Annual Report and Accounts 
2016
Harwood Wealth Management Group plc Annual Report and Accounts 2016 Harwood Wealth is the parent 
company of a leading UK-based 
financial planning and discretionary 
wealth management group, focused 
on the provision of investment advice, 
management and administration 
to our clients through a vertically-
integrated model. Highlights
For more information
www.harwoodwealth.co.uk/
investor-information/
INTRODUCTION
Highlights  01
At a Glance  02
Chairman’s Statement  04
STRATEGIC REPORT
Market Environment  08
Our Business Model  10
Our Strategy 12
Questions and Answers  
with joint CEOs, Neil Dunkley  
and Alan Durrant  14
Financial Review  18
The Principal Risks to  
Achieving our Strategy 20
GOVERNANCE
Board of Directors  24
Corporate Governance 26
Directors’ Report 30
FINANCIAL STATEMENTS
Independent Auditor’s Report 34
Consolidated Statement  
of Comprehensive Income 36
Consolidated Statement  
of Financial Position 37
Consolidated Statement  
of Changes in Equity 38
Consolidated Statement  
of Cash Flows 39
Notes to the Financial 
Statements 40
Company Statement  
of Financial Position 66
Company Statement  
of Changes in Equity 67
Notes to the Company 
Financial Statements 68
Company Information 73
Financial Highlights
• Assets under influence (AUI) up 75% to £2.1bn  
(2015: £1.2bn)
• Revenue up 47% to £11.6m (2015: £7.9m) of which  
more than 75% is recurring
• Gross margin of 61% (2015: 56%)
• Adjusted EBITDA* is up 42% to £2.7m (2015: £1.9m)
• Net cash generated by operations of £2.4m  
(2015: £1.8m) and total cash balances at the period  
end of £10.5m (2015: £3.9m)
• Seventeen acquisitions completed during the period  
for an aggregate consideration of £11.7m (or 1.9% of AUI)
• Launch of own investment platform in partnership  
with AJ Bell
• IPO on AIM in March 2016 raising £10m of capital  
before expenses
*  Earnings before interest, taxation, depreciation and amortisation (EBITDA) is a non  
IFRS measure which the Group uses to assess its performance. 
*  Adjusted EBITDA is earnings before interest, taxation, depreciation, amortisation  
and exceptional costs.
Gross margin  
61%
(2015: 56%)
Revenue  
+47%
£11.6 million (2015: £7.9 million),  
75% recurring
AUI  
+75%
£2.1 billion (2015: £1.2 billion)
2016
2015
£2.1bn
£1.2bn
2016
2015
£11.6m
£7.9m
2016
2015
61%
56%
01
Overview Governance Financial Statements Strategic Report At a Glance
Who we are
Headquartered in Waterlooville 
(Hampshire), Harwood Wealth 
Management Group was created by 
bringing together Compass Wealth 
Management Group, which was 
founded in 2001 by Neil Dunkley and 
Mark Howard, and Wellian Investment 
Solutions, led by Alan Durrant.
What we do
Through our FCA-regulated entities 
and our vertically integrated model, 
we offer a broad range of wealth 
management and financial planning 
services to mass affluent retail 
investment and corporate clients, 
including investment management, 
pension and retirement planning, 
inheritance planning, life cover  
and family protection. In addition, 
we offer Discretionary Investment 
Management services, the Wellian 
investment administration platform 
and operate the Discovery range  
of Multi Manager Funds, which 
supports our investment 
management offering to our clients.
We currently have in excess of 
£2.1bn of assets under influence.
Where we 
operate
We operate a centralised, scalable 
infrastructure from our Waterlooville 
headquarters, supporting multiple 
offices, predominantly throughout  
the South of England.
Our approach
The majority of our 83 FCA-regulated 
financial advisers are self-employed, 
and are remunerated based on a share 
of the annual fee income that they 
generate. The Group is supported by  
a team of more than 50 investment 
management, operations, compliance 
and IT infrastructure staff.
Our acquisition 
model
Historically the majority of our growth 
in client assets has arisen through 
acquisition, with 53 financial services 
businesses acquired to 31 October 
2016. We adopt a formulated and 
structured approach to acquisitions, 
focusing on small to medium-sized 
financial advisory and wealth 
management businesses with between 
£10 million and £100 million of AUI. 
We intend to continue to pursue this 
acquisition-led strategy, supplemented 
with organic growth from referrals and 
marketing initiatives.
Harwood Wealth Management Group is a leading financial planning 
and discretionary wealth management firm. We have grown by 
applying our simple and scalable, acquisition-led model.
We adopt a 
formulated and 
structured approach 
to acquisitions, 
focusing on small 
to medium-sized 
financial advisory 
and wealth 
management 
businesses with 
between £10 million 
and £100 million  
of AUI.
+£2.1bn
assets under 
influence
Harwood Wealth Management Group plc Annual Report 2016
02 Our key strengths
For more information on how we leverage our key strengths to generate value, see Our Business Model on page 10.
Vertically 
integrated 
business
Diversified 
revenue stream
Substantial 
acquisitive and  
organic growth 
opportunities
Scalable 
infrastructure
Award-winning 
investment 
management 
team
Excellent cash 
generation
Robust 
regulatory 
systems  
and controls
Experienced 
Board and  
senior 
management 
team
Strong track 
record of 
growth
Overview Governance Financial Statements Strategic Report
03 Chairman’s statement
We are using the proceeds of our IPO to pursue our proven strategy. 
Our increased scale enhances our ability to grow, both organically 
and through our successful, acquisition-led model.
Strategy
This is my first full year statement 
following our listing on AIM in March 
2016. I am delighted to report on a 
year of achievements for the Group, 
not least of which was the IPO.  
We are using the net proceeds of this 
judiciously to build shareholder value 
by furthering our clear, consistent  
and well-managed strategy namely  
to grow our business by acquiring 
likeminded firms, integrate them 
successfully and provide innovative 
investment solutions for clients. 
Network Direct Limited (NDL) is a 
good example of this and with c.100 
advisers is a larger acquisition than  
we would have been able to make 
historically. We have received consent 
from the FCA to acquire NDL and 
anticipate the acquisition will be 
complete by March 2017.
We have also enjoyed organic growth. 
Our registered individuals are not only 
growing in number, but their per 
capita production is increasing as a 
result of organic opportunities that 
have presented themselves in the 
market, notably pension freedoms 
legislation. This has been a great boost 
to the advisory industry as larger 
numbers of investors are considering 
their retirement more seriously, both  
in terms of asset accumulation and 
also taking advice close to the point  
of decumulation.
We believe that our rigorous, vertically 
integrated process, coupled with our 
high quality investment management, 
delivers good quality client outcomes 
in an efficient manner. Prospective 
vendors feel confident selling to us, 
because they know their clients will  
be treated fairly.
The confidence we have seen  
from shareholders and the market 
underlines our view that our model – 
and sticking to our model – works, 
which is in line with what we told the 
market at the time of the IPO. We are 
excited to be taking the business to 
the next stage of its development.
Performance
2016 was a successful year for the 
Group. We added 17 acquisitions,  
and delivered an adjusted EBITDA of 
£2.7 million (2015: £1.9 million). Assets 
under influence (“AUI”) increased to 
£2.1bn (2015: £1.2bn) and we estimate 
that about two thirds of this increase 
is attributable to acquisitions and one 
third is from organic growth. The net 
cash generated by operating activities 
was £2.4m (2015: £1.8m) closely 
matching EBITDA. 
Performance has been delivered 
against a favourable market backdrop. 
Post the Retail Distribution Review 
(RDR) we see a continued appetite for 
small and medium sized enterprises in 
the financial services sector to seek 
buyers – and if anything, we have  
seen an acceleration in the interest  
of people wishing to sell. We have 
stuck rigidly to our model, with the 
businesses we choose not to acquire 
almost as notable as those that we do!
In addition to the higher demand  
for advisory services from pension 
reforms mentioned above, the market 
itself has been very buoyant. The 
quality of our investment processes 
has delivered good performance 
through uncertain times.
Peter Mann
Chairman
We believe that 
our simple, clear 
strategy, combined 
with the proven 
capabilities of the 
Company, will 
enable Harwood 
Wealth Management 
Group to continue to 
deliver value to our 
stakeholders in the 
current year  
and beyond.
Harwood Wealth Management Group plc Annual Report 2016
04 People
Our team has worked hard to deliver 
this robust financial performance, 
which is very much underpinned  
by our strong corporate culture  
and commitment to great client 
outcomes. Testament to the quality  
of the management team is that they 
were not distracted by the IPO process,  
with the financial results through  
that period largely uninterrupted.  
On your behalf and that of the Board,  
I wish to formally record our thanks.
Board changes
The Board was strengthened at  
IPO by the appointment of two new 
Non-executive Directors, Christopher 
Mills and Paul Tuson, both of whom 
bring a wealth of relevant experience. 
Nick Bravery was also appointed to  
the role of Chief Financial Officer in 
October 2016. The strength of our 
Board has been praised by the market 
as one of the most experienced and 
industry recognised in our arena. This 
is particularly notable for a business  
of our size.
Dividend
The Board is recommending a final 
dividend of 2.00 pence per share 
subject to shareholder approval at  
the Company Annual General meeting 
on 19 April 2017. The final dividend will 
be paid on 12 May 2017 to shareholders 
on the register at the close of business 
on 28 April 2017.
Outlook
We believe that our simple, clear 
strategy, combined with the proven 
capabilities of the Company, will enable 
Harwood Wealth Management Group 
to continue to deliver value to our 
stakeholders in the current year  
and beyond. The value from recent 
acquisitions will contribute to our 
results in our 2017 financial year,  
and we will continue to seek to add 
further client books to our stable. As 
for external factors, we await greater 
clarity on Brexit and its implications  
for the regulatory imperatives the 
financial services sector will face  
but are confident that whatever the 
outcomes our clients will still require 
good quality financial advice.
We go into the year with a good 
degree of confidence, a very sound 
business, and look forward to 
capitalising on further opportunities  
for growth. 
Peter Mann
Chairman
The confidence 
we have seen 
from shareholders 
and the market 
underlines our view 
that our model – 
and sticking to our 
model – works, 
which is in line with 
what we told the 
market at the time 
of the IPO.
05
Overview Governance Financial Statements Strategic Report Harwood Wealth Management Group plc Annual Report 2016
06 Strategic Report
Market Environment  08
Our Business Model  10
Our Strategy 12
Questions and Answers with joint  
CEOs, Neil Dunkley and Alan Durrant  14
Financial Review  18
The Principal Risks to  
Achieving our Strategy 20
Governance Strategic Report Overview Financial Statements
07 Market Environment
The need for advice is increasing and 
several fundamental trends are driving 
consumers’ need for financial advice:
Ageing population
The requirement for financial  
advice is supported by favourable 
demographics, as individuals enjoy 
higher life expectancy than previous 
generations. Those approaching or  
in retirement are of a cohort with 
substantial personal wealth, 
accumulated in an era of generous 
employer pension contributions and 
rising house prices. Total investable 
assets of the UK population are 
estimated to total approximately  
£3.5 trillion. These have grown  
steadily, and are forecast to reach 
around £4 trillion by 2018
1
.
Pension freedoms
In April 2015, pension reforms were 
introduced that aimed to provide  
those approaching retirement with 
greater flexibility in when and how  
they use their pension pots. Previously, 
pensioners over the age of 75 were 
required to purchase annuities, and 
their pension funds were therefore  
lost to the investment industry. 
Pensioners now have the option of 
remaining invested during retirement 
and, in so doing, continue to generate 
investment, advice and administration 
fees for wealth management 
professionals. Statistics from the 
Association of British Insurers for  
the year to April 2016
2
 show:
• £4.2 billion was invested in 80,000 
annuities, with an average fund  
of £52,500.
• £6.1 billion was invested in 90,700 
drawdown products, making  
the average fund invested  
nearly £67,500.
Increasing need for financial  
self-reliance
Historically, individuals were able to 
rely on the government and employers 
to provide their pensions. As the State 
Pension Age has been pushed back 
and defined benefit schemes have 
become a thing of the past, society has 
had to become increasingly self-reliant, 
with private provision for retirement 
and care costs becoming a major 
consideration in financial planning.
Low interest rates
Against a backdrop of a sustained 
period of low interest rates, clients  
are requiring greater guidance to 
generate returns on their savings  
and investments.
There have been major structural 
changes to the provision of 
advice
At the same time that these demand 
dynamics have been at work, the firms 
supplying financial services have faced 
new challenges. At the forefront of 
these has been the regulatory 
environment, notably the Retail 
Distribution Review (RDR).
Historically, the majority of investment 
distribution in the UK was through  
a combination of smaller advisory  
firms and the advisory arms of larger 
organisations such as banks, building 
societies and insurers. Typically 
advisers were paid for their services  
via commission from the providers  
of the products they recommended. 
Consumers therefore did not pay for 
the advice directly. This approach  
was not transparent for consumers, 
however, as it was unclear whether 
they were receiving impartial advice  
or simply being sold the product  
which paid the highest commission  
to the adviser.
We see sound long-term prospects for investment management and financial 
advisory services, underpinned by structural forces that are driving demand, 
as well as shaping the provision of advice.
Pensioners now 
have the option of 
remaining invested 
during retirement 
and, in so doing, 
continue to generate 
investment, advice 
and administration 
fees for wealth 
management 
professionals.
Harwood Wealth Management Group plc Annual Report 2016
08 Effective from 1 January 2013, the  
RDR aimed to improve professional 
standards within the intermediary 
sector, introducing greater clarity 
between the different types of service 
available, and making the charges 
associated with advice and services 
clearer. Changes included the manner 
in which regulated financial and other 
advisers are remunerated, the minimum 
levels of qualification required to be 
obtained by regulated financial advisers 
and the minimum level of regulatory 
capital they must maintain.
This drive to higher standards, has, 
however, contributed to a reduction  
in adviser numbers
3
. Many larger 
institutions, such as banks and 
insurance companies, exited the 
market, leaving a fragmented base  
of smaller advisory firms. As at 31 
December 2015, there were 14,491 firms 
offering financial advice as their main 
regulated activity registered with the 
FCA, with an average of 4.5 advising 
staff per firm
3
. 
The end of commission paid by 
product providers to advisers (which  
is how many people had previously 
paid for their advice), has also 
contributed to a reported ‘advice  
gap’ for customers who seek to make 
investments but who do not access 
advice for reasons including cost, trust 
or awareness of the benefits of advice
4
. 
Concerns over this led to HMRC and 
the FCA launching the Financial  
Advice Market Review in August 2015. 
Published in March 2016, the report  
set out 26 recommendations aimed  
to stimulate the development of a 
market that provides affordable and 
accessible financial advice and 
guidance for everyone at all stages  
of their lives. The FCA is working with 
HM Treasury to develop an appropriate 
baseline and indicators to monitor the 
development of the advice market.
Further changes to the sector may 
result from the FCA’s investigation  
into competition in the asset 
management industry, whose results 
are due for publication in early 2017. 
The Asset Management Review is 
examining fees and profitability in  
asset management, as well as the 
investment consulting market.
Aside from the regulatory landscape, 
technology is another factor driving 
change in the sector. Solutions such  
as ‘robo advice’ are being launched  
by some firms to cater for clients 
currently falling in the ‘advice gap’, 
whereby consumers are offered 
risk-related portfolios, but without  
a full discretionary service.
All of these developments contribute 
to a favourable environment for 
acquisitions in the regulated financial 
advisory sector. In 2015, 124 mergers 
took place in the sector, an increase 
from 83 the previous year
5
, and it  
was reported that up to one third of 
regulated financial advisers would 
consider selling their book
6
. Many  
small advisers and wealth managers 
lack the scale to continually invest  
in the information technology, 
compliance and operational support 
needed in order to remain in business. 
These factors, coupled with the 
increase in the minimum capital reserve 
requirements for advisory firms, leave 
the sector well positioned for further 
consolidation and rationalisation.
The Financial Adviser Market: 
In Numbers, APFA, March 2016
2011 40,467
Other
Bank/Building Society
Financial Adviser
Mid 2012 35,073
31.12.12 31,010
10.01.14 31,220
31.10.14 31,153
Number of advisers
Many small 
advisers and 
wealth managers 
lack the scale to 
continually invest 
in the information 
technology, 
compliance and 
operational support 
needed in order to 
remain in business.
1
  Ernst & Young, IFG Capital Markets Day 
Presentation, September 2015
2
  ABI pension freedom statistics – one year 
on factsheet, 15 August 2015
3
  The Financial Adviser Market: In Numbers, 
APFA, March 2016
4
  FT Adviser, 19 July 2016 (“FCA admits 
RDR contributed to advice gap”)
5
  FT Adviser, 10 August 2016 (“The surge in 
wealth managers”)
6
  FT Adviser, 20 November 2015 (“One third 
of regulated financial advisers consider 
selling over age and risk”)
Governance Strategic Report
09
Overview Financial Statements Our track record of generating value for our different stakeholders is built  
upon our proven, acquisition-focused, vertically integrated business model  
and leveraging our centralised, scalable infrastructure.
Our Business Model
What we do
We focus on the provision of financial 
advice to mass affluent clients (with 
£200,000 to £500,000 of liquid 
financial assets), and corporate 
clients. We operate a vertically-
integrated model, comprising advice, 
investment management and an 
administration platform:
•  Advice and arrangement 
Pensions, savings, investment  
and life insurance related advice.
•  Management 
Investment management and multi-
manager unit trust Discovery range  
of funds, as well as portfolio 
management services for  
external advisers.
•  Administration 
An investment fund platform with 
service and technology outsourced 
to another provider.
How we do it
•  Centralised, scalable infrastructure 
supporting local offices throughout 
the South of England.
•  Centralised investment research, 
allowing us to benefit from scale  
and provide disciplined investment 
management to both internal and 
external clients.
• c.80 FCA-regulated financial advisers.
•  Proven acquisition-based growth 
model, targeting small to medium-
sized financial advisory and wealth 
management businesses with between 
£10 million and £100 million of AUI.  
We also consider larger opportunities 
should they arise, and this has been 
demonstrated by the announced 
acquisition of Network Direct Limited 
with AUI of £1.0bn. Typically we 
acquire client lists and the recurring 
income from targets’ pools of client 
portfolios, such that newly acquired 
clients become clients of our existing 
FCA-regulated financial advisers.
What sets us apart
•  Vertically integrated model provides 
scope to capture a greater share of 
available fees and enables more 
consistent and improved service levels, 
resulting in enhanced client retention.
•  As a listed, well-funded business 
vendors have great transparency 
about our ability to complete a deal. 
Potential vendors are also attracted  
by our high quality advice, investment 
management and administration 
offering and what this offers to  
their clients.
What sets us apart
•  Scalable infrastructure from which 
to support further AUI and AUM 
growth without the need to incur 
significant additional capital or 
operating expenditure; 
•  Robust regulatory systems  
and controls.
Harwood Wealth Management Group plc Annual Report 2016
10 How we  
generate value
•  Fees for the provision of financial 
planning services and for the related 
management and platform 
administration of client funds; most 
fees are recurring. 
•  On an ongoing basis each client has 
three advisory options, with 
incremental annual fees payable 
according to the level of service 
required. Additional fees for 
investment management services  
are charged on a percentage basis.
•  Corporate clients pay fees according 
to the number of employees.
•  Wellian generates revenues from fees 
from portfolio management services 
provided to external advisers.
•  The Wellian Platform charges fees  
for the administration and hosting  
of investment assets.
•  The majority of growth in client assets 
has been achieved by acquisition.
Outcomes
For clients
Investment performance 
Excellent service
For shareholders
Strong cash generation 
Track record of profitable growth
For financial advisers
Centralised infrastructure  
and compliance 
Competitive remuneration
For employees
Attractive career prospects 
Competitive remuneration and benefits
What sets us apart
•  Diversified revenue stream with high 
proportion of recurring revenues; 
•  Award-winning investment 
management team with a strong 
record of investment performance; 
•  Experienced Board and senior 
management team;
•  Substantial growth opportunities 
from operating in a fragmented 
industry undergoing structural 
change.
Harwood Wealth Management 
Group currently has in excess of 
£2.1bn 
of assets under Influence.
As a listed, well-funded business vendors have great 
transparency about our ability to complete a deal. 
Governance Strategic Report Overview Financial Statements
11 Our Strategy
Our focus on creating long-term value for clients and shareholders translates into  
core strategic objectives relating to organic growth, acquisitions and efficiency.
Our objectives Organic growth – existing clients Organic growth – new clients
What this 
means
Growth from existing clients 
accumulating and inheriting 
wealth, and from increasing 
the proportion of their wealth 
that we manage.
Growth from existing FCA-
regulated financial advisers 
seeking to grow their 
individual practices.
Growth from other regulated 
financial advisers approaching 
us to seek assistance in 
supporting their own clients.
How we do this By building long-term, trusted 
relationships with existing 
clients, we are their first port of 
call for additional requirements 
for financial advice, investment 
management and 
administration services.
We have also historically 
achieved growth by 
reactivating dormant clients 
from the client lists of 
businesses we have acquired.
By offering a broader range of 
products and services we can 
capture revenue that would 
otherwise have gone to 
external providers.
By driving word-of-mouth 
referrals and local marketing 
initiatives to benefit from 
inbound enquiries as more 
individuals seek financial 
advice, and to attract 
additional regulated financial 
advisers to the Group.
We will also seek to attract 
further external advisers to  
our portfolio management 
services with articles in trade 
publications and a dedicated 
sales and marketing team.
Harwood Wealth Management Group plc Annual Report 2016
12 Our objectives Growth from acquisitions Efficiency in operations
What this 
means
Growth from business  
or share purchases.
Efficiency through operating 
leverage from our size and 
scalable infrastructure, 
enabling good client outcomes, 
investment, enhancing 
productivity and allowing 
competitive pricing.
How we do this We target small to medium-
sized financial advisory  
and wealth management 
businesses with between  
£10 million and £100 million  
of AUI. We have acquired 53 
businesses to date.
Our reputation as a cash buyer 
attracts prospective vendors, 
directly, or via personal or 
professional networks. 
Professional brokers are the 
primary source of deals.
By integrating acquisitions 
into our centralised 
infrastructure we generate 
better outcomes for clients 
and efficiencies through our 
size, scale, locations and 
expertise.
Use of our own investment 
administration platform allows 
us to capture revenues that 
might otherwise be paid to 
insurance or platform 
providers, and to assist in 
delivering a high quality 
solution to clients at a 
competitive price.
We have two proprietary 
processes to assist with fund 
selection and asset allocation, 
intended to simplify the 
process for regulated financial 
advisers and to provide a 
decision making audit trail.
See pages 20 and 21 for details of the principal risks to achieving our strategy.
Governance Strategic Report
13
Overview Financial Statements Questions and Answers with joint CEOs,  
Neil Dunkley and Alan Durrant
Q. 
Why does the Group have joint Chief Executives,  
and how do you divide responsibilities?
A. 
Alan: Really it’s for operational reasons. Neil and I both have more than 
twenty years of experience in our respective fields. We both know quite a 
lot about each other’s areas, too: Neil has been very successful in the investment 
management area through his work with in-house investment solutions, and I’ve 
been successful in the distribution area with Hargreaves Landsdown and Skandia 
– so we can provide challenge and support to each other. Ultimately we have an 
experienced distribution and advice man in Neil and an investment man in myself, 
running our individual parts of the businesses.
Q. 
 
What was the rationale for the IPO, and how will the proceeds be used?
A. 
Alan: We came to market for a number of clearly defined reasons: the 
primary one was to provide the business with capital to continue with our 
already successful history of acquisitions. There are also ancillary benefits to being 
a listed business in terms of the visibility and transparency for our various 
stakeholders, whether clients, advisers or potential vendors.
Q. 
 
How did the Group perform in 2016?
A. 
Neil: We are pleased to report revenue growth of 47% during the period, 
driven in part by organic growth but primarily through the completion of 
17 acquisitions which added approximately £616m of AUI. Total AUI at 31 October 
2016 was £2.1bn (2015: £1.2bn) including £693m (2015: £276m) assets under 
management (AUM). Adjusted EBITDA grew by 42% to £2.7m (2015: £1.9m).  
The adjusted EBITDA per share of 5.55 pence (2015: 4.68 pence) increased  
by 19% compared with 2015.
Q. 
 
What were your highlights of the year?
A. 
Neil: The IPO was clearly a highlight of the year, as was implementing  
all of the things we said we would do during the listing process. All of the 
acquisitions we have completed have been embedded into the business and have 
contributed to assets under management and profits.
A. 
Alan: Another key highlight of the year was the launch of our own 
investment platform in partnership with AJ Bell. This was the result of  
an extensive selection and implementation process and allows us to offer our 
clients and advisers the opportunity to use an in-house solution from which we 
also generate incremental revenue that otherwise would go to a third party. It’s 
about providing clients with something that they need to have anyway but, rather 
than having to use another external provider’s platform, we can offer them 
something which is at least as good but probably cheaper. When we find a way  
of raising our revenues, cutting our costs and delivering added value to our 
clients it feels like a classic win-win for all.
Alan Durrant
Joint CEO
We came to market 
for a number of 
clearly defined 
reasons: the primary 
one was to provide 
the business with 
capital to continue 
with our already 
successful history  
of acquisitions.
Adjusted EBITDA
+42%
2016
2015
£2.7m
£1.9m
Our Joint Chief Executive Officers Neil and Alan look back on a milestone  
year for the Group, and give their views on the opportunities that lie ahead.
Harwood Wealth Management Group plc Annual Report 2016
14 A. 
Neil: A key achievement is that we have created a vertically integrated 
business. We started, pre listing, with a business that was wholly 
focused on distribution and advice. Post listing, we have a business that is 
advice-driven but with a discretionary investment management function  
and also a range of unitised managed funds, adding to the stable of products 
that we can offer to our advisers.
Q. 
What have been the principal developments in the market,  
and how have these impacted performance?
A. 
Neil: One of the principal drivers for us has been the way in which the 
market has been consolidating, and the opportunities that have arisen 
from that. It’s presented to us a number of willing sellers, and we’ve been able  
to use the proceeds from the IPO to capitalise on that. RDR (the Retail 
Distribution Review), which came out in 2013, was the catalyst for a lot of 
consolidation in the market, because business models and revenue streams  
had to change. Post listing we have been able to accelerate our strategy by 
buying slightly larger businesses than we would have had the opportunity to  
do previously. There have been other changes, in terms of capital adequacy 
requirements, for example, which has made trading for small and medium 
advisory businesses a lot harder. Faced with so many opportunities we have  
to look at prospective acquisitions in a lot of detail, to make sure they fit with  
the culture of the business and are economically attractive.
A. 
Alan: The outcome of the Brexit referendum could have been a challenge 
for us but in fact has had no impact whatsoever so far. We didn’t see 
people holding out for the outcome of the referendum. Unlike some firms, we 
chose not to take people into cash. On the day of the referendum result we didn’t 
have clients panicking or selling, and since then equity and bond markets have 
been strong. The weakness in the pound has helped us. In general, the investment 
returns enjoyed by our clients have been good at a time when returns on cash are 
tiny, if anything. From an acquisitions perspective, we asked the businesses we 
were talking to in the run up to the EU referendum whether their motivations for 
selling had changed, and none had. People tend to want to sell either for reasons 
of lifestyle, i.e. they want to retire, or for deep structural reasons, whether it be to 
do with technology, compliance or capital adequacy, which means they can’t 
carry on as smaller business in the way they would like to. Neither of these 
motivations are impacted by Brexit.
A. 
Neil: Another key development is the pension freedoms. Previously,  
when clients retired, they were required to buy an annuity and no longer 
needed advisory services once that was in place. Today, that same client may still 
have an annuity or partial annuity, but is probably going to go into some sort of 
income solution where they want their money to be managed and to take advice 
for decades to come. For us, this is probably the most important structural 
change for a very long time.
Neil Dunkley
Joint CEO
One of the  
principal drivers 
for us has been the 
way in which the 
market has been 
consolidating, and 
the opportunities 
that have arisen 
from that.
Adjusted EBITDA  
per share
+19%
2016
2015
5.55p
4.68p
Governance Strategic Report
15
Overview Financial Statements Q. 
How would you summarise the firm’s primary objective and 
the strategic priorities to achieve this?
A. 
Alan: The principal opportunity is to buy really nice businesses at really 
nice prices. That has been, and remains, our strategy. Beyond just buying 
businesses we are a vertically integrated business, providing on-going advice, 
investment management and a platform, and we’re not looking to make the 
business much more complicated than that. There will be some additional products 
and services, but this business is driven by doing the simple stuff really well.
A. 
Neil: As Alan says, we are capitalising on the acquisition opportunities, 
we are integrating the businesses into our centralised process, whether 
that be platform or investment. Our ultimate drive is to give clients better 
outcomes from our size, our scale, from our geographic locations and our 
centralised investment expertise. Giving clients better outcomes creates 
shareholder value.
For the future, we’d like to continue with what we’ve been doing, carry on making 
selected acquisitions, making sure all the different parts of the business are 
integrated well, and creating better outcomes for clients. We’re not looking to 
reinvent the wheel. We’ve done pretty well historically, we’d like to carry on doing 
that, but adding to it.
Historically we have been based between the south coast and the M4 Corridor. 
Our geographical spread is widening, and will inevitably change as a natural 
consequence of the acquisition opportunities we face. We have announced the 
acquisition of Network Direct Ltd, which when completed will increase our scale 
and widen our geographical footprint significantly, to become nationwide. 
A. 
Alan: Organic growth will be driven by factors such as the pension 
freedoms we mentioned earlier, as there is a greater need for advice. 
Pension advice used to be pretty straightforward: you’d save and save, you’d 
take your pot and annuitise it, and that was it. Today the rules are a lot more 
complicated, the consequences of misunderstanding those rules are a lot more 
serious, and the options people have are far broader, therefore the need for 
advice has never been greater.
A. 
Neil: This is a really good time for a financial services distribution 
company and investment management business. As Alan said, the need 
for what we do has never been greater. The number of CF30 function IFAs has 
reduced quite significantly over the years, but the requirement for those people 
has increased. It puts us in a really good place, to be running a business like this 
at the moment.
For prospective 
vendors, the fact 
we have cash is a 
very big advantage 
for us. And the fact 
that we’ve been 
doing this for a long 
time: if you are in 
our catchment area 
and are seriously 
looking to sell your 
business, chances 
are you’re going  
to come and speak 
to us.
Alan Durrant
Questions and Answers with joint CEOs,  
Neil Dunkley and Alan Durrant continued
Harwood Wealth Management Group plc Annual Report 2016
16 Q. 
 
What do you see as the firm’s sources of competitive advantage?
A. 
Alan: Whether it be for advisers, clients or those looking to sell their 
business, a key strength is that we are simple, transparent people to 
deal with – we are a straightforward business. 
For prospective vendors, the fact we have cash is a very big advantage for  
us. And the fact that we’ve been doing this for a long time: if you are in our 
catchment area and are seriously looking to sell your business, chances are 
you’re going to come and speak to us.
When it comes to the advice and investment management side of things, again  
I’d point to the simplicity of the offering, to the competitive charging of the 
offering, but also the element of control the client has over what they pay for.  
In most advisory businesses there is one model: here’s what you pay per annum 
for your advice if you’ve got differing levels of assets. Basically, if you’re rich you 
pay more; you end up with a much bigger service, whether or not you want it,  
and have to pay for that. We very much believe in offering choice, however.  
If you want lots of help because your circumstances are more complicated, or 
simply because you want more hand holding, you can be on a proposition where 
you pay more. If you want a relatively light touch that’s fine, whether you have a 
lot of money or not. That is a key differentiator. People don’t feel they are being 
shoehorned into one solution just because they have a lot or a little money.
A. 
Neil: The success of our approach is evident in our client outcomes.  
In a year of significant market volatility caused by Brexit, Trump, China 
and oil, clients invested in our managed portfolios have seen strong returns. This 
is due to the robustness of our investment process and the highly experienced 
team of dedicated investment professionals who manage portfolios for internal 
and external clients.
Q. 
 
What is the outlook for the next 12 months?
A. 
Neil: We are a business that operates in asset markets, so we face the 
same challenges faced by all businesses that operate in asset markets. 
There are some key events coming up, the unwinding of Brexit, interest rate hikes, 
inflation increases and all those sorts of things. To us, they create opportunities  
as well as threats. If things like changes in government legislation confuse us, 
they’ll confuse our clients. When our clients are confused they’ll need help that 
they are willing to pay for.
For the future, we’d 
like to continue 
with what we’ve 
been doing, carry 
on making selected 
acquisitions, 
making sure all the 
different parts of 
the business are 
integrated well, 
and creating better 
outcomes for 
clients. We’re not 
looking to reinvent 
the wheel.
Neil Dunkley
Governance Strategic Report
17
Overview Financial Statements £284m of the growth in AUM is attributable to the acquisition of 
Wellian Investment Solutions, a discretionary fund and investment 
manager, with the balance of £133m representing the capture of 
assets previously external to the Group (another key element to  
the Group’s strategy).
Revenue
Group revenue for the financial year 
ended 31 October 2016 increased  
by 47% to £11.6m (2015: £7.9m) of 
which approximately 75% is recurring. 
The growth was driven by the  
following factors:
• the full-year effect of acquisitions 
completed in the previous  
financial year
• the partial effect of acquisitions 
completed in this financial year
• the growth in assets under 
management
• new business derived from  
acquired client portfolios
• the increase in the number  
of financial advisers
• the movement in market asset 
values
Gross margin
The gross margin increased to 61% 
(2015: 56%) as a result of the higher 
levels of acquisition activity in the year 
and because there were no material 
changes to individual financial adviser 
commission arrangements. Gross profit 
grew by 58% to £7.1m (2015: £4.5m).
Operating expenses 
The total operating expenses of the 
business increased to £6.3m (2015: 
£3.2m). These included the exceptional 
costs associated with the admission  
to AIM, the additional running costs 
associated with being a publicly listed 
company, and the costs associated with 
the acquisitions, in particular Wellian.
Profitability
The primary measure of profitability  
in the sector is adjusted EBITDA, being 
earnings before interest, taxation, 
depreciation and amortisation and 
exceptional costs. Adjusted EBITDA  
for the period showed growth of 42% 
to £2.7m (2015: £1.9m).
Profit before tax for the period was 
£371,000 (2015: £1,150,000) after the 
£336,000 (2015: nil) of exceptional 
costs of the IPO and acquisition costs, 
and £1,581,000 (2015: £596,000) of 
depreciation and amortisation costs.
Financial advisers and staff 
headcount
The number of financial advisers 
(employed and self-employed) 
increased by five to 83 and staff 
headcount grew to 92 incorporating  
11 staff from the Wellian transaction.
Acquisitions
The Group completed 17 acquisitions 
during the period of which 12 were 
asset acquisitions and 5 were share 
acquisitions. The total aggregate 
consideration of £11.7m comprises 
£4.5m paid in cash on completion, 
£2.6m paid by the issue of shares,  
and discounted deferred consideration 
of £4.6m.
Nick Bravery
Chief Financial Officer
Financial Review
The Group 
completed 17 
acquisitions 
during the period 
of which 12 were 
asset acquisitions 
and 5 were share 
acquisitions.
It is pleasing that AUI has grown by 75% to £2.1bn (2015: £1.2bn) and AUM by 151% to 
£693m (2015: £276m). It is estimated that two thirds of this growth has been achieved 
through the successful implementation of the acquisition strategy and one third 
through organic growth. 
Gross Profit
+58%
2016
2015
£7.1m
£4.5m
Harwood Wealth Management Group plc Annual Report 2016
18 Adjusted EBITDA (adjusted to 
exclude exceptional costs of the 
IPO and acquisition costs)
Adjusted EBITDA for the period  
was £2.7m, and an increase of 42% 
over the previous period (2015: £1.9m). 
As a consequence of the Group’s 
accelerated acquisition growth 
strategy, amortisation costs increased 
significantly to £1.6m (2015: £0.6m)  
as did the amortised finance costs  
to £0.5m (2015: £0.1m).
Earnings per share
Basic earnings per share for the year 
ended 31 October 2016 was 0.24p 
(2015: 2.16p) based on a weighted 
average of 49,242,615 shares  
(2015: 40,000,000).
Adjusted EBITDA per share
The Adjusted EBITDA per share, for the 
year ended 31 October 2016, was 5.55p 
(2015: 4.68p).
Dividends
The Board is proposing a final dividend 
of 2.00p per share for 2016, which is 
subject to shareholder approval at the 
AGM on the 19 April 2017, which will be 
paid to shareholders on 12 May 2017 
based on the register of shareholders 
at close of business on 28 April 2017.
Cash position
The Group had cash balances of 
£10.5m at 31 October (2015: £3.9m). 
Net cash generated by financing 
activities in the period was £8.6m 
(2015: net cash used £1.1m).
The Group had discounted deferred 
consideration commitments of £5.4m 
at 31 October (2015: £1.6m).
Financial position
The Group has generated strong 
cashflow from operations which is 
expected to continue into 2017. These 
cashflows, together with available cash, 
ensure the Group is in a robust financial 
position from which to continue its 
strategy to grow the business both 
organically and through acquisition in 
the next trading period.
Post-period end 
Network Direct Ltd
On the 30 August 2016 the Company 
announced the acquisition of Network 
Direct Ltd subject to Financial Conduct 
Authority approval. This approval was 
received on 13 December 2016 and  
the Board expect this acquisition to 
complete by March 2017. The total 
consideration is £4m of which £1m  
is payable at completion, with the 
balance based on performance of NDL 
over the next five years. NDL has a 
network of 107 financial advisers with 
assets under influence of £1bn. 
WT Financial Ltd
The Company agreed, subject to the 
Financial Conduct Authority approval 
which was received on 13 December 
2016, to acquire the entire share capital 
of WT Financial Ltd for a total 
consideration of £315,000 of which 
£157,500 is payable at completion,  
with the balance based on future 
revenue over the next two years.  
WT Financial has £16m of assets  
under influence. This acquisition  
was completed on 19 January 2017.
Current trading
Early indications are that the new 
financial year has started strongly.  
AUI is also performing well, and 
coupled with the recent rise in market 
asset values reinforces the confidence 
expressed earlier by the Chairman.
Nick Bravery
Chief Financial Officer
Revenue
£11.6m
(2015: £7.9 million)
2013
2014
2015
2016
£4.6m
£6.0m
£7.9m
£11.6m
Governance Strategic Report
19
Overview Financial Statements Risk Management
We have a formal risk management framework that provides a structured process for identifying, assessing and 
managing risks associated with the Group’s business objectives and strategy. The principal risks outlined below  
are those deemed most likely to impact our strategy, and are 
Business and Strategic Risks
Risk Description Key mitigators Trend
Underperformance Volatility in capital markets may 
adversely affect trading activity and/
or the value of the Group’s assets 
under administration or management, 
from which we derive revenues.
• Diversified range of flexible 
investment products, designed  
to deliver value to clients in all  
market conditions
• Investment model with explicit  
risk parameters
Growth through 
acquisition
Our ability to identify suitable targets 
and execute transactions is not 
assured. 
Expansion of the business may place 
additional demands on the Group’s 
management, administration and 
infrastructure, and may call for 
additional capital expenditure.
• Risk appetite set by the Board
• Rigorous process for screening 
prospective targets
• Independent legal, accounting  
and regulatory due diligence  
where appropriate
• Track record of successfully 
integrating businesses and  
treating clients fairly
Regulatory change Changes to the regulatory framework 
may impact our ability to grow.
• Regular updates provided to the 
Board on the status and potential 
impact of imminent regulatory 
changes
• Active dialogue with regulators  
and industry bodies
• Business model that is responsive  
to prospective regulatory changes
The Principal Risks to Achieving our Strategy
The Board has ultimate responsibility for setting our risk appetite and ensuring there 
is an adequate and appropriate risk management framework in place.
Harwood Wealth Management Group plc Annual Report 2016
20 Operational Risks
Risk Description Key mitigators Trend
Ability to attract 
and retain key 
people
Loss of key management or other  
key personnel (including regulated 
financial advisers) could have adverse 
consequences for the Group’s 
performance.
• Equity ownership among Directors
• Competitive remuneration structure
• Attractive working environment
Business continuity 
and disaster 
recovery
A physical event or system failure 
could impair our ability to perform 
core business activities.
• Disaster recovery and business 
continuity plans, both for the  
Group and key suppliers
Client privacy,  
data protection  
and online security
We may be subject to IT security 
breaches or collusion to defraud, 
launder money or other illegal 
activities.
• Anti money laundering procedures
• Processes to protect against fictitious 
transactions or collusions
Misconduct We are exposed to the risk of being 
bound to transactions exceeding 
authorised risk limits, unsuccessful 
transactions being concealed, or the 
misuse of confidential information, 
resulting in regulatory sanctions.
• Rigorous internal risk management 
processes
• Professional indemnity insurance
• Restrictive covenants to protect 
against the risk of former employees 
and/or self-employed advisers taking 
clients with them
Nick Bravery
Chief Financial Officer
Governance Strategic Report
21
Overview Financial Statements Harwood Wealth Management Group plc Annual Report 2016
22 Governance
Board of Directors  24
Corporate Governance 26
Directors’ Report 30
Governance Report
This section provides information about our Board,  
sets out our corporate governance approach and  
gives details of our Directors’ remuneration
Overview Governance Strategic Report Financial Statements
23 Peter Mann (58)
Non-executive Chairman 
Peter was appointed Vice Chairman 
of Old Mutual Wealth following  
his time as Managing Director  
UK, when the Skandia businesses 
merged in 2012 to form Old Wealth 
Mutual. Prior to that was CEO of 
Skandia UK, the UK’s largest retail 
platform, overseeing rapid growth 
over a five year period. Before 
joining Skandia in 2008 as Chief 
Development Officer, Peter was 
CEO of Bankhall, a leading supplier 
of support services to financial 
advisers. In this role Peter was an 
active member of the AIFA panel, 
lobbying the FSA, Ombudsman, 
product providers and other market 
participants, as well as regularly 
being a spokesperson on industry 
panel debates. Prior to this Peter 
was an independent financial 
adviser in Glasgow and held senior 
roles in sales and distribution  
at Scottish Amicable and  
Prudential respectively. 
Neil Dunkley (43)
Joint Chief Executive Officer 
Neil was one of the co-founders  
of Compass Wealth Management 
Group (now Harwood Wealth) and 
has been instrumental in leading 
and growing the Group since its 
inception. He continues to be 
responsible for overall business 
direction, setting strategies and, 
together with joint CEO Alan 
Durrant, leads the senior 
management team. His entire  
career has been devoted to the 
financial advisory industry where  
he has accumulated 18 years’ 
experience. Neil qualified as a 
financial adviser in 1998 and went 
on to become one of the most 
successful advisers in Prudential’s 
high net worth division. He left 
Prudential in 2001 in order to 
co-found the Company. 
Alan Durrant (45)
Joint Chief Executive Officer 
Alan joined Wellian following its 
acquisition by Harwood Capital  
in May 2015. He was formerly the 
Group Chief Investment Officer  
at The National Bank of Abu  
Dhabi (NBAD), Head of Asset 
Management at Gulf Finance House 
and Chief Investment Officer at 
Skandia Investment Management 
where he won best Multi-Manager  
at the Money Marketing Awards for 
three consecutive years. Previously 
to that Alan was at Hargreaves 
Lansdown for 12 years, latterly  
as Investment Director. 
Board of Directors
The Group’s co-founding Directors, Mark Howard and Neil Dunkley, have spent their careers in the financial 
advisory sector and they remain fully committed as Executive Directors. Their experience is complemented by 
Alan Durrant’s investment management background and Nick Bravery’s financial and general management track 
record. The non-executive directors – Peter Mann, Christopher Mills and Paul Tuson – add a considerable wealth 
of financial services, investment and listed company experience. The Board believes that this combination of 
skills and knowledge provides the Group with leadership necessary to achieve the Company’s strategy of 
profitable growth.
Brief biographical details of the Directors are set out below.
Harwood Wealth Management Group plc Annual Report 2016
24 Mark Howard (44)
Chief Commercial Officer
Mark is a law graduate and 
postgraduate in Financial 
Decision Analysis. Mark 
qualified as a financial 
adviser in 1997 working  
for the high net worth 
division of Prudential. 
Mark was a co-founder  
of Compass Wealth 
Management Group  
(now Harwood Wealth). 
As well as having Board 
responsibility for the 
acquisition strategy  
of the Group, Mark also 
has oversight of legal  
and compliance matters. 
Nick Bravery (58)
Chief Financial Officer
Nick’s professional life 
began at Unilever Plc in 
1977 where he held various 
financial positions and 
qualified as an Associate 
of the Chartered Institute 
of Management 
Accountants in 1984. He 
subsequently joined the 
Automobile Association  
in 1988 to broaden his 
experience in general 
management roles that 
included leading a 
successful start-up 
business. In 2000 he 
became the AA’s Director 
of Business Services,  
a position he held until 
2003. He then moved into 
Financial Services with 
Simplyhealth, becoming 
the Director of Customer 
Service until 2009 and  
the Finance Director of 
P&I Ltd from 2010 to 2014, 
prior to joining the 
Company in 2014.
Christopher Mills (64)
Non-executive Director 
Christopher founded 
Harwood Capital 
Management in 2011,  
a successor from its 
former parent company  
J O Hambro Capital 
Management, which he 
co-founded in 1993. He  
is investment manager  
of North Atlantic Smaller 
Companies Investment 
Trust plc and is a non-
executive director of 
several companies. 
Christopher was a director 
of Invesco MIM, where  
he was head of North 
American investments  
and venture capital, and  
of Samuel Montagu 
International.
Paul Tuson (50)
Non-executive Director 
Paul is a qualified 
chartered accountant, 
with over twenty years’ 
post-qualification 
experience, who has 
served as CFO or Finance 
Director for numerous 
companies in the media 
and technology industries. 
Most recently, he served 
as CFO of Lombard Risk 
Management plc, one of 
four AIM-listed companies 
for which he has held this 
position. He previously 
served as Finance Director 
for Aspire Technology Ltd 
which was sold to Synnex 
Corporation, and has 
overseen two IPOs. His 
career began with seven 
years of public accounting 
experience at KPMG. 
Overview Governance Strategic Report Financial Statements
25 Corporate Governance
The Directors intend to take account of the requirements of the Corporate Governance Code (“the Code”)  
to the extent they consider it appropriate and having regard to the Company’s size, Board structure, stage  
of development and resources. 
The Company holds regular Board meetings. The Directors are responsible for formulating, reviewing and 
approving the Company’s strategy, budget and major items of capital expenditure. 
The Company’s shares are listed on the AIM markets and are subject to the AIM Admission Rules of the London 
Stock Exchange and consequently are not required to comply with the provisions or report in accordance with  
the UK Corporate Governance Code (the Code) issued by the Financial Reporting Council. However, the Board  
is committed to the principles of corporate governance covering leadership, effectiveness, accountability, 
remuneration and shareholder relations as outlined in the Code. The Directors have applied the Code as far  
as is practicable and appropriate for a public company of the Group’s size.
Corporate Governance
Chairman’s Introduction to Governance
“We understand the importance of sound corporate governance and of adopting 
the principles of good governance across the business. We aim to maintain 
an efficient and effective management framework that enables long-term, 
sustainable growth for our shareholders.”
Peter Mann
Chairman
Harwood Wealth Management Group plc Annual Report 2016
26 The main principles of the code are: 
Leadership
• Every company should be headed by an effective 
board which is collectively responsible for the 
long-term success of the company. 
• There should be a clear division of responsibilities at 
the head of the company between the running of the 
board and the executive responsibility for the running 
of the company’s business. No one individual should 
have unfettered powers of decision.
• The chairman is responsible for leadership of the 
board and ensuring its effectiveness on all aspects  
of its role.
• As part of their role as members of a unitary board, 
non-executive directors should constructively 
challenge and help develop proposals on strategy.
Effectiveness
• The board and its committees should have the 
appropriate balance of skills, experience, 
independence and knowledge of the company  
to enable them to discharge their respective duties 
and responsibilities effectively.
• There should be a formal, rigorous and transparent 
procedure for the appointment of new directors to 
the board.
• All directors should be able to allocate sufficient  
time to the company to discharge their 
responsibilities effectively.
• All directors should receive induction on joining  
the board and should regularly update and refresh 
their skills and knowledge.
• The board should be supplied in a timely manner  
with information in a form and of a quality 
appropriate to enable it to discharge its duties.
• The board should undertake a formal and rigorous 
annual evaluation of its own performance and that  
of its committees and individual directors.
• All directors should be submitted for re-election  
at regular intervals, subject to continued  
satisfactory performance.
Accountability
• The board should present a fair, balanced and 
understandable assessment of the company’s 
position and prospects.
• The board is responsible for determining the nature 
and extent of the principal risks it is willing to take in 
achieving its strategic objectives. The board should 
maintain sound risk management and internal control 
systems.
• The board should establish formal and transparent 
arrangements for considering how they should apply 
the corporate reporting and risk management and 
internal control principles and for maintaining an 
appropriate relationship with the company’s auditors.
Remuneration
• Executive directors’ remuneration should be 
designed to promote the long-term success of the 
company. Performance-related elements should be 
transparent, stretching and rigorously applied.
• There should be a formal and transparent procedure 
for developing policy on executive remuneration and 
for fixing the remuneration packages of individual 
directors. No director should be involved in deciding 
his or her own remuneration.
Relations with shareholders
• There should be a dialogue with shareholders based 
on the mutual understanding of objectives. The 
board as a whole has responsibility for ensuring that 
a satisfactory dialogue with shareholders takes place.
• The board should use general meetings to 
communicate with investors and to encourage  
their participation.
Source: Financial Reporting Council –  
The UK Corporate Governance Code April 2016
Overview Governance Strategic Report Financial Statements
27 Board of Directors
The Board consists of seven Directors including the 
Chairman. The Board meets at least four times a year 
and has full and timely access to all the relevant 
information to enable it to carry out its duties. The 
Board monitors and reviews the Group’s progress 
towards its goals and the implementation of its strategy, 
leaving the day-to-day operations to the Executive 
Directors and management.
The Board has access to its advisers and the Company 
Secretary to keep up to date with corporate governance 
matters and to ensure that relevant rules and 
regulations are followed.
Board Committees
The Board has delegated specific responsibilities to  
the Audit and Remuneration Committees. The Board 
believes that all members of each committee have  
the appropriate experience without having conflicts  
of interest.
Audit Committee
The Audit Committee comprises Paul Tuson (Chairman), 
Christopher Mills and Peter Mann. It meets at least  
twice a year and is responsible for ensuring that the 
financial performance of the Group is properly recorded 
on and monitored on a regular basis. This includes 
reviews of the annual and interim accounts, results 
announcements, internal control systems and 
procedures and accounting policies.
The Audit Committee has responsibility for 
recommending the appointment of the external auditor. 
It will review the cost effectiveness, independence,  
and objectivity of the current auditors.
During the period RSM UK Audit LLP were appointed  
as auditors for the Group. RSM Corporate Finance LLP 
were appointed as the Independent Reporting 
Accountant for the Admission to AIM.
Remuneration
The Remuneration Committee comprises Christopher 
Mills (Chairman), Peter Mann and Paul Tuson. It meets 
at least twice a year and is responsible for determining 
the Group’s policy on the remuneration of the 
Executive Directors. It is also responsible for making 
any recommendations for the introduction of share 
options schemes and long term incentive plans for  
the Executive Directors. 
Details of the Directors’ remuneration are disclosed  
in the notes to the accounts.
Internal control
The Board is responsible for ensuring there is an 
adequate system of internal control and reviewing its 
effectiveness. The system is intended to mitigate risk  
to an acceptable level. These internal controls include 
controls over financial, operations and compliance risk 
factors. The Board is satisfied that the current level of 
internal control meets the current needs of the Group 
maintaining risk exposure to an acceptable level.  
The Board recognises that as the Group develops  
the internal controls should be reviewed and where 
necessary enhanced to ensure the risk exposure does 
not exceed the Board’s risk appetite.
Financial reporting
Financial reporting procedures have been established 
so that the Board has access to reliable and timely 
financial reports on a monthly and quarterly basis. 
Financial reporting includes monitoring performance 
against budgets, forecasts, and prior year results as  
well as cash flow forecasts.
Corporate Governance continued
Harwood Wealth Management Group plc Annual Report 2016
28 Corporate responsibility
Employees – the Group believes in equal opportunities 
and people’s development. The Group policy is to 
appoint staff entirely on the basis of merit, and fully  
in accordance with current legislation.
Anti-bribery – the Group operates zero tolerance 
towards bribery.
Legislative compliance – the Group complies with  
all relevant legislation
Financial Conduct Authority – the Group’s subsidiaries 
that are directly authorised and regulated by the FCA 
comply with the relevant rules and guidelines in all 
material respects.
Relations with shareholders
The Group provides up to date information to its 
shareholders through market announcements and copies 
of all results and announcements are available online at 
www.harwoodwealth.co.uk
Investor presentations are also available for potential and 
current shareholders to attend.
Shareholders receive at least 21 days’ notice of the 
Annual General Meeting. This represents an important 
opportunity for shareholders to meet with the Board of 
Directors. The AGM is scheduled for 19 April 2016 at 3pm 
at the office of Harwood Capital LLP at 6 Stratton Street 
London W1J 8LD.
Overview Governance Strategic Report Financial Statements
29 The Directors present their annual report and financial statements for the year ended 31 October 2016.
Principal activities
The Group’s principal activity is the provision of financial advice and investment management to the retail market.
Directors
The Directors who held office during the period and up to the date of signing these financial statements were:
Executive Directors 
Neil Dunkley Joint Chief Executive Officer
Alan Durrant Joint Chief Executive Officer
Mark Howard Chief Commercial Officer
Nick Bravery Chief Financial Officer Resigned 5 February 2016 and re-appointed  
6 October 2016
Non-executive Directors
Peter Mann Non-executive Chairman
Christopher Mills Non-executive Director Appointed 29 March 2016
Paul Tuson Non-executive Director Appointed 29 March 2016
To read all of our Directors’ biographies, see pages 24 and 25.
Results and dividends
The results for the year are set out on pages 36 to 39.
An interim dividend was paid on 16 November 2015 (prior to the IPO) amounting to £354,000. The Directors 
recommend the payment of a final dividend of 2.00p (£1,111,779) making a dividend for the year of £1,465,779.
Future Developments
Full details of future developments can be found in the Chairman’s statement on pages 4 to 5 and further details  
in note 31.
Directors’ indemnity
The Group maintains Directors’ and Officers’ liability insurance which gives cover against legal action that may  
be taken against them.
Risks
The principal risks of the Group are included in the Strategic Report on pages 20 and 21.
Directors’ Report
Harwood Wealth Management Group plc Annual Report 2016
30 Statement of Directors’ responsibilities
The Directors are responsible for preparing the Strategic Report, Directors’ Report and the Group and Company 
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Company financial statements for each financial year. 
The Directors are required by the AIM Rules of the London Stock Exchange to prepare the Group financial 
statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European 
Union (EU) and have elected to prepare the Company financial statements in accordance with United Kingdom 
Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law).
The Group financial statements are required by law and IFRS adopted by the EU to present fairly the financial 
position and performance of the Group; the Companies Act 2006 provides in relation to such financial statements 
that references in the relevant part of that Act to financial statements giving a true and fair view are references to 
their achieving a fair presentation.
Under company law the Directors must not approve the financial statements unless they are satisfied that they  
give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group  
for that period.
In preparing each of the Group and Company financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state for the Group financial statements whether they have been prepared in accordance with IFRSs as  
adopted by the EU, and for the Company financial statements state whether applicable UK accounting 
standards have been followed subject to any material departures disclosed and explained in the Company 
financial statements; and 
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the  
Group and the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the 
Group’s and the Company’s transactions and disclose with reasonable accuracy at any time the financial position  
of the Group and the Company and enable them to ensure that its financial statements comply with the Companies 
Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the 
assets of the Group and the Company to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included 
on the www.harwoodwealth.co.uk website. Legislation in the UK governing the preparation and dissemination of 
financial statements may differ from legislation in other jurisdictions.
Auditors
RSM UK Audit LLP were appointed auditors of the Group during the previous financial year.
Statement of disclosure to Auditors
So far as each person who was a Director at the date of approving this report is aware, there is no relevant audit 
information of which the Company’s auditors are unaware. Additionally, the Directors individually have taken all the 
necessary steps that they ought to have taken as Directors in order to make themselves aware of all relevant audit 
information and to establish that the Company’s auditors are aware of that information.
On behalf of the Board
Neil Dunkley
Joint Chief Executive Officer 
Overview Governance Strategic Report Financial Statements
31 Harwood Wealth Management Group plc Annual Report 2016
32 Financial 
Statements
Independent Auditor’s Report 34
Consolidated Statement  
of Comprehensive Income 36
Consolidated Statement  
of Financial Position 37
Consolidated Statement  
of Changes in Equity 38
Consolidated Statement  
of Cash Flows 39
Notes to the Financial Statements 40
Company Statement  
of Financial Position 66
Company Statement  
of Changes in Equity 67
Notes to the Company  
Financial Statements 68
Company Information 73
Overview Governance Strategic Report Financial Statements
33 Independent Auditor’s Report
Opinion on financial statements
We have audited the group and parent company financial statements (“the financial statements”) on pages 36 to 72. 
The financial reporting framework that has been applied in the preparation of the group financial statements  
is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The 
financial reporting framework that has been applied in the preparation of the parent company financial statements  
is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting 
Practice), including FRS 101 “Reduced Disclosure Framework”.
In our opinion:
• the financial statements give a true and fair view of the state of the group’s and parent company’s affairs  
as at 31 October 2016 and of the group ‘s profit for the year then ended;
• the group financial statements have been properly prepared in accordance with IFRSs as adopted by the  
European Union;
• the parent company financial statements have been properly prepared in accordance with United Kingdom 
Generally Accepted Accounting Practice; and
• the financial statements have been prepared in accordance with the provisions of the Companies Act 2006.
Scope of the audit of the financial statements 
A description of the scope of an audit of financial statements is provided on the FRC’s website at  
www.frc.org.uk/auditscopeukprivate.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which 
the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report  
to you if, in our opinion:
• adequate accounting records have not been kept, or returns adequate for our audit have not been received  
from branches not visited by us; or
• the parent company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Harwood Wealth Management Group plc Annual Report 2016
34 Respective responsibilities of directors and auditor 
As explained more fully in the Directors’ Responsibilities Statement set out on page 31, the directors are responsible 
for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our 
responsibility is to audit and express an opinion on the financial statements in accordance with applicable law  
and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing 
Practices Board’s (APB’s) Ethical Standards for Auditors.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the 
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those 
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent 
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s 
members as a body, for our audit work, for this report, or for the opinions we have formed.
Geoff Wightwick (Senior Statutory Auditor) 
for and on behalf of RSM UK Audit LLP, Statutory Auditor  
Chartered Accountants
Portland 
25 High Street 
Crawley 
West Sussex 
RH10 1BG
Overview Governance Strategic Report Financial Statements
35 Note
2016
£’000
2015
£’000
Revenue 4 11,605 7,932
Cost of sales (4,513) (3,464)
Gross profit 7,092 4,468
Administrative expenses (5,940) (3,193)
Exceptional items 5 (336) –
Operating profit 7 816 1,275
Investment income 11 18 24
Finance costs 12 (463) (149)
Profit before taxation 371 1,150
Income tax expense 13 (253) (285)
Profit and total comprehensive income for the  
year attributable to equity owners of the parent 118 865
pence pence
Earnings per share
Basic and fully diluted 15 0.24 2.16
The income statement has been prepared on the basis that all operations are continuing operations.
Consolidated Statement of Comprehensive Income 
 for the year ended 31 October 2016
Harwood Wealth Management Group plc Annual Report 2016
36 Company Registration No. 04987966
Note
2016
£’000
2015
£’000
Non–current assets
Intangible assets 16 14,749 4,712
Property, plant and equipment 17 20 17
14,769 4,729
Current assets
Trade and other receivables 20 621 275
Cash and cash equivalents 10,526 3,903
11,147 4,178
Total assets 25,916 8,907
Current liabilities
Trade and other payables 23 3,879 1,608
Accruals and deferred income 341 183
Current tax liabilities 882 278
Borrowings 21 – 12
5,102 2,081
Net current assets 6,045 2,097
Non–current liabilities
Trade and other payables 23 2,219 479
Deferred tax liabilities 25 1,266 383
3,485 862
Total liabilities 8,587 2,943
Net assets 17,329 5,964
Equity
Called up share capital 27 139 100
Share premium account 15,541 3,979
Retained earnings 1,649 1,885
Total equity attributable  
to the owners of the parent 17,329 5,964
The financial statements were approved by the Board of directors and authorised for issue on 23 January 2017. 
Signed on its behalf by:
Neil Dunkley, Director
Consolidated Statement of Financial Position 
as at 31 October 2016
Overview Governance Strategic Report Financial Statements
37 Consolidated Statement of Changes in Equity 
 for the year ended 31 October 2016
Attributable to the  
owners of the parent
Note
Share 
capital
£’000
Share 
premium 
account
£’000
Retained 
earnings
£’000
Total
£’000
Balance at 1 November 2014 100 3,979 1,818 5,897
Year ended 31 October 2015:
Profit and total comprehensive  
income for the year – – 865 865
Dividends 14 – – (798) (798)
Total transactions with owners  
recognised directly in equity
– – (798) (798)
Balance at 31 October 2015 100 3,979 1,885 5,964
Year ended 31 October 2016:
Profit and total comprehensive  
income for the year – – 118 118
Issue of share capital 27 39 12,558 – 12,597
Dividends 14 – – (354) (354)
Costs of share issue – (996) – (996)
Total transactions with owners  
recognised directly in equity 39 11,562 (354) 11,247
Balance at 31 October 2016 139 15,541 1,649 17,329
Share premium comprises consideration received for shares issued above their nominal value net of transaction costs.
Retained earnings comprise accumulated profits and losses, less amounts distributed to shareholders.
Harwood Wealth Management Group plc Annual Report 2016
38 2016 2015
£’000 £’000 £’000 £’000
Cash flows from operating activities
Profit before income tax 371 1,150
Non-cash adjustments
Depreciation and amortisation 1,581 596
Net finance costs 445 125
2,026 721
Working capital adjustments
(Increase)/decrease in trade and other receivables (12) (51)
Increase in trade and other payables 78 115
66 64
Cash inflow from operating activities 2,463 1,935
Income tax paid (63) (162)
Interest paid – (14)
(63) (176)
Net cash generated by operations 2,400 1,759
Investing activities
Purchase of intangible assets (3,601) (1,268)
Interest received 18 24
Acquisition of subsidiaries net of cash acquired (802) (540)
Net cash used in investing activities (4,385) (1,784)
Financing activities
Proceeds from issue of shares 8,974 –
Repayment of borrowings (12) (261)
Dividends paid (354) (798)
Net cash generated from/(used in) financing activities 8,608 (1,059)
Net increase/(decrease) in cash and cash equivalents 6,623 (1,084)
Cash and cash equivalents at beginning of year 3,903 4,987
Cash and cash equivalents at end of year 10,526 3,903
Significant non cash transactions include deferred contingent consideration totalling £4,577,000, together with 
consideration for the acquisition of Wellian Investment Solutions Limited of £2,627,027 which was settled by the  
issue of equity.
Consolidated Statement of Cash Flows 
 for the year ended 31 October 2016
Overview Governance Strategic Report Financial Statements
39 Notes to the Financial Statements
 for the year ended 31 October 2016
1 Accounting policies
Company information 
 Harwood Wealth Management Group plc is a company limited by shares incorporated and domiciled in England and 
Wales. The registered office is 5 Lancer House, Hussar Court, Westside View, Waterlooville, Hampshire, PO7 7SE.
 The principal activity of the Company is to act as a holding company. The principal activity of the Group is the 
provision of financial advice and investment management to the retail market.
1.1 Basis of preparation 
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) 
as adopted for use in the European Union and with those parts of the Companies Act 2006 applicable to companies 
reporting under IFRS, (except as otherwise stated).
The financial statements have been prepared on the historical cost basis, unless otherwise stated in accounting 
policies. The principal accounting policies adopted are set out below.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts 
in these financial statements are rounded to the nearest £’000.
The consolidated financial statements incorporate the financial statements of the Company and entities controlled  
by the Company (the subsidiaries) made up to the accounting reference date each year. Control is achieved when  
the Company has power over the investee; is exposed, or has rights, to variable returns from its involvement with  
the investee; and has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are 
changes to one or more of the three elements of control listed above. Consolidation of a subsidiary begins when  
the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. 
Specifically, the results of subsidiaries acquired or disposed of during the year are included in the consolidated 
statement of comprehensive income from the date the Company gains control until the date when the Company 
ceases to control the subsidiary.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies 
used into line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between  
the members of the Group are eliminated on consolidation.
1.2 Business combinations 
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration 
transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition date 
fair values of assets transferred, liabilities incurred to the former owners of the acquiree, and the equity interest issued 
by the Group in exchange for control of the acquiree. The consideration transferred includes the fair value of any 
liability resulting from a contingent consideration arrangement. Acquisition related costs are recognised in profit or 
loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value  
at the acquisition date, except that assets or liabilities related to deferred tax or to employee benefit arrangements 
are recognised and measured in accordance with International Accounting Standard (IAS) 12 Income Taxes and  
IAS 19 Employee Benefits respectively.
Harwood Wealth Management Group plc Annual Report 2016
40 Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling 
interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) 
over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed. If, after 
reassessment, the net of the acquisition date amounts of the identifiable assets acquired and liabilities assumed 
exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and 
the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately 
in profit or loss as a bargain purchase gain.
Contingent consideration to be settled in cash is recognised at fair value at the acquisition date. Any subsequent 
change to its fair value is recognised in profit or loss.
Positive purchased goodwill arising on acquisitions is capitalised. Goodwill is reviewed for impairment at the end  
of the first full financial year following each acquisition and subsequently annually or as necessary if circumstances 
emerge that indicate that the carrying value may not be recoverable.
1.3 Going concern 
The Group’s business activities, together with the factors likely to affect its future development and performance,  
the financial position of the Group, its cash flows and liquidity position are set out in the Strategic Report on pages  
8 to 21. In addition notes 24, 29 and 30 set out the Group’s objectives for managing its capital, its financial instruments 
and its exposures to the market, credit and liquidity risk.
Based on this assessment, the directors have, at the time of approving the financial statements, a reasonable 
expectation that the company has adequate resources to continue in operational existence for the foreseeable  
future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.
1.4 Revenue 
Revenue comprises firstly the initial fees receivable from clients on inception of a new policy or investment product, 
and then the recurring service fees (trail income) that follow.
Initial fees are recognised when a client has signed a service and fee agreement, and the policy or investment has 
commenced. Provision is made for the potential cancellation of policies where fees are received under indemnity 
terms. Recurring fees are recognised when due from the client, whether payable directly to the Group or to the 
financial provider. Fees for administration charges and other services are recognised as the services are provided. 
Income is shown net of any Value Added Tax.
Interest income represents bank interest receivable on cash balances and is recognised as it is earned.
Having assessed the Group’s revenue arrangements against specific criteria, the Directors have concluded that  
it is acting as a principal rather than agent in its revenue arrangements to date.
1.5 Goodwill 
Goodwill represents the excess of the cost of acquisition of subsidiaries over the fair value of net assets acquired.  
It is initially recognised as an asset at cost and is subsequently measured at cost less impairment losses.
The gain on a bargain purchase is recognised in profit or loss in the period of the acquisition.
For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit  
from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least 
annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount  
of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to  
reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata  
on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not 
subsequently reversed.
Overview Governance Strategic Report Financial Statements
41 Notes to the Financial Statements continued
 for the year ended 31 October 2016
1 Accounting policies continued
1.6 Intangible assets other than goodwill 
Other than goodwill, intangible assets with finite useful lives that are acquired externally are carried at cost less 
accumulated amortisation and impairment losses.
Expenditure on acquired client portfolios, which may be recognised either by way of a business combination  
or as an asset purchase, is capitalised in the period in which the acquisition is completed.
The cost of a purchased intangible asset acquired other than in a business combination is the purchase price plus  
any cost directly attributable to bringing the asset to the location and condition necessary for it to be capable of 
operating in the manner intended.
Client portfolios acquired in a business combination are valued at cost, which is the fair value at the date of 
acquisition, which generally equates to cost; no other intangibles arise (including goodwill).
Amortisation is recognised on a combined reducing balance / straight line method basis starting from the month of 
acquisition, over the estimated useful lives of the assets as below. The estimated useful life and amortisation method 
are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on  
a prospective basis.
Acquired client portfolios are amortised over their expected useful lives of 15 years, calculated at 17.5% on the 
reducing balance for eight years, and the remainder straight line over the remaining seven years.
Client relationships are amortised over their expected useful life of 20 years on a straight line basis.
1.7 Property, plant and equipment 
Property, plant and equipment are initially measured at cost and subsequently measured at cost, net of depreciation 
and any impairment losses.
Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives  
on the following bases:
Leasehold land and buildings over the life of the lease
Equipment   15–33% reducing balance
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds  
and the carrying value of the asset, and is recognised in the income statement.
1.8 Impairment of tangible and intangible assets 
At each reporting end date, the company reviews the carrying amounts of its tangible and intangible assets  
to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication 
exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss  
(if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates  
the recoverable amount of the cash-generating unit to which the asset belongs.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment 
annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the 
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current 
market assessments of the time value of money and the risks specific to the asset for which the estimates of future 
cash flows have not been adjusted.
Harwood Wealth Management Group plc Annual Report 2016
42 If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the 
carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is 
recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the 
impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is 
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not 
exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset 
(or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, 
unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated 
as a revaluation increase.
1.9 Cash and cash equivalents 
Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term liquid investments 
with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings  
in current liabilities.
1.10 Financial assets 
Financial assets are recognised in the company’s statement of financial position when the company becomes party  
to the contractual provisions of the instrument.
Financial assets are classified into specified categories. The classification depends on the nature and purpose of the 
financial assets and is determined at the time of recognition.
Financial assets are initially measured at fair value plus transaction costs, other than those classified as fair value 
through profit and loss, which are measured at fair value.
Loans and receivables 
Trade and other receivables that have fixed or determinable payments that are not quoted in an active market are 
classified as ‘loans and receivables’. Receivables are measured at amortised cost using the effective interest method, 
less any impairment.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition 
of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt 
instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that 
exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying 
amount on initial recognition.
Impairment of financial assets 
 Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at each 
reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that  
occurred after the initial recognition of the financial asset, the estimated future cash flows of the instrument  
have been affected.
Derecognition of financial assets 
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire,  
or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
Overview Governance Strategic Report Financial Statements
43 Notes to the Financial Statements continued
 for the year ended 31 October 2016
1 Accounting policies continued
1.11 Financial liabilities
Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other  
financial liabilities.
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.  
They are subsequently measured at amortised cost using the effective interest method, with interest expense 
recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating 
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future 
cash payments through the expected life of the financial liability to the net carrying amount on initial recognition.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled,  
or they expire.
1.12 Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends 
payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.13 Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in 
the income statement because it excludes items of income or expense that are taxable or deductible in other years 
and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated 
using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of 
assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable 
profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised 
for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that 
taxable profits will be available against which deductible temporary differences can be utilised. Such assets and 
liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other 
assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that  
it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. 
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the 
asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged 
or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and 
liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and  
the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
Harwood Wealth Management Group plc Annual Report 2016
44 1.14 Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs  
are required to be recognised as part of the cost of inventories or non-current assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services  
are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed  
to terminate the employment of an employee or to provide termination benefits.
1.15 Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.16 Leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards 
of ownership to the lessees. All other leases are classified as operating leases.
Rentals payable under operating leases, less any lease incentives received, are charged to income on a straight line 
basis over the term of the relevant lease except where another more systematic basis is more representative of the 
time pattern in which economic benefits from the lease asset are consumed.
1.17 Segmental information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating 
decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing 
performance of operating segments.
The Directors consider that there are no identifiable business segments that are subject to risks and returns different 
to the core business. The information reported to the Directors, for the purposes of resource allocation and 
assessment of performance, is based wholly on the overall activities of the Group.
The Directors have therefore determined that there is only one reportable segment under IFRS8. The results and 
assets for this segment can be determined by reference to the statement of comprehensive income and statement  
of financial position.
1.18 Exceptional items
Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further 
understanding of the financial performance of the group. They are material items of income or expense that have 
been shown separately due to the significance of their nature or amount.
Overview Governance Strategic Report Financial Statements
45 Notes to the Financial Statements continued
 for the year ended 31 October 2016
2 Adoption of new and revised standards and changes in accounting policies 
In the current year, there have been no new and revised Standards and Interpretations that have been adopted  
by the company and have an effect on the current period or a prior period.
Standards which are in issue but not yet effective 
At the date of authorisation of these financial statements, the following Standards and Interpretations, which have  
not yet been applied in these financial statements, were in issue but not yet effective (and in some cases had not  
yet been adopted by the EU):
IFRS 2 (amended)  Share-based Payment
IFRS 5 (amended)  Non-current assets held for sale and discontinued operations
IFRS 7 (amended)  Disclosures – Offsetting Financial Assets and Liabilities
IFRS 8 (amended)  Operating Segments
IFRS 9   Financial Instruments
IFRS 10 (amended) Consolidated Financial Statements
IFRS 11 (amended) Joint Arrangements
IFRS 15   Revenue
IFRS 16   Leases
Other than additional disclosures within the financial statements the Directors do not expect the adoption of these 
standards to have a material effect on the financial statements of the Group in future periods.
3 Critical accounting estimates and judgements
In the application of the company’s accounting policies, the directors are required to make judgements, estimates  
and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. 
The estimates and associated assumptions are based on historical experience and other factors that are considered 
to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates  
are recognised in the period in which the estimate is revised, if the revision affects only that period, or in the period  
of the revision and future periods if the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount 
of assets and liabilities are outlined below.
Critical judgements
Intangible asset life
Intangible assets with a carrying value of £14,748,679 are amortised over their estimated useful lives. In the case of 
acquired client portfolios, this estimation reflects the Directors’ expectation of client attrition, based on the Group’s 
experience of similar portfolios. The expected useful life is 15 years, but the directors believe the pattern of expected 
attrition is higher in the earlier years. For this reason the rate of amortisation has been selected as 17.5% on the 
reducing balance for the first eight year of the expected useful life, and straight line for the remaining period.
For client relationships, the expected useful life is 20 years, based on the existing long standing client relationships.
Fair value of contingent consideration
The estimation of contingent consideration requires the Directors to predict the trail income arising over the earn-out 
period and to decide on the level of the discount rate to be applied. The discount rate applied in the year was 12%. The 
directors use an assumption of 15% client attrition from acquisition. The total value of contingent consideration at the 
year end was £5,433,398 (2015: £1,619,871).
Harwood Wealth Management Group plc Annual Report 2016
46 Impairment of assets
The impairment review process involves the Directors making judgements about, inter alia, future cash flows and the 
discount rate to be applied to those cash flows.
Accrued fee income
Accrued fee income is recognised in respect of fees due to the Group on investments and bank deposits placed 
during the accounting period which have not been received at the reporting date. This requires an estimation of the 
amount of fee income that will be received subsequent to the reporting date in respect of the accounting period, 
which is based on the value of historic fees received and investments placed by clients under advice. The carrying 
amount of accrued fee income at 31 October 2016 was £388,220 (2015: £177,071).
4 Revenue
An analysis of the company’s revenue is as follows:
2016
£’000
2015
£’000
Revenues attributable to the principal activity undertaken wholly in the UK 11,605 7,932
5 Exceptional items
2016
£’000
2015
£’000
IPO Listing costs 263 –
Acquisition costs 73 –
336 –
6 Expenses by nature
An analysis of the company’s expenditure is as follows:
2016
£’000
2015
£’000
Advisers’ costs 4,511 3,464
Staff and director costs 2,735 1,660
Amortisation 1,572 591
Depreciation 9 5
Premises costs 617 362
Regulatory fees 387 266
Other expenses 622 309
10,453 6,657
Overview Governance Strategic Report Financial Statements
47 Notes to the Financial Statements continued
 for the year ended 31 October 2016
7 Operating profit
2016
£’000
2015
£’000
Operating profit for the year is stated after charging/(crediting):
Depreciation of property, plant and equipment 9 5
Amortisation of intangible assets 1,572 591
Operating lease rentals – land and buildings 185 106
8 Auditor’s remuneration
2016
£’000
2015
£’000
Fees payable to the company’s auditor and associates:
For audit services
Audit of the company's financial statements 38 26
Audit of the company’s subsidiaries 21 14
59 40
For other services
Tax services 9 –
Other services – audit related 5 –
Corporate finance services – charged to share premium 165 –
Corporate finance services – charged to statement of comprehensive income 100 25
Total non-audit fees 279 25
9 Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2016
Number
2015
Number
Employed advisers 8 8
Management and administration 75 51 
83 59
Their aggregate remuneration comprised:
2016
£’000
2015
£’000
Wages and salaries 2,483 1,523
Social security costs 245 137
Pension costs 7 –
2,735 1,660
Harwood Wealth Management Group plc Annual Report 2016
48 10 Directors’ remuneration
2016
£’000
2015
£’000
Executive directors
 Short-term remuneration 315 141
 Benefits 14 25
Non-executive director fees 71 30
400 196
Social security costs 48 14
448 210
Below is a summary of the total remuneration paid to each director: 
2016
£’000
2015
£’000
M Howard 116 63
N Dunkley 112 58
N Bravery 36 39
P Mann 52 6
P Tuson 19 –
A Durrant 65 30
400 196
11 Investment income
2016
£’000
2015
£’000
Interest income
Bank deposits 18 24
Overview Governance Strategic Report Financial Statements
49 Notes to the Financial Statements continued
 for the year ended 31 October 2016
12 Finance costs
2016
£’000
2015
£’000
Interest on bank overdrafts and loans – 14
Unwinding of discount on contingent consideration 463 135
Total interest expense 463 149
13 Income tax expense
2016
£’000
2015
£’000
Current tax
Current year taxation 463 285
Adjustments in respect of prior periods 81 –
544 285
Deferred tax
Origination and reversal of temporary differences (271) –
Effect of change in tax rate (20)
(291) –
Total tax charge 253 285
The charge for the year can be reconciled to the profit per the income statement as follows:
2016
£’000
2015
£’000
Profit before taxation 371 1,150
Expected tax charge based on a corporation tax rate of 20.00% (2015: 20.5%) 74 236
Expenses not deductible in determining taxable profit 179 49
Tax charge for the year 253 285
Factors that may affect future tax charges: 
Changes to the rate of Corporation Tax were substantively enacted on 26 October 2015 and 7 September 2016 
resulting in rates of Corporation Tax of 19% with effect from 1 April 2017 and 17% with effect from 1 April 2020.
Deferred tax balances have been re-measured in accordance with the new rates.
Harwood Wealth Management Group plc Annual Report 2016
50 14 Dividends
2016
£’000
2015
£’000
Amounts recognised as distributions to equity holders:
Ordinary shares
Interim dividend: £3.54 per ordinary share of £1 (2015: £7.98) pre subdivision 354 798
The proposed final dividend for the year ended 31 October 2016 is: 
Total
£’000
Final dividend: 2 pence per ordinary share of 0.25 pence 1,112
The proposed final dividend is subject to approval by shareholders and has not been included as a liability in these 
financial statements.
15 Earnings per share
2016
£’000
2015
£’000
Number of shares
Weighted average number of ordinary shares for basic earnings per share 49,243 40,000
£’000 £’000
Earnings
Continuing operations
Profit for the period from continued operations 118 865
Earnings for basic and diluted earnings per share being net profit attributable 
to equity shareholders of the company for continued operations 118 865
pence pence
Basic and diluted earnings per share 0.24 2.16
Overview Governance Strategic Report Financial Statements
51 Notes to the Financial Statements continued
 for the year ended 31 October 2016
16 Intangible assets
Goodwill 
£’000
Acquired 
client 
portfolios 
£’000
Client 
relationships 
£’000
Total 
£’000
Cost
At 1 November 2014 – 3,951 – 3,951
Additions 245 2,551 – 2,796
At 31 October 2015 245 6,502 – 6,747
Additions 210 8,036 3,363 11,609
At 31 October 2016 455 14,538 3,363 18,356
Amortisation and impairment
At 1 November 2014 – 1,444 – 1,444
Charge for the year – 591 – 591
At 31 October 2015 – 2,035 – 2,035
Charge for the year – 1,483 89 1,572
At 31 October 2016 – 3,518 89 3,607
Carrying amount
At 31 October 2016 455 11,020 3,274 14,749
At 31 October 2015 245 4,467 – 4,712
At 31 October 2014 – 2,507 – 2,507
The goodwill and client relationships added in the year arose on the share acquisitions of Wellian Investment  
Solutions Ltd.
The acquired client portfolio additions were acquired through either share acquisitions or asset purchases.
Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating unit,  
which is determined by reference to the original businesses acquired.
An impairment test of goodwill is a comparison of the carrying value of the cash generating unit to their recoverable 
amount. Where it is higher than the recoverable amount, an impairment results. Any amortisation and impairment 
charges are included in operating expenses in the Statement of Comprehensive Income.
Recoverable amounts have been measured based on value in use. Detailed forecasts for the remaining life of each 
cash generating unit (“CGU”) have been used (maximum 20 years), based on approved annual budgets and strategic 
projections representing the best estimate of future performance. The estimated cash flows are based on the 
anticipated revenues from the of the CGUs, with an expected attrition rate of 15% for revenues based on historic 
observed rates, and discounted at the Group’s weighted average cost of capital, estimated at 12%.
Harwood Wealth Management Group plc Annual Report 2016
52 17 Property, plant and equipment
Leasehold 
land and 
buildings 
£’000
Equipment 
£’000
Total 
£’000
Cost
At 1 November 2014 2 83 85
At 31 October 2015 2 83 85
Business combinations – 11 11
At 31 October 2016 2 94 96
Accumulated depreciation and impairment
At 1 November 2014 1 61 62
Charge for the year – 5 5
At 31 October 2015 1 66 67
Charge for the year – 9 9
At 31 October 2016 1 75 76
Carrying amount
At 31 October 2016 1 19 20
At 31 October 2015 1 16 17
At 31 October 2014 1 22 23
Overview Governance Strategic Report Financial Statements
53 Notes to the Financial Statements continued
 for the year ended 31 October 2016
18 Subsidiaries
Country of 
incorporation 
(or residence)
Proportion of 
ownership 
interest (%)
Proportion of 
voting power 
held (%) Nature of business
Compass Wealth  
Management Consultants Ltd UK 100.00% 100.00% Financial advisory services
Active Financial Partners Ltd UK 100.00% 100.00% Financial advisory services
IMS Capital Ltd UK 100.00% 100.00% Financial advisory services
Merchants Wealth  
Management Ltd UK 100.00% 100.00% Financial advisory services
4 Most Ltd UK 100.00% 100.00% Financial advisory services
Compass B2B Ltd UK 100.00% 100.00% Financial advisory services
Meon Valley Financial  
Planning Ltd UK 100.00% 100.00% Financial advisory services
Waterside Independent 
Financial Advisers Ltd UK 100.00% 100.00% Financial advisory services
John Clive Enterprises Ltd UK 100.00% 100.00% Financial advisory services
Absolutely Independent 
Financial Advisers Ltd UK 100.00% 100.00% Financial advisory services
Wellian Investment  
Solutions Ltd UK 100.00% 100.00% Financial advisory services
Vue Platform Services Ltd UK 100.00% 100.00% Dormant
Stephens Nominees Limited UK 100.00% 100.00% Dormant
Fund Intelligence  
(Nominees) Limited UK 100.00% 100.00% Dormant
Harwood Wealth Management Group plc has provided a guarantee in accordance with section 479 of the Companies 
Act 2006 on behalf of the following subsidiaries, in order to provide them with exemption from audit of their 
individual accounts. The company has guaranteed all liabilities to which each subsidiary company is subject  
at the financial year end, until they are satisfied in full. The amount of such liabilities is set out below.
Company 
number
Value  
of liabilities
Active Financial Partners Ltd 04266233 £124,686
IMS Capital Ltd 07324558 £191,677
Merchants Wealth Management Ltd 09035363 £75,664
4 Most Ltd 04805244 £166,162
Meon Valley Financial Planning Ltd 03415179 £141,558
Compass B2B Ltd 06906047 £42,215
Waterside Independent Financial Advisers Ltd 04184825 £9,415
Absolutely Independent Financial Advisers Ltd 03834429 £113,337
John Clive Enterprises Ltd 06622245 £78,657
Harwood Wealth Management Group plc Annual Report 2016
54 19 Acquisitions
Business combinations
During the year the Group acquired the following companies:
Waterside Independent Financial Advisers Ltd
On 29 January 2016, the Group acquired the entire issued share capital of Waterside Independent Financial Advisers 
Ltd, an independent financial advisor provider, in order to expand the advisory services offered. The assets and 
liabilities acquired were as follows:
Book  
Value  
£’000
Fair value 
adjustment 
£’000
Fair  
value 
£’000
Acquired client portfolio – 821 821
Tangible assets 2 – 2
Cash & equivalents 15 – 15
Payables (10) (10)
Deferred tax – (148) (148)
7 673 680
The business combination has been recognised as follows:
£’000
Cash consideration on completion 382
Contingent cash consideration 298
680
Net assets acquired per above (680)
Goodwill arising –
The contingent consideration is payable on the 1st and 2nd anniversaries of acquisition and is based on actual trail 
income from the acquired portfolio with no cap.
It is discounted to present value and adjusted annually when forecasts are updated or when payments become 
certain. Adjustments go through profit or loss.
The post-acquisition results of the acquired company in the year of acquisition, together with estimated results  
for the full year of the Group if the acquisition had been at the start of that year, were as follows:
Revenue 
£’000
Net profit 
£’000
Post-acquisition results – acquisition 129 (30)
Pro-forma results for full year – Group 11,785 93
Overview Governance Strategic Report Financial Statements
55 Notes to the Financial Statements continued
 for the year ended 31 October 2016
19 Acquisitions continued
Meon Valley Financial Planning Ltd
On 1 February 2016, the Group acquired the entire issued share capital of Meon Valley Financial Planning Ltd, an 
independent financial advisor provider, in order to expand the advisory services offered. The assets and liabilities 
acquired were as follows:
Book  
Value  
£’000
Fair value 
adjustment 
£’000
Fair  
value 
£’000
Acquired client portfolio – 1,472 1,472
Tangible assets 3 – 3
Receivables 134 – 134
Cash & equivalents 336 – 336
Payables (141) – (141)
Deferred tax (1) (265) (266)
331 1,207 1,538
The business combination has been recognised as follows:
£’000
Cash consideration on completion 1,031
Contingent cash consideration 507
1,538
Net assets acquired per above (1,538)
Goodwill arising –
The contingent consideration is payable on the 1st and 2nd anniversaries of acquisition and is based on actual trail 
income from the acquired portfolio with no cap.
It is discounted to present value and adjusted annually when forecasts are updated or when payments become 
certain. Adjustments go through profit or loss.
The post-acquisition results of the acquired company in the year of acquisition, together with estimated results  
for the full year of the Group if the acquisition had been at the start of that year, were as follows:
Revenue 
£’000
Net profit 
£’000
Post-acquisition results – acquisition 216 (96)
Pro-forma results for full year – Group 12,005 28
Harwood Wealth Management Group plc Annual Report 2016
56 Absolutely Independent Financial Advisers Ltd
On 13 May 2016, the Group acquired the entire issued share capital of Absolutely Independent Financial Advisers Ltd, 
an independent financial advisor provider, in order to expand the advisory services offered.  
The assets and liabilities acquired were as follows:
Book  
Value  
£’000
Fair value 
adjustment 
£’000
Fair  
value 
£’000
Acquired client portfolio – 347 347
Cash & equivalents 113 – 113
Payables (12) – (12)
Deferred tax – (62) (62)
101 285 386
The business combination has been recognised as follows:
£’000
Cash consideration on completion 262
Contingent cash consideration 124
386
Net assets acquired per above (386)
Goodwill arising –
The contingent consideration is payable on the 1st and 2nd anniversaries of acquisition and is based on actual trail 
income from the acquired portfolio with no cap.
It is discounted to present value and adjusted annually when forecasts are updated or when payments become 
certain. Adjustments go through profit or loss.
The post-acquisition results of the acquired company in the year of acquisition, together with estimated results  
for the full year of the Group if the acquisition had been at the start of that year, were as follows:
Revenue 
£’000
Net profit 
£’000
Post-acquisition results – acquisition 42 8
Pro-forma results for full year – Group 11,695 139
Overview Governance Strategic Report Financial Statements
57 Notes to the Financial Statements continued
 for the year ended 31 October 2016
19 Acquisitions continued
John Clive Enterprises Ltd
On 22 April 2016, the Group acquired the entire issued share capital of John Clive Enterprises Ltd, an independent 
financial advisor provider, in order to expand the advisory services offered. The assets and liabilities acquired were  
as follows:
Book  
Value  
£’000
Fair value 
adjustment 
£’000
Fair  
value 
£’000
Acquired client portfolio 110 517 627
Payables (79) – (79)
Deferred tax – (93) (93)
31 424 455
The business combination has been recognised as follows:
£’000
Cash consideration on completion 219
Contingent cash consideration 236
455
Net assets acquired per above (455)
Goodwill arising –
The contingent consideration is payable on the 1st and 2nd anniversaries of acquisition and is based on actual trail 
income from the acquired portfolio with no cap.
It is discounted to present value and adjusted annually when forecasts are updated or when payments become 
certain. Adjustments go through profit or loss.
The post-acquisition results of the acquired company in the year of acquisition, together with estimated results for the 
full year of the Group if the acquisition had been at the start of that year, were as follows:
Revenue 
£’000
Net profit 
£’000
Post-acquisition results – acquisition 68 (4)
Pro-forma results for full year – Group 11,765 169
Harwood Wealth Management Group plc Annual Report 2016
58 Wellian Investment Solutions Ltd
On 29 March 2016, the Group acquired the entire issued share capital of Wellian Investment Solutions Ltd,  
a discretionary fund and investment management business, in order to expand the advisory services offered.  
The assets and liabilities acquired were as follows:
Book  
Value  
£’000
Fair value 
adjustment 
£’000
Fair  
value 
£’000
Intangible assets 301 3,062 3,363
Tangible assets 6 – 6
Receivables 200 – 200
Cash & equivalents 918 – 918
Payables (187) – (187)
Deferred tax – (605) (605)
1,238 2,457 3,695
The business combination has been recognised as follows:
£’000
Consideration on completion – in issued share capital 2,627
Contingent cash consideration 1,278
3,905
Net assets acquired per above (3,695)
Goodwill arising 210
The contingent consideration is payable in December 2016, July 2017 and July 2018 and is based on funds under 
management.
It is discounted to present value and adjusted annually when forecasts are updated or when payments become 
certain. Adjustments go through profit or loss.
The post-acquisition results of the acquired company in the year of acquisition, together with estimated results  
for the full year of the Group if the acquisition had been at the start of that year, were as follows:
Revenue 
£’000
Net profit 
£’000
Post-acquisition results – acquisition 856 78
Pro-forma results for full year – Group 13,032 264
Overview Governance Strategic Report Financial Statements
59 Notes to the Financial Statements continued
 for the year ended 31 October 2016
19 Acquisitions continued
Asset purchases
A number of client portfolios were acquired as follows:
2016
Number
2015
Number
Portfolios acquired 12 5
£’000 £’000
Cost 4,769 1,325
Immediate cash consideration 2,635 655
Contingent cash consideration 2,134 670
4,769 1,325
The acquisition agreements specify that contingent consideration will be payable on the first and second 
anniversaries of the acquisition and will be based on actual trail income from the portfolios, with no cap.
The contingent consideration is discounted to present value and adjusted annually when forecasts are updated  
or when payments become certain. Adjustments go through profit or loss.
20 Trade and other receivables
2016
£’000
2015
£’000
Trade receivables 58 –
Accrued income 388 177
Prepayments 175 98
621 275
Trade receivables disclosed above are classified as loans and receivables and are therefore measured  
at amortised cost.
The directors consider that the carrying amount of trade and other receivables does not differ from their  
fair value.
No significant receivable balances are impaired at the reporting end date.
21 Borrowings
2016
£’000
2015
£’000
Other loans – 12
Analysis of borrowings
Borrowings are classified based on the amounts that are expected to be settled within the next 12 months and after 
more than 12 months from the reporting date, as follows:
2016
£’000
2015
£’000
Current liabilities – 12
Harwood Wealth Management Group plc Annual Report 2016
60 22 Fair value of financial liabilities
The directors believe that the carrying amounts of financial liabilities carried at amortised cost in the financial 
statements approximate to their fair values.
23 Trade and other payables
Current Non-current
2016
£’000
2015
£’000
2016
£’000
2015
£’000
Trade payables 77 188 – –
Other payables 329 145 – –
Deferred consideration 3,214 1,141 2,219 479
Social security and other taxation 259 134 – –
3,879 1,608 2,219 479
24 Financial instruments
There is an exposure to the risks that arise from the financial instruments. The policies for managing those risks  
and the methods to measure them are described in Note 30. Further quantitative information in respect of these  
risks is presented below and throughout the financial statements.
Financial assets 
The following financial assets were held, all classified as loans or receivables:
2016
£’000
2015
£’000
Trade receivables 58 –
Cash and cash equivalents 10,526 3,903
Financial liabilities 
The following financial liabilities were held, all classified as other financial liabilities at amortised cost:
2016
£’000
2015
£’000
Trade and other payables 406 333
Accruals 341 183
Borrowings – 12
The following financial liabilities (deferred consideration) are at fair value through profit or loss:
2016
£’000
2015
£’000
Other payables 5,433 1,620
This is a level 3 fair value measurement as the inputs are not based on observable market data. The movement  
in level 3 items relates to acquisitions less amounts settled in the period.
Overview Governance Strategic Report Financial Statements
61 Notes to the Financial Statements continued
 for the year ended 31 October 2016
25 Deferred taxation
The following are the major deferred tax liabilities recognised by the company and movements thereon during  
the current and prior reporting period.
Total
£’000
Deferred tax liability at 1 November 2014 138
Deferred tax movements in prior year
On acquisition of subsidiaries 245
Deferred tax liability at 1 November 2015 383
Deferred tax movements in current year
Credit to profit or loss (291)
On acquisition of subsidiaries 1,174
Deferred tax liability at 31 October 2016 1,266
2016
£’000
2015
£’000
Deferred tax liabilities 1,266 383
The deferred tax liability comprises:
Temporary differences on acquired client portfolios 1,266 380
Temporary differences arising from accelerated capital allowances – 3
1,266 383
26 Retirement benefit schemes
Defined contribution schemes
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme 
are held separately from those of the company in an independently administered fund.
The total costs charged to income in respect of defined contribution plans is £6,430 (2015 – £nil).
Harwood Wealth Management Group plc Annual Report 2016
62 27 Share capital
2016
£
2015
£
Ordinary share capital
Issued and fully paid
55,588,927 Ordinary share of 0.25p each 138,972 100,000
The company’s ordinary shares, which carry no right to fixed income, each carry the right to one vote at general 
meetings of the company.
Reconciliation of movements during the year:
Ordinary
Number
At 1 November 2015 100,000
Subdivision of existing share capital to 0.25 pence each 40,000,000
Issue of fully paid shares 15,588,927
At 31 October 2016 55,588,927
On 15 March 2016 every existing ordinary share of £1 each was sub-divided into 400 new shares of 0.25 pence each.
On 29 March 2016 3,243,243 ordinary shares of 0.25 pence each were issued in part consideration for the acquisition 
of the entire share capital of Wellian Investment Solutions limited.
On 29 March 2016 12,345,684 ordinary shares of 0.25 pence each were issued on admission to AIM at the placing 
price of 81 pence per share.
28 Operating lease commitments
Lessee
Amounts recognised in profit or loss as an expense during the period in respect of operating lease arrangements  
are as follows:
2016
£’000
2015
£’000
Lease payments under operating leases 219 106
At the reporting date the company had outstanding commitments for future minimum lease payments under 
non-cancellable operating leases, which fall due as follows:
2016
£’000
2015
£’000
Within one year 145 138
Between two and five years 334 252
In over five years 267 232
746 622
Overview Governance Strategic Report Financial Statements
63 Notes to the Financial Statements continued
 for the year ended 31 October 2016
29 Financial risk management
The Group’s activities expose it to certain financial risks: market risk, credit risk and liquidity risk, as explained below. 
The overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise 
potential adverse effects on the Group’s financial performance. Risk management is carried out by the Directors,  
who identify and evaluate financial risks in close co-operation with key staff.
• Market risk is the risk of loss that may arise from changes in market factors such as competitor pricing and interest 
rates. The direct risk is considered to be minimal, although there is an indirect risk to fee income based on client 
investment values which can be affected by changes in interest rate.
• Credit risk is the financial loss to the Group if a client or counterparty to financial instruments fails to meet  
its contractual obligation. Credit risk arises from the Group’s cash and cash equivalents and receivables balances. 
Cash is held with Bank of Scotland, an institution with an A credit rating.
• Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.  
This risk relates to the Group’s liquidity risk management and implies maintaining sufficient cash. The Directors 
monitor rolling forecasts of liquidity, cash and cash equivalents based on expected cash flow.
30 Capital risk management
The company is not subject to any externally imposed capital requirements.
Certain subsidiaries are regulated by the Financial Conduct Authority and subject to its capital adequacy 
requirements. These requirements have not been breached during the year.
The Group is funded by equity. The components of shareholders’ equity are:
(a) Share capital and share premium
(b) Retained reserve or deficit, reflecting comprehensive income to date less distributions
The objective when managing capital is to maintain adequate financial flexibility to preserve the ability to meet 
financial obligations, both current and long term. The capital structure is managed and adjusted to reflect changes  
in economic conditions. Expenditures on commitments are funded from existing cash and cash equivalent balances, 
primarily arising from equity sources.
Financing decisions are made based on forecasts of the expected timing and level of capital and operating 
expenditure required to meet commitments and development plans.
31 Events after the reporting date
Acquisition of Network Direct Ltd
On 30 August 2016 the Group announced the acquisition of Network Direct Ltd, subject to Financial Conduct 
Authority approval. This approval was received on 13 December 2016 and the Board expect this to complete by  
March 2017. The total consideration is £4 million of which £1 million if payable at completion, with the balance based 
on performance of Network Direct Ltd over the next five years. Network Direct Ltd has a network of 107 financial 
advisers with assets under influence of £1 billion.
Acquisition of WT Financial Ltd
The company agreed, subject to Financial Conduct Authority approval which was received on 13 December 2016,  
to acquire the entire issued share capital of WT Financial Ltd for a total consideration of £315,000 of which £157,000 
is payable at completion, with the balance based on future revenue over the next two years. WT Financial Ltd has  
£16 million of assets under influence. This acquisition completed on 19 January 2017. The provisional fair value of the 
net assets acquired is £291,000.
Harwood Wealth Management Group plc Annual Report 2016
64 32 Related party transactions
Remuneration of key management personnel
The remuneration of the directors and the chief financial officer, who are key management personnel, is set out below 
in aggregate for each of the categories specified in IAS 24 Related Party Disclosures.
2016
£’000
2015
£’000
Short-term employee benefits 492 425
492 425
Other transactions with related parties
The Group has purchased services in the normal course of business from certain companies related to individuals who 
were directors of the Group:
2016
£’000
2015
£’000
SAS Corporate Services LLP 1 34
SAS Corporate Services LLP is a partnership operated by family members of Mr M Howard and Mr N Dunkley.
During the year Mrs S Dunkley (the wife of the director Mr N Dunkley) was paid a salary of £10,250  
(2015: £9,000).
33 Directors’ transactions
Dividends totalling £227,622 (2015 – £390,000) were paid in the year in respect of shares held by two of the 
company’s directors (Mr M Howard £113,811 (2015: £195,000) and Mr N Dunkley £113,811 (2015: £195,000)).
The head office premises are leased from Mr M Howard and Mr N Dunkley at a total annual rent of £48,000, expiring 
on 31 March 2025.
Further premises are leased from Compass Legal Services LLP, a company owned by Mr M Howard and Mr N Dunkley, 
at an annual rent of £9,600.
Overview Governance Strategic Report Financial Statements
65 Company Statement of Financial Position
as at 31 October 2016
Company Registration No. 04987966
Note
2016
£
2015
£
Fixed assets
Intangible assets 3 6,489,659 2,526,647
Investments 4 10,588,213 3,154,996
17,077,872 5,681,643
Current assets
Trade and other receivables 5 395,410 225,024
Cash at bank and in hand 8,783,061 2,233,540
9,178,471 2,458,564
Creditors: amounts falling due within one year
Trade creditors and other payables 6 3,975,946 1,068,651
Taxation and social security 26,350 12,705
4,002,296 1,081,356
Net current assets 5,176,175 1,377,208
Total assets less current liabilities 22,254,047 7,058,851
Creditors: amounts falling due after more than one year
Trade and other payables 6 2,219,000 552,871
Provisions for liabilities
Deferred tax liabilities 7 – 230,818
Net assets 20,035,047 6,275,162
Capital and reserves
Called up share capital 138,972 100,000
Share premium account 15,541,036 3,978,582
Revaluation reserve 1,828,272 1,828,272
Profit and loss account 2,526,767 368,308
Total equity 20,035,047 6,275,162
The financial statements were approved by the Board of directors and authorised for issue on 23 January 2017. 
Signed on its behalf by:
Neil Dunkley, Director
Harwood Wealth Management Group plc Annual Report 2016
66 Note
Share 
capital 
£
Share 
premium 
account 
£
Revaluation 
reserve 
£
Retained 
earnings 
£
Total 
£
Balance at 1 November 2014 100,000 3,978,582 1,828,272 (27,625) 5,879,229
Year ended 31 October 2015:
Profit and total comprehensive 
income for the year – – – 1,193,669 1,193,669
Dividends 2 – – – (797,736) (797,736)
Total transactions with owners 
recognised directly in equity – – – (797,736) (797,736)
Balance at 31 October 2015 100,000 3,978,582 1,828,272 368,308 6,275,162
Year ended 31 October 2016:
Profit and total comprehensive 
income for the year – – – 2,512,460 2,512,460
Issue of share capital 38,972 12,558,059 – – 12,597,031
Dividends 2 – – – (354,000) (354,000)
Costs of share issue – (995,605) – – (995,605)
Total transactions with owners 
recognised directly in equity 38,972 11,562,454 – (354,000) 11,247,426
Balance at 31 October 2016 138,972 15,541,036 1,828,272 2,526,768 20,035,048
Share premium comprises consideration received for shares issued above their nominal value net of transaction costs.
Retained earnings comprise accumulated profits and losses, less amounts distributed to shareholders.
Revaluation reserve comprises the cumulative revaluation gains and losses in respect of fixed asset investments.
Company Statement of Changes in Equity
for the year ended 31 October 2016
Overview Governance Strategic Report Financial Statements
67 Notes to the Company Financial Statements
for the year ended 31 October 2016
1 Accounting policies
Company information
Harwood Wealth Management Group plc is a company limited by shares incorporated in England and Wales.  
The registered office is 5 Lancer House, Hussar Court, Westside View, Waterlooville, Hampshire, PO7 7SE.
1.1 Basis of preparation
The financial statements have been prepared in accordance with Financial Reporting Standard 101 Reduced 
Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.
The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted 
are set out below. In transition to FRS 101, the Company has applied International Financial Reporting Standard 1  
‘First Time Adoption of International Financial Reporting Standards’ (IFRS 1) subject to the exemptions available 
under FRS 101 and listed below:
• the requirements of paragraphs 62, B64(d), B64(e), B64(g), B64(h), B64(j) to B64(m), B64(n)(ii), B64 (o)(ii), 
B64(p), B64(q)(ii), B66 and B67of IFRS 3 Business Combinations. Equivalent disclosures are included in the 
consolidated financial statements of Harwood Wealth Management Group plc in which the entity is consolidated;
• the requirements of paragraph 33 (c) of IFRS 5 Non current Assets Held for Sale and Discontinued Operations;
• the requirements of IFRS 7 Financial Instruments: Disclosures;
• the requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement;
• the requirement in paragraph 38 of IAS 1 ‘Presentation of Financial Statements’ to present comparative information 
in respect of: (i) paragraph 79(a) (iv) of IAS 1, (ii) paragraph 73(e) of IAS 16 Property Plant and Equipment (iii) 
paragraph 118 (e) of IAS 38 Intangibles Assets, (iv) paragraphs 76 and 79(d) of IAS 40 Investment Property  
and (v) paragraph 50 of IAS 41 Agriculture;
• the requirements of paragraphs 10(d), 10(f), 16, 38A to 38D, 39 to 40 ,111 and 134-136 of IAS 1 Presentation  
of Financial Statements;
• the requirements of IAS 7 Statement of Cash Flows;
• the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;
• the requirements of paragraph 17 of IAS 24 Related Party Disclosures;
• the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between 
two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly  
owned by such a member; and
• the requirements of paragraphs 134(d)-134(f) and 135(c)-135(e) of IAS 36 Impairment of Assets.
As permitted by FRS 101, the company has taken advantage of the disclosure exemptions available under that standard 
in relation to share based payments, financial instruments, capital management, presentation of a cash flow statement, 
presentation of comparative information in respect of certain assets, standards not yet effective, impairment of assets, 
business combinations, discontinued operations and related party transactions.
Where required, equivalent disclosures are given in the group accounts of Harwood Wealth Management Group plc.
The company has taken advantage of the exemption under section 408 of the Companies Act 2006 from presenting 
its own profit and loss account. The profit after taxation of the company for the year was £2,512,460 (2015: £1,193,669).
1.2 Going concern
The directors have at the time of approving the financial statements, a reasonable expectation that the company  
has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt 
the going concern basis of accounting in preparing the financial statements.
1.3 Intangible assets other than goodwill
Other than goodwill, intangible assets with finite useful lives that are acquired externally are carried at cost less 
accumulated amortisation and impairment losses.
Expenditure on acquired client portfolios is capitalised in the period in which the acquisition is completed.
Harwood Wealth Management Group plc Annual Report 2016
68 The cost of a purchased intangible asset acquired other than in a business combination is the purchase price plus  
any cost directly attributable to bringing the asset to the location and condition necessary for it to be capable of 
operating in the manner intended.
Amortisation is recognised on a combined reducing balance / straight line method basis starting from the month of 
acquisition, over the estimated useful lives of the assets as below. The estimated useful life and amortisation method 
are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on  
a prospective basis.
Acquired client portfolios are amortised over their expected useful lives of 15 years, calculated at 17.5% on the 
reducing balance for eight years, and the remainder straight line over the remaining seven years.
1.4 Non-current investments
Non-current investments are accounted for at initial cost and discounted deferred consideration, less accumulated 
impairment losses.
2 Dividends
2016
£
2015
£
Amounts recognised as distributions to equity holders:
Ordinary shares
Interim dividend: £3.54 per ordinary share of £1 (2015: £7.98) pre subdivision 354,000 797,736
The proposed final dividend for the year ended 31 October 2016 is:
Total
£
Final dividend: 2 pence per ordinary share of 0.25 pence 1,111,779
The proposed final dividend is subject to approval by shareholders and has not been included as a liability in these 
financial statements.
3 Intangible fixed assets
Acquired client 
portfolios
£
Cost
At 31 October 2015 3,055,935
Additions 4,707,919
At 31 October 2016 7,763,854
Amortisation and impairment
At 31 October 2015 529,288
Charge for the year 744,907
At 31 October 2016 1,274,195
Carrying amount
At 31 October 2016 6,489,659
At 31 October 2015 2,526,647
Overview Governance Strategic Report Financial Statements
69 Notes to the Company Financial Statements continued
for the year ended 31 October 2016
4 Investments
Non-current
2016
£
2015
£
Investments in subsidiaries 10,588,213 3,154,996
10,588,213 3,154,996
The company has not designated any financial assets that are not classified as held for trading as financial assets  
at fair value through profit or loss.
Fair value of financial assets carried at amortised cost
Except as detailed below the directors believe that the carrying amounts of financial assets carried at amortised  
cost in the financial statements approximate to their fair values.
Movements in non-current investments
Shares
£
Cost or valuation
At 31 October 2016 3,154,996
Additions 7,433,217
At 31 October 2016 10,588,213
Impairment
At 1 November 2014 & 31 October 2015 –
Carrying amount
At 31 October 2016 10,588,213
At 31 October 2015 3,154,996
A list of subsidiaries is set out in note 18 of the consolidated financial statements.
5 Trade and other receivables
2016
£
2015
£
Other receivables 4,954 –
Amounts due from subsidiary undertakings 364,353 225,024
Prepayments 26,103 –
395,410 225,024
Harwood Wealth Management Group plc Annual Report 2016
70 6 Trade and other payables
Current Non-current
2016
£
2015
£
2016
£
2015
£
Trade payables 4,620 – – –
Deferred consideration 3,162,755 1,025,950 2,219,000 552,871
Amounts due to subsidiary undertakings 625,614 – – –
Accruals 181,708 41,220 – –
Other payables 1,249 1,481 – –
3,975,946 1,068,651 2,219,000 552,871
7 Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon 
during the current and prior reporting period.
Arising on 
goodwill 
creditor
£
Deferred tax liability at 1 November 2014 –
Deferred tax movements in prior year
Credit to profit or loss 230,818
Deferred tax liability at 1 November 2015 230,818
Deferred tax movements in current year
Credit to profit or loss (230,818)
Deferred tax liability at 31 October 2016 –
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so.  
The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
2016
£
2015
£
Deferred tax liabilities – 230,818
8 Events after the reporting date
Acquisition of Network Direct Ltd
On 30 August 2016 the Group announced the acquisition of Network Direct Ltd, subject to Financial Conduct 
Authority approval. This approval was received on 13 December 2016 and the Board expect this to complete by  
March 2017. The total consideration is £4 million of which £1 million if payable at completion, with the balance based 
on performance of Network Direct Ltd over the next five years. Network Direct Ltd has a network of 107 financial 
advisers with assets under influence of £1 billion.
Acquisition of WT Financial Ltd
The company agreed, subject to Financial Conduct Authority approval which was received on 13 December 2016,  
to acquire the entire issued share capital of WT Financial Ltd for a total consideration of £315,000 of which £157,000 
is payable at completion, with the balance based on future revenue over the next two years. WT Financial Ltd has  
£16 million of assets under influence. This acquisition completed on 19 January 2017. The provisional fair value of the 
net assets acquired is £291,000.
Overview Governance Strategic Report Financial Statements
71 9 Reconciliations on adoption of FRS 101
Reconciliation of equity
Note
1 November
2014
£
31 October
2015
£
Equity as reported under previous UK GAAP 5,558,439 6,016,964
Adjustments arising from transition to FRS 101:
Restatement of acquired client portfolios 1 320,386 356,438
Decrease in deferred consideration 2 99,547 206,582
Additional deferred tax liability 3 (99,143) (230,818)
Decrease in investment in subsidiaries 2 – (74,004)
Equity reported under FRS 101 5,879,229 6,275,162
Reconciliation of profit for the financial period
Note
2015
£
Profit as reported under previous UK GAAP 1,256,261
Adjustments arising from transition to FRS 101:
Reduction in amortisation 1 187,305
Finance interest cost (118,222)
Deferred tax 3 (131,675)
Profit as reported under FRS 101 1,193,669
Notes to reconciliations on adoption of FRS 101
1 Intangible Assets
Under previous UK GAAP the company amortised intangible assets in respect of acquired client portfolios over  
a period of three years. Under FRS 101, the company amortises acquired client portfolios over 15 years. The impact  
is to increase the carrying value of client portfolios to £1,171,029 and £2,526,647 at 1 November 2014 and 31 October 
2015 respectively and decrease the amortisation charge by £187,305 for the year ended 31 October 2015.
2 Deferred consideration
Under previous UK GAAP, deferred consideration was measured at the estimated amount payable. Under FRS 101, 
deferred consideration is measured at the net present value of the estimated amount payable. The impact is to 
decrease the carrying value of deferred consideration to £429,525 and £1,578,821 at 1 November 2014 and 31 October 
2015 respectively and to decrease the carrying value of investments in subsidiaries to £3,154,996 at 31 October 2015. 
The discounted deferred consideration is subsequently unwound, resulting in additional finance costs of £118,222 
being recognised in the year ended 31 October 2015.
3 Deferred tax
The transition adjustment in respect of intangible assets has resulted in additional corporation tax payable in the 
current year. Deferred taxation of £NIL and £230,818 has been recognised in respect of this at 1 November 2014  
and 31 October 2015 respectively. As a result of this adjustment, a charge to the statement of comprehensive income 
of £131,675 has been recognised for the year ended 31 October 2015.
Notes to the Company Financial Statements continued
for the year ended 31 October 2016
Harwood Wealth Management Group plc Annual Report 2016
72 Directors
Mr Neil Dunkley  
Mr Alan Durrant  
Mr Mark Howard  
Mr Nick Bravery  (Resigned 5 February 2016, Re-appointed 6 October 2016) 
Mr Peter Mann  
Mr Christopher Mills (Appointed 29 March 2016)  
Mr Paul Tuson  (Appointed 29 March 2016)
Secretary
Ms L H Somers
Company number
04987966
Registered office
5 Lancer House 
Hussar Court 
Westside View 
Waterlooville 
Hampshire 
PO7 7SE
Auditor
RSM UK Audit LLP 
Portland 
25 High Street 
Crawley 
West Sussex 
RH10 1BG
Company Information
Overview Governance Strategic Report Financial Statements
73 Harwood Wealth  
Management  
Group plc
5 Lancer House 
Hussar Court 
Westside View 
Waterlooville 
Hampshire 
PO7 7SE