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MJ Hudson Group PLC (MJH)

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Tuesday 12 April, 2022

MJ Hudson Group PLC

Interim Results

RNS Number : 0374I
MJ Hudson Group PLC
12 April 2022
 

 

RNS Release: 12 April 2022

 

MJ Hudson Group plc

Interim results for the six months ended 31 December 2021

48% revenue growth in the period; three transformative growth opportunities including key 2021 acquisition making contribution 12 months ahead of schedule

MJ Hudson Group plc ("MJ Hudson", the "Company" or the "Group"), the end-to-end solutions provider to the asset management industry, today announces its interim results for the six months ended 31 December 2021 ("H1 FY22").

Financial highlights

· Revenue growth of 48% to £23.4m from £15.8m in H1 FY21 driven by strong organic growth (especially in ESG & Sustainability) and full contributions from successful acquisitions.

· Fully diluted EPS (0.18)p (H1 FY21 (0.16)p.

· Adjusted EBITDA increased 89% to £3.4m and adjusted EBITDA margin improved from 16% to 20%, owing to a more favourable business mix (both from H1 FY21).

· Adjusted pre-tax profit before tax increased to £1.6m from £0.4m in H1 FY21 .

· Adjusted fully diluted EPS increased to 0.9p (H1 FY21 0.2p).

· Net debt rose to £13.0m excluding leases (H1 FY21 £1.6m net cash), in order to fund infrastructure investments, M&A, and to support accelerated growth in the Irish Super ManCo and ESG & Sustainability.

* Adjusted metrics remove pass-through revenues and certain costs (such as share based payments, M&A and financing costs, losses from discontinued businesses, and other exceptional costs); see notes below for further description and reconciliation of statutory loss before tax to adjusted profit before tax.

Operational highlights

· Three transformative growth opportunities (ESG & Sustainability, the Irish Super ManCo, Luxembourg fund services), plus accelerating growth in the software and data business lines, more generally.

· Strong new business activity, with several global market leaders engaging the Group's services, attracted by the Group's strong brand and mix of cutting-edge Data & Analytics tools and Outsourcing services.

· An extremely productive pipeline, across the Group, with much converted, post-period, and more expected by year end; new engagements have emphasis on recurring revenues, supporting strong revenue generation into FY23, and beyond.

· Acquisition of Saffery Champness Fund Services, a Guernsey-based fund administrator, providing scale to Channel Island operations.

· A number of prestigious industry awards won, including for the ESG technology platform and for ESG & Sustainability advisory services.

 

Operational review

Performance in the period has been transformed through extremely strong (34%) organic revenue growth in the software-driven data and analytics businesses and in long-term recurring contract outsourcing services (21%). This has been further supported by the ability to now recognise full contributions from recent acquisitions in those same business areas.  

Following successful incubation, integration, and investment, the Group now has three transformative growth opportunities in ESG & Sustainability (acquired July 2019), the Irish Super ManCo (acquired in Feb 2021) and the incubated Luxembourg fund services business. Indeed, the investment into ESG & Sustainability, and fund services (including the Irish Super ManCo and the Luxembourg fund services team) has helped these two teams grow to be the Group´s largest business units, by staff numbers.

The power of the MJ Hudson brand and the unique combination of specialist digital tools and services continued to draw the largest firms in the industry into the Group's orbit, with 18 members of the FTSE 100 and several of the world's largest private equity firms already becoming clients by the end of the period and conversations ongoing with prospective clients of similar size and stature .

MJ Hudson's operating infrastructure has also been significantly upgraded, with the Group bringing key systems fully online and succeeding in attracting a large number of additional hires into its fastest growing business units, including ESG & Sustainability. There was industry recognition for MJ Hudson at industry awards, with the Group named a finalist for five Drawdown awards, winning three: Best ESG Advisory Services; Best ESG Technology (for its newly launched ESG Advantage digital platform); and Best Marketing and Communications Advisory. The Outsourcing division also picked up an award from Private Equity Wire, in March 2022, winning for Best ManCo Solution, in an award category voted on solely by the market.

The sole acquisition made in the period was that of Saffery Champness Fund Services Limited, a Guernsey based fund administration business, adding more scale to the Group's services in this field. In addition, FidesIQ, a joint venture with SmartCats, in the Data & Analytics division, was launched. . This joint venture is a FinTech and advisory business that helps pension funds improve the way they monitor and evaluate the success of the investment decisions they make and the advice they receive. The integration of acquisitions made earlier in the financial year remains on track, with contributions from the Irish Super ManCo trading twelve months ahead of expectations.

Market tailwinds supporting the further growth of the Group remain. The Group provides the "picks and shovels" to the fast-growing alternative assets segment within asset management. Oversight and regulation is increasing, as this segment grows, creating greater need for the Group's specialist advice, services and tools. This is all supported by the global trend towards outsourcing.  

 

Financial summary and key performance indicators

Where Group performance has been presented on an adjusted basis, this is to give a clearer picture of the underlying performance of the business, by removing pass-through revenues and exceptional costs. A reconciliation to statutory results is presented within this statement. The Group includes non-GAAP measures where it is deemed useful and necessary.

 

 

 

Notes

Sixmonths ended31 st Dec2021

£m

Sixmonths ended31 st Dec2020

£m

 

 

Growth

Statutoryresults

 

 

 

 

Revenue

 

23.4

15.8

48.1%

EBITDA

 

0.4

(1.3)

130.8%

Lossbeforetax

 

(3.1)

(2.5)

(24.0)%

Basic and diluted EPS (p)

 

(1.8)p

(1.6)p

 

Net (debt)/cash excluding IFRS16 leases

 

(13.0)

1.6

 

 

 

 

 

 

Adjusted results

1

 

 

 

Underlying Revenue

2

17.0

11.3

50.4%

EBITDA

3

3.4

1.8

88.9%

EBITDAmargin

 

20.0%

15.9%

 

Pr ofitbeforetax

4

1.6

0.4

 

Basicanddilutedadjusted EPS(p)

5

0.9p

0.2p

 

 

 

1.  Adjusted results exclude discontinued businesses (revenue £0.1m - H1 FY21 £0.1m)

2.  Revenue under IFRS includes all revenues received by the Group. Within the Group's FMS subdivision (Outsourcing) 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 considers 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 including LTIP expense, discontinued business losses, and M&A and financing costs. Underlying adjustments are explained in more detail below.

4.  Adjusted profit before tax is calculated by taking adjusted operating profit less finance expenses.

5.  Adjusted EPS takes the adjusted profit after tax divided by the weighted average shares outstanding at the period end.

 

Commenting on the results, CEO of MJ Hudson, Matthew Hudson, said:

"Our continued growth is built on a determined effort to translate our growing market reputation and expertise into better quality revenues. While some lower margin advisory services suffered from the lingering, albeit diminished, overhang of Covid-19, we have, in line with our longer-term strategy, focussed on accelerating our high-margin Data & Analytics solutions and scaling up our annuity-style outsourcing services. Our award-winning ESG & Sustainability business unit is leading our growth, successfully working together with other teams within the Group to deliver unique combinations of services to our growing list of clients.

Supported by a strong brand, we have built a robust pipeline of new business, particularly in Outsourcing and Data & Analytics, and with an emphasis on subscription and other recurring revenues, as well as multi-service engagements. This includes large mandates, closed post-period, and more we expect to close both during the current financial year, and beyond. The board remains confident in management's ability to continue growing the business in the second half and (per our January trading update), expects the Company to deliver strong growth at the upper end of market guidance."

A briefing for analysts will be held at 9.30am, this morning via a Zoom video call. Registration is through [email protected]

For further information contact:

MJ Hudson Group plc

Matthew Hudson, CEO

Matthew Craig-Greene , CMO

Katherine Hazelden, PR Director

+44 20 3463 3200

 

Cenkos Securities (Nomad and Joint Broker)

Giles Balleny

Stephen Keys

Callum Davidson

 

 

+44 20 7397 8900

Buchanan (PR Adviser)

Stephanie Whitmore

Kim van Beeck

Hannah Ratcliff

 

+44 20 7466 5000

This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation

About MJ Hudson

 

MJ Hudson (AIM:MJH) is the end-to-end solutions provider to the US$100 trillion+ asset management industry, specialising in its fastest growing segment, private markets (including private equity and venture capital). 

 

The Company offers investors access to the growth in private markets as a tech-enabled 'picks and shovels' play. 

 

Founded in 2010, by CEO Matthew Hudson (a private markets lawyer and former fund manager), MJ Hudson was admitted to the AIM market of the London Stock Exchange in 2019. The Group has grown to more than 300 professionals, serving more than 1,000 clients, across the globe, including some of the industry's largest players and 18 of the FTSE 100.

 

Several factors have contributed to the Group's success, to date, and support strong growth expectations, for the future: 

 

1.  Private markets are growing fast, and MJ Hudson provides the picks and shovels

 

2.  As private markets grow, so do scrutiny and regulation, increasing the need for the Group's specialist advice and services, particularly in areas like ESG, where it has award-winning solutions

 

3.  As it evolves, the sector is increasingly embracing technology, data, and analytics, where MJ Hudson has market-leading and award-winning tools and in which it continues to invest

 

4.  The Group's multi-service approach creates multiple client touchpoints, building stronger, longer-term relationships, and making it easier to sell in additional MJ Hudson services

 

5.  Performing these services generates vast amounts of data, which MJ Hudson aggregates and analyses, in order to further support its clients, by developing next-generation tools and fine-tuning existing services

 

For more information, please visit our website: www.mjhudson.com/investors  

 

LinkedIn: www.linkedin.com/company/mj-hudson/
Twitter: www.twitter.com/MJHudsonCorp

 

 

Chief Executive's statement

MJ Hudson, the end-to-end solutions provider to the asset management industry, is pleased to report its interim results for the six months ended 31 December 2021.

Underlying revenues grew by 50%, compared with the same period last year and adjusted EBITDA increased to £3.4m (H1 FY21: £1.8m). Adjusted pre-tax profits increased to £1.6m (H1 FY21 £0.4m) with EPS of 0.9p (H1 FY21: 0.2p). Organic revenue grew by 7% in the period (H1 FY21 - 4%), with organic revenue for Outsourcing and Data & Analytics growing21% and 34%, respectively. However, Advisory organic revenue contracted by 16% during the period, as explained, below.

During the period, the Group continued its strategy of focussing on higher margin business units in the Outsourcing and Data & Analytics divisions. For H1 FY22, Advisory revenue represented 25% of the total compared with 45% in the prior period; Outsourcing is now the single largest division by revenue, accounting for 45% of the Group in H1 FY22, with Data & Analytics increasing to 30%.

Adjusted EBITDA margins increased to 20.0% (H1 FY21 - 15.9%), even as the Group continued to invest into growth, in order to take advantage of opportunities to scale ESG & Sustainability and the Irish Super ManCo, as well as other areas of the business. Once these major investments into personnel, systems and infrastructure complete (expected to be in FY23), margins are anticipated to improve yet further.

During the reporting period, the Group acquired Saffery Champness Fund Services, a Guernsey based fund administration provider. Following regulatory approval, the entity was renamed MJ Hudson Fund Services Guernsey Limited and was consolidated from the beginning of November 2021. As a result, the first meaningful contribution from this business line will be generated in the second half of FY 2022.

Net debt was £13.0m at the end of the period (excluding lease liabilities) compared with £1.6m net cash in December 2020, The extra funding was used to support planned infrastructure investments and to support accelerated growth in the Irish Super ManCo and ESG & Sustainability. As at the end of December 2021, LTM net debt/adjusted EBITDA was 1.8x.

Segment adjusted performance

£m

Advisory

Outsourcing*

Data & Analytics

Total

6m to 31st December 2021

 

 

 

 

Underlying Revenue

4.3

7.7

5.1

17.0

Growth

(15.7) %

126.5%

88.9%

50.4%

Adjusted EBITDA**

0.6

1.4

1.4

3.4

Adjusted EBITDA margin

14.0%

18.2%

27.5%

20.0%

 

 

 

 

 

6m to 31st December 2020

 

 

 

 

Underlying Revenue

5.1

3.4

2.7

11.3

Adjusted EBITDA**

0.8

0.4

0.6

1.8

Adjusted EBITDA margin

15.7%

11.8%

22.2%

15.9%

*Outsourcing division results include Luxembourg, Fund Administration and Regulatory Consulting business which were previously included

under Organic Investments. To aid comparison the FY21 comparatives have been added to Outsourcing also.

**Adjusted EBITDA takes the segment profit from the segment note and adds back share based payments and LTIP expense and losses from discontinued operations.

 

Performance for the individual segments is as follows:

 

Data & Analytics (30% of Group revenue)


This division achieved 89% revenue growth and 34% organic revenue growth. Adjusted EBITDA margin increased to 27.5% from 22.2%. The MJ Hudson ESG & Sustainability business saw 49% organic sales growth compared to H1 FY2021, in response to sustained customer demand and the launch of the ESG Advantage software product. The fund performance analytics business, acquired in December 2020, is now fully integrated and delivering encouraging revenue at high margin, due to the automated nature of its business model. It is also proving to be a valuable point of entry to the Group for US based and other blue chip alternative funds. The quantitative solutions business was successfully integrated in the review period (acquired late June 2021).

 

 

Outsourcing (45% of Group revenue)


This division achieved 126% revenue growth and 21% organic revenue growth. Luxembourg AIFM, fund administration, and regulatory consulting, which were previously classified as Organic Investments in FY21 have all now moved to Outsourcing from FY22, reflecting the maturity of these businesses. Overall growth has been driven by the Irish Super ManCo, acquired in February 2021. In this business, AUM increased from €6bn at time of acquisition to €50bn at half year stage and this has increased further since December, as a result of significant client wins. Organic growth has been strongest in the Luxembourg AIFM business and UK fund administration team, in the period. Adjusted EBITDA margin improved from 11.8% to 18.2% with gains coming from the former Organic Investments and the impact of the Irish Super ManCo. 

 

Advisory (25% of group revenue)


This division, which comprises the law firm and the Investment Advisory business, experienced a 16% reduction in revenue. This was primarily owing to a restructuring of the law firm, last year, which saw three partners leave, resulting in H1 FY21 revenues falling 15.7% (£0.8m) compared to the same period in the previous year. This revenue dip is expected to be temporary: two law partners have since joined, and they are beginning to make good progress. In the Investment Advisory business, one client in the public sector renegotiated its engagement with the Group, resulting in some revenue loss from that client, and reduced EBITDA margins of 14.0%, compared to 15.7% in H1 FY21. However, the business has since seen a number of new client successes, with a large multi-year contract awarded by the ACCESS pool announced after the period end. This will shape results for the full year FY22 and beyond.

Incubation activities have previously been reported within a fourth category, Organic Investments. As set out above, these businesses have achieved profitability and they are now reported within Outsourcing. Historically, the Group has set up Organic Investments in circumstances where - by way of services or geography - there is a compelling investment case, but where M&A opportunities are unattractive or otherwise do not pass due diligence processes. This has been a successful route to growth for the Group.

New business activity

The Group continues to attract ever larger clients, with a number of notable wins in the period, as reported in the Group's trading update of January 31:

1.  The ESG & Sustainability and IR & Marketing Solutions teams jointly won several mandates to provide technical and marketing services to a range of private markets fund managers. This combined service has since been shortlisted as Specialist Adviser of the Year at the Private Equity Awards 2022

2.  The Luxembourg fund services team won a mandate from a $600bn global fund manager, including ESG & Sustainability services

3.  The law firm was instructed on a series of investments made by a FTSE 100 asset manager

4.  The investment consulting team won a multi-year, multi-million-pound private markets mandate from a £35bn local government pension scheme pool

5.  The Irish Super ManCo has secured major clients, including a £20bn+ multi-strategy asset management house, pushing assets under management ("AUM") above €50bn. The team in Ireland is generating record revenue levels and is an exciting area of growth, moving into the second half of the year

Post period, the Group has executed on several of the major contracts from its H1 FY22 pipeline, including a global investment bank and a top-5 global private equity house. The Group continues to prioritise engagements including the provision of multiple services and recurring revenues.

The Group continued to invest in marketing and business development and a strong pipeline built during the period has seen record revenues achieved in several business units since period-end.

Acquisitions

During the period, the Group acquired Saffery Champness Fund Services Limited, a Guernsey based fund administration business, from the accountancy group Saffery Champness. This has provided greater scale to the Group's multi-jurisdictional fund administration business, within the Outsourcing division. The acquired business generated revenues of £1.4m for the twelve-month period to March 2021 with an EBITDA margin comparable with the Group´s Outsourcing division on a pro forma basis.

One of MJ Hudson's strengths has proven to be its ability to scale acquisitions, once they have been integrated into the Group. For example, the ESG & Sustainability team and the North American IR & Marketing Solutions team, have both grown rapidly since acquisition in 2019 and 2020, respectively, and are expecting to continue on this trajectory. The Irish Super ManCo business acquired in February 2021 continues to progress well, trading twelve months ahead of plans set at the time of acquisition. The cross-selling opportunities and strong brand of MJ Hudson both provide a good catalyst for specialist, owner managed businesses to flourish. The portfolio of businesses acquired in calendar 2021 grew revenue at an average of 36% in the six months to Dec 2021, compared with their periods prior to consolidation.

Net debt

Net debt was £13.0m as at the end of December 2021. In August 2021, the Group borrowed an additional £7m from Santander under the terms of its five-year loan facility. This was to fund infrastructure investments and M&A, and to support accelerated growth in ESG & Sustainability and the Irish Super ManCo business, which is significantly ahead of the business targets set at acquisition. No further funding extension is expected as this business is now capitalised at the maximum required level of €10m. In January 2022, the Group borrowed a further £3m to accelerate investment into growth and technology.

As set out above, LTM net debt/adjusted EBITDA, as at the end of December 2021, was 1.8x. For the full year FY22, this metric will be impacted by the additional borrowing, in January 2022, set out above, but is expected to be tempered by a full EBITDA contribution from recent acquisition and the continued growth of the Group. Management expects to continue to manage this metric within growth company norms.

Reconciliation of adjusted financial measures and statutory results

 

Six months ended

31st Dec 2021

£m

Six months ended

31st Dec 2020

£m

Statutory loss before taxation

(3.1)

(2.5)

Fundraising and acquisition costs

1.1

1.3

Non-recurring costs

0.6

0.7

Unallocated group costs

-

0.1

Share based payment and LTIP charge

0.8

0.5

Amortisation of acquired intangibles

0.6

0.3

Discontinued businesses losses

0.4

0.4

Fair value movements***

1.2

(0.5)

 

 

 

Adjusted profit before taxation

1.6

0.4

*** Fair value movements includes gains and losses on deferred consideration and investments. In H1 FY2022, the 1.2m adjustment primarily related to deferred consideration fair value loss (H1 FY2021 benefitted from £0.9m fair value gain on investments).

 

Adjusted financial measures are presented to provide additional information to best represent the performance of the business. In particular:

· fundraising and acquisition costs of £1.1m (H1 FY21 £1.3m) include the fees relating to the fundraising from Santander in the period (see Net Debt section above) and the Saffrey Champness Fund Services Limited acquisition;

· non-recurring costs of £0.6m (H1 FY21 £0.7m) are one-off in nature and comprise reorganisation and office wind-down costs of £0.5m and professional fees of £0.1m;

· share based payment and LTIP charges primarily relate to share based schemes that were established at the time of the IPO; and

· discontinued business losses represent the loss from individual entities that have either been wound up in the year or management has concluded will be discontinued in the near future due to lack of productivity. This is a non-IFRS alternative financial measure.

 
 

Cashflow

 

 

 

 

6 months ended 31st Dec. 2021

6 months ended 31st Dec. 2020

 

£m

£m

Statutory cash expended from operations

(0.3)

(1.2)

Adjusting items

 

 

Fundraising & acquisition costs

1.1

1.3

Non-recurring costs

0.6

0.7

Unallocated Group expenses

-

0.1

Net cash generated from underlying operating activities

1.4

0.9

 

Net cash expended from operating activities improved to £(0.3)m from £(1.2)m in H1 FY21. On an underlying basis, net cash generated from operating activities increased from £0.9m (H1 FY21) to £1.4m.

The investment into the growth of the group has continued and net cash used in investing activities was £5.3m (H1 FY21 £5.7m).

Cash and cash equivalents at end of period were £11.3m (H1 FY21 £4.9m).

Dividend

The Group made a dividend payment for the financial year FY21 in January of 2022. The Group intends to repeat this approach in the current year and will pay a single dividend in respect of FY22 in January 2023. Per previous guidance, whereas the prior year dividend was in respect of the six-month period to June 2021, the payment for FY22 will be in respect of the full twelve-month period to June 2022. Going forward, and as communicated upon IPO, management is committed to a progressive dividend policy, which reflects the sustainable growth in the business.

Board

The Board of MJ Hudson was appointed prior to the Company´s admission to AIM, in December of 2019, and has been unchanged, since that date. Its composition satisfies the requirements for a company registered in Jersey, as well as its obligations under the AIM rules, and the guidance set out under the QCA code. The structure of the Board is reviewed on a continuing basis, both in this context and given its wider responsibilities. In a separate release today, we have announced, the appointment of former Senior Independent Director, Mr Geoffrey Miller, to the position of Non-Executive Chair of the Board, effective 1 May 2022, and the promotion of the COO, Mr Odi Lahav, to the position of Executive Director of the Board, subject to standard NOMAD due diligence. At the same time, Mr Charles Spicer, the current Chair, replaces Mr Miller as the Senior Independent Director and will chair the Remuneration Committee. These changes are consistent with the Company´s transformation since its admission to AIM, as demonstrated by these interim results, and with its high growth potential.

Current trading and outlook

The strong trading reported in the Group´s January update has continued in recent months. As a consequence, the Board expects to deliver growth for the full year to June 2022 at the upper end of market forecasts. Whilst significant investment will continue into areas of growth in FY23, it is expected that the following years will see margins increase, as the revenue mix shifts further towards Outsourcing and Data & Analytics and infrastructure projects complete.

12 April 2022

 

 

 

MJ HUDSON GROUP PLC

Consolidated statements of comprehensive income

 

Unaudited sixmonthsto

31December2021

Unaudited sixmonthsto

31December2020

(restated)

 

Note

£'000

£'000

Revenue

3

23,445

15,818

Directcostof sales

 

(6,308)

(4,647)

Othercostofsales

 

(1,052)

(345)

 

 

 

 

 

 

Grossprofit

 

16,085

10,826

Administrativeandotherexpenses

 

(17,585)

(13,680)

Otheroperatingincome

 

178

192

 

 

 

 

 

 

Operating loss

 

(1,322)

(2,662)

Financeexpense

 

(508)

(339)

Fairvaluemovements

 

(1,239)

460

 

 

 

 

 

 

Lossbeforetaxation

 

(3,069)

(2,541)

Tax benefit / (expense)

 

34

(43)

 

 

 

 

 

 

Lossfor the year

 

(3,035)

(2,584)

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

Equity holders of the parent

 

(3,046)

(2,584)

Non-controlling interest

 

11

-

 

 

 

 

Lossfortheperiod

 

(3,035)

(2,584)

 

 

 

 

Othercomprehensive income

 

 

 

Exchangedifferencesarising ontranslationofforeignoperations

 

(115)

(32)

 

 

 

 

 

 

Totalcomprehensivelossforthe period

 

(3,150)

(2,616)

 

 

 

 

 

 

 

Earnings per share attributable to the ordinary equityholdersoftheparent

 

 

 

Basicand diluted EPS

4

(0.02)

(0.02)

MJ HUDSON   GROUP   PLC

Consolidated statements of financial position

 

 

 

Note

Unaudited at31December

2021

Audited at30June

2021

 

 

 

£'000

£'000

 

ASSETS

 

 

 

 

Non-currentassets

 

 

 

 

Intangibleassets

 

49,731

46,935

 

Tangibleassets

 

2,193

2,067

 

Right-of-useasset

 

9,141

7,056

 

Investments

 

1,817

2,568

 

Other receivables

 

74

416

 

 

 

 

 

 

 

 

Totalnon-currentassets

 

62,956

59,042

 

Current assets

 

 

 

 

Tradeand otherreceivables

 

17,106

14,857

 

Income taxreceivable

 

  150

150

 

Cashand cashequivalents

 

11,325

9,785

 

 

 

 

 

 

 

 

Totalcurrentassets

 

28,581

24,792

 

 

 

 

 

 

 

 

Totalassets

 

91,537

83,834

 

 

 

 

 

 

 

 

LIABILITIESANDEQUITY

 

 

 

Non-current liabilities

 

 

 

 

Borrowings

 

23,469

16,658

 

Deferred consideration

 

5,899

5,120

 

Lease liabilities

 

8,770

6,377

 

Other payables

 

405

405

 

 

 

 

 

 

 

 

Totalnon-currentliabilities

 

38,543

28,560

 

Currentliabilities

 

 

 

 

Tradeand otherpayables

 

9,034

8,027

 

Income tax liabilities

 

125

396

 

Deferred tax liabilities

 

182

182

 

Borrowings

 

870

12

 

Deferredconsideration

 

6,933

8,556

 

Lease liabilities

 

1,046

897

 

 

 

 

 

 

 

 

Totalcurrentliabilities

 

18,190

18,070

 

Equity

 

 

 

 

Issuedsharecapital

 

-

-

 

Sharepremiumaccount

5

56,023

56,023

 

Owned shares

 

(982)

(928)

 

Otherreserves

6

3,517

2,828

 

Retained loss

 

(23,745)

(20,699)

 

 

 

 

 

 

 

 

Totalequity

 

34,813

37,224

 

 

 

 

 

 

 

 

Non-Controlling interest

 

(9)

(20)

 

 

 

 

 

 

 

 

Totalequity

 

34,804

37,204

 

 

 

 

 

 

 

 

Totalliabilitiesand equity

 

91,537

83,834

 

 

 

 

 

 

 

 

MJ HUDSON   GROUP   PLC

Consolidated statements of changes in equity

 

 

Share

Capital

Share

Premium

Owned

Shares

Other

Reserves

Retained

loss

 

Total

 

NCI

Totalequity

 

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

Balanceasat1July2020

 

-

 

55,527

 

-

 

509

 

(15,319)

 

40,717

 

-

 

40,717

 

Share basedpayments

 

-

 

-

 

-

 

2,446

 

-

 

2,446

 

-

 

2,446

 

Exerciseof options

-

(82)

236

(11)

-

143

-

143

 

Lossforthe period

-

-

-

-

(5,380)

(5,380)

(20)

(5,400)

 

Other comprehensive income

-

-

-

(116)

-

(116)

-

(116)

 

Sharesissued

-

578

-

-

-

578

-

578

 

Shares repurchased

-

-

(1,164)

-

-

(1,164)

-

(1,164)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance asat

30June2021

-

56,023

(928)

2,828

(20,699)

37,224

(20)

37,204

 

Share basedpayments

 

-

 

-

 

-

 

804

 

-

 

804

 

-

 

804

 

Lossforthe period

-

-

-

-

(3,046)

(3,046)

11

(3,035)

 

Other comprehensive income

-

-

-

(115)

-

(115)

-

(115)

 

Shares repurchased

-

-

(54)

-

-

(54)

-

(54)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance asat

31December2021

-

56,023

(982)

3,517

(23,745)

34,813

(9)

34,804

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MJ HUDSON   GROUP   PLC

Consolidated statements of cash flows

 

Un

 

31 Dec

audited sixmonthsto

ember2021

Unaudited six months to

31 December 2020

 

£'000

£'000

(Restated)

Cashflowsfromoperatingactivities:

 

 

Lossforthe financialperiod before taxes

(3,069)

(2,541)

Adjustmentsfor:

 

 

Depreciationandimpairmentoffixedassets and right-of-use assets

855

721

Amortisationandimpairmentofintangibleassets

882

618

Revaluationof investments

166

(842)

Fairvaluemovements

1,067

211

Sharebasedpayment

804

69

Netinterestpayable/(receivable)

508

510

Decrease/(increase)intradeandotherreceivables

(1,976)

(527)

Increase/(decrease)intrade andotherpayables

974

560

Foreignexchange

(344)

12

 

 

 

 

 

Cashfromoperations

(133)

(1,209)

Taxationpaid

(150)

-

 

 

 

 

 

Netcashusedfromoperatingactivities

(283)

(1,209)

 

 

 

 

 

Cashflowsfrom investing activities:

 

 

Purchasesoftangibleassets

(371)

(164)

Purchaseofintangibleassets

(1,516)

(205)

Purchaseof subsidiaryundertaking

(1,340)

(1,195)

Purchaseof financial instruments

(5)

(22)

Proceeds from sale of financial instruments

591

-

Paymentof deferredconsiderationrelated toacquisitions

(2,643)

(4,159)

 

 

 

 

 

Netcashusedininvestingactivities

(5,284)

(5,745)

 

 

 

 

 

Cashflowsfrom financingactivities

 

 

Interestpaid

(192)

(694)

Equitysubscriptionless associatedcosts

-

562

Owned shares purchased

(55)

(991)

Proceedsfromissueofbank loan

8,118

184

Repaymentof bank loan

(150)

(299)

Directorsloanrepaymentsinthe period

-

(18)

Paymentofleaseliabilities

(614)

(259)

 

 

 

 

 

Netcash (used in) / generatedfromfinancingactivities

7,107

(1,515)

 

 

 

 

 

Net increase in cash and cash equivalents

1,540

(8,469)

Cashand cashequivalentsatbeginningofperiod

9,785

13,388

 

 

 

 

 

Cashand cashequivalentsat end of period

11,325

4,919

 

 

 

 

 

Cashandcashequivalentscomprise:

 

 

Cashatbank andinhand

11,325

4,919

Bankoverdrafts

-

-

 

 

 

 

 

 

11,325

4,919

 

 

 

 

 

Notes totheinterimreport

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.

 

Correction of errors

Two errors have identified in relation to the interim results for the six months ended December 2020 (prior period) which have been corrected as prior year misstatements in these financial statements. They are described below:

 

Deferred consideration includes payments which is dependent upon the results of the acquired businesses and are accounted for at fair value through profit or loss. The fair value loss of £382,000 was previous

disclosed within Finance expenses in error and therefore have been reclassified as fair value movements in this financial information.

 

In considering the requirements for discontinued operations, individual entities were not significant enough to be considered discontinued operations in the prior period. The loss associated with these individual entities have been included within the respective lines of the prior period, revenue decreased by £86,000 and Administrative and other expenses increased by £344,000.

 

2.

BASIS OFPREPARATION

The financial information presented in this Interim Report has been prepared in accordance with International Financial Reporting Standards as adopted by the United Kingdom ("IFRS") that are expected to be applicable to the financial statements for the year ending 30 June 2022 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 (£'000), except when otherwise indicated.

 

The Interim Report covers the six months ended 31 December 2021 and was approved by the Board of Directors on 11 April 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 6 months ended 31 December 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 established reportable segments plus organic investments as follows:

 

· Advisory: the provision of legal and investment consultancy services for alternative asset management and investors across all areas of the alternative investment industry. This includes legal services to alternative asset managers, corporate entities and institutional investors to advise on M&A and establishing investment funds along with support for primary fund investments, co-investments and secondaries. This segment also includes consulting services and the provision of individual independent investment advisers and professional trustees to corporate pension schemes, local government pension schemes and charitable organisations.

 

· Outsourcing: a multi-service platform providing regulatory cover and support via a variety outsourced services to asset managers and advisers. This includes the provision of all key front, middle and back-office functions, including portfolio management, risk management, fund and corporate administration, accounting and fiduciary services and regulatory consulting.

 

· Data & Analytics: ESG advisory and retainer services, fund performance analytics , benchmarking services underpinned by data and software tools to support sustainable investment, risk monitoring and investor relations. These services are designed to help investor and asset manager clients make better strategic choices, improve investment performance and investor communications, and obtain better value from their service providers.

 

· Organic investments: incubated businesses form the organic investments business segment. This historically included three separate businesses including Luxembourg services, regulatory consulting team in London and international fund administration business. Previously, they have been presented separately from the other segments to increase the transparency of the profitability of the group before these activities. For the period ended 31 December 2021, these incubated businesses are reported in our Outsourcing division. There are no new Organic Investments in the period.

 

No operating segments have been aggregated to form the above reportable operating segments. Key management are the Chief Operating Decision Makers (CODM) and they monitor the operating results of the business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on adjusted operating profit or loss. The adjustments include organic investments, fundraising and acquisition costs, non-recurring items, unallocated central income / costs, and depreciation and amortisation. Unallocated central income / costs (Group income /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 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. Nonrecurring costs are one-off in nature such as office relocation costs, 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 depreciation and amortisation, 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.

 

 

Period ended

Advisory

Outsourcing

Data & Analytics

Segment total

Organic investments

Consolidated

31 December 2021

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Revenue

4,283

14,064

5,098

23,445

-

23,445

Direct cost of sales

-

(6,308)

-

(6,308)

-

(6,308)

 

 

 

 

 

 

 

Revenue less direct cost of sales

4,283

7,756

5,098

17,137

-

17,137

Other cost of sales

(270)

(294)

(488)

(1,052)

-

(1,052)

 

 

 

 

 

 

 

Gross profit

4,013

7,462

4,610

16,085

-

16,085

Administrative and other expenses

(4,005)

(6,626)

(3,445)

(14,076)

-

Other operating income

122

30

26

178

-

178

 

 

 

 

 

 

 

Segment profit/(loss)

130

866

1,191

2,187

-

2,187

 

 

 

 

 

 

 

Group expenses

 

 

 

 

 

-

Fundraising and Acquisition costs

 

Non-recurring costs

(644)

Depreciation and amortisation

 

 

 

 

 

 

 

 

 

Operating loss

 

 

 

 

 

(1,322)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance expenses

 

 

 

 

 

(508)

Fair value movements

 

 

 

(1,239)

Tax

 

 

 

 

 

34

 

 

 

 

 

 

 

 

Loss for the period

 

 

(3,035)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period ended

Advisory

Outsourcing

Data & Analytics

Segment total

Organic investments

Consolidated

31 December 2020

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

Revenue

4,995

3,263

2,749

11,007

4,811

15,818

Direct cost of sales

-

(741)

-

(741)

(3,906)

(4,647)

 

 

 

 

 

 

 

Revenue less direct cost of sales

4,995

2,522

2,749

10,266

905

11,171

Other cost of sales

(285)

-

(60)

(345)

-

(345)

 

 

 

 

 

 

 

Gross profit

4,710

2,522

2,689

9,921

905

10,826

Administrative and other expenses

(4,672)

(1,859)

(2,191)

(8,722)

(1,458)

Other operating income

155

20

5

180

3

183

 

 

 

 

 

 

 

Segment profit/(loss)

193

683

503

1,379

(550)

829

 

 

 

 

 

 

 

Group expenses

 

 

 

 

 

(95)

Fundraising and Acquisition costs

 

Non-recurring costs

(721)

Depreciation and amortisation

 

 

 

 

 

 

 

 

 

Operating loss

 

 

 

 

 

(2,662)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance expenses

 

 

 

 

 

(510)

Fair value movements

 

 

 

631

Tax

 

 

 

 

 

(43)

 

 

 

 

 

 

 

Loss for the period

 

 

(2,584)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The segment note for the period ended 31 December 2020 has been restated for results of entities that were previously considered to be part of discontinued operations. This is included above within Advisory segment (revenue of negative £82,000 and administrative expenses of £344,000).  

 

 

 

4.

EARNINGSPERSHARE(EPS)

 

 

 

Basic EPS is calculated by dividing the profit for the period attributable to ordinary equity holders of theparentbythe weighted average numberof ordinarysharesoutstandingduringthe period.

 

Diluted EPS is calculated by dividing the profit attributable to ordinary equity holders of the parent by theweighted average number of ordinary shares outstanding during the period plus the weighted averagenumber of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares intoordinaryshares.

 

Thefollowingtablereflectstheincomeand sharedataused inthebasicand diluted EPScalculations:

 

 

Unaudited six months to

31 December 2021

Unaudited sixmonthsto

31December2020

 

 

£'000

£'000

 

Lossfortheperiod attributabletoequity

holdersof theGroup

(3,046)

(2,616)

 

 

Thousands

Thousands

Weightedaveragenumber ofordinary

sharesforbasicEPS

170,964

169,766

 

 

 

 

 

Basicand diluted losspershare

(0.02)

(0.02)

 

 

 

 

 

 

The following instruments are not included in the diluted EPS calculation due as they would have an antidilutive effect on EPS. 

 

 

Unaudited sixmonthsto31December 2021

Unaudited sixmonthsto31December 2020

 

Number'000

Number'000

Shareoptions

16,342

14,197

 

 

 

 

 

Totalof antidilutiveinstrumentsnotincluded

16,342

14,197

 

 

 

 

 

 

5.

SHARECAPITALANDSHAREPREMIUM

 

 

 

Unaudited at31December

2021

Audited at

30June

2020

 

 

£'000

£'000

 

Share capital

 

 

 

Allotted,calledupandfullypaid

 

 

 

172,537,765OrdinarysharesinMJHudsonGroupplcat£nileach

(June 2021 - 172,537,765)

-

-

 

20,000 B Shares in MJH Group Holdings Limited at £0.01 each

(June 2020 -20,000)

-

-

 

 

 

 

 

 

 

Sharepremium

56,089

56,023

 

 

 

 

 

 

 

 

Owned shares

 

 

 

2,027,264 Ordinary shares in MJ Hudson Group plc at £nil each

(June 2021 - 1,881,658)

(991)

(928)

 

 

 

 

 

 

 

 

6.

OTHERRESERVES

 

 

 

 

Share basedpayment

reserve

Foreigncurrencytranslation reserve

 

 

Total otherreserves

Balance asat

1July2020

456

53

509

Sharebased payments

2,446

-

2,446

Exerciseof options

(11)

-

(11)

Currency translation adjustment

-

(116)

(116)

 

 

 

 

 

 

 

Balanceasat

30June2021

2,891

(63)

2,828

Sharebased payments

804

-

804

Currencytranslationadjustment

-

(115)

(115)

 

 

 

 

 

 

 

Balance asat

31December2021

3,695

(178)

3,517

 

 

 

 

 

 

 

 

 

 

7.

BUSINESSCOMBINATIONS

Acquisition of Saffery Champness Fund Services Limited

 

On 31 October 2021 the Group received full regulatory approval from the Guernsey Financial Services Commission in connection with its acquisition of 100% of Saffery Champness Fund Services Limited for £2,495,000, paid in cash, shares, and deferred consideration. It is a Guernsey based, fund administration business and its acquisition adds scale and expertise to the Group´s existing operations. The receipt of this approval was a key outstanding condition of the transaction, announced on 23 July of 2021. The business was subsequently renamed to MJ Hudson Fund Services Guernsey Limited.

 

The goodwill represents the experience and expertise of the staff of MJ Hudson Fund Services Guernsey Limited and non-contractual relationships. In calculating the goodwill arising on acquisition, the fair values of net assets of Saffery Champness Fund Services Limited 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.

 

 

 

 

 

Fairvalue

 

£'000

 

 

Tradeandotherreceivables

14

Contract assets

159

Cash and cash equivalents

260

 

 

 

Totalassets

433

 

 Tradeand otherpayablesduewithinoneyear

(333)

 

 

 

Netassets

100

Customer relationships

Goodwill

 

 

 

 

Totalpurchase consideration

 

2,495

 

 

 

   

 

Of the total consideration £1,600,000 has been settled in the period and the remaining £895,000 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.

POSTBALANCESHEETEVENT

 

 

In January 2022, the Group borrowed £3 million from Santander under the terms of the Uncommitted Facility. This was to provide additional working capital to fund accelerated investment into growth opportunities in ESG & Sustainability and the Group's Irish Super ManCo plus software and product development.

 

 

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