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

    Cavendish Capital Markets Limited Ltd (Nomad & Broker)

    Marc Milmo / 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

                                                                                                                         


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 sale                                                       


-

3,541

-

 


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

88

127,113

124,641











Net assets


             55,910                              55,910

 

64,806

60,899











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: 30th September 2024


KINGSWOOD HOLDINGS LIMITED

 

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 

 

FOR THE PERIOD ENDED 30 JUNE 2024

 

 

Share capital


 

 

Foreign



Equity attributable to the

owners of

 

 

Non-


and share

Preference

currency

Other

Retained

the parent

controlling

premium

      share capital                 reserve

reserves

earnings

Company

interests

Total equity

£ 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

 remuneration


(10,554)


(6,953)


(9,638)










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 operations


-


(1,187)


-


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

30 June 2023


Adjustment for

 

Six months ending

30 June 2023

 

As reported

(unaudited)


Discontinued Operations

 

   Restated

(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

(unaudited)


Discontinued Operations

 

   Restated

(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

management


Wealth

planning


US

operations


Ireland

operations

 

 

Group

 

Continuing

Total

 


Discontinued

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

management


Wealth

planning


US

operations


Ireland

operations

 

 

Group

 

Continuing

Total

 


Discontinued

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

management


Wealth

planning


US

operations


Ireland

operations

 

 

Group

 

Continuing

Total

 


Discontinued

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)

consideration)

6


               (586)


       1,117


                (72)



             (3,293)


                (2,828)


                (490)


            (3,318)


















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

 

5

 

 

Earnings per share




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, being net loss attributable to owners of the Group


           (6,853)


           (10,365)


(17,597)


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


                    -

 


               (172)

 


(636)

 









                                                                                                                                (6,853)                   (10,537)                   (18,233)



Number of shares




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

686,184,010


216,920,719


216,920,724




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 per share

799,088,804


748,762,588


760,904,877




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

9

2,332












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


             (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 future cash flows using the IRR inherent in the company's acquisition price.


Level 3


 

 

 







 
















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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IR EANNNALALEFA