Rapidly expanding wealth manager and Financial Planner Kingswood Holdings has warned that 2022 revenue is likely to be down 3.9% year on year to £143.6m.
In a trading statement today the firm – which recently revealed it was looking at sale options – said lower revenues on US capital markets had hit revenue for the group.
Kingswood said that subject to auditing it expected overall group revenue for 2022 to be down when final results are released.
The group expects 2022 operating profit to be £8.5m, up 34% year on year although below the board’s expectations.
Kingswood said it continues to make “exceptional progress” against its strategic objectives and its medium-term targets.
UK revenues rose in 2022 to approximately £33.8m, a 54% increase year on year, reflecting “resilience to market headwinds” and the benefit of acquisitions, the firm said.
The US business (in which Kingswood Holdings Limited has a 50.1% interest) expects to report revenues of approximately £110m, a decrease of 14% year on year. This was due to lower than expected capital markets activity affecting US investment banking revenues and the timing of a large one-off, high margin US transaction that was expected to be reported in 2022 and that will now be recognised in 2023.
In the UK Kingswood expects to report operating profit of £11.3m (a £5.2m or 84% increase year on year) and in line with board expectations.
The US business expects to report operating profit of £2.8m (a £2.4m or 46% decrease year on year) and below board expectations.
During 2022 Kingswood acquired 10 businesses in the UK. These have added £1.7bn of AuA, 28 advisers and £11.8m revenue to the group in 2022 and will add a further £6m in incremental revenue in 2023.
In Q1 2023 two further acquisitions, Barry Fleming Partners and Moloney Investments Ltd (MMPI), were made.
UK AUM/A increased by £3.2bn to £8.1bn as at 31 December 2022, driven by inorganic growth and positive net flows of assets under management and advice (AUM/A).
The acquisition of IBOSS has also driven increased flows into Kingswood investment solutions, the firm said.
In October 2022, Kingswood added a debt facility with a global financial institution to provide initial funding of £50m with the ability to increase the commitment to £150m. Kingswood says this facility will support Kingswood UK’s growth plans.
In other developments, the ‘Kingswood Go’ app, launched in March 2022, now has over 3,300 clients. The firm says it will make further investments in technology including digital fact finds and new propositions.
In terms of 2023 targets, the firm plans to build AUM/A to in excess of £10bn in UK&I and £12bn for the group. The company is planning further acquisitions and has four potential acquisitions in exclusive talks and a number of others in advanced negotiations.
David Lawrence, Kingswood CEO, said: “I am delighted that our business continues to make progress across the group with organic growth and positive net asset flows complemented by ongoing acquisition activity. It is understandable that capital markets activity softened in the US in 2022 as a result of market conditions, with this division of our business delivering lower operating profit contribution in the year.
“However, the strategy and trajectory of the business continues as planned. Our recent entry into the Irish market is a further demonstration of Kingswood’s progress and commitment to our future growth. We expect to announce further acquisitions later in 2023.”
In March the company said it was looking at the possibility of a sale of its UK division but no firm decision had been taken. It has engaged investment bank Houlihan Lokey as its financial adviser for any deal.
