TEAM plc (LON:TEAM), the wealth, asset management and complementary financial services group, has announced that it has conditionally agreed to acquire the entire issued share capital of Thornton Associates Limited, trading as Thornton Chartered Financial Planners for a consideration of up to £2.5 million. Thornton is an Isle of Man based financial planning business, the first chartered status firm on the island, providing holistic financial planning services with assets under advice of £121 million and approximately 180 client groups.

Highlights

·     Conditional acquisition of Thornton for consideration of up to £2.5 million

·     Natural fit with TEAM’s assets in Jersey and in line with strategy to expand into other Crown Dependencies

·     Potential for delivery of significant synergies and cross-selling opportunities

·    TEAM is also announcing separately today its unaudited interim results for the six months ended 31 March 2023 and the acquisition of Globaleye Wealth Management Group

·    Post-completion, these two acquisitions will take TEAM’s assets under management and advice to over £850 million

·     Thornton and Globaleye represent TEAM’s fifth and sixth acquisitions in the last three years

Consideration

On completion of the Acquisition, an initial consideration of £0.9 million is payable in cash, plus an amount equal to the net assets of Thornton of £250,000 less regulatory capital of £50,000. In addition, a deferred consideration of up to £1.4 million is payable, half in new TEAM shares and half in cash. The deferred consideration is payable in two instalments of up to £700,000, dependent upon the revenue generated by Thornton in the 24 months following Completion. The Acquisition is subject to approval by the Isle of Man Financial Services Commission and is expected to complete in Autumn 2023. The cash consideration payable will be funded through existing resources within the Group, and from the future earnings of TEAM.

Thornton – overview

·   Thornton is a firm of chartered Financial Planners providing multi-jurisdictional financial planning and regulated investment advice to private individuals, trustees and business owners on the Isle of Man

·     Founded in 2000 by its Managing Director, Sharon Sutton, it now supports some 180 client groups (typically high net worth couples and families) with unaudited AUA as at 31 March 2023 of £121 million, largely invested by third party discretionary managers

·     In the year ended 31 March 2023, Thornton generated unaudited revenues of £0.75 million, profit before and after tax of £0.22 million and as at 31 March 2023 had unaudited net assets of £0.40 million

Acquisition Rationale

·    In a market where competition is limited, Thornton is a profitable, well-managed and highly regarded financial planning business. The TEAM Directors expect a smooth integration with the Group. A key element of TEAM’s strategy is to have representation in all of the Crown Dependencies. Thornton is the first step it has taken outside Jersey and makes for a compelling strategic and cultural fit with TEAM, given complementary business models, strong client relationships and an active flow of new clients coming into Thornton

·     The Isle of Man represents an exciting opportunity for TEAM. In addition:

o  Potential synergies have been identified by TEAM’s Directors, primarily through Thornton joining a larger financial planning group and being able to access shared support services

o  Opportunity to offer Thornton services to current and future TEAM clients, and vice versa, most significantly the opportunity for Thornton clients to migrate from third party managers to using the investment expertise of TEAM Asset Management and its model portfolio and bespoke services

o  TEAM plans to integrate Thornton into its financial planning activities, sharing best in class practices across the offices and moving towards one operating model and brand. No one-off costs are expected from this integration exercise

·     The Acquisition is expected to be earnings enhancing in the first year of ownership

·     The total consideration payable represents an estimated forward P/E of 7x before revenue and cost synergies are generated

·     The Acquisition will be the Company’s fifth transaction since its inception in January 2020 and is expected to complete in Autumn 2023

·   On completion of the acquisitions of both Thornton and Globaleye, TEAM expects to have assets under management and advice of over £850 million

Matthew Moore, CFO of TEAM, commented:

“In the Isle of Man, Thornton has been at the forefront of financial planning to help its clients manage, protect and maximise their wealth. In doing so, it has built a strong reputation across the island. Becoming part of TEAM is a natural fit and will, we believe, facilitate the next stage of growth for Thornton which will benefit from being part of a larger group, offering a wider range of services whilst maintaining the same customer centric ethos.

We are delighted to welcome Thornton into the Group. The acquisition is a natural extension into the Isle of Man from our base in Jersey and matches our strategy to build a new wealth, asset management and complementary financial services group with a focus on the UK, Crown Dependencies and International Finance Centres.”

Results

The company also announced its unaudited interim results for the six months ending March 31st 2023.

·    TEAM is today announcing its interim results with total revenues for the six month period to March 31st of £1.9 million (2021: £999,000) reflecting the contribution made by acquisitions.

·    Underlying loss before tax was reduced to £374,000 (2021: £382,000)

·    The integration of the Omega and Concentric acquisitions has been successful and both are now operating from the same offices

·    TEAM is pleased to report that £25 million of client assets have transitioned to TEAM AM model portfolios, underlining their robust performance 

·     TEAM is also announcing separately today two acquisitions that extend its geographical reach and service capabilities. First, for a total consideration of up to £5.6 million, is Dubai headquartered Globaleye Wealth Management which has 5 offices across Africa and Asia. Second, for a total consideration of up to £2.5 million, is Thornton Associates, a financial planning business based in the Isle of Man

·    These deals, the fifth and sixth acquisitions since TEAM came to the market in 2021 deliver on TEAM’s strategy to build and expand into fast-growing international finance centres and enhance its service capabilities as well as on TEAM’s strategy to build in the Crown Dependencies. The integration of these businesses should deliver material cross -selling, revenue and cost synergies

·     As a result of these acquisitions, TEAM’s total AUM will increase to over £850 million

·   TEAM has an ambitious roll-out strategy which requires ongoing shareholder support;  with its Jersey location, TEAM is ideally placed to support clients living outside of their mainland home tax jurisdiction and their specialist financial needs

Mark Clubb, CEO and Founder of TEAM said: “I am pleased to report that our interim results demonstrate our ability to deliver, demonstrating the attractions of our multi asset approach as well as our ability to successfully deliver on integrating acquisitions. As a Group we continue to have an ambitious roll-out strategy and I would like to thank our shareholders for their ongoing support.

The acquisition of Globaleye and Thornton takes TEAM closer to £1 billion under management in our target markets, and extends our global footprint to seven countries. In doing so, we believe we are carving out a valuable section of the high net worth market who are living outside of their mainland home tax jurisdiction and in need of specialist financial advice, which in the past has not been easily accessible. TEAM is filling that space and we see significant scope to expand further.”

Executive Chairman’s Statement

Dear Shareholders,

I am delighted to share with you the latest updates regarding our Company’s performance, strategic initiatives, and two significant acquisitions being separately announced today that will greatly enhance our presence and capabilities in the wealth, asset management and complementary financial services industry.

First,  I am pleased to report that we have witnessed ongoing client migration into our Team AM Model Portfolios, our Discretionary Fund Management (DFM) offering. To date, we have seen over £25 million of client assets transitioning into these portfolios on various platforms, driven by our strong investment performance and the suitability of our offerings.

Furthermore, our Model Portfolios are now available on various platforms, including Morningstar and Quilter International. Expanding our presence on these platforms will be a priority for us moving forward.

I am particularly proud of the successful integration of the Omega and Concentric acquisitions. Both entities now operate from the same office, following streamlined procedures and processes. Moreover, we are confident of recruiting new talent to strengthen our team. This integration sets a strong foundation for our continued growth and improved operational efficiency.

In light of recent developments in the banking sector, we have observed an increase in client interest across various levels of our treasury management services at JCAP. Clients have been taken by surprise and are actively seeking reliable financial solutions. The business development opportunity has never been stronger. Our focus now lies in converting these opportunities into clients. The potential for growth is evident, and we are determined to capitalise on these opportunities.

Turning to the financial performance for the 6 month period ended 31st March 2023 (unaudited), our revenue grew to £1.9 million representing a substantial increase from the previous year’s corresponding period (£999,000). However, staff costs as anticipated increased to £1.4million as we continued to invest in our talented workforce. Non-staff costs also increased as part of our commitment to operational enhancements. These factors contributed to an underlying loss before tax of £374,000 versus a loss of £382,000 in the prior year.

While these results demonstrate the challenges we have faced, we are confident in our ability to overcome them. This involves extending our services, both in terms of type and jurisdictionally, and managing costs. But growing our client base remains our top priority.

We are firmly committed to building shareholder value and believe that our ongoing efforts and strategy will lead to improved financial performance in the future. Our near term objective is to be cash-flow break even.  However, we have a clear path to achieving much more.

In addition to our financial performance, I am thrilled to announce two significant acquisitions being separately announced today that will greatly enhance our presence and capabilities and provide further scale and access to new geographies.

First, the acquisition of Globaleye Wealth Management, a renowned boutique advisory firm specialising in wealth management and financial services. With offices across key global locations, including Dubai and Singapore, Globaleye brings a wealth of expertise and a substantial client base with total assets under advice of £242 million.

This strategic acquisition allows TEAM to tap into high-growth markets, expand into new regions, and provide a wider range of services to our clients. We are particularly excited about the opportunity to transition Globaleye clients to TEAM’s investment management services, offering them a seamless and integrated experience.

Additionally, we are delighted to announce the conditional acquisition of Thornton, a respected chartered Financial Planning firm based on the Isle of Man. Thornton has established a strong reputation for providing financial advice and investment services to individuals, trustees, and business owners. With assets under advice of £121 million, Thornton brings valuable expertise and a loyal client base to TEAM.

The integration of Thornton into our operations will create synergies and open up growth opportunities within our previously stated Crown Dependencies ambitions. Thornton’s strong reputation and client relationships will complement our existing international finance center offerings.

These acquisitions will bring our total AUA and AUM to over £850 million and align with our strategic objectives of expanding our international footprint and enhancing our service capabilities. By combining the strengths of Globaleye and Thornton with TEAM’s expertise and resources, we are well-positioned to deliver good client value and holistic financial solutions to our clients.

I would like to extend a warm welcome to the teams at Globaleye and Thornton, who will play integral roles in our continued growth and success. We are excited about the future prospects that these acquisitions bring and remain committed to providing our clients with industry-leading financial services across multiple jurisdictions.

Thank you for your ongoing support as we continue this transformative journey. Together, we will seize new opportunities and solidify TEAM’s position as a premier wealth management and financial services group.

Thank you.

Sincerely,

Mr J M Clubb

Executive Chair

31 May 2023