70,150) - - - - - -
Preference share capital reserve - - - 1,163 - 1,163 - 1,163
Foreign exchange gain/(loss) - - (242) - - (242) - (242)
At 30 June 2024 89,220 - (1,020) 18,717 (56,013) 50,904 5,006 55,910
KINGSWOOD HOLDINGS LIMITED
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2024
Period Period Year ended
30 Jun 2024 30 Jun 2023 31 Dec 2023
(unaudited) (unaudited) (audited)
*(restated)
Notes £'000 £'000 £'000
Net cash generated from / (used in) operating activities 14 2,828 3,852 4,593
Investing activities
Property, plant and equipment purchased (36) (99) (136)
Acquisition of investments (3,483) (28,458) (24,776)
Goodwill adjustment - additional consideration (1,546)
Proceeds from the disposal of a subsidiary, net of cash disposed - - 946
Deferred consideration and (10,554) (6,953) (9,638)
remuneration
Net cash used in investing activities (15,619) (35,510) (33,604)
Financing activities
Interest paid (4,204) (3,565) (5,910)
Lease payments (394) (430) (940)
Dividends paid to non-controlling interests - - (491)
New loans (repaid) / loans received 14,000 40,607 39,025
Net cash (used in)/generated from financing activities 9,402 36,612 31,684
Net (decrease)/increase in cash and cash equivalents (3,388) 4,954 2,673
Cash and cash equivalents at beginning of Period 18,704 19,624 16,726
Cash transferred to asset held for sale/cash flows from discontinued - (1,187) -
operations
Effect of foreign exchange rates 143 (452) (695)
Cash and cash equivalents at end of Period 15,459 22,939 18,704
* 30 June 2023 results are restated due to a business classified as
discontinued operations - see Note 3
The notes on pages 9 - 28 form an integral part of the financial statements.
KINGSWOOD HOLDINGS LIMITED
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2024
1 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.
2 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 2024
interim report are consistent with those disclosed in the annual financial
statements for the year ended 31 December 2023.
The information relating to the six months ended 30 June 2024 and the six
months ended 30 June 2023 do not constitute statutory financial statements and
has 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 2023.
3 Restatement of Prior Period Results
In the annual financial statements for 31 December 2023, Note 2 made reference
to a reclassification restatement to the prior year reported figures, as a
result of the sale of subsidiary BMI which completed on 9 November 2023. The
sale qualified as a discontinued operation under IFRS 5, "Non-current Assets
Held for Sale and Discontinued Operations" and therefore the results of BMI
for the year ending 2023 and 2022 were segregated from continuing operations
and disclosed separately. As such, to provide a consistent and comparable view
of the Group's financial performance for the six months ending 30 June 2024,
equivalent restatements have been made in respect of the 30 June 2023 figures.
The restatement involves reclassifying BMI's revenues, expenses, assets, and
liabilities from continuing operations to discontinued operations for the six
months ending 30 June 2023. The effect of the restatement on the Group's
interim statement of financial position and statement of comprehensive income
in respect of the comparative amounts for the six months ending 30 June 2023
is set out below:
Six months ending Adjustment for Six months ending
30 June 2023 30 June 2023
As reported Discontinued Operations Restated
(unaudited) (unaudited)
£ 000 £ 000 £ 000
Revenue 62,730 (27,137) 35,593
Cost of sales (37,314) 25,463 (11,851)
Gross Profit 25,416 (1,674) 23,742
Administrative expenses (20,451) 1,764 (18,687)
Operating profit/(loss) 4,965 90 5,055
Business re-positioning costs (369) - (369)
Finance costs (7,138) - (7,138)
Other Finance costs (2,957) 21 (2,936)
Transaction costs (4,161) 61 (4,100)
Remuneration charge (deferred consideration) (259) - (259)
Loss before tax (9,919) 172 (9,747)
Income tax receipt/(expense) (175) - (175)
Loss for the year net of tax reclassified to discontinued operations (172) (172)
Loss for the year from continuing operations (10,094) - (10,094)
3 Restatement of Prior Period Results (continued)
At 30 June 2023 Adjustment for At 30 June 2023
As Reported Discontinued Operations Restated
(unaudited) (unaudited)
£ 000 £ 000 £ 000
Property, plant and equipment 916 (23) 893
Right of use assets 3,298 - 3,298
Intangible assets and goodwill 148,658 - 148,658
Deferred tax asset 4,492 - 4,492
Total non-current assets 157,364 (23) 157,341
Trade and other receivables 10,380 (2,331) 8,049
Cash and cash equivalents 24,126 (1,187) 22,939
Assets held for sale - 3,541 3,541
Short term investments 49 - 49
Current Assets 34,555 23 34,578
Total Assets 191,919 - 191,919
Trade and other payables (13,892) 2,558 (11,334)
Liabilities associated with assets held for sale - (2,558) (2,558)
Deferred consideration (15,513) - (15,513)
Current liabilities (29,405) - (29,405)
Total non-current liabilities (97,708) - (97,708)
Total liabilities (127,113) - (127,113)
Total equity (64,806) - (64,806)
4 Accounting policies
4.1 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 2023 annual
financial statements.
4.2 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.
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 3 below.
5 Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are described in
note 2, 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 the Group - via its board and senior management - the
practical ability to direct, or as the case may be veto, the actions of its
investees.
The company holds 50.1% of voting rights in Kingswood US, LLC, parent company
of the US 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 rights, to variable returns from
involvement with Kingswood US, LLC and its subsidiaries; and the ability to
use power over the US Group to affect the amount of those returns, as such the
Company has consolidated the sub-group as subsidiaries with a 49.9%
non-controlling interest.
The company holds 70% of voting rights in Moloney Investments Limited, parent
company of Ireland and its subsidiaries, as well as a majority stake in the
Ireland 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 Moloney Investments Limited and its subsidiaries
and has consolidated the sub-group as subsidiaries with a 30% non-controlling
interest.
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 Cash Generating Units
(CGU) to their expected recoverable amount, estimated on a value-in-use basis.
The CGUs are based on the business segments as outlined in note 6.
5 Critical accounting judgements and key sources of estimation uncertainty
(continued)
Estimates and Assumptions (continued)
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.
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.
6 Business and geographical segments
Six month ended 30 June 2024 (Unaudited) Investment Wealth US Ireland Group Continuing Discontinued Total
management planning operations operations Total Total
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Revenue (disaggregated by timing):
Non-recurring 578 1,813 15,946 1,510 - 19,847 - 19,847
Recurring 3,563 13,500 1,258 2,460 - 20,781 - 20,781
External sales 4,141 15,313 17,204 3,970 - 40,628 - 40,628 40,628
Direct expenses (568) (603) (13,027) - - (14,198) - (14,198)
Gross profit 3,573 14,710 4,177 3,970 - 26,430 26,430 - 26,430
Operating profit / (loss) 1,773 4,852 1,331 1,336 (3,175) 6,117 - 6,117
Business re-positioning costs - - - - (130) (130) - (130)
Finance costs (3) (38) (6) (2) (7,178) (7,227) - (7,227)
Other finance costs (8) (712) - (28) (1,886) (2,634) - (2,634)
Other gains / (losses) 22 232 254 - 254
Remuneration charge (deferred consideration) - - - - (704) (704) - (704)
Transaction costs (198) (277) (119) (370) (607) (1,571) - (1,571)
Profit / (loss) before tax 1,564 3,847 1,206 936 (13,448) (5,895) - (5,895)
Tax - - (148) - - - (148) - (148)
Profit / (loss) after tax 1,564 3,847 1,058 936 (13,448) (6,043) - (6,043)
6 Business and geographical segments (continued)
Period Ended 30 June 2023 (Unaudited) (Restated) Investment Wealth US Ireland Group Continuing Discontinued Total
management planning operations operations Total Total
£ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Revenue (disaggregated by timing):
Non-recurring 452 2,053 11,894 1,743 - 16,142 25,620 41,762
Recurring 3,465 14,662 534 790 - 19,451 1,517 20,968
External sales 3,917 16,715 12,428 2,533 - 35,593 27,137 62,730
Direct expenses (569) (793) (10,489) - - (11,851) (25,463) (37,314)
Gross profit 3,348 15,922 1,939 2,533 - 23,742 1,674 25,416
Operating profit / (loss) 1,379 5,589 681 761 (3,355) 5,055 (90) 4,965
Business re-positioning costs (76) (104) (124) - (65) (369) - (369)
Finance costs (7) (87) (8) (1) (7,035) (7,138) - (7,138)
Other finance costs (9) (823) 21 (18) (2,107) (2,936) (21) (2,957)
Remuneration charge (deferred
consideration) - - - - (259) (259) - (259)
Transaction costs (61) (272) 61 - (3,828) (4,100) (61) (4,161)
Profit / (loss) before tax 1,226 4,303 631 742 (16,649) (9,747) (172) (9,919)
Tax - (157) (14) (4) - (175) - (175)
Profit / (loss) after tax 1,226 4,146 617 738 (16,649) (9,922) (172) (10,094)
6 Business and geographical segments (continued)
Year Ended 31 December 2023 (Audited) Investment Wealth US Ireland Group Continuing Discontinued Total
management planning operations operations Total Total
Revenue (disaggregated by timing): £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000 £ 000
Non-recurring 974 4,420 28,633 1,550 - 35,577 36,484 72,061
Recurring 6,995 27,970 10,941 4,636 41 50,583 1,827 52,410
External sales 7,969 32,390 39,574 6,186 41 86,160 38,311 124,471
Direct expenses (1,154) (1,482) (32,851) - - (35,487) (36,322) (71,809)
Gross profit 6,815 30,908 6,723 6,186 41 50,673 1,989 52,662
Operating profit / (loss) 3,020 10,709 1,870 1,948 (6,731) 10,816 (103) 10,713
Business re-positioning costs (265) (425) - - (1,204) (1,894) - (1,894)
Finance costs (13) (156) (13) (3) (12,781) (12,966) (6) (12,972)
Amortisation and depreciation (9) (1,656) (145) (51) (4,185) (6,046) (37) (6,083)
Other gains / (losses) - (5) 46 - 90 131 - 131
Remuneration charge (deferred - - - - (474) (474) - (474)
consideration) 6 (586) 1,117 (72) (3,293) (2,828) (490) (3,318)
Profit / (loss) before tax 2,739 7,881 2,875 1,822 (28,578) (13,261) (636) (13,897)
Tax - (39) (37) (290) (2,339) (2,705) - (2,705)
Profit / (loss) after tax 2,739 7,842 2,838 1,532 (30,917) (15,966) (636) (16,602)
7 Discontinued operations
In the 31 December 2023 financial statements, the Group reported the sale of the of the entire share capital of wholly owned subsidiary Benchmark Investments, LLC (BMI) for a consideration of US$5million. At 30 June 2023 and at 31 December 2023, the business has been classified as held for sale and is classified as a discontinued operation, and can be shown below.
No items have been presented as discontinued in 2024.
Six months to Year ending
Results of discontinued operations: 30 June 2023 31 Dec 2023
£ 000 £ 000
Revenue 27,137 38,311
Cost of sales (25,463) ( 36,322)
Gross Profit 1,674 1,989
Administrative expenses (1,764) (2,092)
Operating profit (90) (103)
Business re-positioning costs
Finance costs - (6)
Other Finance costs (21) (37)
Transaction costs (61) (490)
Other gains or losss
(Loss)/Profit before tax (172) (636)
Income tax receipt/(expense) - -
Loss for the year from discontinued operations (172) (636)
Attributable to:
Owners of the Company (86) (319)
Non-controlling interests (86) (317)
(172) (636)
Six months to Year ending
30 June 2023 31 Dec 2023
Cash flows used in discontinued operations £ 000 £ 000
Net cash from operating activities 1,187 -
Net cash from investing activities - -
Net cash from financing activities - -
Net cash flows for the year 1,187 -
7 Discontinued operations (continued)
At 30 June 2023, the disposal group was stated at its carrying value and
comprised the following assets and liabilities:
At
30 June 2023
£ 000
Property, plant and equipment 23
Trade and other receivables 2,331
Cash and cash equivalents 1,187
Assets held for sale 3,541
Trade and other payables 2,558
Liabilities associated with assets held for sale 2,558
At of 30 June 2024 and 31 December 2023, there was no disposal groups, as the
sale was completed in November 2023.
9 Earnings per share
5
Six months to Six months to Year ended
30 Jun 2024 30 Jun 2023 31 Dec 2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Loss from continuing operations for the purposes of basic loss per share, (6,853) (10,365) (17,597)
being net loss attributable to owners of the Group
Loss from discontinued operations for the purposes of basic loss per share, - (172) (636)
being net loss attributable to owners of the Group
(6,853)
(10,537) (18,233)
Number of shares
Weighted average number of ordinary shares for the purposes of basic loss per 686,184,010 216,920,719 216,920,724
share
Effect of dilutive potential ordinary shares:
Share options 5,607,177 6,624,664 5,956,773
Convertible preference shares in issue 107,297,617 525,217,205 538,027,380
Weighted average number of ordinary shares for the purposes of diluted loss 799,088,804 748,762,588 760,904,877
per share
Continuing operations:
Basic loss per share £(0.01) £(0.05) £(0.08)
Diluted loss per share £(0.01) £(0.01) £(0.02)
Total loss:
Basic loss per share £(0.01) £(0.05) £(0.08)
Diluted loss per share £(0.01) £(0.01) £(0.02)
8 Other (losses) / gains
Six months to Six months to Year Ended
30 June 2024 30 June 2023 31 December 2023
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Realised gain on investment 254 - 131
254 - 131
10 Goodwill and other intangible assets
Goodwill Other intangible assets Total
£'000 £'000 £'000
Cost
At 1 January 2023 57,817 76,106 133,923
Additions 7,306 20,554 27,860
Movement due to FX (315) 14 (301)
At 30 June 2023 64,808 96,674 161,482
Additions 127 (266) (139)
Revaluation of acquisition 247 - 247
Exchange adjustments (14) (15) (29)
At 30 December 2023 65,168 96,393 161,561
Additions 1,343 2,361 3,704
Goodwill adjustment 1,546 - 1,546
Movement due to FX 127 - 127
Disposals - - -
At 30 June 2024 68,184 98,754 165,398
Accumulated amortisation
At 1 January 2023 2,279 8,175 10,454
Charge for period - 2,370 2,370
At 30 June 2023 2,279 10,545 12,824
Disposals
Charge for period - 2,332 2,332
9
At 31 December 2023 2,279 12,877 15,156
Disposals
Charge for period - 2,634 2,634
At 30 June 2024 2,279 15,511 17,790
10 Goodwill and other intangible assets (continued)
Net book value
As at 30 June 2024 65,905 83,243 149,148
As at 30 June 2023 62,529 86,129 148,658
As at 31 December 2023 62,889 83,516 146,405
11 Deferred consideration payable
Six Months to Six Months to Year Ended
30 June 2024 30 June 2023 31 December 2023
£'000 £'000 £'000
Deferred consideration payable on acquisitions: 18,130 28,072 26,274
- falling due within one year 17,629 15,513 23,905
- due after more than one year 501 12,559 2,369
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 Share or 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.
Previously all deferred consideration payable on acquisitions was recorded as
a deferred liability and included in the fair value of assets. 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 is not 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.
12 Share capital
Six months to Six months to Year ended Six months to Six months to Year ended
30 June 2024 30 June 2023 31 Dec 2023 30 June 2024 30 June 2023 31 Dec 2023
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Shares Shares Shares £'000 £'000 £'000
Ordinary shares issued:
Fully paid 686,184,010 216,920,719 216,920,719 34,309 10,846 10,846
686,184,010 216,920,719 216,920,719 34.309 10,846 10,846
Share capital and share premium
Number of ordinary shares Par value Share premium Total
'000 £'000 £'000 £'000
At 1 January 2023 216,921 10,846 8,224 19,070
Issued during year - - - -
As at 30 June 2023 216,921 10,846 8,224 19,070
At 31 December 2023 216,921 10,846 8,224 19,070
Issued during year 469,263 23,463 46,687 70,150
At 30 June 2024 686,184 34,309 54,911 89,220
On 31 May 2024, the Company issued 469,263,291 new ordinary shares of £0.05
each following the conversion of 77,428,443, £1 convertible preference shares
into ordinary shares at an agreed conversion price of 16.5 pence per share.
The par value of the newly issued ordinary shares amounted to £23,463,165,
with the excess over par value recognised as share premium. Please refer to
the Note 13 for more details.
Ordinary shares have a par value of £0.05 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.
As at 31 December 2023 HSQ Investment Limited held 469,263,291 Ordinary
Shares, representing approximately 68.4 per cent of ordinary shares in issue
at 30 June 2024.
13 Preference share capital
Six Months to Six Months to Year Ended Six Months to Six Months to Year Ended
30 June 2024 30 June 2023 31 Dec 2023 30 June 2024 30 June 2023 31 Dec 2023
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Shares Shares Shares £'000 £'000 £'000
Convertible preference shares issued:
Fully paid - 77,428,443 77,428,443 - 77,428 77,428
- 77,428,443 77,428,443 - 77,428 77,428
Six Months to Six Months to Year Ended
30 June 2024 30 June 2023 31 Dec 2023
(unaudited) (unaudited) (audited)
Equity component - 70,150 70,150
- 70,150 70,150
Number of shares Par value
'000 £'000
At 1 January 2023 77,428 70,150
Issued during year - -
As at 30 June 2023 77,428 70,150
At 31 December 2023 77,482 70,150
Extinguishment on conversion (77,428) (70,150)
At 30 June 2024 - -
On 31 May 2024, the Company announced that, following the receipt of approvals
from applicable regulatory authorities in the US, UK, and Republic of Ireland,
the Company's convertible preference shares would be converted into Ordinary
Shares. As part of this transaction, all convertible preference shares were
converted into ordinary shares, resulting in the issuance of 469,263,291 new
ordinary shares. The conversion was executed at the agreed conversion price of
16.5 pence per ordinary share. The carrying amount of the preference share
capital was transferred to share capital and share premium.
HSQ Investment Limited ("HSQ"), a wholly owned indirect subsidiary of funds
managed and/or advised by Pollen Street Capital Limited ("Pollen Street"),
will be beneficially interested in a total of 469,263,291 Ordinary Shares
representing approximately 68.4 per cent of the enlarged issued share capital
of the Company.
Preferential dividends on the convertible preference shares continued to
accrued and has been recognised until the date of conversion, daily at a fixed
rate of five per cent per annum. The Company and HSQ are currently in
discussions regarding the treatment and settlement of these accrued dividends,
with further announcements to follow.
14 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.
Six Months to Six Months to Year Ended
30 June 2024 30 June 2023 31 Dec 2023
(unaudited) (unaudited) (audited)
(restated)
£'000 £'000 £'000
Loss before tax from continuing operations (5,895) (10,091) (13,261)
Profit/(loss) for the year from discontinued operations, net of tax - 172 (636)
Loss before tax (5,895) (9,919) (13,897)
Depreciation and amortisation 2,634 2,957 6,046
Goodwill adjustment - - -
Finance costs 7,227 6,639 12,966
Remuneration charge (deferred consideration) 704 259 474
Share-based payment expense 130 499 456
Other losses / (gains) (254) - (224)
Other non cash items 519 - 846
(Gain) on disposal of businesses, net of disposal costs - - (1,039)
Tax paid (148) (175) -
Operating cash flows before movements in working capital 4,917 260 (5,628)
(Increase)/decrease in receivables 3,376 6,318 (9,804)
Increase/(decrease) in payables (5,465) (2,726) 8,769
Net cash inflow / (outflow) from operating activities 2,828 3,852 (4,593)
15 Financial instruments
The following table states the classification of financial instruments and is
reconciled to the Statement of Financial Position:
30 Jun 2024 30 Jun 2023 31 Dec 2023
Carrying amount Carrying amount Carrying amount
(unaudited) (unaudited) (audited)
(restated)
£'000 £'000 £'000
Financial assets measured at amortised cost
Trade and other receivables 10,492 8,049 14,295
Cash and cash equivalents 15,459 22,939 18,704
Financial liabilities measured at amortised cost
Trade and other payables (9,363) (11,334) (15,654)
Loans and borrowings (77,611) (64,984) (62,879)
Non-current portion of lease liability (1,982) (2,519) (2,357)
Financial liabilities measured at fair value through profit and loss
Deferred consideration payable (18,130) (28,072) (26,274)
(81,135) (75,921) (74,165)
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
£'000
Deferred consideration payable 18,130 Fair value of deferred consideration payable is estimated by discounting the Level 3
future cash flows using the IRR inherent in the company's acquisition price.
16 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 to Six months to Year ended
30 June 2024 30 June 2023 31 Dec 2023
(unaudited) (unaudited) (audited)
2024 2023 2023
£'000 £'000 £'000
Salaries and other short-term employee benefits 432 665 943
Other related parties
During the period, KHL incurred fees of £50,000 (30 June 2023: £50,000; 31
December 2023: £104,000) from KPI (Nominees) Limited in relation to
Non-Executive Director remuneration. At 30 June 2024, £nil of these fees
remained unpaid (30 June 2023: £nil; 31 December 2023: £nil).
Fees paid for financial and due diligence services to Kingswood LLP, in which
Gary Wilder and Jonathan Massing hold a beneficial interest, totalled £28,726
for the period to 30 June 2024 (30 June 2023: £69,469; 31 December 2023:
£171,353), of which £nil (30 June 2023: £nil; 31 December 2023: £nil) was
outstanding at 30 June 2024.
17 Business combinations
On 6 February 2024, the Company's Irish subsidiary, Moloney Investments Ltd
("MMPI"), completed the "bolt-on" acquisition of BasePlan Ltd ("BasePlan"), a
retirement planning advice firm based in Dublin, Ireland, following regulatory
approval. MMPI acquired 100% shareholding of Baseplan for a total cash
consideration of £3.1m (€3.65m).
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.
Details of the fair value of identifiable assets and liabilities acquired the
purchase consideration and goodwill are as follows:
Book value Adjustment Fair value
£ 000 £ 000 £ 000
Intangibles assets- customer relationships - 2,361 2,361
Trade and other receivables 48 - 48
Cash 28 - 28
Payables (75) - (75)
Deferred tax liability - (590) (590)
Total identifiable net assets 1 1,771 1,772
The trade and other receivables were recognised at fair value, being the gross
contractual amounts.
17 Business combinations (continued)
Fair value of consideration paid:
The acquisition has been accounted for using the acquisition method and
details of the purchase consideration are as follows:
2024
£'000
Initial cash paid 3,115
Deferred cash consideration -
Total purchase consideration
3,115
Goodwill recognised on acquisition 1,343
Acquisition costs have been recognised as transaction costs under
acquisition-related adjustments in the Consolidated Statement of Comprehensive
Income.
The main factors leading to the recognition of goodwill are:
• the strategic foothold the BasePlan team and business gives the Group in
Ireland, Dublin; and
• the ability to leverage BasePlan platform and achieve economies of
scale.
Consideration:
2024
£'000
Net cash outflow arising on acquisition:
Total purchase consideration 3,115
Less: Deferred consideration -
Initial cash paid to acquire BasePlan 3,115
Less: cash held by BasePlan (28)
Net cash outflow 3,087
MMPI's acquisition of BasePlan formed an expected part of Kingswood's
acquisition of MMPI in March 2023. An additional amount of £1.54m (€1.8m)
was paid to MMPI by the Company as part of the completion proceeds of MMPI
which was held pending receipt of the required regulatory approvals. This
amount has been recognised as additional goodwill on the MMPI acquisition
during the year.
18 Ultimate controlling party
As at the date of approving the financial statements, the ultimate controlling
party of the Group was HSQ Investment Limited, a wholly owned indirect
subsidiary of funds managed and/or advised by Pollen Street Group Limited. HSQ
Investment Limited, holds 68.40% of the voting rights and issued share capital
of the Group.
19 Events after the reporting date
On 15th August 2024, the Company obtained an additional £6.0m debt facility
from Pollen Street Capital Limited. This funding was obtained to provide the
necessary capital for the Company to meet upcoming deferred payment
obligations related to previous acquisitions. The key terms of the Facility
Agreement are as follows:
- £6.0m facility;
- Repayment date of earlier of 29 October 2030 or date of an
exit or partial exit; and
- Interest rate of 12%, paid at maturity.
There were no other significant events after the reporting period.
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