TEAM plc, the wealth, asset management and complementary financial services group, has announced its final audited results for the year to 30 September 2023.
Financial Highlights
· Revenues increased 151% to £5.3m (FY 22: £2.1m)
· Adjusted EBITDA loss of £0.7m (FY 22: £0.8m)
· Group assets under management / advice up 51% at £833m (FY 22: £551m)
· £1.9m cash in bank as at 30 September 2023
Acquisitions
· June 2023, acquired Globaleye the international wealth management business headquartered in Dubai with regulatory licences and approvals in Singapore, Malaysia, South Africa, and United Arab Emirates.
· December 2023, acquired Neba Wealth, provider of a regulatory and operational structure for self-employed financial advisors and Neba Singapore, a promoter of funds and products to international IFA’s around the world.
· Completion of strategic acquisitions, and the Company now well-placed to deliver growth organically and through individual and strategic adviser team hires
Operational Highlights
· Re-organised the business into three divisions:
o Investment Management – AUM £289m
o Advisory – AUA £365m
o International – AUA £180m
· Continuing to build a stable and scalable investment management capability in Jersey, alongside acquiring distribution channels in international growth markets. Predominantly the ex-pat communities around the world.
· Significant inflows of capital from Advisory clients into MPS services provided by the Investment Management division
· Group expanding with total number of employees, up from 33, to 87 as at 30 September 2023. Further meaningful qualified and experienced recruitment continues.
· Focus on expanding the number of financial advisors in the International division and targeting ex-pat professional clients working in Asia, Africa and the Middle East
Current trading
· 28 Feb AUM/A up to £1.0 Billion
· Material re-organisation of International division to create one branded division with an experienced, regional senior management structure in place.
The Company also gives notice that its Annual General Meeting (‘AGM’) will be held at 6 Caledonia Pl, St Helier, Jersey JE2 3NG, Jersey on Wednesday 17th April 2024 at2.00 pm. The Notice of AGM will be sent to shareholders and the Notice of AGM and annual report and accounts for 2023 will be made available to download later today from the Company’s website https://www.teamplc.co.uk.
Commenting on the results Mark Clubb, Executive Chairman, said:
“This has been another active period for TEAM. We are picking up the pace and the shape of the business is emerging with Jersey as the central fund management engine operating out of a highly regulated jurisdiction with a strong international reputation for fiduciary responsibility. Alongside this in Jersey, our financial planning advisory hub is combining well and is positioned to deliver dependable organic growth going forward. The recent acquisitions of Globaleye and Neba have been combined into the International Division creating a new platform, branded as Neba Private Clients, aimed at supporting expatriates of all nationalities, who have very specific wealth management and advice needs which we specialise in solving. The current financial year has started well.”
Executive Chairman’s Statement
Last year I wrote about “path to progress” and looking forward to “further progress” which we have delivered. This year it’s about “Escape velocity” and “Direction of travel”, terms kindly introduced to me by Mr Andy Brough. “Escape velocity” is the speed required for an object to escape gravitational pull and move into space. “Direction of travel” is the momentum of your propulsion to “escape”.
Businesses are very similar to that. Once you break through the barrier of costs, gaining brand recognition, establishing your place in the market, and in TEAM’s case, breaking barriers of regulatory licences and approvals, then the spaceship is able to glide with very little energy and it all becomes about navigation.
While TEAM has broken through many barriers since we listed, we are not yet at the magical “gliding” point of being cash positive, but we are close to that “escape velocity”. Momentum is accelerating as we become bigger.
When TEAM Plc listed on the AIM market, revenues were £713,000 (June 2022) and assets under management were £291 million. As at end September 2023, reported revenues were £5.3 million and assets under management and advice of £838 million.
Soon we will have the scale to “escape”. Since April last year, towards £100 million has come into the Model Portfolio Service (“MPS”). We have all the basics in place: licences, approvals, advisers, a value proposition, and we are building a solid track record.
TEAM’s Advisory division focuses on financial planning for Jersey Islanders – to be further strengthened by an upcoming acquisition. Our presence in Guernsey is soon to be established, headed by new senior recruit, Mark Chipperfield, alongside a small acquisition.
Jersey is also the base for our cash and asset management capabilities. Importantly, including our MPS range, available on international platforms and core to our value proposition.
Our International business is supported by a network of offices, advisers and regulatory approvals and similarly offers a holistic service, encompassing pensions, life cover and mortgage advice for locals and expatriates of all nationalities.
Internationally, we have hubs in Singapore, Kuala Lumpur, Abu Dhabi, Dubai, Durban, and Nairobi in addition to Jersey. TEAM International is extremely well-managed by John Beverly who very successfully founded our recent acquisition, Neba. His ambitions include aggressively growing adviser numbers in these territories.
Our aim is to be in a great many more places and jurisdictions, including Europe (MiFid II) and further afield in markets such as the Cayman Islands and Bermuda. We will expand into new jurisdictions.
Our ‘systematic active’ investment management process serves our clients well. Our models will be unitised by the second half of the current financial year under a Dublin “ManCo” provided by Waystone. The primary motivation behind launching the TEAM UCITS fund range is to deliver enhanced protection and outcomes for our clients. There are clear, robust rules around the securities we can and cannot invest in, a sharp focus on liquidity, diversification ratios to reduce portfolio risk, and strong risk management and investment limits. In addition, the guidance around information disclosure is clear.
TEAM Multi Asset Performance, as at 29-Sep-2023
From TEAM’s perspective, UCITS funds will significantly broaden our global opportunity set, allowing us to flex our asset allocation muscles through a blend of active and passive investments. Most importantly, every client invested across our UCITS range will receive the same performance outcome underpinned by our best ideas and over 200 years plus of combined market expertise.
Our drivers for growth are very simple. The main driver being clients, and their propensity to save or invest in their futures, principally, retirement. The aspiration of financial security and a provision for the future is not going to shrink. I would argue it will grow as self-reliance becomes more prevalent. And in the emerging world, much of TEAM’s world, everyday people in the ex-pat communities, and not just British, are getting wealthier.
Our model is highly scalable and will benefit from the “network effect.” The more clients and advisers, the more opportunities for interaction, or communication. There is very little marginal increase in cost for each new client and the associated revenues. The power of compounding springs to mind.
Our share price performance has been disappointing. As has the AIM or the London Stock Exchange’s market for smaller companies. On a forward price-to-earnings and price-to-book basis, small-caps trade at a 30% discount to their 15-year median.
Meanwhile, in the Private Equity sector inflows keep accelerating. Last year private equity backed entities acquired circa 100 UK based companies in our sector. This consolidation is expected to continue through 2024.
An estimated $4 trillion is available to be deployed globally in the sector, almost a third of the entire private capital industry ($13 trillion) with over 40 houses continuing to tap into the highly fragmented wealth sector for more acquisitions.
Within the industry MPS is growing at double digit rates. Within the confines of the UK, industry experts expect on-platform MPS AUM to reach £200 billion by 2026, assuming that growth remains at pre-2022 levels of 25% p.a. TEAM has a well evolved MPS solution which will be augmented by our Dublin Manco proposition.
Our board is very clear on how and what we can achieve in the long term. We are uniquely positioned to succeed. Our story is informed and evidence driven. We are confident that our competitive position will get even stronger as we execute on our strategy.
Despite the current share price being disappointing, the state of the markets, etc, we want to stay listed. This is because in our international markets, being listed on the London Stock Exchange is valuable. It’s about reputation and the comfort that a high level of governance provides. This helps us with recruiting talented investment managers and on-going client engagement.
But we are not just a financial “model.” We are a culture. We have great people, and we are continuously challenging our people.
Our strategic aspirations are simple. More advisers serving more clients. We are confident that we have a business that will continue to grow and that we will achieve escape velocity. If we achieve that we will create a business that is valuable to shareholders whilst providing our clients with excellent service.
I truly thank all my colleagues. My job is to ensure that they have the resources and training to allow them to demonstrate how great they are to our clients and to their peers.
To our clients, thank you. Thank you for your support.
To our shareholders, thank you. Your support will be fully rewarded through us delivering fabulous shareholder value growth. “Escape velocity” is within touching distance.
I am a substantial shareholder and I have never been more excited and passionate about our business. I will continue to buy more TEAM shares.
Mr J M Clubb
Executive Chair
27 March 2024
Performance and Strategic Report
Introduction
The Directors present their Strategic Report on the Group for the year ended 30 September 2023.
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 overall strategy is to promote the continued development of the Group into a leading international wealth and asset management business. It is expected that the Group’s growth will be achieved through:
· an acquisition driven strategy to bring into the Group complementary offshore and onshore wealth management and financial planning businesses;
· 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 and delivering 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
· client growth through team and selective hires and targeted business development.
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 also believe that expansion in the faster growing international markets, rather than the slower growing UK and Crown Dependencies markets, will also benefit the development of the Group.
Key Performance Indicators (KPIs)
As TEAM is in the initial stages of delivering the strategic plan for the business, the Board has yet to set longer term measures for the assessment of the performance of the business.
The key targets for the Directors are to:
· manage the business with a high standard of corporate governance;
· improve the operating performance of the Group to a cashflow positive position;
· build the business to scale within Jersey, which we define as AUM of over £500 million and an operating surplus;
· integrate and deliver the cost and revenue synergies identified in the acquired businesses, and
· build and convert our pipeline of acquisition opportunities. A necessary part of further acquisitions will be raising additional financing, which is expected to be required for any further acquisitions to be made by the Group.
These measures, along with revenue, cost, and profitability measures, will be developed into longer term KPIs for the business, to which future Board remuneration will be aligned.
Principal risks and uncertainties
Risk appetite is established, reviewed, and monitored by the Board. The Group, through the operation of its Committee structure, considers all relevant risks and advises the Board as necessary. The Group and each operating entity maintains a comprehensive risk register as part of its risk management framework encouraging a risk-based approach to the internal controls and management of the Group.
The Group seeks to ensure that its risk management framework and control environment is continuously evolving which the Board monitors on an ongoing basis.
Liquidity and capital risk: the Group’s focus is on bringing the business to a positive cash flow position, whilst implementing its growth strategy. Before this goal is reached, the availability of sufficient liquid resources to meet the operating requirements of the business, and any deferred payments due to vendors of businesses to the Group, are closely monitored and a key element of any investment decisions taken.
Operational risk: operational risk is the risk of loss to the Group resulting from inadequate or failed internal processes, people, and systems, or from external events. Each trading entity conducts a business risk assessment to identify all risks faced, and to put in place effective mitigating controls and procedures. These are reviewed regularly.
Business continuity risk: the risk that serious damage or disruption may be caused as a result of a breakdown or interruption, from either internal or external sources, to the business of the Group. This risk is mitigated in part by the Group having business continuity and disaster recovery arrangements.
Credit risk: the Board takes active steps to minimise credit losses, including the close supervision of credit limits and exposures, and the proactive management of any overdue accounts. Additionally, risk assessments are performed on an ongoing basis on all deposit taking banks and custodians and our outsourced relationships.
Non-compliance with laws and regulations risk: the Group has Compliance and Operations functions resourced with appropriately qualified and experienced individuals. The Directors monitor changes and developments in the regulatory environment and ensure that sufficient resources are available for the Group to implement any required changes.
S.172 Statement
As a Jersey company, TEAM plc does not fall under the UK Companies Act 2006 (the “CA 2006”), but we do follow the requirements under section 172 CA 2006 by which the Directors have a duty to promote the success of the Company for the benefit of shareholders as a whole. In doing so, the Directors have regard to the likely consequences of any decision in the long-term; the desirability of the Company for maintaining a reputation for high standards of business conduct; and the need to act fairly as between members of the Company.
The Board considers that its primary stakeholders are shareholders, employees, clients, suppliers and regulators. We set out below how we engage with our stakeholders:-
Shareholders – contact with our shareholders is through a number of avenues which include the Annual Report, Annual General Meeting, one-to-one meetings and telephone conversations. Matters under discussion include strategy and its execution and generating strong returns.
Employees – the Board engages with employees through a variety of methods, including regular face-to–face meetings with the management teams of the operating entities. The executive Directors are more actively engaged with staff, and are known personally to the management team.
Clients – the Group through its subsidiaries aims to provide investment and advisory services that meet the needs of its clients. The Group’s subsidiary management teams update the Board on a regular basis on matters of client service and performance, and new client requirements.
Suppliers – the Company places reliance on external third party providers for certain activities and services. The selection process and engagement with these parties is undertaken by senior management to ensure the smooth operation and delivery of services to the Company.
Regulators – three of the Company’s subsidiaries are regulated by the JFSC, and there are regulated entities operating in Singapore, the UAE, South Africa, and the Federal Territory of Labuan (in Malaysia). Regular ongoing communication with the regulators is maintained by the boards of the respective operating companies and regular management information is supplied as required. All Board members and key individuals of the regulated entities are approved in their roles by the respective regulators, as are the significant shareholders in TEAM plc.
The Performance and Strategic Report on pages 9 – 11 has been approved by the Board and signed on its behalf.
Mr M C Moore
Chief Financial and Operating Officer
27 March 2024
