Investments 

Wealth manager faces profit hit

Wealth manager faces profit hit

Wealth management group Kingswood has predicted pre-tax profits for last year will be lower than previously expected, as a result of its investment in restructuring the company.  

In a market update published today (April 2) the wealth manager confirmed its full financial results for the year ended December 2018 would be reported later this month.

While Kingswood expects its revenue and gross profit margin to be broadly in line with expectations, it confirmed its profit before tax would be below previous expectations due to costs incurred when restructuring the Kingswood platform. 

Kingswood's cash holdings at the end of last year were £2.4m and its net cash, including deferred consideration in relation to the Marchant McKechnie acquisition in October 2018, stood at £1.2m. 

The AIM-listed integrated wealth management group has more than 4,500 active clients and about £2bn of assets under management and advice. 

Kingswood reported the last couple of years had been a period of "significant change" for the company, with 2018 impacted by a "highly uncertain market environment and weaker investor sentiment" resulting in an "industry-wide" slowdown in net flows. 

But in its most recent update the wealth manager reported it was now in a position to deliver sustained growth for investors after implementing "significant changes" to its strategic plan. 

Patrick Goulding, group chief financial officer and chief executive of Kingswood's operating platforms, said: "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."

In October 2018 Kingswood acquired IFA firm Marchant McKechnie in East Yorkshire and purchased Oxford-based Thomas & Co Financial Services for £3.3m in February. 

In today's statement the wealth management group confirmed the acquisitions were performing to plan, with a pipeline in excess of £100m under evaluation for further accretive investments across the UK and internationally.

To execute on the pipeline Kingswood confirmed it is looking to source additional funding via institutional investors. 

Last month the company appointed Najib Canaan as US chief executive as part of its international expansion plans, with the group in discussions to gain a foothold in the US in the "very near future".

Buzz West, board chairman of Kingswood, said: "We have made huge strides in expanding and reinforcing the Kingswood brand in the UK over recent months and we see the US as a really exciting market.  

"I am pleased with the future direction of the company and a strong foundation is now in place from which to grow the platform and add value for shareholders. I look forward to working with the board and executive team to deliver our strategy." 

rachel.addison@ft.com