TEAM plc (LON:TEAM), the wealth, asset management and complementary financial services group, announces its final results for the year to 30 September 2021.
Financial Highlights
o As at 30 September 2021, total client assets increased to £1.9 billion (31 March 2021: £286 million)
o AUM increased to £295 million (31 March 2021: £286 million) (this will increase to £372 million with the addition of AUA from Omega)
o Treasury Advisory AUA of £1.6 billion (31 March 2021: nil)
· For the year to 30 September 2021:
o Revenue was £1.5 million
o Adjusted loss before tax of £0.8 million*
o No borrowings and cash of £4.9 million, as at 30 September 2021
Operational Highlights
· March 2021, completed successful listing on AIM raising gross proceeds of £7.5 million to support the creation of a leading independent wealth and asset management business through a mix of organic and acquisition led growth
· July 2021, completed the £2.95 million acquisition of JCAP, a leading Jersey based provider of cash management services, focused on improving the return and mitigating the risks associated with the management of cash for institutions, professional advisers, trustees and high net worth individuals
· November 2021, £4.0 million proposed acquisition of Omega Financial Services (Jersey) Ltd (“Omega”), a Jersey-based IFA, specialising in retirement planning, mortgage advice, life assurance and bespoke investment advisory services (a separate announcement has also been released today with further details)
· Strengthened investment management team with new senior hires and continued to invest in client engagement, systems and controls
·Looking ahead, excellent pipeline of individual and team hires plus further complementary acquisition opportunities
*Unadjusted Loss before tax of £1.7 million, adjustments for acquisition and IPO related expenses
Commenting on the results Mark Clubb, Executive Chairman, said:
“We are pleased to announce today both our results for the year alongside the acquisition of Omega, a strong business as well as an entry point for us into the IFA market and a platform to build upon whilst also being immediately earnings enhancing. We came to the market in March to build a modern wealth and asset management business and I am pleased to report that we are making good progress towards this objective. The acquisitions and senior hires we have made this year will be a significant step for TEAM towards becoming cashflow positive in 2023 and we have an excellent pipeline of opportunities to pursue, to underpin the future growth of the Group.”
Chairman’s Statement
Progress
I am pleased to be presenting the inaugural results of TEAM plc (the “Company”) and its subsidiaries, together, ‘the Group’ as a public company following our listing in March 2021 at which time we set out our ambition to become a leading wealth and asset management business. I am delighted to confirm that we have made significant progress towards this goal notwithstanding the challenges presented by the Covid pandemic.
In July we completed the acquisition of Jersey based treasury advisory business JCAP and today we announced the exchange of contracts to acquire a Jersey based IFA, Omega Financial Services (Jersey) Limited (“Omega”). These two businesses, together with the organic growth achieved, and the further development of our pipeline of potential transactions demonstrate we have delivered on our early plans and clearly signals the future potential of the Group.
Our financial results for the period demonstrate a significant improvement in our revenues, and, while this has taken investment, we expect it to pay off in future periods. Our revenues rose from £701k in the previous period to £1,469k, while our operating loss extended to £1,742k (£415k). The underlying loss, excluding the costs associated with the IPO and acquisitions, increased to £1,052k from £275k. The group total net assets increased to £7.4 million, up from £1.4 million, and cash balances at the year end were £4.9 million (2020: £0.3 million). Financially we are well positioned to continue with our growth plans.
Ambition
TEAM is building a new wealth, asset management and complementary financial services group. With a focus on the UK, Crown Dependencies and International Finance Centres, the strategy is to build local businesses of scale around TEAM’s core skill of providing investment management services. Growth will be achieved via targeted and opportunistic acquisitions, through team and individual hires, through collaboration with suitable partners, and organic growth and expansion.
The acquisitions of both JCAP and Omega have expanded our range of products and services, together with extending the scale of our addressable market.
Omega extends TEAM into wider financial advice, including pensions and mortgage advice. Typically, one of the best ways for retail clients to invest is via pensions and with increasing focus on self-reliance this will continue to be a growth market. We will look to grow our adviser presence organically, by recruitment and by selective acquisitions. Omega has a first-class growth record, is most ably managed and is a foundation for our ambitions in this sector.
Platform
We are headquartered in Jersey but focused more broadly. We have clients residing in many different parts of the world. Our platform is particularly applicable for the British “ex pat” communities benefitting from overseas pension schemes such as QROPS, QNUPS and International Savings Schemes all of which necessitate “offshore” custody and management.
We believe having Jersey as a base is an advantage – it is a highly regarded international financial centre in a tax-neutral environment with strong connectivity, stable regulatory authorities and an established marketplace for investment services.
Our initial acquisitions have been in Jersey and these are forming the base for the Company. As we progress, we will look to acquire businesses and attract individuals and teams from outside of the Channel Islands.
Client assets and investment performance
A key indicator for our business is AUM and client satisfaction. Clients and client service, together with investment performance are our priorities. I am pleased to report we have grown AUM from the start of the year to £295 million and with the acquisition of JCAP we now have cash assets under advice of £1.6 billion. Omega will bring a further £77 million of AUA, giving total managed assets of £372 million.
I believe, like many, that we are closer to UK interest rates rising than we have been for some time. Higher rates will place greater scrutiny on client cash holdings and should encourage clients both existing and new to consider a JCAP management solution, which includes diversity of deposits, often “preferred rates” together with CASS reporting for those who require it. The JCAP acquisition may prove to be very timely.
Part of AUM growth is investment performance for managed assets. Much work and development has been completed on the TEAM Multi Asset Portfolio. We now have three models, Balanced, Growth and Diversified Income, all of which have performed creditably year to date. Importantly, we can truly display a differentiated, well-articulated investment process that is being well received in the market.
To prepare for a future that may not resemble the past, TEAM has developed a clearly defined two-stage investment process:
1) A strategic macro-overlay that reflects our view of the world and governs how, and where, we invest capital and risk.
2) A quantitative asset allocation model to execute this view and deliver what we consider to be the most attractive asset class mix on a medium-to-long term time horizon.
Within the building blocks of our asset management menu are our in-house managed Funds.
At the beginning of June, we established the TEAM International Equity UCITS Fund (Dublin registered). The Fund is a “mega cap” global equities portfolio. Performance has started well.
Our Fixed Interest capabilities include the three KEOX funds. These have had a satisfactory performance in what has been a very difficult part of the investment world over the last twelve months, and funds managed have increased from £84 million to £95 million over the year.
Transactions and pipeline
Both acquisitions announced in 2021 are significantly earnings enhancing and are expected to move the Group towards profitability in 2023. As I have written, both acquisitions extend the range of TEAM’s investment services, bring in capable senior personnel to the Group and have the potential to be expanded organically and by further acquisition. Looking into 2022, we have an exciting pipeline of complementary financial services businesses as potential acquisition targets which we continue to develop.
I remain positive on the prospect of potential team or individual recruitment. The easing of Covid restrictions is resulting in new approaches. I would add that being a listed company has enhanced enquiry levels. The ability to reward and incentivise with listed shares has a strong appeal to the entrepreneurial candidate.
Internal organisation
Since acquiring TEAM Asset Management, Jersey, in January 2020, the business has undergone substantial change, with focus on upgrading operational procedures and service providers alongside the introduction of online access to their accounts for all clients.
The pandemic placed many challenges in front of us, all of which we have successfully met. I have to thank all those involved and would particularly like to mention Matthew Boxall and Managing Director Tony Wilshin, who have been invaluable. Tony’s deep and long operational experience stands us in very good stead for our future growth.
The past is the past and we are now about the future, a future we can be optimistic about with a business we can all be proud of. A business with an inclusive and merit-based culture. A business with good governance, ethics and a long-term investment philosophy.
We are transparent and accountable, we now have an effective structure which enables the management to be singularly focused on providing the best investment advice, and by outsourcing the back office to a leading administrator, the support and the digital interface with clients is market leading. Providing an effective structure is also about Regulators, particularly our local Jersey Financial Services Commission (JFSC). We have and will continue to invest in this critical area.
We are embarking on the greatest inter-generational transfer of wealth, following years of asset price inflation, especially in real estate, which has concentrated wealth amongst the older generations. As this wealth filters down, creating a new class of private clients, there are opportunities for a modern wealth and asset manager to make significant inroads. I believe we are modern, contemporary and highly relevant. That includes ESG considerations in investment as well as the management of the Group.
Without the support of our shareholders, we would not have been able to have achieved the progress that we have and their support allows us to plan for the long term. In return, our aim is to reward them and, ultimately, that is how we will be judged. I do not take this lightly and as a meaningful shareholder myself, I look for us to grow in a considered and transparent manner.
I would also like to thank our staff both senior and junior, new and old, the vast majority of whom are shareholders too. In this regard I consider them my partners.
Mr J M Clubb
Executive Chair
30 November 2021
Strategic Report
Overview
The Directors’ aim is to provide long term capital appreciation for Shareholders by building a profitable and sustainable business. Growth will be sought through winning new clients and targeted acquisitions, underpinned by investment in the support infrastructure.
The Group’s overall strategy is to promote the continued development of the Group into a leading wealth and asset management business. It is expected that the Group’s growth will be achieved through:
· an acquisition driven strategy to consolidate the offshore and onshore wealth and asset management market.
· a focus on delivering revenue and cost synergies, leveraging our increasing scale and breadth of services to gain a greater share of client wallet and economies of scale for clients and the Group.
· identifying complementary services such as specialist funds, cash management, and corporate services.
· the expansion into complementary locations – onshore UK, Crown Dependencies, other International Finance Centres, and
· AUM growth through team lifts, selective hires and targeted business development in Jersey and other locations.
The Directors believe that the successful execution of a buy and build strategy to acquire incremental scale is likely to have the most meaningful impact on the future value of the Group. The Directors believe that there are a number of asset managers who are significantly underperforming due to a variety of factors including poor management, increased regulatory and technology requirements, lack of capital and strategic vision.
The Listing
On 8 March 2021, TEAM plc was admitted to trading on the AIM market of the London Stock Exchange.
The net proceeds of the fundraising receivable by the Company were approximately £6.4 million. The net proceeds were applied principally as follows:
· to fund the general working capital requirements of the Group.
· to repay the loans provided by Mr J M Clubb; and
· to finance acquisition opportunities that may arise from time to time.
The Directors are of the opinion that Admission will be beneficial to the Group for the following reasons:
· it will raise the profile of the Group.
· the Group will be better positioned to attract, recruit and retain key employees.
·it will provide the Group with flexibility for further organic and acquired growth, specifically by providing access to capital from institutional investors. The Company will also be able to issue new shares in a liquid asset as consideration in connection with acquisition opportunities, a differentiator to the many private equity backed business in the sector.
Operational Strategy
TEAM has put in place an operating infrastructure, resulting in efficient and effective regulatory compliance that has scalability to meet the organic growth ambitions of the Directors. TEAM Asset Management clients are well informed through regular communications via website publications, face to face meetings or presentations. The Directors believe that TEAM Asset Management is focused on customer service, operational efficiency, independent risk control and compliance supervision and that the business model and operating systems are scalable.
Acquisition of JCAP Limited
On 5 July 2021 TEAM plc acquired the entire share capital of JCAP Limited, a leading Jersey based provider of cash management services, focused on improving the return and mitigating the risks associated with the management of cash for institutions, professional advisers, trustees and high net worth individuals.
Highlights
· JCAP is a well-established and profitable Jersey business, and has been known to Mr J M Clubb, Executive Chair of TEAM, since its establishment in 2010.
· JCAP provides a range of cash management services to institutions, professional advisers, trustees and high net worth individuals.
· It has long-term partnerships established with leading global providers of treasury management and foreign exchange services, providing diversification of income sources, and significant opportunities for high profit margin growth.
· In the unaudited accounts for the year to 31 December 2020 JCAP generated revenues of £1.0 million and made a post-tax profit of £0.4 million. Net assets at that date were £0.9 million.
· The total net consideration is up to £2.95 million, of which £2.2m will be paid in cash and the remainder in new shares. The net tangible current assets of JCAP are acquired on a pound for pound basis.
The acquisition has a compelling strategic rationale:
·fits with TEAM’s strategy to acquire wealth, asset management and complementary financial services business.
·clear synergistic revenue growth opportunities through providing cash management services to the TEAM client base, and through the potential to launch cash management products through the regulated fund business of TEAM.
· builds scale in the home market of Jersey.
Material financial benefits expected from the acquisition:
·a significant increase in the revenues of the Group, with the addition of over £1.6 billion in assets under advice, and a significant step for TEAM towards becoming cashflow positive.
· a combination of expected revenue and cost synergies, through client referral, co-locating in TEAM’s offices, and through using TEAM’s governance and control infrastructure.
· the net consideration represents a P/E multiple of 7.9 times the 2020 earnings.
Acquisition of Omega Financial Services (Jersey) Limited
Today we announced that we had exchanged contracts to acquire, subject to regulatory approval, a Jersey based IFA, Omega Financial Services (Jersey) Limited, a specialist in retirement planning, mortgage advice, life assurance and bespoke investment advisory services.
The acquisition has a compelling strategic rationale:
·TEAM was established to become a leading independent wealth and asset management business, via (amongst other paths) acquiring offshore wealth management businesses which add to scale and breadth of services.
· Omega is a successful Jersey based IFA providing financial and investment advice to 500+ discretionary only clients, with assets under management of £77 million (as at 30 Sept 2021) and a solid track record of profitability.
· on completion of the transaction, TEAM will have assets under management (“AUM”) of £372 million and assets under advice (“AUA”) of £1.6 billion.
·the acquisition is a strong fit with TEAM’s existing businesses and investment expertise, expanding the Jersey based client base and AUM as well as introducing IFA expertise into the Group.
Financial Highlights
·In the 12 months to 31 December 2020, Omega generated revenues of £1.1 million and made a net profit before directors’ payments of £0.85 million.
· Omega generates a run-rate EBITDA of approximately £0.7 million, which on a pro forma basis is expected to be a significant step for TEAM towards becoming cashflow positive;
·The payment at completion will be £1.98 million in cash and £0.02 million in new TEAM shares. The deferred component is split over two equal payments, payable subject to certain performance conditions being met, made up of £0.785 million in cash and £0.215 million in shares, for a total net consideration of up to £4.0 million. The net tangible current assets of Omega, less the regulatory capital required in the business, will be acquired on a pound for pound basis.
·The upfront cash consideration will be funded from TEAM’s existing cash resources, and the deferred payments from existing cash resources, and earnings from Omega.
Mr M C Moore
CFO and COO
30 November 2021
