(Alliance News) - Kingswood Holdings Ltd on Thursday continued with its acquisition pipeline amidst a widened annual loss widened even as revenue rose.
The London-based investment management group said it's pretax loss widened in 2020 to GBP10.7 million from GBP9.0 million in 2019. Meanwhile, revenue more than doubled to GBP25.5 million from GBP10.1 million the year prior, "reflecting the impact of recent acquisitions", the company said. Kingswood decided against paying a dividend for 2020, in line with the year before.
Kingswood's net equity at the end of 2020 was GBP50.2 million and although it has no debt, the group does have deferred obligations of GBP16.6 million to be paid if acquisitions meet pre-established performance criteria. The company also noted that in 84% of UK and 61% of group revenue is recurring, giving them a strong base to work from.
In the UK, Kingswood acquired Sterling Trust Professional Ltd and Regency Investment Services in 2020, expanding its retail business to serve around 8,000 active clients with GBP3.4 billion of retail assets under management.
Sterling Trust includes 22 financial planners managing GBP1.2 billion in client assets from five locations across Yorkshire and the North East of England, whilst the smaller Surrey, England-based Regency Investment manages GBP320 million for around 1,000 clients.
Regency Investment delivered GBP500,000 in earnings before interest, tax, depreciation and amortisation with "strong" revenue and net assets of GBP2.1 million, the company said.
In the US, meanwhile, the company acquired San Diego, California-based financial service providers Chalice Capital Partners and Chalice Wealth Advisors.
In addition, the group now holds a 50% stake in Manhattan Harbor Capital, which was rebranded as Kingswood US in late 2020. The financial performance of Kingswood US was integrated into the groups results since November 2020. Kingswood noted that the US side of the group delivered strong results, driven by an active investment banking business.
"We have an active transaction pipeline in UK and US, and a strategy that provides a hedge against UK centric businesses and enhances quality of earnings. Kingswood's financial strategy is to maintain a robust and disciplined balance sheet, underpinned by Pollen Street's growth equity commitment and ensuring no deferred liabilities remain uncovered from a funding perspective, and a disciplined approach to expense management," said Chief Financial Officer Patrick Goulding.
"The implementation of our change management programme to improve the cost to income ratio and enhance margins is beginning to bear fruit. Our focus is to maximise shareholder returns through earnings before interest, tax, depreciation and amortisation growth combined with minimising our weighted average cost of capital and closing the current market valuation gap to reflect our true underlying valuation," Goulding added.
Kingswood shares were trading up 4.8% at 24.10 pence each in London on Thursday afternoon.
By Scarlett Butler; scarlettbutler@alliancenews.com
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Kingswood H. (KWG)