03:00 Mon 26 Oct 2020
W.H. Ireland Group - Interim Results
WH Ireland Group Plc
("WH Ireland" or the "Company")
Interim Results for the Six Months ended
Highlights
Financial Highlights[1]
§ Revenue increased 15.2% to
o WM revenue down 10.8% at
o CIB revenue up 61.4% at
§ Adjusted operating profit[2] for the period of
§ Profit before tax of
§ Group regulatory capital solvency ratio (CET1): 15.11%[3] (
§ Cash balance at
Divisional Highlights
§ Wealth Management:
o
o Group AUM (excluding IOM) up 13.8% to
o
§ Corporate & Institutional Broking:
o 80 Corporate clients (
o 32 transactions completed in H1 raising
Commenting,
"I am pleased to be reporting the first half year profit for WH Ireland for five years. Over the last six months, WHIreland has seen the benefits of the significant restructuring we embarked on 18 months ago; fixed costs have reduced over that period, whilst revenue has remained broadly flat as we have simplified the business.
Our Wealth Management business has remained operationally robust despite the significant market falls in March, and our Corporate and Institutional Business is showing strong momentum as we act for an increasing number of clients.
Whilst the uncertainty of the impact of Covid 19 on businesses and the wider economy continues, it is challenging to predict future performance, nevertheless, I believe the momentum we have seen in the first half, alongside a robust capital and cash position, gives us a strong platform for the second half."
For further information please contact:
WH Ireland Group plc www.whirelandplc.com
Phillip Wale, Chief Executive Officer +44(0) 20 7220 1666
SPARK Advisory Partners Limited (Nominated Adviser)
Andrew Emmott +44(0) 20 3368 3555
MHP Communications +44 (0) 20 3128 8793
Reg Hoare / James Bavister whireland@mhpc.com
Chairman's Statement
Further progress has been made in returning WH Ireland to a position of strength, despite the challenges facing almost all businesses over the last six months. The Group's first profit for five years has been made possible because of the hard work, dedication and professionalism of the WH Ireland management team and employees, as well as the loyalty of our clients.
The restructuring of the Group, which is now largely complete, means that we can now focus on growing the business in earnest. The strong performance from Corporate and Institutional Broking ("CIB") is particularly pleasing, and provides solid evidence of the progress that has been made in that business. Our ability to attract new clients has been illustrated in the period through winning our first corporate client with a market capitalisation of over
The robustness of our Wealth Management ("WM") platform, in a period which has seen considerable asset volatility, demonstrates that we have a platform from which we can grow our discretionary assets.
There remains much work to do in order for us to achieve our collective ambitions for both businesses and as we grow, we must ensure that we maintain our now strong cost discipline. Whilst Covid-19 brings with it an uncertain economic backdrop, the performance in the first half, our capital and cash positions and our strengthened regulatory and compliance frameworks give the Board confidence that the Group is now well positioned to build further.
As we look to the future we remain ambitious for both businesses. Our aim is to increase discretionary assets in our WM division to
With good progress evident in the first half, the Board looks forward to the remainder of the financial year with some confidence, albeit in what remain highly uncertain times. We do that knowing that the business has reduced its risk considerably, whilst demonstrating an ability to increase revenue in this challenging environment.
Phil Shelley
Chief Executive Officer's Report
The first six months of this financial year has seen WH Ireland make further strong progress, building on the momentum we reported at the time of the annual results in July. We have delivered a small profit, with our continued focus on driving efficiencies ensuring a much-reduced fixed cost base. Group revenue has held up well, with a very strong performance from CIB supported by a resilient performance from our WM division, despite the sharp fall in asset values seen in March. This is all the more impressive given the requirement for all our employees to work from home for much of the period. On an adjusted basis, the profit for the period before exceptional items and discontinued operations was
We have worked hard to reduce risk across the Group, with further work undertaken to enhance our regulatory and compliance framework, and introduce a group-wide alignment of remuneration with our strategic ambitions for each division. This has reduced our fixed cost base. We have continued to align the interests of key employees with shareholders through variable remuneration: in CIB through profit share arrangements and in WM through the issue of share options and variable pay arrangements linked to retaining and growing assets.
WEALTH MANAGEMENT
The WM division has gone through significant change. Having completed re-pricing and cost initiatives, the first half of this financial year saw the conclusion of our restructuring programme for the division with the sale of our Isle of Man ("IOM") business in
The Assets under Management ("AUM") of the WM division (excluding IOM) increased over the period, albeit from a level which showed the full impact of the very significant asset price fall in
OUTLOOK FOR WEALTH MANAGEMENT
In the second half of this financial year our focus will move to growing assets, as well as initiatives on brand, product and distribution. We are actively engaged in building a pipeline of potential individual and team hires, as well as potential inorganic opportunities to accelerate asset growth.
CORPORATE & INSTITUTIONAL BROKING
The CIB division has 80 clients and has completed 32 transactions, raising
At the start of the period under review, we also sought to align the interests of the Company and employees in this division by amending the balance of fixed and variable compensation. This has led to a reduction in overall fixed costs and, alongside the alignment of variable compensation with profit, has reduced risk for this business.
PUBLIC MARKETS
We secured 12 new retained corporate clients in the six months ended
Our ability to provide high quality research distributed to a broad range of investment professionals, our excellent and unique distribution capability, and experienced corporate advice, is continuing to prove a successful combination for both existing and potential corporate clients.
PRIVATE MARKETS
In addition to our traditional public markets business, we continue to build out our platform for raising growth capital for private companies from VCT and EIS funds, as well as through the 'Investor Forum'. We continue to believe this platform has significant long-term potential for the business and our clients.
OUTLOOK FOR CORPORATE & INSTITUTIONAL BROKING
We continue to build an encouraging pipeline of future opportunities across the business, notwithstanding the current backdrop. CIB continues to win clients and execute a wide range of transactions. To accelerate our progress, we are continuing to actively recruit further high calibre people to join the division.
LOOKING FORWARD
Despite the uncertain outlook, we look forward to the second half with some optimism. We have a growing pipeline of opportunities in both businesses, and are starting from a position of strength. There remains much to do to achieve our ambitious targets for the Group, but we have made a positive start in our pursuit of growth.
Phillip Wale
Consolidated Statement of Comprehensive Income
UNAUDITED FOR THE 6 MONTHS ENDED
|
|
6 months ended |
6 months ended |
|
|
(unaudited) |
(unaudited) |
|
Notes |
£'000 |
£'000 |
|
|
|
|
Revenue |
2 |
12,351 |
10,725 |
Administrative expenses |
|
(12,097) |
(11,697) |
Operating profit/(loss) |
|
254 |
(972) |
|
|
|
|
|
|
|
|
Operating profit/(loss) before exceptional items: |
|
254 |
(972) |
Exceptional items |
|
(228) |
(530) |
|
|
|
|
Operating profit/(loss) after exceptional items |
|
26 |
(1,502) |
|
|
|
|
|
|
|
|
Realised gains |
2 |
366 |
60 |
Finance income |
|
2 |
5 |
Finance expense |
2 |
(63) |
- |
Profit/(loss) before tax |
|
331 |
(1,437) |
Tax charge |
|
- |
- |
Profit/(loss) from continuing operations |
|
331 |
(1,437) |
Profit from discontinued operations |
|
51 |
90 |
Profit/(loss) and total comprehensive income for the year |
|
382 |
(1,347) |
|
|
|
|
|
|
|
|
Earnings per share |
6 |
|
|
From continuing operations |
|
|
|
Basic |
|
0.68p |
(3.35p) |
Diluted |
|
0.68p |
(3.35p) |
From discontinued operations |
|
|
|
Basic |
|
0.10p |
0.21p |
Diluted |
|
0.10p |
0.21p |
Total |
|
|
|
Basic |
|
0.78p |
(3.14p) |
Diluted |
|
0.78p |
(3.14p) |
Consolidated Statement of Financial Position
UNAUDITED AS AT
|
|
As at |
As at |
|
|
(unaudited) |
(audited) |
|
Notes |
£'000 |
£'000 |
ASSETS |
|
|
|
Non-current assets |
|
|
|
Intangible assets |
|
696 |
758 |
Property, plant and equipment |
|
618 |
831 |
Investments |
3 |
1,986 |
278 |
Right of use asset |
|
2,203 |
2,474 |
|
|
5,503 |
4,341 |
Current assets |
|
|
|
Trade and other receivables |
|
4,355 |
5,944 |
Other investments |
3 |
1,726 |
1,223 |
Cash and cash equivalents |
4 |
5,849 |
2,580 |
Assets held for sale |
|
- |
2,128 |
|
|
11,930 |
11,875 |
Total assets |
|
17,433 |
16,216 |
LIABILITIES |
|
|
|
Current liabilities |
|
|
|
Trade and other payables |
|
(6,054) |
(4,103) |
Lease liability |
|
(765) |
(629) |
Assets held for sale |
|
- |
(704) |
|
|
(6,819) |
(5,436) |
Non-current liabilities |
|
|
|
Lease liability |
|
(1,981) |
(2,274) |
Accruals and deferred income |
|
- |
- |
|
|
(1,981) |
(2,274) |
Total liabilities |
|
(8,800) |
(7,710) |
Total net assets |
|
8,633 |
8,506 |
|
|
|
|
Capital and reserves |
|
|
|
Share capital |
5 |
2,335 |
2,335 |
Share premium |
|
14,414 |
14,414 |
Other reserves |
|
981 |
981 |
Retained earnings |
|
(8,453) |
(8,580) |
Treasury shares |
|
(644) |
(644) |
Total equity |
|
8,633 |
8,506 |
Consolidated Statement of Cash Flows
UNAUDITED FOR THE 6 MONTHS ENDED
|
|
|
6 months ended |
6 months ended |
|
|
|
(unaudited) |
(unaudited) |
|
|
Notes |
£'000 |
£'000 |
Operating activities: |
|
|
|
|
Profit/(loss) for the year: |
|
|
|
|
Continuing operations |
|
|
331 |
(1,437) |
Discontinuing operations |
|
|
51 |
90 |
|
|
|
382 |
(1,347) |
Adjustments for: |
|
|
|
|
Depreciation, amortisation and impairment |
|
|
647 |
306 |
Finance income |
|
|
(2) |
(9) |
Finance expense |
|
|
63 |
- |
Gains on investments |
|
|
(366) |
(60) |
Non-cash adjustment for share option charge |
|
|
- |
- |
Decrease/(increase) in trade and other receivables |
|
|
2,056 |
(959) |
Increase/(decrease) in trade and other payables |
|
|
736 |
(1,443) |
Increase in deferred consideration |
|
|
- |
47 |
Increase in provisions |
|
|
800 |
- |
Increase in current asset investments |
|
3 |
(503) |
(94) |
Increase in non-current asset investments |
|
|
(1,548) |
- |
Disposal of property, plant and equipment from discontinued operations |
|
|
39 |
- |
Sale of assets and liabilities in disposal group |
|
|
(69) |
- |
Net cash generated from/(used in) operations |
|
|
2,235 |
(3,559) |
Income taxes paid |
|
|
- |
- |
Net cash inflows/(outflows) from operating activities |
|
|
2,235 |
(3,559) |
Investing activities: |
|
|
|
|
Proceeds from sale of investments |
|
|
185 |
- |
Interest received |
|
|
2 |
9 |
Acquisition of investments |
|
|
- |
- |
Acquisition of property, plant and equipment |
|
|
(75) |
(47) |
Net cash generated from/(used in) investing activities |
|
|
112 |
(38) |
Finance activities: |
|
|
|
|
Proceeds from issue of share capital |
|
|
- |
- |
Lease liability payments |
|
|
(232) |
- |
Increase/(decrease) in treasury shares |
|
|
- |
- |
Repayment of borrowings |
|
|
- |
- |
Interest paid |
|
|
- |
- |
Net cash used in financing activities |
|
|
(232) |
- |
Net increase/(decrease) in cash and cash equivalents |
|
|
2,115 |
(3,597) |
Cash and cash equivalents at beginning of period |
|
|
3,734 |
7,702 |
Cash and cash equivalents at end of period |
|
|
5,849 |
4,105 |
Consolidated Statement of Changes in Equity
UNAUDITED FOR THE 6 MONTHS ENDED
|
Share |
Share |
Other |
Retained |
Treasury |
Total |
|
capital |
premium |
reserves |
earnings |
shares |
equity |
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
Balance at |
2,044 |
11,908 |
981 |
(5,524) |
(644) |
8,765 |
Loss and total comprehensive income for the period |
- |
- |
|
(1,347) |
- |
(1,347) |
Employee share option scheme |
- |
- |
- |
- |
- |
- |
Other movements |
- |
- |
- |
- |
- |
- |
Balance at |
2,044 |
11,908 |
981 |
(6,871) |
(644) |
7,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at |
2,335 |
14,414 |
981 |
(8,580) |
(644) |
8,506 |
Profit and total comprehensive income for the period |
- |
- |
- |
382 |
- |
382 |
Employee share option scheme |
- |
- |
- |
- |
- |
- |
Other movements |
- |
- |
- |
(255) |
- |
(255) |
Balance at |
2,335 |
14,414 |
981 |
(8,453) |
(644) |
8,633 |
Notes to the Consolidated Statements
(UNAUDITED)
1. BASIS OF PREPARATION
STATEMENT OF COMPLIANCE
The financial information in this interim report has been prepared in accordance with the disclosure requirements of the AIM Rules for Companies and the recognition and measurements of International Financial Reporting Standards ("IFRS"), as adopted by the European Union ("EU").
The interim report does not include all of the information required for full annual financial statements.
The accounting policies adopted by the Group in the preparation of its 2020 interim report are those which the Group currently expects to adopt in its annual financial statements for the year ending
The financial information in this interim report and accounts does not constitute the Company's statutory accounts. The statutory accounts for the period ended
The AIM Rules for Companies do not require IAS 34 "Interim Financial Reporting" to be applied; therefore it has not been used in the preparation of this interim report.
SIGNIFICANT ACCOUNT POLICIES
The same accounting policies, presentation and methods of computation are followed in these condensed set of financial statements as are applied in the Group's latest audited Report and Accounts for the period ended
GOING CONCERN
Management has used its judgement and knowledge of the business in preparing detailed financial forecasts for the period to
There remains uncertainty over what the future impact on the economy, the Group and its business will be as a result of Brexit and Covid-19. However, this is being continuously monitored by the Group and the stressed forecast prepared to
Covid-19, recognised as a pandemic by the World Health Organization in
There remains uncertainty over what the future impact on the economy, the Group and its business will be. However, since the pandemic was declared, our CIB business has been appointed by several new clients and completed a number of transactions. The resulting performance in the first period of the new financial year has been significantly above our stressed-scenario planning which informed the going concern basis of accounting decision noted. What the future plans of our corporate clients are, and what the future levels of stock market indices will be that determine the level of assets managed and the resulting WM fees, is not possible to quantify with total certainty. If the future impact of Covid-19 were to lead to a period of market inactivity this could result in a reduction in CIB fees and a decline in the values of securities that could impact both the CIB and the WM businesses. The impact of the Covid-19 pandemic on the financial markets and the Group is continuously monitored.
Based on all the aforementioned, the Directors believe that regulatory capital requirements will continue to be met.
EXCEPTIONAL COSTS
These are considered by the Board to be non-trading and exceptional in nature. This includes costs relating to the completion of "Project Discovery" - to outsource Wealth Management back office operations and move to a "Model B" arrangement; Group restructuring costs; and other one-off costs.
2. SEGMENTAL REPORTING
The Group has two principal operating segments, Wealth Management (WM) and Corporate & Investment Broking (CIB) and a number of minor operating segments that have been aggregated into one operating segment.
The WM division offers investment management advice and services to individuals and contains our Wealth Planning business, giving advice on and acting as intermediary for a range of financial products. The CIB division provides corporate finance and corporate broking advice and services to companies and acts as Nominated Adviser (Nomad) to clients quoted on AIM, a market of the London Stock Exchange and contains our Institutional Sales and Research business, which carries out stockbroking activities on behalf of companies as well as conducting research into markets of interest to its clients.
Investment gains in the CIB division represents the profit generated by the sale of securities received by the firm from corporate clients as transaction success fees.
All divisions are located in the UK or the Isle of Man. Each reportable segment has a segment manager who is directly accountable to, and maintains regular contact with, the Chief Executive Officer.
No customer represents more than ten percent of the Group's revenue.
The majority of the Group's revenue originated within the UK with a non-material element originating overseas in the Isle of Man which has been included in "Other Group companies".
The Group announced its intention to sell its subsidiary WH Ireland (IOM) Limited on
The following tables represent revenue and profit information for the Group's business segments.
|
WM |
CIB |
Head Office |
Other Group Companies |
Group |
Less Discontinued Operations |
Continuing Operations |
6 months ended |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
Revenue |
6,151 |
6,215 |
- |
468 |
12,834 |
483 |
12,351 |
Direct costs |
(5,335) |
(4,857) |
- |
(632) |
(10,824) |
(427) |
(10,397) |
Contribution |
816 |
1,358 |
- |
(164) |
2,010 |
56 |
1,954 |
Indirect costs |
- |
- |
(1,586) |
- |
(1,586) |
- |
(1,586) |
Segment result |
816 |
1,358 |
(1,586) |
(164) |
424 |
56 |
368 |
Investment gains |
- |
245 |
- |
121 |
366 |
- |
366 |
Depreciation |
- |
- |
(287) |
- |
(287) |
(6) |
(281) |
Amortisation |
- |
- |
(61) |
- |
(61) |
- |
(61) |
Finance income |
- |
1 |
1 |
1 |
3 |
1 |
2 |
Finance expense |
- |
- |
(63) |
- |
(63) |
- |
(63) |
Profit/(loss) before tax |
816 |
1,604 |
(1,996) |
(42) |
382 |
51 |
331 |
Tax |
- |
- |
- |
- |
- |
- |
- |
Profit/(loss) for the year |
816 |
1,604 |
(1,996) |
(42) |
382 |
51 |
331 |
|
|
|
|
|
|
|
|
|
WM |
CIB |
Head Office |
Other Group Companies |
Group |
Less Discontinued Operations |
Continuing Operations |
6 months ended |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
Revenue |
6,895 |
3,850 |
- |
615 |
11,360 |
635 |
10,725 |
Direct costs |
(5,986) |
(3,563) |
- |
(762) |
(10,311) |
(539) |
(9,772) |
Contribution |
909 |
287 |
- |
(147) |
1,049 |
96 |
953 |
Indirect costs |
- |
- |
(2,158) |
- |
(2,158) |
- |
(2,158) |
Segment result |
909 |
287 |
(2,158) |
(147) |
(1,109) |
96 |
(1,205) |
Investment gains |
- |
60 |
- |
- |
60 |
- |
60 |
Depreciation |
- |
- |
(237) |
(9) |
(246) |
(9) |
(237) |
Amortisation |
- |
- |
(61) |
- |
(61) |
- |
(61) |
Finance income |
4 |
2 |
- |
3 |
9 |
3 |
6 |
Finance expense |
- |
- |
- |
- |
- |
- |
- |
Profit/(loss) before tax |
913 |
349 |
(2,456) |
(153) |
(1,347) |
90 |
(1,437) |
Tax |
- |
- |
- |
- |
- |
- |
- |
Profit/(loss) for the year |
913 |
349 |
(2,456) |
(153) |
(1,347) |
90 |
(1,437) |
The prior period numbers have been re-presented to be consistent with current period disclosures.
3. INVESTMENTS
|
As at |
As at |
Investments |
£'000 |
£'000 |
Fair value: unquoted |
48 |
48 |
Fair value: quoted |
1,709 |
1 |
Fair value: warrants |
229 |
229 |
Total investments |
1,986 |
278 |
Quoted and unquoted investments include equity investments other than those in subsidiary undertakings. Warrants may be received during the ordinary course of business; there is no cash consideration associated with the acquisition.
Fair value, in the case of quoted investments, represents the bid price at the reporting date. In the case of unquoted investments, the fair value is estimated by reference to recent arm's length transactions. The fair value of warrants is estimated using established valuation models.
|
As at |
As at |
Trading investments |
£'000 |
£'000 |
Listed investments |
1,726 |
1,223 |
Investments are measured at fair value, which is determined directly by reference to published prices in an active market where available.
Available for sale assets are restated from IAS 39.
4. CASH, CASH EQUIVALENTS AND BANK OVERDRAFTS
For the purposes of the statement of cash flows, cash and cash equivalents comprise cash in hand and deposits with banks and financial institutions with a maturity of up to three months.
Cash and cash equivalents represent the Group's money and money held for settlement of outstanding transactions.
Money held on behalf of clients is not included in the statement of financial position. Client money at
5. SHARE CAPITAL
The total number of ordinary shares in issue is 48.70 million (
6. EARNINGS PER SHARE
Basic earnings per share (EPS) is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares.
Diluted EPS is the basic EPS, adjusted for the effect of conversion into fully paid shares of the weighted average number of all dilutive employee share options outstanding during the period. At
Reconciliation of the earnings and weighted average number of shares used in the calculations are set out below.
|
As at |
As at |
Group |
|
|
Weighted average number of shares in issue during the period ('000) |
48,704 |
42,870 |
|
48,704 |
42,870 |
|
|
|
From continuing operations |
|
|
Profit/(loss) for the year attributable to ordinary shareholders (£'000) |
331 |
(1,437) |
Basic EPS |
0.68p |
(3.35p) |
Diluted EPS |
0.68p |
(3.35p) |
|
|
|
From discontinued operations |
|
|
Profit for the year attributable to ordinary shareholders (£'000) |
51 |
90 |
Basic EPS |
0.10p |
0.21p |
Diluted EPS |
0.10p |
0.21p |
|
|
|
Total |
|
|
Profit/(loss) for the year attributable to ordinary shareholders (£'000) |
382 |
(1,347) |
Basic EPS |
0.78p |
(3.14p) |
Diluted EPS |
0.78p |
(3.14p) |
7. DIVIDENDS
No interim dividend has been paid or proposed in respect of the current financial period (2019: nil).
[1] All numbers for continuing operations
[2] Being the net operating profit before exceptional items but including CIB investment gains on securities which have been received as fees from corporate clients, as is common in the broking sector, for continuing operations (see Note 2).
[3] Includes unaudited profit for the 6 months to
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of...
FOR OUR FULL DISCLAIMER CLICK HERE