All About The Carlyle Group’s Move To Buy Harwood Wealth Management Group Plc

All About The Carlyle Group’s Move To Buy Harwood Wealth Management Group Plc

Harwood Wealth Management Group Plc

Harwood Wealth Management Group Plc (LON: HW.), previously also known as Compass Wealth Management Group Plc, is a Waterlooville, the United Kingdom based financial services organisation that is primarily engaged in providing financial planning services as well as discretionary wealth management services, especially to high net worth individuals (HNWI) across the United Kingdom. Additionally, the company is also engaged in providing investment management services through its brands IMS Capital as well as Wellian Investment Solutions. In terms of providing financial planning services, the organisation’s core brands include the likes of Compass Wealth Management Consultants, Active Financial Planners, Retirement and Investment Solutions, AE Financial Services and Merchant Chartered Financial Planners. Compass Wealth Management Consultants, which is the group’s flagship company, is a market leader in financial planning and engages in the provision of services such as Portfolio Management, Retirement Planning, Corporate as well as Group Pensions, Family Protection, Equity Release, Mortgage Planning and an online platform to discover all kinds of information. Active Financial Planners, or AFP as it is known, is another flagship brad for the group that provides similar services to that of Compass Wealth Management. AE Financial services arm of the group engages in the core activity of wealth management in addition to financial planning with a bouquet of services that include Life Insurance and Income Protection, Portfolio Management, Pensions and retirement, Corporate advisory as well as estate planning. The company also has a Network Services arms, that is led by its brand Network Direct, through which, the company supports its Appointed Representatives (ARs) to have more flexibility to deliver their services to clients on behalf of the Network.

Financial Performance

On 27th June 2019, the company announced its unaudited interim results for the six months ended on 30th April 2019. The company announced the appointment of Gillian Davies as the permanent Chief Financial Officer (CFO) of the company during the period, after holding the same position in the interim for the previous 10 months. As on 30th April 2019, the company reported the Assets Under Influence valued at £5.3 billion, as opposed to £4.3 billion as on 30th April 2018 displaying a year on year increase of around 23 per cent. Similarly, on 30th April 2019, the company reported the Assets Under Management (AUM) at £1.8 billion, a growth of 13 per cent year on year compared to the AUM as on 30th April 2018 at £1.6 billion. The revenue for the period was reported at a year on year increase of 6 per cent at £16.12 million, as opposed to the revenue reported in the first half of the previous year at £15.13 million. The revenue was primarily driven by the financial planning segment which was reported to be at £7.10 million during the period, an increase of 6 per cent year on year, followed by the revenue of the Network Services segment, where the revenue was reported to be at £6.75 million in the first half of the year, an increase of 6 per cent year on year as well. It was also reported that around 73 per cent of the total revenue of the company was of a recurring nature during the period. This also led to a year on year increase of around 16 per cent in Gross profit, which was reported to be at £7.93 million during H1 FY 2019, as opposed to the gross profit reported in H1 FY 2018 at £6.85 million. The company reported a significant 74 per cent year on year growth in the Profit Before Tax (PBT) which was reported at £1.63 million during the first half of this year, in comparison to the PBT reported in H1 FY 2018 at £0.93 million. This also translated to a growth in the Basic Earnings per share, which reported a growth of around 86 per cent year on year from GBX 0.91 per share in the first half of the previous year to GBX 1.69 per share reported during H1 FY 2019. As a reflection of this excellent interim performance, the board of the organisation declared an interim dividend of GBX 1.17 per share displaying a year on year growth of 8 per cent as opposed to GBX 1.08 per share reported in H1 FY 2018.

Financial highlights:      
  H1 2019 H1 2018 % change
Assets Under Influence ("AUI") £5.3 bn £4. 3bn 23 %
Assets Under Management ("AUM") £1.8 bn £1.6 bn 13 %
Revenue £16.12 m £15.13 m 6 %
Gross profit £7.93 m £6.85 m 16 %
Adjusted EBITDA* £3.46 m £2.71 m 28 %
Profit before tax £1.63 m £0.93 m 74 %
Cash inflow from operating activities £2.56 m £2.67 m -4 %
       
Basic earnings per share 1.69 p 0.91 p 86 %
Adjusted earnings per share** 4.48 p 3.51p 28 %
Dividend per share 1.17 p 1.08 p 8 %

Source: Company Website

Share Price Performance

As on 23rd December 2019, at 08:30 A.M Greenwich Mean Time, while writing, Harwood Wealth Management Group Plc’s price of the stock was reported at GBX 145.00 per stock on the London Stock Exchange, a decline in the value of 7.94 per cent or GBX 12.50 per stock, as opposed to the last day’s closing price, which was reported at GBX 157.50 per stock. The company’s market capitalisation stood at a value of  GBP 98.51 million in relation with the present market price of the share of the company.

The Harwood Wealth Management Group Plc share has depicted an upside return in the previous half- year, of approximately 20.83 per cent from the price of the stock of GBX 120.00 per stock that the company’s stock achieved on June 24, 2019. Harwood Wealth Management Group Plc’s stock had also lost value by 9.38 per cent, in the previous month from the price of GBX 160.00 per stock when the markets closed on November 22, 2019.

Company’s share beta was reported to be at a value of 0.15, which means the movement of the share of Harwood Wealth Management Group Plc, has been less volatile, in comparison with the movement of the comparative benchmark index in the last one year.

 

The Carlyle Group

The Carlyle Group is a global investment as well as Private Equity firm, which has around US $222 billion in Assets Under Management through 365 Investment Vehicles across the world in various industries. The company has around 33 offices in North America, South America, Europe, the Middle East, Africa, Asia and Australia. The company basically has four business divisions which are Corporate Private Equity which includes of buyout, middle market as well as growth entities, Real Assets, that includes the likes of Reals Estate, Infrastructure, Energy and renewable resources, Global Credit segment which engages in the businesses of distressed & special situations, direct lending, energy credit, loans & structured credit and opportunistic credit as well as the Investment solutions segments, through which it provides its 2600 Investors access to the large pool of alternative investment strategies within the private equity and real estate areas.

Acquisition

On 22nd December 2019, various news reports suggested that the Carlyle group had struck a deal to purchase Harwood Wealth Management Group Plc for a value of around £100 million. This news erupted amid a large number of takeover bids amongst the UK wealth managers doing round for last some time now.

Later on the same day (on 22nd December 2019), the company published a press release to confirm this news by reporting a recommended cash acquisition by Hurst Point Topco Limited, which is a newly formed company and will act as an investment vehicle held by The Carlyle group. Under the terms of this acquisition, it was reported that each shareholder would be entitled to receive an amount worth GBX 145 per share in cash, valuing the deal at £90.70 million. As per the press release, the company, through this acquisition, has been valued at a multiple of 16.3 times its unaudited adjusted earnings and at a multiple of 12.9x its unaudited adjusted EBITDA for the 12 months to 30 April 2019.

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