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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Kingswood Holdings Limited | LSE:KWG | London | Ordinary Share | GG00BKY4K072 | ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 11.25 | 10.50 | 12.00 | 11.25 | 11.25 | 11.25 | 2,020 | 08:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Investment Advice | 146M | -7.8M | -0.0359 | -3.13 | 24.4M |
TIDMKWG
RNS Number : 8316M
Kingswood Holdings Limited
24 September 2021
Half-year Report
Kingswood Holdings Limited ("Kingswood") remains in a strong position and has delivered significant growth in the first half of 2021, with a robust foundation to deliver further growth
o A period of consolidation and growth for the business, with the Group reporting GBP61.5m revenues, GBP3.1m Operating Profit and assets under advice/management of GBP6.2bn. UK and US Divisional Operating Profit for the period is GBP5.3m
o Kingswood continues to build a leading international integrated wealth and investment management business and was delighted to recently complete the acquisition of Admiral Wealth Management in the UK in August 2021. Inorganic growth remains a key focus and Kingswood has signed Heads of Terms, and is in exclusive discussions, with a further 9 UK businesses and 3 businesses outside the UK
o The UK Wealth Management and Investment Management Division delivered GBP10.6m revenue and GBP2.8m Operating Profit in the first six months of 2021, with Operating Profit growing 173% year over year
o The US Wealth and Investment Management Division delivered GBP50.9m revenues and GBP2.5m Operating Profit in the first six months of 2021
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 2021.
David Hudd, Kingswood Group Chairman said: "We are pleased with the performance of the business in the first half of 2021. It has been a period of consolidation which has seen both the UK and US Divisions report material improvements to Operating Profit. Since I have been acting Chairman, I have been impressed with the dedication and commitment of our employees and leadership team. Not only have we minimised the effect of COVID-19 on the Group, but we are also making tremendous progress on our strategic priorities. I would like to place on record my thanks to Kenneth "Buzz" West, our former chairman, for his contribution to the business and also to welcome Mike Biggin and the Admiral team to Kingswood."
Market Update
Strategic Highlights
-- Kingswood has 16 UK regional network offices across the country with 64 client facing advisory colleagues and assets under advice/management of GBP4.5bn from c.8,000 active clients. -- Positioning for growth is a key focus following the successful integration of Regency Investment Services completed at the end of August. -- Flows into the Kingswood Discretionary Investment Management proposition continue to grow. MPS reported GBP186.5m assets under management as at June 2021 (June 2020: GBP41.9m) across our Core, Passive, ESG and Income portfolios, all of which exhibit a track record of performance above benchmark. -- Kingswood's institutional business continues to deliver solid revenue growth supporting university and other clients with cash management and treasury needs in a period of extreme volatility. -- An extensive pipeline of potential UK M&A opportunities is under evaluation with nine transactions currently under exclusive due diligence including opportunities in key preferred markets across the UK. -- Since completing the acquisition of 50.1% of the US business in mid-November 2020, which represents a controlling interest, we now consolidate the financial performance of Kingswood US into our Group results. -- Significant progress has been made in the US which has reported revenue of GBP50.9m and Operating Profit of GBP2.5m (H1 2020 GBP(0.03)m). The Independent Broker Dealer (IBD) and Registered Investment Adviser (RIA) businesses h as delivered significant organic growth through the recruitment of Independent Advisors. EF Hutton Investment Banking services was a particular driver of revenue growth which benefitted from strong capital market activity completing over 41 transactions raising $1.8bn for its clients. -- The US team now comprises of 207 Authorised Representatives, represented in 11 States across the country, with 3 key hubs in New York, Atlanta and San Diego and will continue to recruit new Reps throughout H2. We have an extensive pipeline of potential M&A opportunities that can deliver significant inorganic growth to the business and are in exclusive negotiations with 2 wealth management businesses
Gary Wilder, Group CEO commented : "Kingswood continues to make major forward steps in achieving its strategy to build a best-in-class international wealth management business for the mass affluent market. We are now benefiting from our acquisition strategy and successful entry and consolidation of our position in the attractive high growth US market. The financial results for the first half of 2021 are very pleasing - we have been able to deliver growth across all our divisions in Wealth Planning, Investment Management, and the US, under the superb leadership of David Lawrence in the UK and Mike Nessim in the US, supported by all of our wonderful and committed staff on both sides of the Atlantic. Kingswood remains focussed on building its long-term value strategy, centred around vertical complementary growth business lines in the international independent retail wealth and investment management sectors. With the acquisition of Admiral Wealth Management in the UK in August and a strong pipeline of UK and international acquisition opportunities, the second half of 2021 promises to be another busy and exciting period for the Group. With the financial and strategic support of Pollen Street Capital and KPI, Kingswood will continue to capitalise on the consolidation, acquisition and integration opportunities across international wealth and investment management markets."
Financial Highlights
-- Total Group revenue for the period was GBP61.5m, a 646% increase on prior year reflecting the impact of acquisitions and growth in the US. -- Wealth Planning revenues of GBP8.3m grew 78% year over year reflecting the successful acquisitions of Sterling Trust and Regency Investments. Investment Management revenues of GBP2.3m grew 8% year over year through Kingswood's institutional business and new Managed Portfolio Service. -- US revenues of GBP50.9m performed exceptionally well. EF Hutton Investment Banking revenues were GBP41.8m in the period and benefitted from strong capital market activity. The Broker Dealer and Advisor business delivered revenues of GBP9.1m, reporting healthy double digit growth year over on a like for like basis. -- 86% of the UK's revenue is recurring in nature providing a strong, annuity-style fee stream. Investment Banking Fees are a larger portion of Kingswood US revenues, and transactional in nature, which mean that recurring revenue in the US is 5% (29% excluding Investment Banking). Combined, group recurring revenue is 19%. -- Operating Expenditure was GBP58.5m (H1 2020: GBP9.5m). The increase in expenditure was mainly due to an increase in US Investment Banking cost of sales. In addition, operating costs increased in UK Wealth Management as a result of the 2 acquisitions in 2020. Central costs of GBP2.3m remained flat year over year (2020: GBP2.3m) through careful cost management. -- Operating Profit for the period to 30 June 2021 was GBP3.1m, an improvement of GBP4.3m over the six months to 30 June 2020 (H1 2020: Operating Loss GBP(1.3)m). The results reflect solid underlying business dynamics and the impact of acquisitions. -- 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). -- Profit before Tax for the period to 30 June 2021 was a Loss of GBP(3.7)m reflecting GBP4.1m of acquisition related deferred consideration expense, GBP1.1m amortisation and depreciation, GBP0.8m finance costs and GBP0.7m business re-positioning and transaction costs. -- The Group had GBP24.7m of cash as at June 2021, an increase of GBP20.8m since 31 December 2020. This is largely driven by further investment from our private equity partners at Pollen Street Capital and GBP5.7m cashflow generated from operating activities, partly offset by investment activities and lease payments. -- Net Equity as at 30 June 2021 was GBP43.3m and the company has no debt. Equity includes GBP37.6m of irredeemable, convertible preference shares issued under the Pollen Street Capital subscription agreement. -- Kingswood's financial strategy is to maintain a robust and disciplined balance sheet, ensuring no deferred liabilities relating to acquisition activities remain uncovered from a funding perspective. GBP'000 (unless otherwise stated) 2021 2020 Change % --------------------------- --------- -------- --------- Wealth Management 8,307 4,678 78% Investment Management 2,312 2,135 8% Kingswood US 50,922 * 1,438 3441% Total Revenue 61,541 8,251 646% Recurring Revenue 19% ** 84% Kingswood UK (WM + IM) 2,830 1,035 173% Kingswood US 2,519 (28) Division Operating Profit 5,349 1,007 431% Central Costs (2,294) (2,274) 1% Operating Profit 3,055 (1,267) n/a Total Equity 43,315 32,886 32% AUA/AUM (GBP millions) 6,172 4,718 31% # of UK Advisers 64 30 34
* GBP41.8m Investment Banking Fees and GBP9.1m Wealth Management Revenues. ** 60% excl. Inv. Bank Fees
The interim report will be available to be viewed or downloaded from the Company's website.
For further details, please contact:
Kingswood Holdings Limited
Gary Wilder / David Lawrence
+44 (0)20 7293 0730
www.kingswood-group.com
Peel Hunt LLP (Nomad and Broker)
James Britton / Rishi Shah
+44 (0)20 7418 8900
Greentarget (for Kingswood media)
Jamie Brownlee / Alice Gasson / Ellie Basle
+44 (0)20 7324 5498
Jamie.Brownlee@greentarget.co.uk
About Kingswood
Kingswood Holdings Limited (trading as Kingswood) is an AIM-listed (AIM: KWG) international fully integrated wealth management group, with around 8,000 active clients and GBP6.2bn of Assets under Advice and Management. It has a growing network of offices in the UK including Abingdon, Beverley, Darlington, Derby, Grimsby, Hull, Lincoln, London, Maidstone, Newcastle, Sheffield (2), Worcester and York with offices in Johannesburg, South Africa and Atlanta, New York and San Diego in the US.
Kingswood offers a range of trusted investment solutions 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 and wealth planning. Kingswood is focused on becoming a leading player in the wealth and investment management market through targeted acquisitions in the UK and US, creating a global business through strategic partnerships.
Company Registration No. 42316 (Guernsey) KINGSWOOD HOLDINGS LIMITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTH PERIODED 30 JUNE 2021
KINGSWOOD HOLDINGS LIMITED
CONTENTS
Page Financial and Operational Review 1 - 2 Interim Consolidated Statement of Comprehensive Income 3 - 4 Interim Consolidated Statement of Financial Position 5 - 6 Interim Consolidated Statement of Changes in Equity 7 - 8 Interim Consolidated Statement of Cash Flows 9 Notes to the Interim Consolidated Financial Statements 10 - 30
KINGSWOOD HOLDINGS LIMITED
FINANCIAL AND OPERATIONAL REVIEW
FOR THE SIX MONTH PERIODED 30 JUNE 2021
Group Review: Gary Wilder Kingswood Group CEO After such disruption to personal and professional lives throughout 2020 and the beginning of 2021 it is pleasing to see that the re-opening of the global economy remains on track as COVID-19 vaccination rates climb. I, like all of us, hope that current vaccines continue to prevent the spread of more contagious COVID-19 variants. At a macro-economic level, the global economy in 2021 is set to expand at its strongest post-recession pace in 80 years with sharp re-bounds in both the UK and US economies. Equities in the US, UK, and Europe have returned double digit growth year to date in 2021. With this backdrop, Kingswood has delivered an exceptional first half performance. In David Lawrence and Mike Nessim and their teams, we have leadership that is driving tangible results and executing our long-term strategy to be a leading participant in wealth & investment management in the UK, US and Internationally. The UK advice market remains ripe for ongoing consolidation, and we have built a health pipeline of acquisition opportunities in the UK, the US and further afield. Financial Performance During the period, total Group revenue was GBP61.5m, a 646% increase on prior year. Wealth Planning revenues of GBP8.3m grew 78% year over year and Investment Management revenues of GBP2.3m grew 8% year over year. US revenues of GBP50.9m performed well mainly from EF Hutton Investment Banking services which benefitted from strong capital market activity. Operating Profit for the period to 30 June 2021 was GBP3.1m, an improvement of GBP4.3m over the six months to 30 June 2020 (H1 2020: Operating Loss GBP(1.3)m). The results reflect solid underlying business dynamics and the impact of acquisitions. Net Equity as at 30 June 2021 was GBP43.3m and the company has no debt. Equity includes GBP37.6m of irredeemable, convertible preference shares issued under the Pollen Street Capital subscription agreement. Backed by the growth equity commitment from Pollen Street Capital, we are fully conscious of the need to drive enhanced, organic financial performance from the up-scaled business. Kingswood's financial strategy is to maintain a robust and disciplined balance sheet, ensuring no deferred liabilities relating to acquisition activities remain uncovered from a funding perspective, and a disciplined approach to expense management. Our focus is to maximise shareholder returns through Operating Profit growth combined with minimising our weighted average cost of capital. UK Key Highlights: David Lawrence Kingswood UK Chief Executive Officer My first nine months as the UK CEO for Kingswood have been spent consolidating progress built in 2020 whilst also charting a course in 2021 and beyond to become a leading UK wealth management business. We have made key investments in our colleague proposition as we strive to make Kingswood a great place to work. I am also delighted to have appointed Lucy Whitehead to a new role as Chief Client Officer, to ensure we have a single-minded client focus across our core propositions and to improve the overall customer experience. I am similarly delighted to welcome Jon Millam as our new CFO, who joined Kingswood in early August. By further strengthening my leadership team, and through a number of other key hires, we are now developing strategies and a technology roadmap to build a truly client and colleague centric business and proposition that can actively respond to emerging trends. Acquisition, integration, and growth are stated imperatives for us. We have built some great momentum in developing a pipeline of acquisitions which we hope to convert during the remainder of 2021 and into 2022. The acquisition selection process is rigorous; targets must be singularly dedicated to servicing their clients with the Kingswood model designed to free up adviser time to focus more on clients, and provide a centralised, efficient support infrastructure to manage the routine but time-consuming tasks required across compliance, finance, human resources, risk, and technology. Similarly, we have become well-practised at integrating acquired businesses, with specialist teams leading this activity, that will then create a platform for future growth. I am confident that a combination of investment and proactive management of our business will serve us well as we go forward. My ambition is to make Kingswood a magnet business for all, not least for firms wanting to take their next step in joining a progressive and capable wealth management business. US Key Highlights: Mike Nessim Kingswood US Chief Executive Officer Significant progress has been made in the US and I am pleased to report revenues of GBP50.9m and an Operating Profit of GBP2.5m. The Independent Broker Dealer (IBD) and Registered Investment Adviser (RIA) businesses has delivered significant growth through the first half of 2021, largely due to the successful execution of several strategic initiatives, with a particular focus on driving organic growth through the recruitment of Independent Advisors. The team now comprises 207 Authorised Representatives managing $2.3bn of client monies across the US. Additionally, investment in a robust technology infrastructure has provided advisors with a superior integrated wealth management platform enabling the IBD & RIA to offer a much wider range and more diverse selection of products. Kingswood US has also delivered significant organic growth in recurring revenue streams through the build out of the full-service RIA which currently has 21 advisors managing over $800m. We have an extensive pipeline of potential M&A opportunities that can deliver significant inorganic growth to the business. I am particularly focused on acquiring small to mid-sized RIAs and IBDs where Kingswood can create margin accretion through synergies. Currently, two transactions are under exclusive due diligence, representing +$10bn in Assets Under Management. The EF Hutton Investment Banking services was a particular driver of revenue growth which benefitted from strong capital market activity. EF Hutton, a global full-service middle market investment bank, now has 30 bankers and 10 support staff and is headquartered in NYC. In the first half of 2021, EF Hutton completed over 41 transactions and raised $1.8bn. 24 September 2021
KINGSWOOD HOLDINGS LIMITED
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIODED 30 JUNE 2021
Six months Six months Year ended to to 30 Jun 2021 30 Jun 2020 31 Dec 2020 (unaudited) (unaudited) (audited) restated Notes GBP'000 GBP'000 GBP'000 Revenue 4 61,541 8,251 25,477 Direct expenses (47,824) (1,938) (8,471) Gross profit 13,717 6,313 17,006 Operating staff costs (7,631) (5,426) (11,148) Other operating costs (3,031) (2,154) (5,052) Total operating costs (10,662) (7,580) (16,200) Share of post-tax profits of equity accounted associates - - 56
Operating profit / (loss) 3,055 (1,267) 862 Non-operating costs: Business re-positioning costs (407) (661) (1,801) Finance costs (840) (81) (554) Acquisition-related adjustments: Amortisation and depreciation (1,117) (785) (1,822) Other (losses) / gains 5 - (10) 1,744 Remuneration charge (deferred consideration) 12 (4,145) (3,059) (7,254) Transaction costs (274) (203) (1,855) Loss before tax (3,728) (6,066) (10,680) Tax 3 - (60) Loss after tax (3,725) (6,066) (10,740) Other comprehensive gain / (loss) 368 - (855) Total comprehensive loss (3,357) (6,066) (11,595)
KINGSWOOD HOLDINGS LIMITED
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)
FOR THE SIX MONTH PERIODED 30 JUNE 2021
Loss after tax is attributable to: - Owners of the parent company (4,857) (6,066) (11,000) - Non-controlling interests 1,132 - 260 Total comprehensive loss is attributable to: - Owners of the parent company (4,489) (6,066) (11,855) - Non-controlling interests 1,132 - 260 Loss per share: - Basic loss per share 6 GBP (0.02) GBP (0.03) GBP (0.05) - Diluted loss per share 6 GBP (0.02) GBP (0.03) GBP (0.05) The notes on pages 10 - 30 form an integral part of the financial statements
KINGSWOOD HOLDINGS LIMITED
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
30 Jun 2021 30 Jun 2020 31 Dec 2020 (unaudited) (unaudited) (audited) restated Notes GBP'000 GBP'000 GBP'000 Non-current assets Property, plant and equipment 7 915 576 927 Right-of-use assets 8 2,583 2,586 2,828 Goodwill and other intangible assets 9 / 19 46,943 41,702 47,616 Investments 10 20 416 - Deferred tax asset 392 387 392 50,853 45,667 51,763 Current assets Trade and other receivables 5,067 2,764 24,204 Cash and cash equivalents 24,733 1,945 3,899 29,800 4,709 28,103 Total assets 80,653 50,376 79,866 Current liabilities Trade and other payables 19 20,077 6,920 12,955 12 / Deferred consideration payable 19 900 2,197 836 20,977 9,117 13,791 Non-current liabilities 12 / Deferred consideration payable 19 3,810 2,685 3,232 Other non-current liabilities 19 9,834 5,688 10,802 Deferred tax liability 1,889 - 1,889 Total liabilities 36,510 17,490 29,714 Net assets 44,143 32,886 50,152 Equity Share capital 13 10,846 10,846 10,846 Share premium 13 8,224 8,224 8,224 14 / Preference share capital 19 37,550 14,985 37,550 Deferred share capital - - - Other reserves (459) 56 (519) Foreign exchange reserve (487) - (855) Retained (loss) / earnings 19 (12,359) (1,225) (6,159) Equity attributable to the owners of the Parent Company 43,315 32,886 49,087 Non-controlling interests 828 - 1,065 Total equity 44,143 32,886 50,152 The notes on pages 10 - 30 form an integral part of the financial statements 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: Chairman Date:
KINGSWOOD HOLDINGS LIMITED
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIODED 30 JUNE 2021
Share Deferred Preference Other Foreign Retained Equity Non-controlling Total capital share share reserves exchange earnings attributable interests and capital capital reserve to the share owners premium of the parent Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Balance at 1 January 2020 (audited) 19,070 - 4,586 (296) - 4,841 28,201 - 28,201 Loss for the period - - - - - (6,066) (6,066) - (6,066) Issue of share capital - - - - - - 10,399 - 10,399 Issue of preference share capital - - 10,399 - - - - - - Foreign exchange reserve - - - 2 - - 2 - 2 Share based remuneration - - - 350 - - 350 - 350 Restated balance at 30 June 2020 (unaudited) 19,070 - 14,985 56 - (1,225) 32,886 - 32,886 (Loss) / profit for the period - - - - - (4,934) (4,934) 260 (4,674) Amounts attributable to non-controlling interests - - - - - - - 805 805 Issue of preference share capital - - 22,565 - - - 22,565 - 22,565 Share based remuneration - - - (573) - - (573) - (573) Foreign exchange loss - - - (2) (855) - (857) - (857) Balance at 31 December 2020 (audited) 19,070 - 37,550 (519) (855) (6,159) 49,087 1,065 50,152
KINGSWOOD HOLDINGS LIMITED
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
FOR THE PERIODED 30 JUNE 2021
(Loss) / profit for the period - - - - - (4,857) (4,857) 1,132 (3,725) Amounts attributable to non-controlling interests - - - - - - - (32) (32) Elimination of local goodwill on consolidation - - - - - (1,343) (1,343) (1,337) (2,680) Share based remuneration - - - 60 - - 60 - 60 Foreign exchange gain - - - - 368 - 368 - 368 Balance at 30 June 2021 (unaudited) 19,070 -37,550 (459) (487) (12,359) 43,315 828 44,143 Note 13 provides further details of, and the split between, Share Capital and Share Premium. Additional reserves consist of foreign exchange translation, other reserves including share-based remuneration and expenses charged against reserves. The notes on pages 10 - 30 form an integral part of the financial statements
KINGSWOOD HOLDINGS LIMITED
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIODED 30 JUNE 2021
Six months Six months Year ended to to 30 Jun 2021 30 Jun 2020 31 Dec 2020 (unaudited) (unaudited) (audited) restated Notes GBP'000 GBP'000 GBP'000 Net cash generated from / (used in) operating activities 15 5,654 3,909 (1,575) Investing activities Property, plant and equipment purchased (529) (394) (796) Acquisition of investments - (12,068) (10,579) Remuneration charge (deferred consideration) (3,975) (3,953) (5,153) Net cash used in investing activities (4,504) (16,415) (16,528) Financing activities Proceeds from issue of shares 20,000 12,622 20,243 Interest paid (12) (3) (17) Lease payments (304) (174) (421) New loans received / loans repaid - - 255 Net cash generated from financing activities 19,684 12,445 20,060 Net increase/(decrease) in cash and cash equivalents 20,834 (61) 1,957 Cash and cash equivalents at beginning of Period 3,899 2,006 2,006 Effect of foreign exchange rates - - (64) Cash and cash equivalents at end of Period 24,733 1,945 3,899 The notes on pages 10 - 30 form an integral part of the financial statements
KINGSWOOD HOLDINGS LIMITED
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE PERIODED 30 JUNE 2021
1 Accounting policies General information Kingswood Holdings Limited is a company incorporated in Guernsey under The Companies (Guernsey) Law, 2008. The shares of the Company are traded on the AIM market of the London Stock Exchange (ticker symbol: KWG). The nature of the Group's operations and its principal activities are set out in the Strategic Report. Certain subsidiaries in the Group are subject to the FCA's regulatory capital requirements and therefore required to monitor their compliance with credit, market and operational risk requirements, in addition to performing their own assessment of capital requirements as part of the ICAAP. 1.1 Basis of accounting The Group's interim condensed consolidated financial statements are prepared and presented in accordance with IAS 34 'Interim Financial Reporting'. The accounting policies adopted by the Group in the preparation of its 2021 interim report are consistent with those disclosed in the annual financial statements for the year ended 31 December 2020 except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2021, and will be adopted in the 2021 annual financial statements. The information relating to the six months ended 30 June 2021 and the six months ended 30 June 2020 do not constitute statutory financial statements and have not been audited. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's most recent annual financial statements for the year ended 31 December 2020. 1.2 Changes in significant accounting policies The Group has applied the same accounting policies and methods of computation in its interim consolidated financial statements as in its 2020 annual financial statements. There are a number of standards and interpretations which have been issued by the International Accounting Standards Board that are effective for periods beginning subsequent to 31 December 2021 (the date on which the company's next annual financial statements will be prepared up to) that the Group has decided not to adopt early. The Group does not believe these standards and interpretations will have a material impact on the financial statements once adopted. 1.3 Significant accounting policies Going concern The Directors review the going concern position of the Group on a regular basis as part of the monthly reporting process which includes consolidated management accounts and cash flow projections and have, at the time of approving the financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly the Directors continue to adopt the going concern basis of accounting in preparing the financial statements. Revenue recognition Performance obligations and timing of revenue recognition The majority of the Group's UK revenue, being investment management fees and ongoing wealth advisory, is derived from the value of funds under management / advice, with revenue recognised over the period in which the related service is rendered. This method reflects the ongoing portfolio servicing required to ensure the Group's contractual obligations to its clients are met. This also applies to the Group's US Registered Investment Advisor ("RIA") business. 1 Accounting policies For certain commission, fee-based and initial wealth advisory income, revenue is recognised at the point the service is completed. This applies in particular to the Group's US Independent Broker Dealer ("IBD") services, and its execution-only UK investment management. There is limited judgement needed in identifying the point such a service has been provided, owing to the necessity of evidencing, typically via third-party support, a discharge of pre-agreed duties. The US division also has significant Investment Banking operations, where commission is recognised on successful completion of the underlying transaction. Determining the transaction price Most of the Group's UK revenue is charged as a percentage of the total value of assets under management or advice. For revenue earned on a commission basis, such as the US broker dealing business, a set percentage of the trade value will be charged. In the case of one-off or ad hoc engagements, a fixed fee may be agreed. Allocating amounts to performance obligations Owing to the way in which the Group earns its revenue, which is largely either percentage-based or fixed for discrete services rendered, there is no judgement required in determining the allocation of amounts received. Where clients benefit from the provision of both investment management and wealth advisory services, the Group is able to separately determine the quantum of fees payable for each business stream. Further details on revenue, including disaggregation by operating segment and the timing of transfer of service(s), are provided in note 4 below. 2 Critical accounting judgements and key sources of estimation uncertainty In the application of the Group's accounting policies, which are described in note 1, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Critical judgements in applying the Group's accounting policies The following are the critical judgements that the Directors have made in the process of applying the Group's accounting policies that had the most significant effect on the amounts recognised in the financial statements. Assessment of control Control is considered to exist where an investor has power over an investee, or else is exposed, and has rights, to variable returns. The Group determines control to exist where its own direct and implicit voting rights relative to other investors afford KHL - via its board and senior management - the practical ability to direct, or as the case may be veto, the actions of its investees. KHL holds 50.1% of voting rights in MHC and its subsidiaries, as well as a majority stake in the US division's advisory board when grouped with affiliated entities. The Group has thus determined that the Company has the practical ability to direct the relevant activities of MHC and its subsidiaries, and has consolidated the sub-group as subsidiaries with a 49.9% non-controlling interest. 2 Critical accounting judgements and key sources of estimation uncertainty Estimates and Assumptions Intangible assets: Expected duration of client relationships The Group makes estimates as to the expected duration of client
relationships to determine the period over which related intangible assets are amortised. The amortisation period is estimated with reference to historical data on account closure rates and expectations for the future. During the period, client relationships were amortised over a 10-20 year period. Goodwill The amount of goodwill initially recognised as a result of a business combination is dependent on the allocation of the purchase price to the fair value of the identifiable assets acquired and the liabilities assumed. The determination of the fair value of the assets and liabilities is based, to a considerable extent, on management's judgement. Goodwill is reviewed annually for impairment by comparing the carrying amount of the CGUs to their expected recoverable amount, estimated on a value-in-use basis. Share-based remuneration: Share based payments The calculation of the fair value of share-based payments requires assumptions to be made regarding market conditions and future events. These assumptions are based on historic knowledge and industry standards. Changes to the assumptions used would materially impact the charge to the Statement of Comprehensive Income. Deferred tax: Recoverability of deferred tax assets The amount of deferred tax assets recognised requires assumptions to be made to the financial forecasts that probable sufficient taxable profits will be available to allow all or part of the asset to be recovered. Leases: Estimating the incremental borrowing rate The Group cannot readily determine the interest rate implicit in leases where it is the lessee, therefore, it uses its incremental borrowing rate to measure lease liabilities. This is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The incremental borrowing rate therefore reflects what the Group 'would have to pay', which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary's functional currency). The Group estimates the incremental borrowing rate using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the subsidiary's stand-alone credit rating). 2 Critical accounting judgements and key sources of estimation uncertainty Deferred consideration: Payment of deferred consideration The Group structures acquisitions such that consideration is split between initial cash or equity settlements and deferred payments. The initial value of the contingent consideration is determined by EBITDA and/or revenue targets agreed on the acquisition of each asset. It is subsequently remeasured at its fair value through the Statement of Comprehensive Income, based on the Directors' best estimate of amounts payable at a future point in time, as determined with reference to expected future performance. Forecasts are used to assist in the assumed settlement amount. 3 Significant events and transactions On 16 June 2021, Kingswood signed definitive agreements to acquire 100% of the shares in Admiral Wealth Management, an independent financial advisory firm with a client base primarily in Lincolnshire and Yorkshire. Following regulatory approval, the business will be acquired for cash consideration of GBP4.0 million, payable over a 2-year period. GBP2.0 million will be paid at closing and the balance paid on a deferred basis, some of which is subject to the achievement of pre-agreed performance targets. Regulatory approval was received, and this deal formally completed, on 17 August 2021. 4 Business and geographical segments Information reported to the Group's Non-Executive Chairman for the purposes of resource allocation and assessment of segment performance is focused on the category of customer for each type of activity. The Group's reportable segments under IFRS 8 are as follows: investment management, wealth planning and US operations. The Group has disaggregated revenue into various categories in the following table which is intended to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic date and enable users to understand the relationship with revenue segment information provided below. The following is an analysis of the Group's revenue and results by reportable segment for the six month period to 30 June 2021. The table below details six months worth of revenue and results for the principal business and geographical divisions, which has then reconciled to the results included in the Statement of Comprehensive Income: Investment Wealth US Group Total management planning operations Six months Six months Six months Six months Six months to to to to to 30 Jun 2021 30 Jun 2021 30 Jun 2021 30 Jun 2021 30 Jun 2021 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) Continuing operations: GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Revenue (disaggregated by timing): Point in time 513 953 48,162 - 49,628 Over time 1,799 7,354 2,760 - 11,913 External sales 2,312 8,307 50,922 - 61,541 Direct expenses (790) (460) (46,574) - (47,824) Gross profit 1,522 7,847 4,348 - 13,717 Operating profit / (loss) 56 2,774 2,519 (2,294) 3,055 Business re-positioning costs (76) (112) (184) (35) (407) Finance costs - (50) 5 (795) (840) Amortisation and depreciation - (522) (15) (580) (1,117) Remuneration charge (deferred consideration) - (2,128) - (2,017) (4,145) Transaction costs - (8) - (266) (274) (Loss) / profit before tax from continuing operations (20) (46) 2,325 (5,987) (3,728) Tax - - (40) 43 3 (Loss) / profit after tax from continuing operations (20) 46 2,285 (5,944) (3,725) 4 Business and geographical segments Investment Wealth US Group Total management planning operations Six months Six months Six months Six months Six months to to to to to 30 Jun 2020 30 Jun 2020 30 Jun 2020 30 Jun 2020 30 Jun 2020 (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) restated restated restated restated restated Continuing operations: GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Revenue (disaggregated by timing): Point in time 586 558 1,207 - 2,351 Over time 1,549 4,120 231 - 5,900 External sales 2,135 4,678 1,438 - 8,251 Direct expenses (461) (228) (1,249) - (1,938) Gross profit 1,674 4,450 189 - 6,313 Operating (loss) / profit (329) 1,364 (28) (2,274) (1,267) Business re-positioning costs - - - (661) (661) Finance costs (1) (8) - (72) (81) Amortisation and depreciation - (81) - (704) (785) Other losses - - - (10) (10) Remuneration charge (deferred consideration) - (2,413) - (646) (3,059) Transaction costs - - - (203) (203) (Loss) / profit before tax from continuing operations (330) (1,138) (28) (4,570) (6,066) Tax - - - - - (Loss) / profit after tax from continuing
operations (330) 1,138 (28) (4,570) (6,066) 4 Business and geographical segments Investment Wealth US Group Total management planning operations Year ended Year ended Year ended Year ended Year ended 31 Dec 2020 31 Dec 2020 31 Dec 2020 31 Dec 2020 31 Dec 2020 (audited) (audited) (audited) (audited) (audited) Continuing operations: GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 Revenue (disaggregated by timing): Point in time 1,071 1,595 7,299 - 9,965 Over time 3,169 11,320 1,023 15,512 External sales 4,240 12,915 8,322 - 25,477 Direct expenses (1,158) (643) (6,670) - (8,471) Gross profit 3,082 12,272 1,652 - 17,006 Operating (loss) / profit (107) 4,380 543 (3,954) 862 Business re-positioning costs - - - (1,801) (1,801) Finance costs (3) (48) (3) (500) (554) Amortisation and depreciation (10) (835) (3) (974) (1,822) Other gains - - - 1,744 1,744 Remuneration charge (deferred consideration) - - - (7,254) (7,254) Transaction costs - - - (1,855) (1,855) Share of profit from associates - - - - - (Loss) / profit before tax from continuing operations (120) 3,497 537 (14,594) (10,680) Tax - (2) (101) 43 (60) (Loss) / profit after tax from continuing operations (120) 3,495 436 (14,551) (10,740) 5 Other (losses) / gains Six months Six months Year ended to to 30 Jun 2021 30 Jun 2020 31 Dec 2020 (unaudited) (unaudited) (audited) GBP'000 GBP'000 GBP'000 Net unrealised (loss) / gain on investments - (10) 1,744 - (10) 1,744 Unrealised losses and gains on investments relate to the US acquisitions. 6 Earnings per share Six months Six months Year ended to to 30 Jun 2021 30 Jun 2020 31 Dec 2020 (unaudited) (unaudited) (audited) restated GBP'000 GBP'000 GBP'000 Loss from continuing operations for the purposes of basic loss per share, being net loss attributable to owners of the Group (4,857) (6,066) (11,000) Number of shares Weighted average number of ordinary shares for the purposes of basic loss per share 216,920,719 216,920,719 216,920,719 Effect of dilutive potential ordinary shares: Share options - - - Convertible preference shares in issue - - - Weighted average number of ordinary shares for the purposes of diluted loss per share 216,920,719 216,920,719 216,920,719 Basic loss per share GBP(0.02) GBP(0.03) GBP(0.05) Diluted loss per share GBP(0.02) GBP(0.03) GBP(0.05) 7 Property, plant and equipment Fixtures and equipment GBP'000 Cost At 1 January 2020 564 Additions 393 At 30 June 2020 957 Additions 423 At 31 December 2020 1,380 Additions 79 At 30 June 2021 1,459 Depreciation and impairment At 1 January 2020 343 Depreciation charged in the Period 38 At 30 June 2020 381 Depreciation charged in the Period 72 At 31 December 2020 453 Depreciation charged in the Period 91 At 30 June 2021 544 Net book value At 30 June 2021 915 At 31 December 2020 927 At 30 June 2020 576 8 Right-of-use assets Land and buildings GBP'000 Cost At 1 January 2020 1,335 Additions 1,705 At 30 June 2020 3,040 Additions 529 At 31 December 2020 3,569 Additions 65 At 30 June 2021 3,634 Accumulated depreciation At 1 January 2020 234 Depreciation charged in the Period 220 At 30 June 2020 454 Depreciation charged in the Period 287 At 31 December 2020 741 Depreciation charged in the Period 310 At 30 June 2021 1,051 Net book value At 30 June 2021 2,583 At 31 December 2020 2,828 At 30 June 2020 2,586 9 Goodwill and other intangible assets Goodwill Other intangible Total assets GBP'000 GBP'000 GBP'000 Cost At 1 January 2020 16,384 17,655 34,039 Additions 4,735 8,287 13,022 At 30 June 2020 (restated) 21,119 25,942 47,061 Additions 4,565 2,026 6,591 At 31 December 2020 25,684 27,968 53,652 Additions 35 - 35 At 30 June 2021 25,719 27,968 53,687 Accumulated amortisation At 1 January 2020 2,202 2,629 4,831 Amortisation charged for the Period 77 451 528 At 30 June 2020 (restated) 2,279 3,080 5,359 Amortisation charged for the Period - 677 677 At 31 December 2020 2,279 3,757 6,036 Amortisation charged for the Period - 708 708 At 30 June 2021 2,279 4,465 6,744 Net book value At 30 June 2021 23,440 23,503 46,943 At 31 December 2020 23,405 24,211 47,616 At 30 June 2020 (restated) 18,840 22,862 41,702 10 Investments GBP'000 Cost At 1 January 2020 416 Additions - At 30 June 2020 416 Additions 1,101 Net movement on equity accounting of associate (16) Investment de-recognised on gain of control (1,501) At 31 December 2020 - Additions 20 At 30 June 2021 20
On 25 May 2019, Kingswood acquired a 7% interest in US-based Manhattan Harbor Capital, LLC ("MHC") for an initial consideration of GBP416,435 (US$525,000), comprising a cash payment of GBP263,742 (US$332,500) and a share component of GBP152,693 (US$192,500) which was satisfied through the issuance of 1,654,787 new ordinary shares in the Company. On 12 August 2020, Kingswood acquired an additional 17% interest in MHC for total cash consideration of GBP1,101,362 (US$1,438,158). In the period during which Kingswood held 24% interest in MHC, equity accounting was applied and Kingswood's unrealised gain on investment during this period equalled GBP57,349 (US$75,563). On 23 November 2020, Kingswood acquired a controlling 50.1% share in MHC and its subsidiaries for consideration of GBP3,841,268 (US$5,106,582), comprising a cash payment of GBP832,392 (US$1,106,582), a deferred cash payment of GBP752,219 (US$1,000,000) and the contribution of a 49.9% non-controlling interest in Kingswood Capital Partners, LLC and Kingswood Wealth Advisors, LLC, together valued at GBP99,210 (US$131,890). The carrying value of Kingswood's 24% share of MHC immediately prior to acquiring control, from which was MHC and its subsidiaries was consolidated, was GBP2,334,365 (US$3,103,304). This investment is no longer recognised in the consolidated financial statements at 30 June 2021, with Kingswood instead fully consolidating MHC and its subsidiaries. 11 Lease liabilities The lease liabilities are included in trade and other payables and other non-current liabilities in the statement of financial position. Land and buildings GBP'000 At 1 January 2020 1,151 Additions 1,693 Interest expense 28 Lease payments (173) At 30 June 2020 2,699 Additions 701 Interest expense 82 Lease payments (248) At 31 December 2020 3,234 Additions 65 Interest expense 92 Lease payments 315 At 30 June 2021 3,076 The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses and adjusted for certain re-measurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the Group's incremental borrowing rate. The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payment made. The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that includes renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities and right-of-use assets recognised. 12 Deferred consideration payable 30 Jun 2021 30 Jun 2020 31 Dec 2020 (unaudited) (unaudited) (audited) restated GBP'000 GBP'000 GBP'000 Deferred consideration payable on acquisitions: 4,710 4,882 4,068 - falling due within one year 900 2,197 836 - due after more than one year 3,810 2,685 3,232 The deferred consideration payable on acquisitions is due to be paid in cash. The deferred consideration liability is contingent on performance requirements during the deferred consideration period. The value of the contingent consideration is determined by EBITDA and/or revenue targets agreed on the acquisition of each asset, as defined under the respective Business Purchase Agreement. As at the reporting date, the Group is expecting to pay the full value of its deferred consideration as all acquisitions are on target to meet the requirements, and therefore no gains or losses have arisen from this during the year. During the period, deferred consideration expensed as remuneration through profit or loss was GBP4,145,000 (year ended 31 Dec 2020: GBP7,253,510; six month period ended 30 Jun 2020: GBP3,059,173). 13 Share capital Six months Six months Year ended Six months Six months Year ended to to to to 30 Jun 2021 30 Jun 2020 31 Dec 2020 30 Jun 2021 30 Jun 2020 31 Dec 2020 Shares Shares Shares GBP'000 GBP'000 GBP'000 (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) Ordinary shares issued: Fully paid 216,920,719 216,920,719 216,920,719 10,846 10,846 10,846 216,920,719 216,920,719 216,920,719 10,846 10,846 10,846 Share capital and share premium Number of Par value Share premium Total ordinary shares '000 GBP'000 GBP'000 GBP'000 At 1 January 2020 216,921 10,846 8,224 19,070 Issued during year - - - - At 30 June 2020 216,921 10,846 8,224 19,070 Issued during year - - - - At 31 December 2020 216,921 10,846 8,224 19,070 Issued during year - - - - At 30 June 2021 216,921 10,846 8,224 19,070 Ordinary shares have a par value of GBP0.05 per share. They entitle the holder to participate in dividends, and to share in the proceeds of winding up the company in proportion to the number of, and amounts paid on, shares held. On a show of hands, every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote and upon a poll each share is entitled to one vote. Kingswood Holdings Limited does not have a limit on the amount of authorised capital. 14 Preference share capital Six months Six months Year ended Six months Six months Year ended to to to to 30 Jun 2021 30 Jun 2020 31 Dec 2020 30 Jun 2021 30 Jun 2020 31 Dec 2020 Shares Shares Shares GBP'000 GBP'000 GBP'000 (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) Convertible preference shares issued: Fully paid 44,828,443 18,350,043 44,828,443 37,550 18,350 37,550 44,828,443 18,350,043 44,828,443 37,550 18,350 37,550 Preference share capital movements are as follows: Number of Par value shares '000 GBP'000 At 1 January 2020 5,728 5,728 Issued during year 12,622 12,622 At 30 June 2020 18,350 18,350 Issued during year 26,478 26,478 At 31 December 2020 44,828 44,828
Issued during year - - At 30 June 2021 44,828 44,828 Six months Six months Year ended to to 30 Jun 2021 30 Jun 2020 31 Dec 2020 GBP'000 GBP'000 GBP'000 (unaudited) (unaudited) (audited) restated Equity component 37,550 14,985 37,550 Liability component 7,469 3,395 7,365 45,019 18,380 44,915 14 Preference share capital On 12 September 2019, Kingswood Holdings Limited entered into a subscription agreement with HSQ INVESTMENT LIMITED, a wholly owned indirect subsidiary of funds managed and/or advised by Pollen Street, to subscribe for up to 80 million irredeemable convertible preference shares, at a subscription price of GBP1 each (the Subscription). Pollen Street is a global, independent alternative asset investment management company, established in 2013 with currently over GBP2.6 billion gross AUM across private equity and credit strategies, focused on the financial and business services sectors, with significant experience in specialty finance. All irredeemable convertible preference shares convert into new ordinary shares at Pollen Street Capital's option at any time from the earlier of an early conversion trigger or a fundraising, or automatically on 31 December 2023. Preferential dividends on the irredeemable convertible preference shares accrue daily at a fixed rate of five per cent per annum from the date of issue. 15 Notes to the cash flow statement Cash and cash equivalents comprise cash and cash equivalents with an original maturity of three months or less. The carrying amount of these assets is approximately equal to their fair value. Cash and cash equivalents are detailed in note . Six months Six months Year ended to to 30 Jun 2021 30 Jun 2020 31 Dec 2020 GBP'000 GBP'000 GBP'000 (unaudited) (unaudited) (audited) restated GBP'000 GBP'000 GBP'000 Loss before tax (3,728) (6,066) (10,680) Adjustments for: Depreciation and amortisation 1,117 785 1,822 Finance costs 840 218 554 Remuneration charge (deferred consideration) 4,145 3,059 7,254 Share-based payment expense 60 350 (223) Other (losses) / gains - 10 (1,744) Foreign exchange gain 4 (47) (22) Tax paid (40) - (103) Share of post-tax profits of equity accounted associates - - (56) Operating cash flows before movements in working capital 2,398 (1,691) (3,198) (Increase)/decrease in receivables (863) (449) (1,893) Increase/(decrease) in payables 4,119 6,049 3,516 Net cash inflow / (outflow) from operating activities 5,654 3,909 (1,575) 16 Financial instruments The following table states the classification of financial instruments and is reconciled to the Statement of Financial Position: 30 Jun 2021 30 Jun 2020 31 Dec 2020 Carrying Carrying Carrying amount amount amount (unaudited) (unaudited) (audited) GBP'000 GBP'000 GBP'000 Financial assets measured at amortised cost Trade and other receivables 3,790 889 23,048 Cash and cash equivalents 24,733 1,945 3,899 Financial liabilities measured at amortised cost Trade and other payables (17,495) (4,512) (10,483) Other non-current liabilities - - (794) Lease liability (3,076) (2,699) (3,234) Preference share liability (7,469) (3,395) (7,365) Financial liabilities measured at fair value through profit and loss Deferred consideration payable (4,710) (4,882) (4,068) (4,227) (12,654) 1,003 Financial instruments not measured at fair value includes cash and cash equivalents, trade and other receivables, trade and other payables, and other non-current liabilities. Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables, and trade and other payables approximates fair value. Item Fair value Valuation technique Fair value hierarchy level GBP'000 Deferred 4,710 Fair value of Level 3 consideration deferred payable consideration payable is estimated by discounting the future cash flows using the IRR inherent in the company's acquisition price. The potential profit or loss impact in relation to deferred consideration payable of a reasonably possible change to the discount rate is as follows: Profit or (loss) impact Assumption Reasonably Increase Decrease possible GBP'000 GBP'000 Discount rate change (+ / - 5%) (64) 66 17 Related party transactions Remuneration of key management personnel The remuneration of the Directors, who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures. Six months Six months Year ended to to 30 Jun 2021 30 Jun 2020 31 Dec 2020 (unaudited) (unaudited) (audited) GBP'000 GBP'000 GBP'000 Short-term employee benefits 371 338 898 Share based payments 34 260 68 405 598 966 Other related parties During the period, KHL incurred fees of GBP62,500 (30 June 2020:
GBP62,500; 31 December 2020: GBP125,000) from KPI (Nominees) Limited in relation to Non-Executive Director remuneration. At 30 June 2021, GBP37,500 of these fees remained unpaid (30 June 2020: GBPnil; 31 December 2020: GBP112,500). Fees received from Moor Park Capital Partners LLP, in which Gary Wilder holds a beneficial interest, relating to property related services provided by KHL totalled GBP23,708 for the period ended 30 June 2021 (30 June 2020: GBP20,000; 31 December 2020: GBP20,000), of which GBPnil (30 June 2020: GBPnil; 31 December 2020: GBPnil) was outstanding at 30 June 2021. Fees paid for financial and due diligence services to Kingswood LLP and Kingswood Corporate Finance Limited, in which Gary Wilder and Jonathan Massing hold a beneficial interest, totalled GBP201,829 for the period to 30 June 2021 (30 June 2020: GBP38,900; 31 December 2020: GBP184,426), of which GBP5,430 (30 June 2020: GBP12,132; 31 December 2020: GBP29,280) was outstanding at 30 June 2021. 18 Ultimate controlling party As at the date of approving the financial statements, the ultimate controlling party of the Group was KPI (Nominees) Limited. 19 Restatement of prior periods Deferred consideration In 2020, the Group restated its accounting treatment regarding business combinations and deferred consideration to conform with the required treatment of deferred consideration under IFRS 3. Previously all deferred consideration payable on acquisitions was recorded as a deferred liability and included in the fair value of the consideration of the business acquired. However, in circumstances where the payment of deferred consideration is contingent on the seller remaining within the employment of the Group during the deferred period, the contingent portion of deferred consideration should not have been included in the fair value of consideration paid, rather is treated as remuneration and accounted for as a charge against profits over the deferred period. This has therefore required the restatement of prior years and the reclassification of certain deferred payments as remuneration. The following restatement covers the share purchase acquisition of Marchant McKechnie in 2018 and the asset purchases of WFI and Thomas & Co in 2019. (a) Statement of Comprehensive Income (extract) Six months Increase Six months to 30 Jun / (decrease) to 30 Jun 2020 2020 (restated) GBP'000 GBP'000 GBP'000 Finance charge 218 (137) 81 Amortisation charge 807 (279) 528 Remuneration charge (previously deferred consideration) - 3,059 3,059 Total comprehensive loss (3,424) (2,642) (6,066) Earnings per share - basic and diluted GBP(0.02) GBP(0.01) GBP(0.03) 19 Restatement of prior periods (b) Statement of Financial Position (extract) 30 Jun 2020 Increase 30 Jun 2020 / (decrease) (restated) GBP'000 GBP'000 GBP'000 Intangible assets and goodwill 58,664 (16,962) 41,702 Total non-current assets 62,619 (16,952) 45,667 Trade and other payables 4,801 2,119 6,920 Deferred consideration payable in less than 1 year 10,006 (7,809) 2,197 Total current liabilities 15,212 (6,095) 9,117 Deferred consideration payable in more than 1 year 9,890 (7,205) 2,685 Other non-current liabilities 2,294 3,394 5,688 Total liabilities 27,396 (9,906) 17,490 Net assets 39,932 (7,046) 32,886 Retained earnings 2,456 (3,681) (1,225) Preference share capital 18,350 (3,365) 14,985 Total equity 39,932 (7,046) 32,886 20 Events after the reporting date Regulatory approval for the acquisition of 100% of the shares in Admiral Wealth Management was received on 17 August 2021. Full details can be found in note 3.
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