Kingswood H. Regulatory News (KWG)

KINGSWOOD HOLDINGS LIMITED

("Kingswood", the "Company" or the "Group")

Audited Final Results for the financial year ended 31 December 2018

After a period of significant change, a series of transformative initiatives have established a strong platform from which sustained earnings growth can be delivered for investors

Kingswood Holdings Limited (AIM: KWG), the integrated wealth management group, is pleased to announce its audited financial results for the year ended 31 December, 2018.

Strategic Highlights

· The last couple of years have seen a period of significant management and operational change within the Group, with 2018 also impacted by a highly uncertain market environment and weaker investor sentiment resulting in an industry-wide slowdown in net inflows;

· While Assets under Management and Advice in the core business fell slightly to £0.8b at year end (2017: £0.9b), the Group generated further growth in the Fixed Income division increasing AUM by £63m to £0.7b at 31 December, 2018;

· With a new management team and organisational structure now in place, coupled with the implementation of the Board's three-year growth plan initiated early in 2019, a number of key strategic initiatives designed to enhance client yield and stimulate growth are now in process;

· The expansion of the Wealth Planning business with the acquisition of Marchant McKechnie in East Yorkshire completed in Q4 2018, in addition to the purchase of Oxford-based Thomas & Co in early Q1 2019, has bolstered the Group's wealth planning foundation. The acquisitions, which are performing to plan, significantly broaden Kingswood's UK footprint;

· The global wealth management industry is highly fragmented and the Group continues to pursue additional accretive investments across the UK and internationally with a pipeline in excess of £100 million under evaluation. The Company is exploring opportunities to source additional funding via institutional investors to enable it to execute on this pipeline;

· The Group recently appointed Richard Jeffrey as Chairman of the Investment Committee and is building a robust investment process with a group of highly experienced professionals under his stewardship. Richard Klein has also joined to lead and expand Kingswood's alternative product offerings for distribution to the firm's growing client base;

· Kingswood has set its sights on US expansion and growing investment distribution channels for its products. To support these growth efforts, Najib Canaan has been appointed as US CEO. Najib's extensive knowledge and experience will be invaluable as Kingswood grows in the US; and

· The Group is committed to broadening its client offering with a range of holistic, value added client services through its Kingswood affiliates including the provision of personal taxation compliance services, incorporating accounting services, the preparation of annual tax returns, tax planning and advisory support including corporate finance offerings.

Financial Highlights

· Group revenue for the year was £8.8 m (2017: £9.3m);

· Core adjusted loss of £3.0m (2017: £1.0m) driven largely by a number of one-off factors including a change in accounting treatment requiring the reclassification of previously reserved debt and acquisition costs to the P&L (£1.0m negative impact), costs relating to senior staff departures (£0.5m) and additional expenditure incurred across the Group to restructure the Kingswood platform and position it for growth (£0.8m);

· The underlying core operating platform incurred a loss of £0.7m; and

· Cash and cash equivalents at 31 December 2018 were c.£2.4m with the Group having access to £4.9m under its convertible debt facility from KPI (Nominees) Limited.

Gary Wilder, Kingswood's Group CEO said: "Since Patrick Goulding and I have taken over day-to-day management control at the Board's request earlier this year, we have now implemented the significant changes that were originally planned. I am pleased with the future direction of the Company and believe a strong foundation is now in place from which to grow the platform and add value for shareholders.

We have a strong competitive advantage with our integrated Wealth Planning and Investment Management platform. We plan to leverage the platform to its full potential and are looking to expand our current product offering with turn-key opportunities such as mortgages, cash management and lending products, including the launch of Kingswood labelled products in partnership with best in class industry expertise." 

The annual report will shortly be sent to shareholders and is available to be viewed or downloaded from the Company's website: https://www.kingswood-group.com

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

For further details, please contact:

About Kingswood

Kingswood Holdings Limited (trading as Kingswood) is an AIM-listed (AIM: KWG) integrated wealth management group, with c.7,000 active clients and c.£1.9 billion of Assets Under Management and Advice. It has a growing network of offices in the UK including London, Manchester, Cheltenham, Maidstone, Worcester, Beverley and Abingdon, and an office in Johannesburg, South Africa.

Kingswood offers a portfolio of services to its clients, which range from private individuals to some of the UK's largest universities and institutions, including investment advice and management, personal and company pensions, wealth planning, and stockbroking. Kingswood is focused on becoming a leading player in the wealth management market through targeted acquisitions in the UK, with the ultimate goal of creating a global business through strategic partnerships and its ambition is to gain a foothold in the US market in the near future.

Chairman and Group Chief Executive Officer Statement

We are pleased to inform you that after a period of restructuring, the platform is in a position to deliver sustained earnings growth for investors. The Board acknowledges that the last couple of years have seen significant change within the Group, with 2018 also impacted by a highly uncertain market environment and weaker investor sentiment resulting in an industry-wide slowdown in net inflows.

Despite this backdrop, the Board believes the strength of Kingswood's business model positions the Group well for improved sentiment. A new management team and organisation structure is now in place. Gary Wilder took over as Group Chief Executive Officer at the beginning of the year and Patrick Goulding joined as Group CFO and CEO of the operating platform. They have day-to-day management control and have now implemented the significant changes originally planned. The three-year growth plan initiated by the Board at the end of 2018 has solidified a number of strategic initiatives designed to enhance client yield and stimulate growth. The Board and management's key objective now is to prove its model and execution capability.

Kingswood currently has approximately 7,000 active clients and assets under management of £1.9bn, and is focused on becoming a leader in the UK wealth and investment management market by building a listed brand that is recognised internationally. We have ambitious plans to be a global wealth and investment management platform serving mass affluent and private clients, with expansion plans already activated in the US and Asia. Our goal is to provide current and new clients with a full suite of services and products designed to protect their wealth and provide sustainable and growing returns.

The Financial Planning business has expanded with the acquisition of Marchant McKechnie in East Yorkshire which completed in Q4 2018, and the acquisition in Q1 2019 of Oxford-based Thomas & Co, which have further bolstered our financial planning foundation. The acquisitions broaden Kingswood's UK footprint, adding to our existing office network in London, Manchester, Cheltenham, East Malling, Brighton and Worcester. We continue to pursue additional accretive investments across the UK and internationally with a pipeline in excess of £100 million under evaluation. In order to execute on this pipeline, we are exploring opportunities to source additional funding via institutional investors to meet our requirements.

Within the Investment Management team, we have embarked on an enhanced strategy to provide existing and new clients unprecedented access to best in class investment products across equities, fixed income and alternatives, managed by best in class global investment managers. Many of these products are currently solely available to institutional investors. The goal is to provide clients with high quality products and service on a cost-effective basis under the global Kingswood brand.

We have a unique competitive advantage with our integrated Financial Planning and Investment Management platform. We plan to leverage this platform to its full potential and are looking to expand our current product offering with turnkey opportunities such as mortgages, cash management, lending products, including the launch of Kingswood labelled products in partnership with best-in-class industry expertise.

To support delivery of our growth plans, we recently announced the appointments of Richard Jeffrey as Chairman of the Investment Committee and Richard Klein as Head of Alternatives and Distribution.

The Group is building a robust Investment Committee process with a group of highly experienced investment professionals, under the stewardship of Richard Jeffrey who most recently, was Chief Investment Officer and then Chief Economist at Cazenove Capital, part of the Schroders group.

Richard Klein has joined to lead and expand Kingswood's best of breed product offerings for distribution to our growing client base. His principal focus will be on providing existing and future clients with unprecedented access to capital protected, yield-enhanced strategies managed by independent best in class asset managers with offerings in key asset classes including Private Equity, Real Estate, Infrastructure, Hedge Funds, Liquids & Credit. Richard has spent the majority of his 30 plus year investment banking career at Merrill Lynch, specifically in a number of capital markets and international distribution roles.

We have also launched our enhanced Managed Portfolio Service ('MPS') which is available via industry platforms used by wealth planners across the UK. The MPS offering provides intermediaries with a discretionary managed, risk-rated investment solution for their underlying clients. These portfolios are mapped to industry leading risk profiling tools, providing a streamlined on-boarding process for financial advisers and their clients, in addition to ensuring clients are suitably mapped into an investment strategy. 

Expanding our product offering in real estate, Kingswood recently signed a cooperation agreement with its affiliate Moor Park Capital Partners LLP, a leading independent pan-European real estate investment firm that creates a partnership to broaden our alternative investment product offering to clients.

We have also set our sights on US expansion and growing investment distribution channels there for our products. We see the US as a major growth opportunity being the largest global wealth management market. To support these growth efforts, we recently appointed Najib Canaan as US CEO. Najib, who also joins the newly restructured Kingswood Investment Committee, has more than 30 years of experience at firms including GSO Capital, a Blackstone Group affiliate; Brevan Howard; Donaldson, Lufkin, and Jenrette, where he established the Special Situations Group; and Nomura Securities International where he oversaw a fixed income, asset-backed, and real estate balance sheet in excess of $100 billion.

Najib's extensive knowledge and experience will be invaluable as we grow in the US. We have made huge strides in expanding and reinforcing the Kingswood brand in the UK over the last 12 months and we view the US as a really exciting market going forward.

We are committed to broadening our client offering with a range of holistic, value add client services through our affiliates including the provision of personal taxation compliance services, incorporating the preparation of annual tax returns, tax planning and advisory support. Via our affiliates, we now offer a range of services for small and medium-sized businesses including the provision of accounting and annual tax compliance as well as corporate finance offerings (e.g. advisory, working capital lines, debt & financing structuring and broad-based debt sourcing). Through our affiliate advisory platform, we are also able to provide corporate finance support including large transaction advisory services, fair value assessments and independent accountant's reports.

These additional value-added services available to our expanding client base highlight the breadth and depth of our offerings. By further adding to and integrating our brand, Kingswood is developing a strong competitive advantage enabling us to drive growth initiatives under a common brand.

We believe our people are fundamental to the future success of the Group and we are committed to an employee ownership model, which in recent weeks led to the roll out of a new organisational and title structure, culminating in the creation of our first group of Managing Directors and Partners in the Group. Through the Group's LTIP plan, Partners will have a significant portion of their compensation aligned with Group targets, with some subject to Group target EBITDA and TSR performance conditions, and some subject to Group target EBITDA and individual portfolio targets. These Partners also comprise Kingswood's inaugural Executive Committee, which will support the Board and senior management team in delivering the Group's growth strategy.

The Board firmly believes this partnership structure will be a defining feature of Kingswood's future success, with an annual opportunity to achieve partner status subject to meeting difficult, objective performance criteria and an ability to perform at the highest level for the benefit of the Group's overall performance.

We are committed to delivering shareholders and clients with high quality reporting and information, and are focused on partnering with best in class service providers to deliver non-core operating functions. We recently entered into an agreement with Global Prime Partners (GPP) - a third party clearing, custody and financial services provider - who will shortly take over Kingswood's investment management operations. We believe partnerships such as these are an efficient and effective way of delivering back office services, enabling Kingswood to focus on its core revenue-generating business activities.

At Board level, Jonathan Massing has assumed the role of Non-Executive Deputy Chairman, given Gary Wilder's installation as Group CEO earlier this year.

In conclusion, we would like to reinforce our commitment to growing our clients' wealth and protecting it for the future. Our clients' needs are at the heart of everything we do which is why we take a holistic approach, building our business and service around them. Our offering is tailored using a wide range of services, completely focused on meeting our long term needs and achieving future goals. We are committed to being authentic and providing existing and new clients unprecedented access to best in class advice and capital protected, yield enhanced investment products.

We would like to express our personal thanks and those of the Board to our clients, shareholders and staff for their strong support for the Group.

Kenneth 'Buzz' West Gary Wilder

Chairman Group Chief Executive Officer

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2018

*Prior periods have been restated to separate the results of discontinued operations, consistent with the presentation in the current period. Refer to note 16 for further details of the results of the discontinued operations.

Consolidated Statement of Financial Position

As at 31 December 2018

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:

Kenneth 'Buzz' West

Chairman

April 2019

Consolidated Statement of Changes in Equity

For the year ended 31 December 2018

Consolidated Statement of Cash Flows

For the year ended 31 December 2018