RNS Number : 0878O
Kingswood Holdings Limited
29 September 2023
 

Kingswood 2023 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 2023.

 

H1 2023 Group Operating Profit was £5.0m, £0.5m or 10% higher than H1 2022.

 

UK & Ireland revenue increased by 41% compared to the same period last year, of which 86% is recurring in nature. UK & I Operating Profit was £7.7m and in line with expectations.  

 

US revenue decreased by 38% compared to the same period last year, impacted by a slowdown in capital market activity. Operating Profits were £0.6m, falling short of expectation, though with recovery expected in H2 2023.

 

Group Assets under Management and Advice (AuM/A) at June 2023 were £12.0bn, having increased by £1.5bn compared to December 2022, supported by UK&I acquisitions of Barry Fleming & Partners (BFP) and Moloney Investments Ltd (MMPI) and in the US by the on-boarding of an additional 9 registered representatives.

 

In the UK, migration of AuA into its Discretionary Central Investment Propositions, notably the IBOSS AM MPS solution has gathered pace with AuM reaching £1.05bn in June 2023, up from £0.65bn on December 2022 - an increase of 62%.

 

David Lawrence, Kingswood Chief Executive Officer, commented:

 

"I am delighted to share our interim financial results for 2023. Despite continued economic and market uncertainties, the group has delivered strong growth year over year, and we continue to build the business into a leading participant in the sector. Our business fundamentals remain strong, with positive net asset growth, high levels of recurring revenue and very low adviser and consequently client attrition.

 

"We continue to have a clear growth focus across the business with complementary investment in our People, Technology and Client Experience to enable and support this. Whilst our focus remains on inorganic opportunities with which we have a proven integration model, organic growth has seen an increased focus across our three drivers of more advice for more clients, migration of AuA into our investment propositions and growing our IBOSS IFA distribution channel. 

 

"In the US, whilst market conditions have impacted performance, the fundamentals across both the investment banking and alternatives divisions give us confidence that as markets recover an accelerated growth trajectory will re-appear."


H1'23 - Strategic Highlights:

  • UK & Ireland successfully completed the purchase of Moloney Investments Ltd (MMPI) and Barry Fleming & Partners (Tax, Trusts and Investment Planning) Limited (BFP):-
    1. 70% acquisition of MMPI, a leading financial advisory group based in Dublin with €0.8bn AuM/A and EBITDA of c.€4.0m
    2. BFP, an IFA business based in Berkshire with £150m AuA and Operating Profit of c.£0.2m.

 

  • UK & Ireland AuM/A increased by £1.4bn to £9.5bn in H1'23, driven by acquisitions and encouraging levels of organic growth:
    1. Inorganic growth: £0.85bn client assets onboarded following the acquisitions of MMPI and BFP
    2. Strong levels of growth from vertical integration: £1.05bn client assets under our own management, an increase of £0.4bn compared to FY'22
    3. Institutional growth: £80m AuM net inflows in H1'23, with client assets 17% higher year on year.

 

  • IBOSS has been ranked by Next Wealth as the sixth fastest growing discretionary fund manager by assets and percentage of assets over the past 12 months. We have retained our 5 Star and 5 Diamond Defaqto ratings and gained further recognition from the adviser community by scooping three accolades at the Citywire Wealth Manager Awards. In 2023, IBOSS hopes to become the only DFM provider to win FTAdviser's 5 Star Award for four consecutive years.
  • Kingswood was named as one of the UK's 'Best Workplaces for Women' in 2023, by Great Place to Work. We continue to make progress in addressing diversity imbalances across the organisation and remain committed to increasing the female representation of our UK adviser population to at least 25% in the medium term, compared to current levels of 20% (2022: 19%).
  • Kingswood Go, our UK focused digital finance app and portal, is a great success with 3,525 clients registered and readily using the app. The app also enables us to serve smaller clients in an efficient and cost-effective manner. Accordingly, we can target clients at an earlier stage of their wealth journey.
  • We strive to maintain the highest level of service for our clients as reflected in our 'Vouchedfor' rating of 4.8 / 5.0.
  • Kingswood exhibits a strong Consumer Duty culture and pays particular attention to the needs of clients with characteristics of vulnerability. We successfully delivered in our Consumer Duty requirements by the 31st July 2023 deadline.
  • Inorganic growth continues to see focus with two transactions currently in exclusive discussions. We continue undertake a highly effective process of integration where the clients sit at the heart of this process.   
  • Kingswood US unveiled Kingswood Investments, a comprehensive in-house investment banking and capital markets division - which is set to contribute to future revenue generation, with its inaugural deal scheduled to close in September. This addition, along with the business' existing investment banking team in Florida and SPAC Advisory team, positions Kingswood US as a provider of one of the industry's most extensive investment banking services.
  • Kingswood US has invested in cutting-edge technology within the wealth management sector, ensuring that its advisors have access to a top-tier technology platform. The integration of Altigo, an industry-leading automated alternative investment platform, surpassed 1,200 subscriptions, representing $129 million in investments in just three years.
  • Kingswood US achieved recognition in the USA Today list of Best Financial Advisory Firms, a ranking compiled by Statista for USA Today. This accolade resulted from assessing over 31,000 RIAs, narrowing it down to the top 500 firms based on their asset under management growth, client and peer recommendations, both in the short and long term.
  • Our US footprint further expanded in the first half of the year adding nine new registered representatives and supporting growth in our total AuM/A in Kingswood US.
  • Kingswood US has obtained approval from FINRA (Financial Industry Regulatory Authority) to broaden its authorized business activities. This development positions the company to continue its natural growth trajectory. The revised membership agreement grants the opportunity for the potential employment of 325 individuals, the operation of up to one hundred offices; and engagement in research activities. These approvals mark a significant milestone for Kingswood US, allowing the company to strengthen its capabilities, extend its reach, and solidify its standing in the market. This expanded scope of operations aligns seamlessly with Kingswood's strategy for organic growth and enlarging its market presence.

 

H1'23 - Financial Highlights

  • Group revenue of £62.7m decreased by £17.6m, or 22%, compared to H1'22. This was due to a decrease of £24.4m in US revenues is reflected in US Investment Banking as macro-economic headwinds and market volatility led to a slowdown in capital market activity. The increase of £6.8m across UK & Ireland revenues has been achieved through a combination of acquisitions and organic growth.
  • 86% of UK 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 means that recurring revenue for the Group was 33% compared to 28% in 2022.
  • Operating Profit of £5.0m was £0.5m, or 10%, higher than H1'22 reflecting acquisitions in the UK & Ireland partly offset by the reduction in profits from lower US Investment Banking revenues in the US business. 
  • Within Kingswood US, Investment Banking experienced a 48% decline in revenue compared to the previous year, delivering  $33.5 million, down from $65 million in 2022. This decrease was primarily attributed to lower deal volumes due to challenging macroeconomic conditions. Despite this decline, the business maintains a strong recruitment pipeline for new advisers, with a particular focus on developing consistent and recurring revenue streams through client asset management. During the first half of 2023, Kingswood US expanded its presence in the U.S. by adding 9 new registered representatives and increasing  AUM/A by $0.4 billion, contributing to a 32% increase in fee-based revenue.

 

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)

H1'23

H1'22

Change %

Change £

Wealth Planning

16,715

12,864

30%

3,851

Investment Management

3,917

3,588

9%

329

Kingswood Ireland 

2,533

-

n/a

2,533

Kingswood US

39,565

63,937

(38)%

-24,372

Total Revenue

62,730

80,389

(22)%

-17,659

Recurring Revenue

33%

28%



 

 

 

 

 

Kingswood UK&I

7,729

5,810

33%

1,919

Kingswood US

591

1,529

(61)%

-938

Division Operating Profit

8,320

7,339

13%

981

Central Costs

(3,355)

(2,834)

(18)%

(521)

Operating Profit

4,965

4,505

10%

460

 

 

 

 

 

£'000 (unless otherwise stated)

H1'23

FY'22

Change %

Change £

Total Equity

64,806

73,967

12%

(9,161)

Total Cash

24,126

19,642

23%

4,484

Key Metrics

 

 

 

0

   AUM/A (£m)

11,954

10,453

14%

1,501

   # of UK&I Advisers

116

100

16%

16

   # of US RIA/IBD reps

241

232

4%

9

 

Outlook

 

In our 2022 Annual Report we stated that our "near term" target for the group was to get to £12.5bn of AuA. We are delighted that, despite difficult conditions, we have made strong progress against this objective and at June 2023 our AuA/M now stands at £12bn (£10.5bn at December 2022). 

 

In the first half of the year, we have increased the amount of assets under our own management in our market leading discretionary propositions by £0.4bn to £1.05bn.  A strong suite of initiatives are in place to encourage vertical integration. We believe there remains a significant further opportunity within our existing wealth advisory AuA to increase from our current levels of 20.5% to 40%, over a three-year term, subject to client suitability.   

 

We stated an expectation for a total group proforma operating profit of £14.7m for 2023 in our 2022 annual results. Whilst our UK and Ireland business is tracking broadly in line with expectations, difficult conditions in the US lead to us revising this expectation to £13.6m due to lower than expected Investment Banking / Capital Markets activity and a more cautious approach in the US to users of our Alternatives division, as investors sought better returns across a broader range of opportunities.  

 

We remain confident in the success of our ambitious long-term growth strategy, grounded in supporting our clients to protect and grow their wealth. 

 

Our new advisory clients, which are historically derived from professional introducer base and referrals, continue to see strong inflows into the business, despite volatile market conditions. We also continue to invest in a range of lead generation and digital tools to widen reach to new and younger demographics.

 

In the second half of the year, we expect further organic growth and positive net inflows, and the business remains well positioned as financial markets begin to recover. 

 

 

 

                                                                                                                          

For further details, please contact:

   Kingswood Holdings Limited

+44 (0)20 7293 0730

   David Lawrence

www.kingswood-group.com

   Cavendish Capital Markets Limited Ltd (Nomad & Broker)

   Simon Hicks / Abigail Kelly

+44 (0)20 7220 0500

   GreenTarget (for Kingswood media)

   Jamie Brownlee / Ellie Basle 

+44 (0)20 7324 5498

Jamie.Brownlee@greentarget.co.uk

                                                                                                                          

 

The Group's Nominated Adviser and Broker, finnCap Ltd, has now changed its name to Cavendish Capital Markets Limited following completion of its own corporate merger.

 

 


Company Registration No. 42316 (Guernsey)


KINGSWOOD HOLDINGS LIMITED


CONSOLIDATED INTERIM UNAUDITED FINANCIAL STATEMENTS


FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2023

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 - 26

 

 

 


 

Group Review:

 

The Group has continued to build momentum in 2023 and revenue and operating profit have grown despite unfavourable market conditions.  Our business continues to grow organically in both the UK and US and our acquisition activity is slowing down, 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.

 

 

Finance Review: 

 

We have maintained both cost and balance sheet discipline in the first half of 2023. 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 H1'23 against a continued backdrop of market volatility. Group Assets under Management and Advice (AuM/A) of £12.0bn at FY'23 represents a £1.5bn, or 14%, increase compared to FY'22.

 

Group revenue was £62.7m, a 22% decrease year on year. US Investment Banking revenues are lower as macro-economic headwinds and market volatility led to a slowdown in capital market activity. In the UK and Ireland a 41% revenue increase was achieved through a combination of acquisitions and organic growth. 

 

Operating Profit of £5.0m is 10% higher than 2022, driven by a £1m reduction in US profits and continued acquisition and organic growth. Central costs have increased by reflecting an increase in the central resources required to support a larger business.

 

The overall result for H1'23 was a loss before tax of £8.6m reflecting £0.3m of acquisition-related deferred consideration expenses, £3.0m amortisation and depreciation, £5.8m finance costs and £5.0m business re-positioning and transaction costs. 

 

The Group had £24.1m of cash as at H1'23, an increase of £4.5m since 31 December 2022 with a positive cashflow from operating activities.

 

 

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 Moloney Investments Ltd (MMPI) and Barry Fleming & Partners (BFP). The 70% acquisition of MMPI, a leading advisory group based in Dublin with €0.8bn AuM/A and annual Operating Profit of c.€4.0m, 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. The purchase of BFP, an IFA business based in Berkshire has added £150m AuA contributing c.£0.2m annual Operating Profit.

The hard work and dedication of our staff enables us to continually deliver against our buy, build and grow strategy at pace whilst maintaining the highest levels of service and experience for our clients, as reflected in our 'Vouchedfor' rating of 4.8 / 5.0. We expect organic growth in both initial and ongoing fees post integration through accretive assets under influence and, despite continued economic uncertainty, the UK business generated healthy net client asset inflows over the first half of the year.

The business delivered double-digit revenue and operating profit growth in H1'23.  Revenue of £23.2m was £6.7m (41%) higher and over 80% of revenues are recurring in nature, providing the strong, annuity style revenue stream required to deliver sustainable, long term returns to our shareholders.

AuM/A increased by £1.4bn to £9.5bn over H1'23, driven by acquisitions and encouraging levels of organic growth. There were strong levels of vertical integration over the period, with client retail Assets under our own Management (AuM) in IBOSS AM MPS and Personal DFM now totalling £1.05bn, an increase from £0.65bn at FY'22. Institutional net asset inflows were £80m in the first six months of the year, with total AuM 17% higher year on year.


 

US Highlights: 

 

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 client assets. In the first half of 2023, we extended our presence in the US by adding 9 new registered representatives and increasing our assets under management and advisement (AUM/A) by $0.2bn.

 

 In the first half of the year (H1), operating profit saw a decrease of 69% on a YoY basis, delivering $0.7m (2022: $2.3m). The decrease in operating profit was primarily driven within revenue, which saw a decline of 41% resulting in Group revenues of $48.4 million (2022: $82.2m). The escalating geopolitical tensions, the conflict in Ukraine, rising inflation rates, and the looming spectre of a global recession are collectively exerting additional stress on wealth management firms. These factors are especially challenging because they are contributing to lower growth in assets under management (AuM), which, in turn, is putting a strain on profitability. 

 

Investment Banking: Revenue in our Investment Banking division declined by 48% compared to the previous year, amounting to $33.5 million (compared to $65 million in 2022). This decrease was primarily due to subdued deal volumes resulting from unfavourable macroeconomic conditions. The situation was exacerbated by challenges in the banking and financial services sectors, compounded by the collapse of Silicon Valley Bank. However, we anticipate a rebound in deal volumes towards historical levels in the second half of the year as market conditions improve. Additionally, H1 marked the establishment of Kingswood Investments (KWUS' internal investment banking team), which is set to contribute to revenue generation in H2, with its inaugural deal scheduled to close in September.

 

Our Alternatives division experienced a revenue decline of 47% resulting in $2.3 million in revenue (compared to $4.4 million in 2022) This decline was attributed to shifting investment dynamics, as investors sought better returns across a broader range of opportunities, reducing reliance on riskier investments. Although there were concerns about asset value markdowns in private markets, the demand remains robust and is anticipated to align with historical performance in H2.

 

On a positive note, Advisor Fees category recorded a 32% revenue increase, delivering $5.3 million in revenue (compared to $3.9 million in 2022). This growth was fuelled by a 20 year-on-year increase in the number of advisors, contributing an additional $450 million in AuM.

 

These results reflect our ability to adapt to changing market conditions, seize growth opportunities, and maintain a strong footing in our core revenue-generating sectors. While challenges persist, we are optimistic about the prospects for the remainder of the fiscal year.

 

 

 


 

 

 

 

KINGSWOOD HOLDINGS LIMITED

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

FOR THE PERIOD ENDED 30 JUNE 2023


 

 

Six months to

 

Six months to

Year ended

 

 

 

30 June 2023

 

30 June 2022

31 Dec 2022

 

 

 

(unaudited)

 

(unaudited)

(audited)

 

 

 

Notes

£'000

 

£'000

£'000

 

 

 

 

Revenue

3

62,730

 

           80,389

145,998

 

 

Direct expenses

 

 (37,314)

 

         (60,330)

(103,878)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

25,416

 

20,059

42,120

 

 

 

 

 

 

 

 

Operating staff costs

 

 

(14,034)

 

(10,283)

(23,720)

 

Other operating costs

 

(6,417)

 

          (5,271)

(9,704)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating costs

 

(20,451)

 

         (15,554)

(33,424)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

4,965

 

          4,505

8,696

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-operating costs:

 

 

 

 

 

Business re-positioning costs

 

(369)

 

        (1,202)

(1,964)

 

Finance costs

 

 

(7,138)

 

        (1,455)

(6,398)

 

Amortisation and depreciation

 

(2,957)

 

         (1,863)

(4,507)

 

 

 

 

 

 

 

Acquisition-related items:

 

 

 

 

 

Other (losses) / gains

4

-

 

-

 

(23)

 

Remuneration charge (deferred consideration)

10

(259)

 

         6,309

(1,852)

 

Goodwill adjustment

8

 

-

 

        (6,364)

-

 

 

Restructuring and integration costs

 

(4,161)

 

         (1,621)

(4,924)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before tax

 

(9,919)

 

        (1,691)

(10,972)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax

 

 

(175)

 

         (139)

 

(4,480)

 

 

 

 

 

 

 

Loss after tax

 

(10,094)

 

        (1,830)

(6,492)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income / (loss)

 

 

 

 

 

Items that may not be reclassified to profit or loss

 

 

 


Exchange differences on translation of foreign operations

 

-

 

         (417)

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive loss

 

(10,094)

 

         (2,247)

(6,492)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 






























 

 

Six months to

 

Six months to

Year ended

 

 

30 June 2023

 

30 June 2022

31 Dec 2022

 

 

(unaudited)

 

(unaudited)

(audited)

 

 

£'000

 

£'000

£'000

 

 

- Owners of the parent company

 

(10,537)

 

(2,545)

                (7,797)

- Non-controlling interests

 

443

 

715

1,305

 

 

Total comprehensive loss is attributable to:

 

- Owners of the parent company

 

(10,537)

 

(2,962)

(7,797)

- Non-controlling interests

 

443

 

715

1,305

 

 

Loss per share:

 

- Basic loss per share

5

£ (0.05)

 

£ (0.01)

£ (0.04)

 

- Diluted loss per share

5

£ (0.01)

 

£ (0.00)

£ (0.01)

 

 

The notes on pages 10 - 26 form an integral part of the financial statements.

 

 

 

 

 

 













 

 

30 Jun 2023

30 Jun 2022

31 Dec 2022

 

 

 

 

(unaudited)

(unaudited)

(audited)

 

 

 

Notes

 

£'000

£'000

£'000

 

Non-current assets

 

Property, plant and equipment

6

 

916

916

832

 

Right-of-use assets

7

 

3,298

3,071

3,553

 

Goodwill and other intangible assets

8

 

148,658

97,231

123,469

 

Deferred tax asset

 

 

4,492

-

4,492

 

 

 

 

 

 

 

 

 

 

 

157,364

101,218

132,346

 

Current assets

 

Short term investments

 

49

72

52

 

Trade and other receivables

 

 

10,380

7,207

9,274

 

Cash and cash equivalents

 

 

24,126

20,693

19,624

 

 

 

 

 

 

 

 

 

 

 

34,555

27,972

28,950

 

 

 

 

 

 

 

 

 

 

Total assets

 

191,919

129,190

161,296

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

Trade and other payables

 

 

13,892

18,515

17,597

 

Deferred consideration payable

10

 

15,513

14,286

20,771

 

 

 

 

 

 

 

 

 

 

 

29,405

32,801

38,368

 

Non-current liabilities

 

Deferred consideration payable

10

 

12,559

10,304

9,228

 

Other non-current liabilities

 

 

2,519

2,956

2,806

 

Loans and borrowings

 

 

64,984

-

24,343

 

Deferred tax liability

 

 

17,646

7,521

12,584

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

97,708

53,582

87,329

 

 

 

 

 

 

 

 

 

 

Net assets

 

64,806

75,608

73,967

 

 

 

 

 

 

 

 

 

 

Equity

 

Share capital

11

 

10,846

10,846

10,846

 

Share premium

11

 

8,224

8,224

8,224

 

Preference share capital

12

 

70,150

70,150

70,150

 

Other reserves

 

16,168

 

11,597

14,373

 

Foreign exchange reserve

 

(1,087)

 

417

(422)

Retained (loss)

 

 

(42,132)

          (27,638)

(31,595)

 

 

 

 

 

 

 

 

 

Equity attributable to the owners of the Parent Company

62,169

73,596

71,576

 

 

Non-controlling interests (NCI)

 

2,637

2,012

2,391

 

 

 

 

 

 

 

 

 

 

Total equity

 

64,806

75,608

73,967

 

 

 

 

 

 

 

 

 















 

The notes on pages 10 - 26 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: 29th September 2023

 


 

 

              KINGSWOOD HOLDINGS LIMITED

 

                INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)

 

                FOR THE PERIOD ENDED 30 JUNE 2023








 

Share capital and share premium

Preference share capital

Other reserves

Foreign exchange reserve

Retained earnings

Equity attributable to the owners of the parent Company

NCI

Total

 

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

Balance at 1 January 2022

19,070

70,150

 

11,041

(488)

(23,800)

75,973

925

  76,898

 

 

 

Loss for the period

-

-

-

-

(2,545)

(2,545)

715

(1,830)

 

 

 

Movement on NCI

-

-

-

-

-

-

372

 

 372

 

 

Consolidation adjustment

-

-

-

-

(1,293)

(1,293)

-

 

 (1,293)

 

 

Foreign exchange gain

-

-

-

905

-

905

-

905

 

 

 

Share based remuneration

-

-

556

-

-

556

-

556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2022 (unaudited)

19,070

70,150

 

11,597

417

 

(27,638)

73,596

2,012

75,608

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) / profit for the period

-

-

-

-

 

(5,252)

(5,252)

         590

 

  (4,662)

 

 

Movement on NCI

-

-

-

-

-

-

 

(351)

          (351)

 

 

Other adjustment

-

-

-

-

1,293

1,293

-

1,293

 

 

 

Share based remuneration

-

-

296

-

-

296

-

296

 

 

 

Preference share capital reserve

-

                       -           2,480

-

-

2,480

 

        -

    2,480

 

Foreign exchange loss

-

-

-

 

(839)

2

 

(837)

140

(697)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 31 December 2022 (audited)

19,070

70,150

14,373

 

(422)

(31,595)

71,576

2,391

73,967

 

 















































 

 

(Loss) / profit for the period

-

-

-

-

 

(10,537)

 (10,537)

443

(10,094)

Movement on NCI

-

-

-

-

-

-

(197)

(197)

Consolidation adjustment

-

-

-

-

-

-

-

-

Foreign exchange movement

-

-

-

(665)

-

(665)

-

(665)

Share based remuneration

-

-

498

-

-

498

-

498

Preference share capital

-

-

1,297

-

-

1,297

-

1,297

Foreign exchange gain

-

-

-

-

-

-

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 June 2023 (unaudited)

19,070

70,150

16,168

(1,087)

(40,835)

62,169

2,637

 66,806

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 






















 

 

Period

 

Period

 

Year ended

 

 

30 Jun 2023

 

30 Jun 2022

 

31 Dec 2022

 

 

(unaudited)

 

(unaudited)

 

(audited)

 

 

Notes

£'000

 

£'000

 

£'000

 

 

Net cash generated from / (used in) operating activities

13

 

3,852

 

(8,989)

 

(2,704)

 

 

Investing activities

 

Property, plant and equipment purchased

 

(99)

 

(50)

 

(113)

Acquisition of investments

 

(28,458)

 

(13,180)

 

(32,272)

Remuneration charge (deferred consideration)

 

(6,953)

 

(173)

 

(10,774)

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

(35,510)

 

(13,403)

 

(43,159)

 

Financing activities

 

Interest paid

 

(3,565)

 

(11)

 

(21)

Lease payments

 

(430)

 

(454)

 

(852)

Dividends paid to non-controlling interests

 

-

 

-

 

(811)

New loans (repaid) / loans received

 

40,607

 

(156)

 

23,784

 

 

 

 

 

 

 

 

 

 

Net cash (used in)/generated from financing activities

 

36,612

 

(621)

 

22,100

 

 

 

 

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

 

4,954

 

(23,013)

 

           (23,763)

 

 

Cash and cash equivalents at beginning of Period

19,624

 

42,933

 

42,933

 

Effect of foreign exchange rates

 

(452)

 

771

 

454

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of Period

 

24,126

 

20,691

 

19,624

 

 

 

 

 

 

 

 

 

 

 

The notes on pages 10 - 26 form an integral part of the financial statements.

 



















 

 

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 2022 interim report are consistent with those disclosed in the annual financial statements for the year ended 31 December 2021.

 

The information relating to the six months ended 30 June 2022 and the six months ended 30 June 2021 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 2021.

 

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 2022 annual financial statements.

 

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.

 

 

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.


 

1

Accounting policies

 

 

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.

 

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 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.

 


 

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 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 3.

 

 

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).

 

 

 

 

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

 

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 year to 31 December 2021. The table below details a full year's 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 management

Wealth planning

US 

operations

IRE

operations

Group

Total

 

 

 

Perioded Ended 30 June 2023

 

 

 

 

 

 

 

Continuing operations:

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Revenue (disaggregate

by timing):

 

 

 

 

Non-recurring

452

2,053

37,514

1,743

-

41,762

 

 

 

Recurring

3,465

14,662

2,051

790

-

20,968

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales

3,917

16,715

39,565

2,533

-

62,730

 

 

 

 

 

 

Direct expenses

 

(569)

(793)

(35,952)

-

-

 

(37,314)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

3,348

15,922

3,613

2,533

-

25,416

 

 

 

 

 

 

Operating profit / (loss)

1,379

5,589

591

              761

 

(3,355)

4,965

 

 

 

 

 

 

Business re-positioning costs

 

(76)

(104)

 

             (124)

-

(64)

(368)

 

 

Finance costs

 

(7)

(87)

(8)

(1)

(7,035)

(7,138)

 

 

Amortisation and depreciation

     (9)

 

(823)

-

                      

(18)

 

(2,107)

(2,957)

 

 

Remuneration charge (deferred consideration)

-

 

-

-

 

(259)

(259)

 

 

Transaction costs

(61)

(272)

-

 

 

(3,828)

(4,161)

 

 

Goodwill adjustment

-

-

-

 

 

-

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit / (loss) before tax from continuing operations

1,226

4,303

459

 

742

 

(16,649)

(9,919)

 

 

 

 

 

Tax

-

 

(157)

(14)

(4)

 

-

(175)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit / (loss) after tax from continuing operations

1,226

4,146

445

 

 

738

 

(16,649)

(10,094)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 






























 

3

Business and geographical segments

 

 

 

Perioded Ended 30 June 2022

Investment management

Wealth planning

US 

operations

Group

Total

 

 

 

Continuing operations:

£'000

£'000

£'000

£'000

£'000

 

 

 

Revenue (disaggregated by timing):

 

 

Non-recurring

465

1,776

55,944

-

58,185

 

 

Recurring

3,123

11,088

7,993

-

22,204

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales

3,588

12,864

63,937

-

80,389

 

 

 

Direct expenses

 

(717)

(519)

(59,094)

-

 

(60,330)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

2,871

12,345

4,843

-

20,059

 

 

 

Operating (loss) / profit

685

5,125

1,529

 

(2,834)

4,505

 

 

 

Business re-positioning costs

 

(140)

(336)

(397)

(329)

(1,202)

 

Finance costs

(1)

 

(70)

(3)

 

(1,381)

(1,455)

 

Amortisation and depreciation

-

 

(687)

42

(1,218)

(1,863)

 

Remuneration charge (deferred consideration)

-

 

(42)

-

 

6,351

6,309

 

Transaction costs

-

 

-

-

 

(1,621)

(1,621)

 

Goodwill adjustment

-

 

-

-

 

(6,364)

(6,364)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit / (loss) before tax from continuing operations

 

544

3,990

1,171

 

(7,396)

(1,691)

 

 

Tax

-

(129)

 

11

(21)

(139)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit / (loss) after tax from continuing operations

 

544

3,861

1,182

 

(7,417)

(1,830)





















 

3

Business and geographical segments

 

 

 

Year Ended 31 December 2022

 

Investment management

Wealth planning

US 

operations

Group

Total

 

 

(audited)

 

 

 

 

 

 

 

 

 

Continuing operations:

£'000

£'000

£'000

£'000

£'000

 

 

 

Revenue (disaggregated by timing):

 

 

Non-recurring

931

2,045

118,396

-

121,322

 

 

Recurring

6,252

15,169

9,431

23

28,394

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

External sales

7,183

17,214

127,827

23

149,716

 

 

 

Direct expenses

 

(1,476)

(913)

(118,108)

-

 

(120,497)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

3,176

16,301

9,719

23

29,219

 

 

 

Operating (loss) / profit

365

5,779

5,123

 

(4,940)

6,327

 

 

 

Business re-positioning costs

 

(177)

(239)

(263)

(885)

(1,564)

 

Finance costs

-

 

(72)

2

 

(4,857)

(4,927)

 

Amortisation and depreciation

-

 

(1,197)

(212)

(990)

(2,399)

 

Other gains

-

-

-

 

(3,056)

(3,056)

 

Remuneration charge (deferred consideration)

-

 

(3,691)

-

 

(3,318)

(7,009)

 

Transaction costs

-

 

(4)

-

 

(1,832)

(1,836)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) / profit before tax from continuing operations

188

576

4,650

 

(19,878)

(14,464)

 

 

Tax

-

 

(16)

(317)

(428)

(761)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) / profit after tax from continuing operations

188

560

4,333

 

(20,306)

(15,225)

 

 

 

4

Other (losses) / gains

 

 

Six months to

Six months to

Year Ended

 

 

30 June 2023

30 June 2022

31 December 2022

 

 

(unaudited)

(unaudited)

(audited)

 

 

£'000

£'000

£'000

 

 

 

Additional payments due on acquired businesses

-

-

 

-

 

Unrealised gain/(loss) on investment

-

-

 

(23)

 

 

 

 

 

 

 

 

 

 

-

-

 

(23)

 

 

 

 

 

 

 

 






















 

5

Earnings per share

 

 

 

Six months to

 

Six months to

 

Year ended

 

 

30 Jun 2023

 

30 Jun 2022

 

31 Dec 2022

 

 

(unaudited)

 

(unaudited)

 

(audited)

 

 

 

£'000

 

£'000

 

£'000

 

 

 

Loss from continuing operations for the purposes of basic loss per share, being net loss attributable to owners of the Group

 

(10,537)

 

(2,545)

 

(7,797)

 

 

 

 

 

 

 

 

 

 

Number of shares

 

 

 

Weighted average number of ordinary shares for the purposes of basic loss per share

216,920,719

 

216,920,719

 

216,920,724

 

 

 

Effect of dilutive potential ordinary shares:

 

 

 

Share options

6,624,664

 

8,580,094

 

5,897,018

 

 

Convertible preference shares in issue

525,217,205

 

469,263,291

 

512,407,029

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares for the purposes of diluted loss per share

748,762,592

 

694,764,104

 

735,224,771

 

 

 

Continuous operations:

 

 

Basic loss per share

£(0.05)

 

£(0.01)

 

£(0.04)

 

 

Diluted loss per share

£(0.01)

 

£(0.00)

 

£(0.01)

 

 

 

Total loss:

 

 

Basic loss per share

£(0.05)

 

£(0.01)

 

£(0.04)

 

 

Diluted loss per share

£(0.01)

 

£(0.00)

 

£(0.01)

 



















 

6

Tangible Assets

 

 

 

Fixtures and equipment

 

£'000

 

Cost

 

 

At 1 January 2022

1,655

 

Additions

86

 

Acquisitions NBV

61

 

 

 

 

 

At 30 June 2022

1,802

 

Additions

27

 

Acquisitions NBV

19

 

Reclassifications

1,438

 

FX on opening

17

 

 

 

 

 

At 31 December 2022

3,303

 

Additions

99

 

Acquisitions NBV

160

 

Reclassifications

39

 

FX on opening

(7)

 

 

 

 

 

At 30 June 2023

3,594

 

 

 

 

 

Accumulated depreciation

 

 

At 1 January 2022

714

 

Depreciation charged in the Period

172

 

 

 

 

 

At 30 June 2022

886

 

Depreciation charged in the Period

138

 

Reclassifications

1,438

 

FX on opening

9

 

 

 

 

 

At 31 December 2022

2,471

 

Depreciation charged in the Period

153

 

Reclassifications

39

 

FX on opening

15

 

 

 

 

 

At 30 June 2023

2678

 

 

 

 

 

Net book value

 

 

At 30 June 2023

916

 

 

 

 

 

At 31 December 2022

832

 

 

 

 

 

At 30 June 2022

916

 

 

 







 

7

Right-of-use assets

 

 

 

 

 

Land and buildings

 

 

£'000

 

 

Cost

 

 

 

At 1 January 2022

4,089

 

 

Movement due to FX

 

8

 

 

Additions

742

 

 

 

 

 

 

 

 

 

At 30 June 2022

4,839

 

 

Current year adjustment

(137)

 

 

Movement due to FX

(8)

 

 

Additions

963

 

 

 

 

 

 

 

 

 

At 31 December 2022

5,657

 

 

Current year adjustment

137

 

 

Additions

66

 

 

 

 

 

 

 

 

 

At 30 June 2023

5,860

 

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

At 1 January 2022

1,370

 

 

Depreciation charged in the Period

398

 

 

 

 

 

 

 

 

 

At 30 June 2022

1,768

 

 

Current year adjustment

(25)

 

 

Depreciation charged in the Period

361

 

 

 

 

 

 

 

 

 

At 31 December 2022

2,104

 

 

Current year adjustment

25

 

 

Depreciation charged in the Period

433

 

 

 

 

 

 

 

 

 

At 30 June 2023

2,562

 

 

 

 

 

 

 

 

 

Net book value

 

 

 

At 30 June 2023

3,298

 

 

 

 

 

 

 

 

 

At 31 December 2022

3,553

 

 

 

 

 

 

 

 

 

At 30 June 2022

3,071

 

 

 

 

 

 









 

8

Goodwill and other intangible assets

 

 

Goodwill

Other intangible assets

Total

 

 

£'000

£'000

£'000

 

 

Cost

 

 

At 1 January 2022

45,150

42,615

87,765

 

 

Additions

11,226

13,449

24,675

 

 

Revaluation of acquisition

 (6,364)

-

(6,364)

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2022

50,012

56,064

106,076

 

 

Additions

7,176

20,042

27,218

 

 

Exchange adjustments

629

-

629

 

 

 

 

 

 

 

 

 

 

 

At 30 December 2022

57,817

76,106

133,923

 

 

 

 

 

 

 

 

 

 

 

Additions

7,306

20,554

27,860

 

 

Movement due to FX

(315)

14

(301)

 

 

Disposals

-

-

-

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2023

64,808

96,674

161,482

 

 

 

 

 

 

 

 

 

 

 

Accumulated amortisation

 

 

At 1 January 2022

2,279

5,231

7,510

 

 

Charge for period

-

1,335

1,335

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2022

2,279

6,566

8,845

 

 

 

 

 

 

 

 

 

 

 

Disposals

 

 

Charge for period

-

1,609

1,609

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2022

2,279

8,175

10,454

 

 

 

 

 

 

 

 

 

 

 

Disposals

 

 

Charge for period

-

2,370

2,370

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2023

2,279

10,545

12,824

 

 

 

 

 

 

 

 

 











 

8

Goodwill and other intangible assets (continued)

 

 

 

Net book value

 

 

 

As at 30 June 2023

62,529

86,129

148,658

 

 

 

 

 

 

 

 

 

 

 

As at 31 December 2022

55,538

67,931

123,469

 

 

 

 

 

 

 

 

 

 

 

As at 30 June 2022

47,733

49,498

97,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

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

 

 

£'000

 

 

 

At 1 January 2022

 

3,274

 

 

 

Additions

 

735

 

 

Interest expense

 

95

 

 

Lease payments

 

(451)

 

 

 

 

 

 

At 30 June 2022

 

3,653

 

 

 

Additions

 

920

 

 

Interest expense

 

52

 

 

Lease payments

 

(401)

 

 

 

 

 

 

At 31 December 2022

 

4,274

 

 

 

Additions

 

66

 

 

Interest expense

 

71

 

 

Lease payments

 

(430)

 

 

 

 

 

 

At 30 June 2023

 

3,981

 

 

 

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.

 















 

9

Lease liabilities (continued)

 

 

 

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.

 

 

10

Deferred consideration payable

 

 

Six Months to

Six Months to

Year Ended

 

30 June 2023

30 June 2022

31 December 2022

 

£'000

£'000

£'000

 

 

Deferred consideration payable on acquisitions:

28,072

24,590

29,999

 

 

 

 

 

 

 

 

 

- falling due within one year

15,513

14,286

20,771

 

- due after more than one year

12,559

10,304

9,228

 

 

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.

 

 

 

 

 

 

 












 

11

Share capital

 

 

Six months to

Six months to

Year ended

 

Six months to

Six months to

Year ended

 

30 June 2023

30 June 2022

31 Dec 2022

 

30 June 2023

30 June 2022

31 Dec 2022

 

(unaudited)

(unaudited)

(audited)

 

(unaudited)

(unaudited)

(audited)

 

Shares

Shares

Shares

 

£'000

£'000

£'000

 

 

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 ordinary shares

Par value

Share premium

Total

 

'000

£'000

£'000

£'000

 

 

At 1 January 2022

216,921

10,846

8,224

19,070

 

Issued during year

-

-

-

-

 

As at 30 June 2022

216,921

10,846

8,224

19,070

 

 

 

 

 

 

 

 

 

 

 

At 31 December 2022

216,921

10,846

8,224

19,070

 

Issued during year

-

-

-

-

 

 

 

 

 

 

 

 

 

 

 

At 30 June 2023

216,921

10,846

8,224

19,070

 

 

 

 

 

 

 

 

 

 

 

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 2022 KPI (Nominees) Limited held 144,125,262 Ordinary Shares, representing 66.4 per cent of ordinary shares in issue at year end.

 

























 

12

Preference share capital

 

 

Six Months to

Six Months to

Year Ended

Six Months to

Six Months to

Year Ended

 

 

30 June 2023

30 June 2022

31 Dec 2022

30 June 2023

30 June 2022

31 Dec 2022

 

 

(unaudited)

(unaudited)

(audited)

(unaudited)

(unaudited)

(audited)

 

 

Shares

Shares

Shares

£'000

£'000

£'000

 

 

 

Convertible preference shares issued:

 

 

 

Fully paid

77,428,443

77,428,443

77,428,443

77,428

77,428

77,428

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

77,428,443

77,428,443

77,428,443

77,428

77,428

77,428

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months to

Six Months to

Year Ended

 

 

30 June 2023

30 June 2022

31 Dec 2022

 

 

(unaudited)

(unaudited)

(audited)

 

 

 

Equity component

 

70,150

70,150

70,150

 

 

Liability component

 

-

-

-

 

 

 

 

 

 

 

 

 

 

 

70,150

70,150

70,150

 

 

 

 

 

 

 

 

 
















 

 

 

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 Capital, to subscribe for up to 80 million irredeemable convertible preference shares, at a subscription price of £1 each (the Subscription). Pollen Street Capital is a global, independent alternative asset investment management company, established in 2013 with currently £3.2 billion gross AUM across private equity and credit strategies, focused on the financial and business services sectors, with significant experience in speciality 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. Effective 17 December 2021 onwards, these will be settled via the issue of additional ordinary shares, thereby extinguishing the liability component.

 

 


 

13

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 2023

30 June 2022

31 Dec 2022

 

 

 

(unaudited)

(unaudited)

(audited)

 

 

£'000

£'000

£'000

 

 

 

Loss before tax

 

(9,919)

(1,691)

(10,972)

 

 

 

Depreciation and amortisation

2,957

1,863

4,507

 

 

Goodwill adjustment

-

6,364

-

 

 

Finance costs

6,639

1,455

6,398

 

 

Remuneration charge (deferred consideration)

 

259

(7,399)

1,852

 

 

Acquisition of investments

 

-

-

586

 

 

Share-based payment expense

499

556

878

 

 

Other losses / (gains)

-

-

23

 

 

Foreign exchange gain

-

12

 

-

 

 

Tax paid

 

(175)

(139)

(22)

 

 

 

 

 

 

 

 

 

 

 

Operating cash flows before movements in working capital

260

 

1,021

(3,250)

 

 

 

(Increase)/decrease in receivables

6,318

 

786

1,821

 

 

Increase/(decrease) in payables

 

(2,726)

(10,796)

(7,775)

 

 

 

 

 

 

 

 

 

 

 

Net cash inflow / (outflow) from operating activities

 

3,852

(8,989)

(2,704)

 

 

 

 

 

 

 

 

 
















 

14

Financial instruments

 

 

 

 

 

The following table states the classification of financial instruments and is reconciled to the Statement of Financial Position:

 

 

 

 

 

30 Jun 2023

30 Jun 2022

31 Dec 2022

 

 

Carrying amount

Carrying amount

Carrying amount

 

 

(unaudited)

(unaudited)

(audited)

 

 

£'000

£'000

£'000

 

 

 

 

Financial assets measured at amortised cost

 

 

 

Trade and other receivables

10,181

5,846

9,273

 

 

Cash and cash equivalents

24,126

20,693

19,624

 

 

 

 

Financial liabilities measured at amortised cost

 

 

 

Trade and other payables

 

(11,316)

(16,530)

(16,130)

 

 

Other non-current liabilities

 

(2,519)

               (222)

 

(2,806)

 

 

Lease liability

 

(1,462)

(3,653)

(1,467)

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities measured at fair value through profit and loss

 

 

 

Deferred consideration payable

 

(28,072)

(24,590)

(29,999)

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,060)

(18,456)

(21,505)

 

 

 

 

 

 

 

 

 

 

 

 

 

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

28,072

Fair value of deferred consideration payable is estimated by discounting the future cash flows using the IRR inherent in the company's acquisition price.

 

Level 3

 

 

















 

15

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 2023

30 June 2022

31 Dec 2022

 

(unaudited)

(unaudited)

(audited)

 

2023

2022

2022

 

£'000

£'000

£'000

 

 

Salaries and other short-term employee benefits

665

103

678

 

 

 

 

 

 

 

 

 

 

Other related parties

 

 

 

During the period, KHL incurred fees of £50,000 (30 June 2022: £58,333; 31 December 2022: £116,000) from KPI (Nominees) Limited in relation to Non-Executive Director remuneration. At 30 June 2023, £nil of these fees remained unpaid (30 June 2022: £nil; 31 December 2022: £nil).

 

 

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 £nil for the period ended 30 June 2023 (30 June 2022: £23,708; 31 December 2022: £23,708), of which £nil (30 June 2022: £nil; 31 December 2022: £nil) was outstanding at 30 June 2023.

 

 

Fees paid for financial and due diligence services to Kingswood LLP, in which Gary Wilder and Jonathan Massing hold a beneficial interest, totalled £69,469 for the period to 30 June 2023 (30 June 2022: £420,807; 31 December 2022: £479,955), of which £nil (30 June 2022: £nil; 31 December 2022: £nil) was outstanding at 30 June 2023.

 

16

Ultimate controlling party

 

 

As at the date of approving the financial statements, the ultimate controlling party of the Group was KPI (Nominees) Limited.

 

 

17

Events after the reporting date

 

 

There were no significant events after the reporting period.

 

 

 

 

 

 

 

 

 










 


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