TIDMMJH
RNS Number : 1090T
MJ Hudson Group PLC
23 March 2021
RNS Release: 23 March 2021
MJ Hudson Group plc
(the "Company", "Group" or "MJ Hudson")
Interim results for the six months ended 31 December 2020
MJ Hudson Group plc (AIM: MJH) the international asset
management consultancy, today announces its unaudited interim
results for the six months ended 31 December 2020 ("H1 FY21").
Highlights
-- The Group's markets remained resilient and are now showing signs of strengthening
-- Recent acquisitions of PERACS and Bridge consolidated from
end of period and integrating well, each with early client
collaboration successes
-- Group underlying revenue growth from continuing operations of
14.4% to GBP11.3m. Statutory revenue increased by 45% to
GBP15.9m*and 3.6% organic growth** achieved, continuing recovery
trend
-- Underlying EBITDA from continuing operations maintained at GBP1.8m (H1 FY20: GBP1.8m)
-- Underlying pre-tax profit GBP0.4m (H1 FY20: GBP0.4m)
(reconciled to statutory results in table below)
-- Underlying fully diluted EPS of 0.2p***
-- Process to secure senior debt facility for Group is now well advanced
-- Significant client wins - ESG and Luxembourg detailed below
-- Trading in early 2021 on track with expectations. Activity
levels in legal services recovering well
* This number includes pass through revenues which are not
considered part of underlying results - see notes below, **Organic
revenue growth adjusts for the impact of acquisitions
*** Prior period distorted as IPO shares in issue for less than
one month
Financial summary and key performance indicators
In order to assist shareholders' understanding of the underlying
performance of the Group, the underlying performance of the
business has been presented on an adjusted basis for the 6 months
to 31 December 2020 and for the comparative period to 31 December
2019. The Group includes non-GAAP measures where it is deemed
useful and necessary. A reconciliation from adjusted to statutory
results is presented within this statement. In addition, segment
and division are used interchangeably in this release.
Six months Six months
ended 31 Dec ended 31 Dec Growth
Notes 2020 2019(6)
GBPm GBPm
Adjusted results 1
Revenue 2 11.3 9.8 14.4%
EBITDA 3 1.8 1.8 (1.1)%
EBITDA margin 15.8% 18.2%
Pr ofit before tax 4 0.4 0.4
Basic and Diluted EPS (p) 5 0.2p 0.5p
Statutory results
Revenues 15.9 11.1 44.6%
EBITDA (0.9) (0.7) (21.0)%
Profit before tax (2.1) (3.1) 32.2%
Basic and Diluted EPS (p) (1.6)p (3.5)p
Net cash/ (debt) excluding
IFRS16 leases 1.6 20.1
1. Adjusted results exclude discontinued businesses
2. Revenue under IFRS includes all revenues received by the
Group. Within the Group's Business Outsourcing division and Organic
Investments, a material proportion of revenue is typically passed
through to clients as a specific payment linked to the performance
of the clients' funds. This is reflected in direct costs of sales.
In managing the business and looking at underlying trends for the
Group as a whole, Management consider that these payments can have
a distorting effect. Underlying revenue is a measure defined to
specifically excludes these items. It provides a more
representative metric, especially in relation to the value created
by the Group, its underlying growth and the operating efficiency of
its activities. These pass-through revenues have increased in the
period due to a significant new Luxembourg AIFM client's first
billing.
3. Adjusted EBITDA is segment profit/(loss) before share based
payments and LTIP expense and excludes fundraising and acquisition
costs, non-recurring costs, unallocated group expenses and
discontinued business losses. Adjusting items are explained in more
detail below.
4. Adjusted profit before tax is calculated by taking underlying
operating profit less finance expenses. Finance expenses are
adjusted to exclude the unwinding of discounting of deferred
consideration related to acquisitions
5. Adjusted EPS takes the underlying profit after taxes divided
by the weighted average shares outstanding at the period end. In
the case of the period to 31 Dec 2019, adjusted EPS assumes the
shares issued at the Company's AIM listing were in issue for part
of the period.
6. The results for 6 months to 31 December 2019 have been
restated for comparability. This includes the transfer of IR
business from Business Outsourcing to Data & Analytics; and the
removal of discontinued operations form Advisory. Refer to segment
note for additional details.
Commenting on the results, CEO of MJ Hudson, Matthew Hudson
said:
" We made real progress in the Covid-impacted six months to end
December 2020, including a return to organic revenue growth,
against what was a tough comparison period. We extended the
recovery in group organic revenues since the start of the Covid
pandemic. We announced two acquisitions, adding a key jurisdiction
(Republic of Ireland) to our Business Outsourcing division and
strengthening our Data & Analytics offering in Europe and
America. Both additions to the Group are integrating well with
early successes in terms of new clients and business pipeline
additions which will benefit our second half. In Advisory, where
the impact of Covid has been most keenly felt, activity levels in
legal services improved and new funds began to launch again. This
is beginning to positively impact revenues with good momentum in
the final three months of the period and a good start to our H2
2021. Outside of Advisory, we continue to make progress led by
strong secular demand for our ESG offer and regulatory driven
services.
Risk factors remain in relation to the global economy caused by
the Covid pandemic, but in the alternatives sector which we serve,
this is increasingly a question of the speed as opposed to the
prospect of a recovery. This translates directly into our own
business. With the benefit now of a solid first half, signs of
recovery in current trading in the early months of calendar 2021
and growth prospects for the second half, our confidence levels
have improved. We confirm we are trading in line with market full
year expectations which require a step up in profitability in our
second half. Linked to this, we also confirm the payment of a
maiden dividend payment to shareholders in respect of the current
period to June."
For further information contact:
MJ Hudson Group plc
Matthew Hudson, CEO
Andrew Walsh, IRO
Katherine Hazelden, PR Director +44 20 3463 3200
Cenkos Securities (Nomad and Joint Broker)
Giles Balleny
Stephen Keys
Callum Davidson +44 20 7397 8900
Investec Bank (Joint Broker)
Christopher Baird
David Flin +44 20 7597 5970
Buchanan (PR Adviser)
Stephanie Watson
Kim van Beeck +44 20 7466 5000
This announcement contains inside information as defined in
Article 7 of the Market Abuse Regulation
Chief Executive's Statement
MJ Hudson, the international asset management consultancy, is
pleased to report its interim results for the six months ended 31
December 2020. The Group has made two key acquisitions in the
period, in line with our strategy, and whilst first half results
have been impacted by the economic environment, we are seeing
strong signs of increased activity across most business units in
the past two months to February. The Advisory division's share of
Group underlying revenue has now fallen to 45% (H1 FY2020 - 57%)
largely due to prior acquisitions in Business Outsourcing and Data
& Analytics and this downward proportionate trend is expected
to continue.
During the reporting period we announced the acquisition of
Bridge Consulting ("Bridge"), the Dublin based funds platform, and
PERACS Group (PERACS) the fund performance analytics business.
Following regulatory approval, Bridge was consolidated into the
Group's results from mid-February 2021. As a result, the first
meaningful contribution from both these businesses will come in the
second half of FY 2021. They are both integrating well and, in both
cases, we have been able to quickly extend their marketing reach
within and without our existing client base.
Net cash was GBP 1.6m at the end of the period (excluding lease
liabilities) compared with net cash of GBP20.1m in December 2019.
With the acquisitions of PERACS in December and Bridge Consulting
in February, MJ Hudson has announced four acquisitions since IPO
and six since the purchase of Amaces in FY 2019. In aggregate, the
Group has invested GBP15m on these acquisitions since IPO. Looking
forward, we are now at an advanced stage in our efforts to source
debt funding for the Group to support M&A and will be making an
announcement to the market in due course. Revenues on an underlying
basis grew by 14.4% compared with the same period to H1 FY20 and
underlying EBITDA was maintained at GBP1.8m. In terms of
profitability, adjusted pre-tax profits reduced marginally to
GBP0.4m, and EPS was 0.2p (from 0.5p in H1 2020 which was not
representative due to our IPO taking place in December 2019). This
is a creditable result given the half year to December 2019
represented a challenging comparison period for two separate
reasons: the
interims to December 2019 saw strong growth of 26% (of which 13%
was organic, driven by legal services); and, it was the last
complete period in our financial calendar before the start of the
Covid lockdowns. On an organic basis, underlying revenue grew by
3.6% in the period which continues the improving trend from the
second half of FY20.
Underlying EBITDA margins fell from 18.2% to 15.8% and Covid
related cost saving measures in April to June 2020 were
discontinued in H1 2021. We have taken measures to further reduce
costs on a precautionary basis in the second half and expect margin
to improve during the rest of the financial year. More detailed
segmental analysis is included in the table below.
These results show the resilience of our business model: the
well-reported market weakness in new fund launches during lockdown
impacted our Advisory division whilst counter cyclical growth in
ESG and regulation continues to lift Data & Analytics and
Business Outsourcing. The growth in recent years - both by
acquisition and incubation - of the divisions outside of MJ
Hudson's origins as a law firm has made this possible.
Adjusted performance by segment
GBP000s Advisory Business Data & Organic Total
Outsourcing Analytics Investments
6m to 31(st) December
2020
Underlying Revenue 5,077 2,522 2,749 905 11,253
Growth (9.3)% 57.6% 22.2% 130% 14.4%
Underlying EBITDA 830 815 612 (483) 1,774
Underlying EBITDA margin 16.4% 32.3% 22.3% n/a 15.8%
6m to 31(st) December
2019*
Underlying revenue 5,595 1,600 2,250 394 9,839
Underlying EBITDA 1,135 589 466 (380) 1,793
Underlying EBITDA margin 20.3% 36.8% 20.7% n/a 18.2%
* These figures restated for comparability, refer to note 6 above.
At the Group level, underlying EBITDA margin for the period
reduced from 18.2% to 15.8% as at December 2020. This is largely
due to additional cost of Organic Investments. Removing organic
investments from the above totals, the underlying EBIDTA for the
period reduced from 23.2% to 21.8%. This change has been driven by
a reduction in the Advisory margins caused largely by certain fixed
cost in a period of continued reductions in revenue. This was due
to a combination of delayed new fund launches from the ongoing
Covid related lockdowns which continued to suppress legal revenues
and reduced project income in Investment Advisory. I have commented
previously that we consider reduced Advisory revenues to represent
postponed rather than lost revenue, and I am pleased to report that
we have seen a return to strong year on year growth in activity
levels in the law firm in 2021 with activity levels in January and
February tracking consistently ahead of pre lockdown levels in 2020
and 2019 for the same period.
Performance for the individual segments is as follows:
-- Advisory - (9.3)% reduction in revenue. As above legal
revenues continued to be suppressed by postponements in new fund
launches in 2020. A series of cost saving measures were put in
place in the law business unit from October which have stabilised
results and margin. In fact, the period ended on a high with good
momentum building in terms of revenues in the last three months of
the year and December modestly ahead of the comparison period.
Investment Advisory was loss making in the period, which has
suppressed margin. This accounts for the reduction at the
divisional level from 20.3% to 16.4%.
-- Business Outsourcing - 57.6% growth, of which 4% was organic.
Underlying EBITDA margin reduced from 36.8% to 32.3% because
integration of the Anglo Saxon Trust Jersey fiduciaries business
has been slower than hoped due to local lockdown restrictions,
which , in turn, impacted revenue. We also invested, with the help
of consultants, in strengthening the management team in the
Appointed Representative function to increase our capacity going
forward. This temporarily suppressed margins which should improve
as the business expands in the second half of the financial
year.
-- Data & Analytics - 22.2% revenue growth, of which 22% was
organic. Underlying EBITDA margin increased slightly to 22.3% from
20.7%. The MJ Hudson ESG & Sustainability business saw 83%
organic sales growth compared to FY2020 in response to sustained
customer demand. The Meyler IR and Marketing analytics acquisition
has now been fully combined with the UK IR & Marketing business
unit. Previously included in Business Outsourcing - FY2020 half
year revenue for UK IR business was GBP0.2 million (2019 - GBP0.2
million).
-- Organic Investments - Revenue increased by 130% to GBP0.9m
which was primarily driven by expansion in the Luxembourg AIFM
operation. Losses at the underlying EBITDA level rose slightly to
GBP0.48m which was largely due to the Fund Administration business
unit. The third organic investment, Regulatory Consulting, has
shown good growth after its launch in the prior period. It is
expected that Luxembourg and Regulatory Consulting will form part
of Business Outsourcing from FY22.
New business activity
As announced in our trading update in February, we have secured
two new clients in ESG & Sustainability (Data & Analytics)
and Luxembourg (Organic Investments) which are significant for
different reasons. We are working with a global financial services
group, following a rigorous international pitch process, to develop
a new training and reporting service for their platform. This is a
new product structure for us in ESG & Sustainability, creating
recurring revenues and follow on opportunities. We will update
investors on further new product opportunities within Data &
Analytics at the preliminary results stage. Elsewhere, a new
material client in Luxembourg underpins its route to profitability
for what was an incubation start up for the Group.
In terms of our new business KPIs, clients taking services from
more than one division represented 17.2% of underlying revenue in
the six months to December an increase on the 12.3% reported for
the prior period. We expect this percentage to improve again over
the full year with the impact of renewed activity in new fund
launches (an historic impetus for cross sales activity) and the
addition of acquired clients of scale from recent M&A. In
addition, we are introducing Salesforce across the organisation in
the final quarter of FY 2021.
Whereas the top 10 client list as recently as 2019 was dominated
by clients from the law firm (Advisory division), it is noteworthy
that half of the clients in the six months to December 2020 came
from outside that division, with a higher degree of recurring
revenue. This follows naturally as our three divisions add scale.
Recent acquisitions, Bridge Consulting in particular, are likely to
extend this trend.
Acquisitions and integration
Including PERACS and Bridge we have now made six acquisitions
since Amaces in FY 2019, with four announced as a public
company.
Following investment in 2020, we are improving our processes to
integrate new businesses in the Group. Naturally it helps that the
whole Group has a similar focus on alternative assets and recent
integrations of Bridge and PERACS have led to early successes with
clients. In the case of Bridge, the business acquired a significant
new client for its Super Manco services in the immediate aftermath
of completion with the help of the Group and, in addition, its new
business pipeline has improved since our original due diligence. In
the case of PERACS, a collaborative marketing campaign in the first
8 weeks of integration has yielded a new business pipeline which is
already comparable in terms of potential revenue with its full-year
revenues in 2020.
Our strategic focus remains on the alternatives sector at all
points in its investment lifecycle. We look to add value through
technology across all our divisions and build scale where it makes
economic sense to do so. In terms of geography, our starting point
is Northern Europe but increasingly we are accelerating our
presence in North America. Recent deals fit this pattern and we
continue to see further opportunities, particularly within Data
& Analytics which has the ability to satisfy a number of our
criteria at once. In terms of the genesis for our deals to date,
the Group's multi-division structure and common client focus makes
us an attractive candidate for business vendors looking to
accelerate growth as opposed to a pure liquidity event.
Net debt
Together with our debt adviser, we are now at an advanced stage
in a process to secure senior debt facility for the Group. This
process has generated a number of credit-approved offers. The
facility is to support our M&A activities as well as to provide
both general working capital and regulatory capital for the Group.
We expect to complete this process in the weeks ahead.
Reconciliation of adjusted financial measures
Six months Six months
ended ended
31Dec 2020 31 Dec 2019
GBPm GBPm
Loss before taxation (2.1) (3.1)
Fundraising and acquisition costs 1.3 2.0
Non-recurring costs 0.7 0.4
Unallocated group costs 0.1 0.0
Share based payment and LTIP charge 0.5 0.1
Amortisation of acquired intangibles 0.3 0.1
Unwind of discount on deferred and
contingent consideration 0.4 0.3
Fair value movements - gain on investments
(2019 - CLN revaluation) (0.8) 0.6
Adjusted profit before taxation 0.4 0.4
Adjusted financial measures are presented to provide additional
information to best represent the underlying performance of the
business.
Acquisitions added a further GBP1m of costs in respect of the
transactions completed in the period and GBP0.3m in respect of the
2016 Tower Gate Capital acquisition related to the fair value
investment gain indicated above. The fair value adjustment gain in
respect of a former Tower Gate Capital investment included in the
H1 2021 numbers is GBP0.8m.
The non-recurring costs are one-off in nature and in H1 2021
include consultancy costs in respect of the UK regulated entities
totalling GBP0.3m; reorganisation costs in UK law, investment
advisory and fund management solutions business units which saw 5
people leave the Group as part of a cost-cutting review; and
continued low US launch costs (suspended due to Covid-19)
Discontinued business losses relate to the closure of the
Guernsey law office and comprise trading results to September 2020,
when the business was wound up, settlement costs in respect of the
partner and staff, closure costs and associated fees in respect of
local professional guidance in respect of the employee and closure
costs.
Unallocated group costs - reduced considerably from H2 2020
level which was one-off in nature, connected to improvement in
integration processes and IT infrastructure.
Cashflow
6 months
6 months ended ended 31
31 Dec. 2020 Dec. 2019
GBPm GBPm
Statutory cash expended from operations (1.2) (1.3)
Underlying adjustments
Share based payments and LTIP 0.5 0.1
Fundraising & acquisition costs 1.3 2.0
Non-recurring costs 0.7 0.4
Discontinued losses 0.4 0.1
Group expenses 0.1 0.0
Net cash generated from underlying operating
activities 1.8 1.3
Net cash generated from operating activities has increased to
GBP1.8m from GBP1.3m. Working capital balances were largely neutral
in the period with an increase in creditors (GBP0.6m H1 2021) from
acquisitions being offset by increase in receivables (GBP0.5m H1
2021). The increase in receivables is expected to reverse in H2
2021 as it primarily relates to increases in accrued income
balances relating to deferred client projects but also a trend in
lockdown that projects that are ongoing are taking longer to
conclude, which delays final billing.
Dividend
As set out in our report and accounts for the year to June 2020,
it is the Group's intention to introduce a progressive dividend
policy in line with reported profitability and future prospects. On
the strength of these results, we expect to pay our maiden dividend
in respect of the current period i.e. the six months to June 2021.
The quantum of this dividend will be set in our preliminary results
for the year to June 2021. Dividend payments in earnest will
commence from FY 2022. This is in line with market
expectations.
Current trading & outlook
Despite the impact of the global economic decline caused by the
Covid pandemic and the various lockdowns on the business
environment, the Group performed in line with management's
expectations in the first half of FY2021. In particular,
profitability was maintained at the underlying EBITDA and adjusted
pre-tax levels compared with a strong comparison period in
FY20.
With regards to progress in the second half and with the benefit
of two months of trading, a number of visible factors combine to
provide further encouragement. The recovery trend since the start
of the Covid pandemic in terms of Group organic revenue growth
continued in January and February. Recent acquisitions PERACS and
Bridge, consolidated after December, have seen material early
integration successes in terms of client wins and new business
pipelines. There has been a measurable recovery in new funds
activity and activity levels in the law firm generally. In
particular, the revenue gap in law has begun to reverse with
current activity ahead of the prior two years for the equivalent
time period. Elsewhere, new client wins for ESG &
Sustainability in Data & Analytics and Luxembourg within
Organic Investments add to an improving picture generally for the
new business pipeline across the Group.
Whilst the conversion rate of increased activity levels to
revenue growth remains a risk factor, the Board is confident that
trading is in line with management expectations for the full
financial year to June 2021.
23(rd) March 2021
MJ HUDSON GROUP PLC
Consolidated statements of comprehensive income
Unaudited six Unaudited six
months to months to
31 December 31 December 2019
2020
Continuing operations Note GBP'000 GBP'000
Revenue 3 15,900 10,997
Direct cost of sales (4,647) (1,158)
Other cost of sales (345) (685)
Gross profit 10,908 9,154
Administrative and other expenses (13,336) (10,766)
Other operating income 192 4
Operating loss (2,236) (1,608)
Finance expense (721) (973)
Fair value movements 842 (544)
Loss before taxation from continuing
operations (2,115) (3,125)
Tax (expense)/benefit (43) 7
Loss after tax from continuing operations (2,158) (3,118)
Discontinued operations
Loss after tax from discontinued operations (426) (119)
Loss for the period (2,584) (3,237)
Other comprehensive income
Exchange differences arising on translation
of foreign operations (32) (201)
Total comprehensive loss for the period (2,616) (3,438)
Earnings per share attributable to
the ordinary equity holders of the
parent
Basic and diluted EPS 4 (0.02) (0.03)
MJH GROUP HOLDINGS PLC
Consolidated statements of financial position
Unaudited at 31 Audited
Note December at 30 June
2020 2020
GBP'000 GBP'000
ASSETS
Non-current assets
Intangible assets 36,847 32,689
Tangible assets 2,174 2,196
Right-of-use asset 7,508 7,578
Investments 2,172 1,308
Other receivables 408 398
Total non-current assets 49,109 44,169
Current assets
Trade and other receivables 12,403 11,322
Cash and cash equivalents 4,919 13,388
Total current assets 17,322 24,710
Total assets 66,431 68,879
LIABILITIES AND EQUITY
Non-current liabilities
Borrowings 789 873
Deferred consideration 6,319 5,719
Lease liabilities 6,688 6,497
Other payables 1,360 497
Total non-current liabilities 15,156 13,586
Current liabilities
Trade and other payables 6,665 6,148
Borrowings 2,507 2,538
Deferred consideration 3,259 4,758
Lease liabilities 769 798
Total current liabilities 13,200 14,242
Equity
Issued share capital - -
Share premium account 5 56,089 55,527
Treasury shares (991) -
Other reserves 6 546 509
Retained loss (17,569) (14,985)
Total equity 38,075 41,051
Total liabilities and equity 66,431 68,879
MJH GROUP HOLDINGS PLC
Consolidated statements of changes in equity
Share Share Treasury Other Retained
Capital Premium Shares Reserves loss Total equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1
July 2019 20 15,344 - 1,443 (9,027) 7,780
Share based payments - - - 437 - 437
Exercise of options 1 1,506 - (565) 565 1,507
Convertible
options exercised - 11,826 - (883) 883 11,826
Loss for the period - - - - (7,202) (7,202)
Other comprehensive
income - - - 77 - 77
Shares issued - 28,861 - - - 28,861
Cost of IPO shares
issued - (2,232) - - - (2,232)
B shares
issued - 201 - - - 201
Group restructure (21) 21 - - (204) (204)
Balance as at
30 June 2020 - 55,527 - 509 (14,985) 41,051
Share based payments - - - 69 - 69
Loss for the period - - - - (2,584) (2,584)
Other comprehensive
income - - - (32) - (32)
Shares issued - 562 - - - 562
Shares repurchased - - (991) - - (991)
Balance as at
31 December 2020 - 56,089 (991) 546 (17,569) 38,075
MJH GROUP HOLDINGS PLC
Consolidated statements of cash flows
Un audited Unaudited
six months six months
31 Dec to to
ember 31 December
2020 2019
GBP'000 GBP'000
Cash flows from operating activities:
Loss for the financial period before taxes (including
discontinued) (2,541) (3,244)
Adjustments for:
Depreciation and impairment of fixed assets and
right-of-use assets 721 343
Amortisation and impairment of intangible assets 618 523
Revaluation of investments (842) -
Fair value movements - 544
Share based payment 69 373
Amortisation of interest on convertible loans - 90
Unwind of discount on deferred consideration 211 -
Net interest payable/(receivable) 510 573
Decrease/(increase) in trade and other receivables (527) (818)
Increase/(decrease) in trade and other payables 560 268
Foreign exchange 12 98
Cash from operations (1,209) (1,250)
Taxation paid - -
Net cash used from operating activities (1,209) (1,250)
Cash flows from investing activities:
Purchases of tangible assets (164) (804)
Purchase of intangible assets (205) (102)
Purchase of subsidiary undertaking (1,195) (895)
Purchase of investments (22) -
Payment of deferred consideration related to acquisitions (4,159) (2,500)
Net cash used in investing activities (5,745) (4,301)
Cash flows from financing activities
Interest paid (694) (284)
Equity subscription less associated costs 562 27,287
Treasury shares acquired (991) -
Proceeds from issue of bank loan 184 223
Repayment of bank loan (299) (478)
Directors loan repayments in the period (18) (246)
Payment of lease liabilities (259) (245)
Net cash (used in) / generated from financing activities (1,515) 26,257
Net increase in cash and cash equivalents (8,469) 20,706
Cash and cash equivalents at beginning of period 13,388 3,099
Cash and cash equivalents at end of period 4,919 23,805
Cash and cash equivalents comprise:
Cash at bank and in hand 4,919 23,805
Bank overdrafts - -
4,919 23,805
Notes to the interim report
1 . GENERAL INFORMATION
MJ Hudson Group plc (the "Company") is a public limited company
incorporated in Jersey, Channel Islands and its shares are quoted
on the AIM Market of the London Stock Exchange under the Companies
(Jersey) Law 1991. The address of the registered office is PO Box
264, Forum 4, Grenville Street, St Helier, JE4 8TQ. The financial
information consolidates the financial statements of the Company
and its subsidiary undertakings (together the "Group").
The principal activity of the Group is acting as an independent
advisory and infrastructure business, serving fund managers,
investors and advisers active in private equity, venture capital,
hedge, credit, real estate and infrastructure. The group owns three
full scope AIFM management platforms to fund managers, in the UK ,
Luxembourg and Ireland.
2. BASIS OF PREPARATION
The financial information presented in this Interim Report has
been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union ("IFRS") that are
expected to be applicable to the financial statements for the year
ending 30 June 2021 and on the basis of the accounting policies
expected to be used in those financial statements.
The financial information is prepared on a going concern basis,
under the historical cost convention, except for certain financial
assets and liabilities, which are revalued and measured at fair
value through profit or loss. The financial information is
presented in pounds sterling and all values are rounded to the
nearest thousand (GBP000), except when otherwise indicated.
The Interim Report covers the six months ended 31 December 2020
and was approved by the Board of Directors on 22 March 2021. The
Interim Report is unaudited. The interim condensed set of
consolidated financial statements in the Interim Report are not
statutory accounts as defined by Companies (Jersey) Law 1991.
Comparative figures for the year ended 30 June 2020 have been
extracted from the prior year financial statements for that
period.
3. SEGMENT INFORMATION
For management purposes, the Group is organised into business
units based on its products and services and has three reportable
segments as follows:
-- Advisory: the provision of legal and consulting services
across all areas of the investment industry. This includes services
to alternative asset managers, corporate entities and institutional
investors to advise on M&A and investment funds along with
support for primary fund investments, co-investments and
secondaries. This segment also includes the provision of individual
independent investment advisers and professional trustees to
corporate pension schemes, local government pension schemes and
charitable organisations.
-- Business Outsourcing: a multi-service platform providing
regulatory advice, regulatory cover and a variety of management,
operations and related support services to asset managers and
advisers. This includes the provision of all key front, middle and
back-office functions, including investor relations, portfolio
management, risk management, fund and corporate administration,
accounting and fiduciary services.
-- Data & Analytics: research, consulting, benchmarking services and tools to support ESG and sustainability, investment and investment fund performance analysis, and developing stronger and more productive relationships with investors, custodian banks and others. This includes providing assistance to clients to make strategic choices, improve investment performance and obtain better value from their service providers.
No operating segments have been aggregated to form the above
reportable operating segments. Key management are the Chief
Operating Decision Makers (CODM) and monitor the operating results
of each business unit separately for the purpose of making
decisions about resource allocation and for performance assessment.
Segment performance is evaluated based on adjusted operating profit
or loss. The adjustments include unallocated central costs, organic
investments, fundraising and acquisition costs, non-recurring
items, and depreciation and amortisation. Unallocated central costs
(Group expenses) are items incurred centrally which are neither
directly attributable nor can be reasonably allocated to individual
segments but are considered recurring in nature. The organic
investments are revenues and costs related to newly formed
businesses which are still considered to be in their start-up
phase. Fundraising and acquisition costs are professional fees
incurred relating to new debt or equity issuances and acquisition
of new entities. Non- recurring costs are one off in nature such as
relocation costs, dilapidation provisions and other one-off
costs.
Business unit performance is not driven from assets given the
nature of business being primarily the provision of services. For
this reason, the CODM does not regularly obtain the split of asset
and liabilities by reporting segment, which are monitored on a
Group basis. The Group's financing costs (including finance costs,
finance income and other income), fair value movements and income
taxes are also managed on a Group basis and are not allocated to
operating segments.
Business Data & Segment Organic
Period ended Advisory outsourcing Analytics total investments Consolidated
31 December GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2020
Revenue 5,077 3,263 2,749 11,089 4,811 15,900
Direct cost
of sales - (741) - (741) (3,906) (4,647)
Revenue less
direct cost
of sales 5,077 2,522 2,749 10,348 905 11,253
Other cost
of sales (285) - (60) (345) - (345)
Gross profit 4,792 2,522 2,689 10,003 905 10,908
Administrative
and other
expenses (4,328) (1,859) (2,191) (8,378) (1,458) (9,836)
Other operating
income 155 20 5 180 3 183
Segment profit/(loss) 619 683 503 1,805 (550) 1,255
Group expenses (95)
Fundraising and Acquisition costs (1,337)
Non-recurring costs (721)
Depreciation and amortisation (1,338)
Operating
loss (2,236)
Finance expenses (721)
Fair value movements 842
Tax (43)
Loss for the period from continuing
operations (2,158)
Restated Business Data & Segment Organic
Period ended Advisory outsourcing Analytics total investments Consolidated
31 December GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2019 GBP'000
Revenue 5,595 2,758 2,250 10,603 394 10,997
Direct cost
of sales - (1,158) - (1,158) - (1,158)
Revenue less
direct cost
of sales 5,595 1,600 2,250 9,445 394 9,839
Other cost
of sales (606) - (79) (685) - (685)
Gross profit 4,989 1,600 2,171 8,760 394 9,154
Administrative
and other expenses (3,941) (1,043) (1,711) (6,695) (791) (7,486)
Other operating
income 3 - - 3 1 4
Segment profit/(loss) 1,051 557 460 2,068 (396) 1,672
Group expenses -
Fundraising and Acquisition costs (1,974)
Non-recurring
costs (440)
Depreciation and amortisation (866)
Operating loss (1,608)
Finance expenses (973)
Fair value movements (544)
Tax 7
Loss for the period from continuing
operations (3,118)
The segment note for the period ended 31 December 2019 has been
restated for comparability. The IR business was transferred from
Business outsourcing to Data & Analytics (Revenue of GBP197,00
and Administrative expenses of GBP187,000). The discontinued
operations were also removed from Advisory (Revenue of GBP135,00
and Administrative expenses of GBP254,000).
Geographic information (revenue)
Unaudited six months Unaudited
to 31 December six months
2020 to 31 December
2019
GBP'000 GBP'000
United Kingdom 5,165 5,903
Luxembourg 4,613 268
Channel Islands 1,984 1,199
North America 1,353 1,162
Netherlands 939 408
Rest of Europe 546 803
Rest of World 692 384
Switzerland 353 732
Cayman Islands 255 138
15,900 10,997
UK revenue has reduced with the change in mix of business in the
Business Outsourcing division where a material proportion of
revenue is typically passed through to clients as a specific
payment linked to the performance of the clients' funds, there was
also a new client of this type in Luxembourg. The direct cost of
sales associated with this revenue is GBP4.6m in this period
(GBP1.2m in prior period).
4. EARNINGS PER SHARE ( EPS)
Basic EPS is calculated by dividing the profit for the period attributable
to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the period.
Diluted EPS is calculated by dividing the profit attributable to
ordinary equity holders of the parent by the weighted average number
of ordinary shares outstanding during the period plus the weighted
average number of ordinary shares that would be issued on conversion
of all the dilutive potential ordinary shares into ordinary shares.
The following table reflects the income and share data used in the
basic and diluted EPS calculations:
Unaudited six months Unaudited six
to months to
31 December 2020 31 December 2019
GBP'000 GBP'000
Loss for the period attributable to
equity
holders of the Group (2,616) (3,438)
Thousands Thousands
Weighted average number of ordinary
shares for basic EPS 169,766 97,905
Basic and diluted loss per share (0.02) (0.03)
The following instruments are not included in the diluted EPS
calculation due as they would have an antidilutive effect on
EPS.
Unaudited six Unaudited
months to 31 December six months
2020 to 31 December
2019
Number '000 Number '000
Share options 14,197 9,088
Convertible loan notes - 1,053
Total of antidilutive instruments not
included 14,197 10,141
5. SHARE CAPITAL AND SHARE PREMIUM
Unaudited at Audited at
31 December 30 June
2020 2020
GBP'000 GBP'000
Share capital
Allotted, called up and fully paid
172,537,765 Ordinary shares in MJ Hudson Group - -
plc at GBPnil each
(June 2020 - 171,320,220)
20,000 B Shares in MJH Group Holdings Limited - -
at GBP0.01 each
(June 2020 - 20,000)
Share premium 56,089 55,527
Treasury shares
2,047,365 Ordinary shares in MJ Hudson Group plc
at GBPnil each
(June 2020 - nil) (991) -
During the period ended 31 December 2020 the Group established
of The MJ Hudson Group Plc Employee Benefit Trust ("The Trust").
The trust has acquired shares in MJ Hudson Group Plc. These shares
are listed above as treasury shares.
6. OTHER RESERVES
Foreign
Share based Convertible currency Total other
payment debt option translation reserves
reserve reserve reserve
Balance as at
1 July 2019 584 883 (24) 1,443
Share based payments 437 - - 437
Exercise of options (565) - - (565)
Exercise of convertible debt - (883) - (883)
Currency translation adjustment - - 77 77
Balance as at
30 June 2020 456 - 53 509
Share based payments 69 - - 69
Currency translation adjustment - - (32) (32)
Balance as at
31 December 2020 525 - 21 546
7. BUSINESS COMBINATIONS
Acquisition of Prof. Gottschalg UG
On 29 December 2020, the Group acquired 100% of Prof. Gottschalg
UG a fund and portfolio performance specialist company trading
under the name of PERACS for GBP4,226,000 paid in cash, shares and
deferred consideration. The acquisition of PERACS extends the
services provided by MJ Hudson's Data & Analytics division. The
business was subsequently renamed to MJ Hudson Performance
Analytics (German) UG.
The goodwill represents the experience and expertise of the
staff of MJ Hudson Performance Analytics (German) UG. and
non-contractual relationships. In calculating the goodwill arising
on acquisition, the fair values of net assets of Prof. Gottschalg
UG have been assessed and adjustments from book value have been
made where necessary. The goodwill values recorded upon acquisition
are not deductible for tax purposes. The acquisition accounting and
associated fair value adjustments are still being finalised at the
time these interim results have being released. The amounts noted
below are indicative only and may change upon finalisation of the
purchase price accounting.
Fair value
GBP'000
Intangible assets 362
Trade and other receivables 638
Total assets 1,000
Trade and other payables due within one year (935)
Net assets 65
Goodwill 4,161
Total purchase consideration 4,226
Of the total consideration GBP1,195,000 has been settled in the
period and the remaining GBP3,031,000 is located within current and
non-current liabilities depending on timing of payment. Included
within the amount of total consideration above are amounts that are
contingent upon certain performance thresholds being achieved by
the acquired business discounted to their present value as at the
date of exchange. The contingent consideration recognised is based
on the estimated fair value where the consideration is probable and
can be measured reliably. If these performance thresholds are not
met the total consideration will decrease, or if the thresholds
initially considered to not be probable are met the total
consideration may increase.
8. POST BALANCE SHEET EVENT
On 13 October 2020, the Group entered into a share purchase
agreement relating to the purchase of the entire issued share
capital of Bridge Consulting Limited and its subsidiaries ('Bridge
Group'). Based in the Republic of Ireland, Bridge Group provides
governance, compliance and risk services to the fund management
industry and owns Bridge Fund Management Limited which is an Irish
domiciled super management company which provides fund management
services. Approval by the local regulator, Central Bank of Ireland,
was received on 11 February 2021 and completion occurred on 13
February 2021. A full purchase price allocation will be completed
as part of the finalisation of results for the financial year
ending 30 June 2021.
No other transactions occurred in the period after the
consolidated statement of financial position date up to the date of
the authorisation of these financial statements which would affect
the figures stated within these financial statements.
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END
IR FFFELVLIFFIL
(END) Dow Jones Newswires
March 23, 2021 03:00 ET (07:00 GMT)
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