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Wealth firm issues profit warning on restructure costs

Kingswood has warned that full-year 2018 profit is likely to miss expectations as ‘a result of additional investment expenditure’ on a long-running restructure.

Wealth firm issues profit warning on restructure costs

Kingswood has warned that full-year 2018 profit is likely to miss expectations as ‘a result of additional investment expenditure’ on a long-running restructure of the company since its purchase in mid-2017.

In early trading, shares in the company – which previously operated as European Wealth before a recent rebrand as KW Wealth – were 3.8% lower at 10p, down from near 18p in September.

In a statement, the company said: ‘While the last couple of years have seen a period of significant change within the group and 2018 also impacted by a highly uncertain market environment and weaker investor sentiment resulting in an industry-wide slowdown in net inflows, the board believes that the group is well-positioned for growth once sentiment improves.

‘A new management team and organisation structure is now in place, and the three-year growth plan initiated by the board at the beginning of the year has solidified a number of strategic initiatives designed to enhance client yield and stimulate growth.’

Former chief executive Marianne Ismail (pictured) announced that she would be stepping down from the company in January, with deputy executive chair Gary Wilder, founder partner of ultimate parent company Kingswood Property Finance taking on her responsibilities.

Ismail had initiated a radical restructure of the business, consolidating smaller portfolios to free up individuals with the skillset to build an institutional business. She also began to move staff into central hubs to make management and the sharing of information easier. 

The company has grown its planning business with the acquisition of financial advisers Marchant McKechnie in Yorkshire late last year and Oxford-based Thomas & Co in early 2019.

The company also hired former hedge fund boss Najib Canaan to spearhead a North American expansion last month.

The company said it had identified tax planning as a strategic area of expansion and launched a range of corporate finance, tax and accounting services for small and medium-sized businesses.

Chief executive of Kingwood’s operating platforms, Patrick Goulding, 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.’

Alongside South African asset manager Anchor Capital, acting as manager to Mauritian investment company Astoria, Kingswood took effective control of European Wealth in mid-2017, as the former executive team struggled to meet debt obligations.

In its most recent update, the business reported £1.8 billion in client assets at the end of June, versus £1.7 billion 12 months earlier. Restructuring costs drove the company £5.9 million into the red in 2017, compared with a £750,000 loss in 2016.

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