27 June 2024

TEAM plc

("TEAM " or the "Company ")

Interim Results

TEAM well-placed for International Growth on the back of Wealth exodus

TEAM plc (AIM: TEAM), the wealth, asset management and complementary financial services group, is pleased to announce its interim results for the six months to 31 March 2024.

Commenting on the results Mark Clubb, Executive Chairman of TEAM, said: "We have significant growth opportunities ahead. Britain has seen a material exodus of the wealthy following Brexit and tax reforms. According to a recent report* Britain will lose 9,500 millionaires this year, more than double the previous year and nearly seven times the number in 2022. Critically for TEAM, they are re-locating to cities where we are strong and can provide the financial advice and offshore services they require. This is therefore an important tail-wind as we expand our international platform servicing the financial needs of expatriates not just from Britain but from all nationalities. With AUM/A now close to 1 billion we are in a good position and will look to build on this during the reminder of the financial year and beyond." *Henley & Partners' "Private Wealth Migration Report 2024"

Financial Highlights

·    Revenues increased 116% to £4.1 million (HY 23: £1.9 million)

·    Loss before tax of £1.0m (HY 23: Loss £0.5m)

·    Group assets under management / advice up 87% to £916m (HY 23: £493m) with £97 million in model portfolios

·    Successful fund raise of £1.8 million: £1.3 million in new equity, £500,000 in a convertible loan note

Operational Highlights

·    Strategic focus on migrating assets under advice to assets under management, primarily through TEAM Multi Asset Portfolio Strategies (MPS), to drive future group profitability

·    Continued expansion of the number of financial advisors in the International division and targeting ex-pat professional clients working in Asia, Africa and the Middle East - team highly motivated to introduce clients to TEAM AM services

·    Strong growth in model portfolio AuM, up 372% to £97 million (Mar '23 £20 million), showing the benefits of vertical integration

·    Launch of unitised version in H2 24 key to unlocking Team International AuA for conversion into AuM at management fees of 0.5% - 1.5%

·    Excellent investment performance has underpinned positive response to models by advisers and their clients

·    Jersey advisory integration complete, launched in Guernsey in H2 24

Current trading

·    Stable start to the beginning of H2

·    Progressing advanced discussions with a strategic investor for additional funding and deeper collaboration

For further information, please contact:

About TEAM plc

TEAM plc is building a new wealth, asset management and complementary financial services group. With a focus on Jersey and International Finance Centres, the strategy is to build local businesses of scale around TEAM plc's core skill of providing investment management services. Growth will be achieved via targeted and opportunistic acquisitions, team and individual hires, collaboration with suitable partners, and by organic growth and expansion.

TEAM plc has three principal activities, Investment Management, Advisory, and International.

Investment Management provides discretionary investment management services, model portfolios, bespoke portfolios and fund management services via fixed income and equity fund vehicles. Total assets managed as at 30 September 2023 were £289 million (30 September 2022: £233 million).

Advisory - primarily for individuals resident in Jersey, investment consultancy services to wealthy individuals and trusts and treasury advisory service for institutions, professional advisers, trustees and high net worth individuals. Total assets advised on as at 30 September 2023 were £365 million (30 September 2022: £318 million).

International is the Group's financial advisory, fund distribution division and insurance brokering services covering Africa, the Middle East and Asia. Total assets advised on as at 30 September 2023 were £180 million (30 September 2022: £nil).

At 30 September 2023, the Group had 87 staff (30 September 2022: 33), with 52 in the UAE, 29 in Jersey, 3 in Singapore and 1 each in the UK, South Africa and Malaysia (30 September 2022: 32 in Jersey and 1 in the UK). There were also 10 self-employed advisers, 8 with BVI contracts and 2 in Jersey.

Executive Chairman's Statement

Dear Shareholders,

The six months leading up to the end of March 2024, were highly active. We completed the acquisition of Neba businesses on December 12, 2023, enhancing our international expansion. John Beverley, Neba's founder, is now CEO of our offices in Dubai, Abu Dhabi, Kenya, South Africa, Malaysia, and Singapore. He is also a substantial shareholder and between us we own 20% of the business.

At the start of the year, we focused on remediating the Globaleye businesses acquired in 2023. We are nearing the end of this process. Our recruitment efforts have intensified, beginning with the appointment of Bart Kendall as Managing Director for the Middle East and Will Price as Managing Director for Asia. The management structure is evolving positively.

We have new advisors set to join before the end of September. Our goal is to expand from around 70 advisors to over 100 within the next 12 months, with a promising pipeline already committed.

To meet cashflow requirements, we initiated a fund raise in March 2024, supported by our new Nomad, Strand Hanson, and brokers Oberon Capital. Despite challenging market conditions we successfully raised £1.8 million: £1.3 million in new equity at 20p and £500,000 in a convertible loan note from Harwood Capital.  Further details on funding requirements are set out in the Operational and Financial Review.

Since then, we are pleased to announce that we are in ongoing discussions with a strategic investor for additional funding and deeper collaboration. These talks underscore our commitment to securing partnerships that align with our long-term vision and capacity to deliver meaningful growth and value to shareholders. The potential investor is expected to bring both financial investment and strategic insights and expertise that will bolster our international market position and drive repeatable growth, although there is no guarantee that the discussions will lead to a successful conclusion. We remain dedicated to transparency throughout this process and look forward to updating shareholders on developments. This dialogue is a testament to the robust foundations we have built and our focus on future opportunities in the international financial services markets.

Our investment strategy focuses on migrating assets under advice to assets under management, primarily through TEAM Multi Asset Portfolio Strategies (MPS), which will drive future group profitability. The MPS Investment performance remains strong, and assets under management have grown to £97 million.

We hope that Neba Private Clients and Concentric Guernsey will be significant supporters of the TEAM MPS given its strong performance and anticipate funds to flow once the investment models are unitized, which we expect to be in Q4 2024. The UCITS unitization project will open new distribution channels, especially for the clients of our International advisers. Waystone in Dublin will handle the fund and trust administration.

We have historic annualized revenues now exceeding £9 million and approaching £1 billion in assets under advice/management, primarily in regions experiencing significant wealth growth and our clients typically have high disposable incomes.

We have significant growth opportunities ahead. Britain has seen a material exodus of the wealthy following Brexit and recent tax reforms. According to Henley & Partners' "Private Wealth Migration Report 2024," Britain will lose 9,500 millionaires this year, more than double the previous year and nearly seven times the number in 2022( www.henleyglobal.com ). Britain is second only to China for high-net-worth outflows. But it's not just the British and Chinese on the move. In 2024, a record 128,000 millionaires are expected to relocate, up from 120,000 in 2023 and 110,000 pre-pandemic in 2019.

Wealthy Britons and other nationalities are flocking to the UAE and Singapore as well as other favourable tax and investor-friendly regulation "Safe Haven's". These "Expats" or individuals living outside their native country are moving abroad temporarily or permanently for tax, work, lifestyle, retirement, or other reasons. This year, Singapore will gain 3,500 millionaires while the UAE welcomes 6,700. The UAE is rolling out the red carpet for the wealthy with a golden visa programme offering a 10-year renewable residence for a GBP500,000 property investment and no income, capital gains or inheritance taxes. The UAE now boasts 20 billionaires and 116,500 millionaires. Up and coming are Saudi Arabia, Malta, Mauritius, Monaco, Spain, France and New Zealand. All of them are projected to see net inflows of over 200 millionaires each in 2024.

The wealthy are all heading to regions where TEAM can cover their needs, they are going to require financial advice and offshore services, including asset and cash management, life insurance, tax and retirement planning, estate planning, mortgages and loans, property ownership advice, trusts and/or foundations and currency exchange.

I call these pools of expertise and services TEAM "castles", all focused on delivering strong, regulated financial services for global clients and locals, emphasizing continuity and expertise, ensuring strong client-advisor relationships and spanning borders and regulatory environments. These castles are growing in value, just on a replacement cost basis, let alone availability as jurisdictions tighten regulations and law. They have moats which are getting deeper and wider.

The TEAM strategy for growth? More castles and more advisers, with a focus on recruitment, which should deliver a growing base of clients with more disposable income.

Clients have strong relationships with their financial advisor and appreciate continuity in financial planning and investment strategies. By being part of a network, the advisor or client can maintain these relationships even if they move locations or switch firms within the network. Clients also have the security of being part of a London Stock Exchange listed "castle". For recruitment, few alternatives have the spread of network and are listed. That provides transparency, governance and security.

I remain confident in being able to achieve our short and longer-term prospects. Achieving breakeven remains the immediate aim alongside the goal of scalability and "escape velocity" targeting growing the business to £20 million in revenues, 30%+ EBITDA margin, and £4 billion in AUA/M.

Thank you.

Sincerely,

Mr J M Clubb

Executive Chair

26 June 2024

Operational and Financial Review

Review of the results for the period

The table below shows the Group's financial performance for the six months to 31 March 2024 along with prior comparative periods and provides a reconciliation to the underlying results, which the Company considers to be an appropriate reflection of the Group's underlying trading, and the statutory result.

The first six months of the financial year include a full contribution from Globaleye, acquired in June 2023, and a part contribution from Neba, acquired in December 2023. These acquisitions account for most of the changes from the previous interim results to March 2023.

Revenues increased 116% to £4.1 million from £1.9 million while the underlying loss before tax of the group was £1.0 million, an increase from a loss of £0.4 million. Underlying adjustments of £21,000, reflecting non-cash expenses, were down from £132,000.   The loss per share for the period was 3.5 pence (H1 23: 2.3 pence) and no dividend is recommended at this point in the Company's development (H1 23: nil).

Client assets

The table below shows the opening and closing client asset position and the movements during the period broken down by division.

*£55 million of client assets where an investment reporting service is provided have been excluded from the A&C total. 

Within the Investment Management division the model portfolios, now available on five investment platforms, increased from £20 million (H1 23) to £97 million. Material flows into the models are expected from our newly established Guernsey Advice operation, and as the portfolios become available in a single UCITS structure, where they become suitable for many of our International clients.

Revenues

Total revenues rose 116% to £4.1 million (H1 23: £1.9 million). Investment and fund management ("IFM") revenues rose 23% to £0.6 million, reflecting the higher yield on the incremental asset managed in the models and the 11% increase in AUM. Advisory and Consultancy ("A&C") revenues fell 36% to £1.0 million (H1 23: £1.6 million), primarily as there was a one-off settlement of £0.6 million received in the prior period. Excluding this item revenues were up 3%. International recorded its first H1 revenues of £2.5 million (H1 23: nil).

Costs

Direct costs, being the cost of commissions paid to International advisers, and the custody and trading costs incurred for certain clients in IFM, rose significantly from £0.2 million to £1.5 million. This is a feature of the International business model, where the self-employed adviser receive no or small salaries, and high commission shares on business written. The indirect cost, being primarily the costs of staff, office and technology, rose to £3.6 million, up 76% on H1 23. Of this increase of £1.6 million, £1.5 million was from International, with the costs across the rest of the group falling by 2% despite inflation running at over 7% in Jersey. This reflects the cost cutting measures taken in the consolidation of the A&C division (down 9%) and in IFM (down 12%).

Loss before tax

The resulting loss before tax for the half year was £1.0 million (H1 23: £0.5 million), with the underlying position a loss of £1.0 million (H1 23: £0.4 million)

The underlying adjustments are shown in the below table:

Adjustments to the statutory loss have been selected to give a more informative indication of the trading of the group.

Amortisation of client relationships was unchanged at £0.5 million. Acquisition related expenses incurred in the period were £52,000 (H1 23: nil). Changes in deferred consideration were £0.7 million (H1 23: £0.5 million) of which £0.5 million was from the fall in the value of the 3.2 million shares due to be issued for the consideration to acquire Neba, and £0.2 million from the fall in the expected revenue related deferred consideration for the Omega acquisition.

Segmental analysis

The Group operates in three divisions, supported by the PLC head office. International is a new division following the Globaleye and Neba acquisitions:

Taxation

Regulated financial services businesses in Jersey pay a flat corporation tax rate of 10%. The treasury services business is not regulated and has a nil tax rate. The International entities operate predominantly in nil corporation tax environments.

Earnings per share

The Groups underling loss per share was 3.5 pence, an increase of 52% from a loss per share of 2.3 pence in H1 23.

Financial position and going concern

The Group's cash position has increased from £0.9 million to £1.5 million. As at 31 March 2024 the regulated entities within the Group all held in excess of the required level of regulatory assets.

The Directors have prepared financial projections along with sensitivity analyses of reasonably plausible alternative outcomes, covering clients and assets, cost inflation and take up of group services. The forecasts demonstrate that the Directors have a reasonable expectation that the Group will require additional financial resources to meet working capital requirements and the cash-settled deferred consideration liabilities due in the financial year ending 30 September 2025. The requirement for additional fundraising has been highlighted as a feature of the business model for TEAM in the initial years on the business plan. The placing and subscription in May 2024, which raised £1.3 million and an additional £0.5 million via a convertible loan note, has enabled the business to recapitalise the Globaleye entities and top up the regulatory capital of the nine regulated entities. Further external funding will be required to see the business through to a cash flow positive state and to fund all deferred consideration payments and the Board is in advanced discussions with various parties to provide such funding.  The track record of TEAM in fund raising from the current and potential shareholder base, and the ongoing funding discussions, gives the Board sufficient confidence to consider the going concern basis to be appropriate for the accounts. 

Dividend

The Group is at the early stages of building the business, and so is consuming capital. No dividends are expected to be paid until underlying profits are made.

Mr M C Moore

CFO and COO

26 June 2024