12 July 2022

MJ Hudson Group plc

(the "Company", "Group" or "MJ Hudson")

Post year end trading update, stronger than expected finish to the year

MJ Hudson Group plc (AIM:MJH), the specialist service provider to the asset management industry, is  pleased to announce that the Group has continued to trade strongly for the rest of the financial year ended June 2022 (''FY 2022'').

In particular, the Group has seen notable outperformance in ESG and Fund Performance Analytics, both part of the Data & Analytics division. The combination of these factors means that management now expects to report results for FY 2022 modestly ahead of prior guidance given on 12 May 2022.

Performance By Division

The Group has made significant progress in each of its three divisions in the second half of FY 2022. The nature of this progress, in most cases underpinned by recurring client engagements, gives management increased confidence for the current financial year and beyond. In terms of operational highlights -

·      Data & Analytics - The Group has won two specific ESG and Fund Performance Analytics contracts in the last three months of the financial year which together are expected to generate over $1.2m  in revenues for the Group on an annualised basis.

ESGAdvantage, the Company´s award-winning digital ESG platform, has performed well since its recent launch and the new business pipeline remains very strong for ESG related contracts including carbon-related services. One feature of early account wins for ESGAdvantage has been the potential to upsell consulting and other ESG services. Management expects revenue from this business unit to have more than tripled in the two-year period to end June 2022.

Fund Performance Analytics is a business unit formed from the acquisition of PERACS in December 2020. During FY 2022, a number of significant, high margin contracts have been won, supporting the business´ strongest ever year in terms of revenues.  The largest of these wins was secured in the final month of the financial year. FY 2022 represents Fund Performance Analytics´ first full year within MJ Hudson and, management expects it to be the highest margin business in the Group.

Elsewhere, progress was strong within the IR & Marketing Solutions business as well as the recently acquired Quantitative Solutions business, where the team´s fintech capabilities and the platform have quickly delivered real strategic value. Once fully integrated, the platform is expected to increase efficiency both across the Group and in the Outsourcing division specifically, where the business units can leverage its services in a cost-effective manner.

·      Outsourcing - The Group's Irish 'Super ManCo' based in Dublin, formed by the acquisition of Bridge Consulting in 2021, continues to perform at the upper end of the growth expectations set at the time of the deal. The Luxembourg operations, which were established following the UK Article 28 ("Brexit") referendum, have broken even and are now increasingly profitable. Whilst Saffrey Champness Fund Services Limited was acquired towards the end of calendar 2021, integration is at an early stage and we will give more detail on progress at the Group´s preliminary results for the full year.

·      Advisory - The Group has experienced a strong recovery in the law firm since January. This was due to a general improvement in new fund launches as well as a pleasing return from new partner hires. The Investment Advisory business unit has shown improved profitability in recent months with the benefit of the initial revenues accrued in relation to the Access client contract win. This and the Investment Advisory business unit's improving momentum, generally, during FY 2022, has bolstered the Group´s new business pipeline.

As outlined in the Company´s interim results for the six months ended December 2021, the key areas of outperformance are the Company´s three transformative growth areas: ESG & Sustainability; the Irish Super ManCo in Dublin; and, Luxembourg fund services. These business units are distinguished within the Group by their ability to grow underlying revenue by more than 50% annually on an organic basis and the recurring nature of their client engagements. Taken together, these three transformative growth areas now account for 34% of Group revenues (was 22% at the same point last year) but a higher proportion of EBITDA given their superior individual margins.

Outlook

Underlying revenue growth was 50% in the first half of the year but is expected to be modestly ahead of this for the full year, given strong growth in the second half. The difference is more pronounced on an organic growth basis where growth for the full year is expected to be more than double the 7% reported at the interim stage.

The impact of the scale of outperformance in the second half and the nature of the new business won is helping to underpin margin expansion for the Group as a whole, whilst improving the balance of repeat and recurring revenues.

In May, the Group announced that the Board expected the financial results for FY 2022 to deliver adjusted EBITDA of at least £8.3m, on the basis of the Group´s nine-month performance to end March 2022. The performance of the Group in the final three months of the financial year has been very encouraging, led by large new client gains in high-margin business units. This, combined with a marked recovery in the Advisory division, means that the Board now expects to report adjusted EBITDA modestly ahead of this guidance for FY2022. Given much of this outperformance in the second half stems from recurring client revenues, this gives management further confidence in the growth outlook for FY 2023, and beyond.

Matthew Hudson, CEO of MJ Hudson, commented:

"We are delighted to give another positive trading update on what is turning out to be a milestone year for the MJ Hudson Group. Our three transformative growth areas continue to underpin the organic growth of the Group, led by the enduring tail winds of: ESG; regulation; the growth in outsourcing; and the general trend for greater transparency and insight. At the same time, we have made real strides in our Advisory division, with a welcome return to revenue growth now expected for the full year to June. This has been a real team effort and I commend our staff at a time of tightening economic conditions, under the shadow of geopolitical risk. There is much more for us to do, however, and we have no intention of slowing down.  I am particularly pleased that our efforts to add value to our Data & Analytics offer with the launch of dedicated digital services has received such an encouraging reaction from clients and the market."

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About MJ Hudson

MJ Hudson (AIM:MJH) is the end-to-end solutions provider to the US$100 trillion+ asset management industry, specialising in its fastest growing segment, private markets (including private equity and venture capital). 

The Company offers investors access to the growth in private markets as a tech-enabled 'picks and shovels' play. 

Founded in 2010, by CEO Matthew Hudson (a private markets lawyer and former fund manager), MJ Hudson was admitted to the AIM market of the London Stock Exchange in 2019. The Group has grown to more than 300 professionals, serving more than 1,000 clients, across the globe, including some of the industry's largest players and 18 of the FTSE 100.

Several factors have contributed to the Group's success, to date, and support strong growth expectations, for the future: 

1.   Private markets are growing fast, and MJ Hudson provides the picks and shovels

2.   As private markets grow, so do scrutiny and regulation, increasing the need for the Group's specialist advice and services, particularly in areas like ESG, where it has award-winning solutions

3.   As it evolves, the sector is increasingly embracing technology, data, and analytics, where MJ Hudson has market-leading and award-winning tools and in which it continues to invest

4.   The Group's multi-service approach creates multiple client touchpoints, building stronger, longer-term relationships, and making it easier to sell in additional MJ Hudson services

5.   Performing these services generates vast amounts of data, which MJ Hudson aggregates and analyses, in order to further support its clients, by developing next-generation tools and fine-tuning existing services

For more information, please visit our website: www.mjhudson.com/investors 

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