An increased regulatory burden – coupled with the need for technological innovation – is driving consolidation within the wealth management industry, particularly among smaller players. Harwood Wealth (HW.) has been scooping up smaller companies unable to cope with rising operating costs, making another nine acquisitions for a total £10.9m during the first half of the year. The spree included four independent financial advisers, while non-binding terms were agreed with a further 18 companies.
The financial planning and discretionary wealth management group – which listed on Aim in March 2016 – operates via nine brands split into three divisions. Following the acquisition of Network Direct, the network services division led the way in terms of revenue growth, which more than doubled to £6.4m.
Overall assets under influence – held on one of the group’s platforms – grew almost a third to £4.3bn. Meanwhile, assets under management of the centralised investment product were up more than a quarter to £648m. External investment mandates, including Frenkel Topping, also boosted managed assets. And increased benefits of scale within the financial planning division fed through to an eight percentage point increase in the segmental gross margin, although profitability was held in check by the margin mix, specifically a greater contribution from lower-margin Network Direct.
Analysts at house broker N+1 Singer expect adjusted pre-tax profit of £5.4m for the year to October 2018, giving EPS of 6.9p (from £4.3m and 5.9p in 2017).
| HARWOOD WEALTH MANAGEMENT (HW) | ||||
| ORD PRICE: | 170p | MARKET VALUE: | £106m | |
| TOUCH: | 165-175p | 12-MONTH HIGH: | 180p | LOW: 138p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 93 | |
| NET ASSET VALUE: | 40p* | NET CASH: | £14m | |
| Half-year to 30 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 10.5 | 0.33 | 0.27 | 1 |
| 2018 | 15.1 | 0.93 | 0.91 | 1.08 |
| % change | +44 | +182 | +237 | +8 |
| Ex-div: | 25 Oct | |||
| Payment: | 9 Nov | |||
| *Includes intangible assets of £24m, or 39p a share | ||||
