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Kingswood set for 8 more acquisitions despite pre-tax loss

Fast growing Financial Planning group Kingswood is planning eight more adviser firm acquisitions in the UK and Ireland this year after unveiling strong revenue growth.

The company reported half year figures today showing that revenue in the first half of 2022 rose by 31% year on year to £80.4m.

Despite the revenue growth, the firm made a pre-tax loss of £1.7m although this was less than the £3.7m loss over the same period last year. This year’s loss reflected a net £6.3m of acquisition-related costs and other costs.

The firm said it believed operating profit was a better indicator of its financial health. Operating profit was £4.5m, £1.5m higher than H1 2021.

The group had £20.7m of cash as at June 2022, a decrease of £22.2m since December 2021, largely driven by acquisition related payments in the UK and timing of the settlement of Investment Banking commission payments in the US.

Kingswood said that despite short term uncertainty UK trading was in line with expectations and the firm had completed six acquisitions so far in 2022, adding £2.8m in annual operating profit and £0.9bn in Assets under Management and Advice (AUM/A).  

Kingswood group client assets under management or advice have increased by 37% compared to December 2021 to £9.3bn with UK AUM/A up by £2.2bn to £7.1bn driven mostly by acquisitions.

The company plans to build on its digital services following the launch of the Kingswood Go in March which now has more than 1,300 clients registered, giving them with improve access to their investment portfolios.  The firm plans investments in technology with ‘digital fact finds’ and “new propositions” which will provide both a face to face and a ‘digitally-delivered’ service.

In the UK the firm says 60% of UK adviser hires in 2022 were female compared to an adviser community average of about 15%.

Kingswood’s US arm continued to grow through accelerated recruitment of registered representatives, which produced an 8% increase in AUM/A to $2.7bn (£2.35bn).

Overall, the group saw revenue of £80.4m up £18.8m (31%) compared to H1 2021. Wealth Planning revenue of £12.9m was up 55%, reflecting recent acquisitions and higher new volumes of new business. Investment Management revenue of £3.6m also increased by 55% due to the acquisition of IBOSS Asset Management.

US revenue of £63.9m increased by 26% compared to last year and Kingswood increased its number of US representatives by 12 to 223.  

Operating expenditure of £15.6m increased by 46% compared to H1 2021 largely reflecting the impact of acquisitions in the UK (£2.9m) and higher costs in Kingswood US (£1.5m) due to higher legal, compliance and regulatory costs. 

Kingwood CEO David Lawrence said: “We delivered record levels of revenue and operating profit in all 3 of our divisions in 2021 and I am delighted to report further growth in the first half of 2022. 

“Whilst the business continues to build momentum through 2022, revenue and operating profit have been impacted by unfavourable market conditions, mainly from lower than expected capital market activity in the US. Despite this, our business continues to grow organically in both the UK and US and our acquisition strategy continues to progress as planned.”

“We have continued to implement our buy, build and grow strategy in the UK, successfully completing the acquisition of six UK IFA businesses and have a strong pipeline for future UK acquisitions. Under the leadership of Mike Nessim, we have also continued to expand our US footprint adding 12 new registered representatives and growing our AUM by $0.2bn.”  

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

• During H1 2022 Kingswood Holdings Limited appointed PKF Littlejohn as its new auditor after existing auditor BDO LLP (“BDO”) resigned and declined to re-bid. 

• Editor’s note: Story updated to clarify pre-tax loss was less than last year.



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