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.

** 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)

* 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

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