REG - W.H. Ireland Group - Final Results and Notice of AGM
27/07/2022 07:00
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RNS Number : 8353T W.H. Ireland Group PLC 27 July 2022
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 (MAR) as in force in the United Kingdom pursuant to the
European Union (Withdrawal) Act 2018. Upon the publication of this
announcement via Regulatory Information Service (RIS), this inside information
is now considered to be in the public domain.
WH Ireland Group Plc
("WH Ireland" or the "Company" and with its subsidiaries the "Group")
Financial Results for the Twelve Months ended 31 March 2022
Notice of AGM
"A year of underlying progress despite a challenging second half market
backdrop"
WH Ireland announces its final results for the year ended 31 March 2022.
Financial & Operating Highlights
· Revenue increased 11% to £32.0m (FY 2021: £28.7m)
· Underlying profit* before tax £1.4m (FY 2021: £1.5m)
· Statutory profit before tax from continuing operations £0.1m (FY
2021: £1.1m)
· Underlying earnings per share* (basic from continuing operations)
of 2.34p (FY 2021: 2.95p)
· Statutory earnings per share (basic from continuing operations)
of 0.13p (FY 2021: 2.47p)
· Cash and cash equivalents as at 31 March 2022 of £6.4m (FY 2021:
£8.2m)
· Cash balances at 26 July 2022: £9.25m.
· Group Assets under Management ("AUM") increased 14% to £2.4bn (FY
2021: £2.1bn)
· Senior appointments during the year to strengthen the executive
team:
o Simon Jackson appointed Group CFO in October 2021
o Michael Bishop appointed Head of Wealth Management in January 2022
o Stephen Balonwu appointed as Chief Risk and Compliance Officer in May 2022
Note: These numbers do not include partial year contributions from WH Ireland
(IOM) Limited, which was disposed of during August 2020.
* A reconciliation from underlying profits to statutory profits is shown
within the financial review.
Note: The comparative information for the year end 31 March 2021 has been
restated to reflect the correct net gains on investment from revenue, further
details can be found in note 3 of these financial statements.
Divisional Highlights
Wealth Management:
· Revenue up 19% to £15.8m (FY 2021: £13.3m), reflecting a
significant increase in management fees and wealth planning including the
first full year of contribution from Harpsden, and despite a fall in
commission income
· Continued improvement in the quality of the business with fee
income now representing 85% of total wealth management income (FY 2021: 76%)
· Discretionary managed assets ("DFM") increased 6% to £1.0bn
(FY2021: £0.9bn)
· Wealth Management total AUM remained at £1.6bn (FY2021: £1.6bn)
Capital Markets:
· Revenue up 5% to £16.2m (FY 2021: £15.5m)
· £236m funds raised for public and private corporate clients (FY
2021: £232m)
· Total equity transactions: 38 (FY 2021: 42) including 5 IPOs (FY
2021: 2)
· Won 21 new quoted corporate clients to end the year with 88
quoted corporate clients (FY 2021: 82)
· Strengthened position as a top AIM broker, climbing from number
five to number two, while maintaining our top three ranking by client numbers
for the role of NOMAD
· Ultra High Net Worth and Family Office AUM of £0.7bn (FY 2021:
£0.5bn)
Current Trading and Outlook
· Volatile and testing global and economic environment impacting
markets, volumes and transaction levels
· Despite this, the number of quoted corporate clients has
increased in the new financial year to 94
· Creation of our Debt Capital Markets (DCM) business, which
completed its first transaction in April 2022
· Aim to return the Company to sustainable profitability, grow the
business and reward shareholders
Commenting, Phillip Wale, Chief Executive Officer said:
"WH Ireland has had another year of underlying progress across both divisions,
set against a number of well-publicised and evolving wider market challenges
in our second half. We remain confident that we are ready to take advantage of
conditions when they improve given our strengthened and improving platform
across the Group, despite a cautious near-term outlook."
Annual General Meeting
The Company confirms that it will today post to shareholders the annual report
and accounts for the period ended 31 March 2022, and a notice convening the
annual general meeting of the Company. A copy of the annual report and
accounts along with the notice of AGM is available on the Company's website
www.whirelandplc.com (http://www.whirelandplc.com) . The Annual General
Meeting of the Company will be held at the Company's offices at 24 Martin
Lane, London EC4R 0DR on 8 September 2022 at 11.00 a.m.
The Directors continue to closely monitor developments relating to COVID-19
and if any change to the Annual General Meeting arrangements are required, the
Company will notify this to all shareholders as soon as possible.
For further information please contact:
WH Ireland Group plc www.whirelandplc.com (http://www.whirelandplc.com)
Phillip Wale, Chief Executive Officer +44(0) 20 7220 1666
Canaccord Genuity Limited www.canaccordgenuity.com (http://www.canaccordgenuity.com)
Andrew Potts / Harry Rees +44(0) 20 3523 8000
MHP Communications whireland@mhpc.com
Reg Hoare / Charles Hirst +44 (0) 20 3128 8193
Notes to Editors:
About WH Ireland Group plc
Wealth Management Division
WH Ireland provides independent financial planning advice and discretionary
investment management. Our goal is to build long term, mutually beneficial,
working relationships with our clients so that they can make informed &
effective choices about their money and how it can support their lifestyle
ambitions. We can trace our history of helping individuals and their
families as well as entrepreneurs, charities and trustees back to 1872. By
building a financial plan & investment strategy with us, our clients are
free to focus on the important things, like life.
Capital Markets Division
Our Capital Markets Division is focused across the public and private growth
company marketplace. The team's significant experience in this exciting
segment means that we are able to provide a specialist service to each of its
respective participants. For companies, we raise equity and debt capital, as
well as providing both day-to-day and strategic corporate advice. Our tailored
approach means that our teams engage with all of the key investor groups
active in our market - High Net Worth Individuals, Family Offices, Wealth
Managers and Funds. Our broking, trading and research teams provide the link
between growth companies and this broad investor base.
Chief Executive's statement
The financial year began with another set of restrictions due to the Covid-19
pandemic. Our employees continued to work diligently and professionally
throughout these difficult times, ensuring our clients' needs were met across
all business areas.
Further global challenges emerged as the year progressed, culminating in the
war in Ukraine, and this created difficult market conditions. We have adjusted
well to these challenges, but as already reported by many of our peers, these
have inevitably had a significant impact on activity levels in our Capital
Markets division.
The Financial Year 2022
Overall revenue for the Group was £32.0m (FY21 restated: £28.7m*).
Administrative expenses were £33.1m (FY21: £28.4m).
On a divisional basis, revenue in Capital Markets stood at £16.2m (FY21
restated: £15.5m), despite the downturn in the second half after a rise in
income in the first six months of the year. Wealth Management continued its
improvement in the quality of its earnings with an increase in the proportion
of assets under discretionary management. The division also completed the full
integration of its first acquisition, Harpsden. Wealth management delivered
revenue in the year of £15.8m (FY21: £13.3m).
Clients
Our clients remain our priority and our central mission is to continue
providing excellent and improved service to our corporate, institutional and
private clients. I would like to take the opportunity to thank all of our
clients for their loyalty and flexibility as we have continued to introduce
change and improvements during another year of challenges.
We believe that our platform now is starting to show the quality of service
that will continue to differentiate us in the future.
Employees
We have maintained our focus on our core people, while continuing to attract
new individuals and teams across both divisions. Group headcount presently
stands at 159, including the addition of our Debt Capital Markets team and
additional corporate finance strength.
Building on solid foundations
It has been important to ensure that we build a strong central expertise to
support both divisions and our strengthened capabilities in Finance, HR and
Compliance equip us for expansion. We were delighted in the first half of the
year to attract Simon Jackson to join the business as CFO and as a member of
the Board. We have recently welcomed Stephen Balonwu to the executive team as
Chief Risk and Compliance Officer. This is a key role in ensuring that we
conduct business to the highest possible standards.
I would like to thank my fellow Board members and all employees of the firm
for their hard work and dedication during the year. I am also grateful to Phil
Shelley, our previous Chair, for his dedication and commitment to the business
over the past two years.
Shareholders
I would like to thank our shareholders for their continuing support as we
continue to implement our strategy.
Wealth Management (WM)
We were delighted to attract Michael Bishop as Head of Wealth Management
during the year. Michael has most recently had a senior role at UBS AG and
has 22 years of experience in wealth management. We are now focused on
driving the WM business from our four offices in London, Manchester, Henley
and Poole, and addressing the efficiency of the wider WM division with renewed
vigour.
Capital Markets (CM)
Our Equity Capital Markets (ECM) business strengthened its position as a top
AIM broker, climbing from number five to number two*, while maintaining our
top three ranking by client numbers for the role of NOMAD. During the year the
division welcomed 21 new quoted corporate clients, acting for 88 at year-end
(FY21: 82), and we are pleased that this number has continued to grow into the
new financial year and is 94 at the date of this report. These client
relationships are key to our business and our strategy and are the key driver
of revenue in CM.
Away from public markets, we continued to raise capital for a number of
growing private company clients.
Gross transaction fees across CM in the 12-month period stood at £10.0m (FY21
restated: £8.8m) and the average transaction size increased as the team
completed 38 transactions raising £236m for clients (FY21: 42 and £232m
respectively).
The drive to strengthen our capabilities continued into 2022, diversifying our
offering to clients with selective hires. This continued in the new financial
year with the creation of our Debt Capital Markets (DCM) business. We
completed our first DCM transaction, as joint lead manager to EnQuest PLC
following the launch of its sterling denominated 9% guaranteed retail eligible
notes, which successfully raised £133m in April 2022.
Total Group AUM increased to £2.4bn (FY21: £2.1bn) including £1.6bn in WM.
WM discretionary managed assets increased by 6% to £1.02bn (FY21: £0.96bn)
Looking forward
The calendar year has started in the grip of the conflict in the Ukraine, with
an almost unprecedented effect on markets, volumes and transaction levels on
AIM in particular. The economic and global environment is probably as
volatile and testing as any I have experienced in my career. We therefore
remain cautious of the very short-term, but remain confident that we are ready
to take advantage of conditions when they improve given our strengthened and
improving platform across both divisions. I would like to thank my colleagues
who have continued to work with real dedication to return the Company to
sustainable profitability, and I remain committed to working with them to grow
the business and rewarding shareholders for their loyalty.
Phillip Wale
Chief Executive Officer
Consolidated statement of comprehensive income
Year ended Year ended
31 March 2022 31 March 2021*
Note £'000 £'000
Continuing operations
Revenue 5 32,035 28,741
Administrative expenses (33,062) (28,390)
Expected credit loss (81) (28)
Operating profit/ (loss) 6 (1,108) 323
Net gains on investments 18, 23 1,626 818
Finance income 8 1 2
Finance expense 8 (511) (96)
Profit before tax 8 1,047
Taxation 9 67 192
Profit from continuing operations 75 1,239
Loss from discontinued operations 10 - (86)
Profit and total comprehensive income for the year 75 1,153
*The comparative revenue, net gains on investments and earnings per share have
been restated. Further details can be found in note 3 of these financial
statements
There were no items of other comprehensive income for the current year or
prior years.
Consolidated and Company statement of financial position
Group Company
31 March 31 March 31 March 31 March
2022 2021 2022 2021
Note £'000 £'000 £'000 £'000
ASSETS
Non-current assets
Intangible assets 16 4,259 4,764 - -
Goodwill 15 3,539 3,539 - -
Investment in subsidiaries 17 - - 26,448 26,448
Property, plant and equipment 13 325 511 4 -
Investments 18 3,013 1,099 - -
Right of use asset 19 1,168 1,603 - -
Deferred tax asset 21 190 190 - -
Loan receivable 20 - - 900 644
12,494 11,706 27,352 27,092
Current assets
Trade and other receivables 22 5,758 5,156 113 56
Other investments 23 1,912 2,490 - -
Cash and cash equivalents 24 6,446 8,211 1,246 1,246
14,116 15,857 1,359 1,302
Total assets 26,610 27,563 28,711 28,394
LIABILITIES
Current liabilities
Trade and other payables 25 (6,681) (7,623) (2,357) (2,960)
Lease liability 19 (376) (552) - -
Deferred consideration 26 (2,412) (1,087) (2,412) (1,087)
Deferred tax liability 21 (732) (799) - -
(10,201) (10,061) (4,769) (4,047)
Non-current liabilities
Lease liability 19 (999) (1,506) - -
Deferred consideration 26 - (909) - (909)
(999) (2,415) - (909)
Total liabilities (11,200) (12,476) (4,769) (4,956)
Total net assets 15,410 15,087 23,942 23,438
Capital and reserves
Share capital 29 3,104 3,101 3,104 3,101
Share premium 29 19,014 18,983 19,014 18,983
Other reserves 981 981 228 228
Retained earnings (6,789) (7,334) 1,596 1,126
Treasury shares 30 (900) (644) - -
Shareholders' funds 15,410 15,087 23,942 23,438
The Company has elected to take the exemption under Section 408 of the
Companies Act 2006 not to present the Company statement of comprehensive
income. The loss after tax of the Company for the year was £Nil (FY21:
£5,347k).
These financial statements were approved by the Board of Directors on 26 July
2022 and were signed on its behalf by:
S Jackson
Director
Consolidated and Company statement of cash flows
Group Company
Year ended Year ended Year ended Year ended
31 Mar 2022 31 Mar 2021* 31 Mar 2022 31 Mar 2021
Notes £'000 £'000 £'000 £'000
Operating activities:
Profit/ (Loss) for the year:
Continuing operations 75 1,239 - (5,347)
Discontinuing operations - (86) - -
75 1,153 - (5,347)
Adjustments for non-cash items:
Depreciation and amortisation 13, 16, 19 1,229 1,242 - -
Finance income 8 (1) (2) - -
Finance expense 8 511 96 416 -
Tax 9 (67) (196) - -
Non-cash adjustment for share option charge 7 470 90 470 90
Non-cash adjustment for investment gains 18, 23 (1,626) (48) - -
Non-cash consideration for revenue* 18, 23 (1,651) (3,988) - -
Losses in investments - - - 283
Working capital changes:
Decrease/ (increase) in trade and other receivables (601) 1,975 (57) 2,533
(Decrease)/ increase in trade and other payables (942) 2,602 (603) 2,804
Net cash (used in)/generated from operations (2,603) 2,924 226 363
Income taxes received/(paid) 9 - - -
Net cash inflows/ (outflows) from operating activities (2,603) 2,924 226 363
Investing activities:
Cost on disposal of subsidiary undertaking - (90) - -
Interest received 8 - 3 - -
Investment in subsidiary 17 - (4,765) - (5,437)
Acquisition of property, plant and equipment 13 (103) (201) (4) -
Increase in loan receivables - - (256) -
Movement in current asset investments 18, 23 1,933 2,170 - -
Net cash used in investing activities 1,830 (2,883) (260) (5,437)
Finance activities:
Proceeds from issue of share capital 34 5,335 34 5,335
Proceeds from repayment of subordinated loan - - - 985
Purchase of own shares by Employee Benefit Trust (256) - - -
Interest paid 8 (2) (1) - -
Lease liability payments (768) (898) - -
Net cash (used in)/generated from financing activities (992) 4,436 34 6,320
Net (decrease)/increase in cash and cash equivalents (1,765) 4,477 - 1,246
Cash and cash equivalents at beginning of year 8,211 3,734 1,246 -
Cash and cash equivalents at end of year 6,446 8,211 1,246 1,246
* The comparative group cash flow figures have been restated. Further details
can be found in note 3 of these financial statements.
Reconciliation of Group cash and cash equivalents at the end of the year:
Year ended
31 Mar 2022
Group £'000
Cash and cash equivalents from continuing operations 6,446
Cash and cash equivalents from discontinuing operations -
Cash and cash equivalents at end of year 6,446
Year ended
31 Mar 2021
Group £'000
Cash and cash equivalents from continuing operations 8,211
Cash and cash equivalents from discontinuing operations -
Cash and cash equivalents at end of year 8,211
Reconciliation of Group and Company liabilities arising from financing
activities in the year:
As at Cash flows Non-cash As at
1 April 2021 changes 31 March 2022
Group £'000 £'000 £'000 £'000
Lease liability 2,058 (768) 85 1,375
2,058 (768) 85 1,375
Reconciliation of Group and Company liabilities arising from financing
activities in the prior year:
As at Correction of Cash flows Non-cash As at
1 April 2020 calculation changes 31 March 2021
Group £'000 £'000 £'000 £'000 £'000
Lease liability 3,223 (369) (898) 102 2,058
3,223 (369) (898) 102 2,058
There are no Company liabilities arising from financing activities.
Consolidated and Company changes in equity
Share Share Other Retained Treasury Total
capital premium reserves earnings shares equity
Group £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 April 2020 2,435 14,314 981 (8,580) (644) 8,506
Profit and total comprehensive income for the year - - - 1,153 - 1,153
Transactions with owners in their capacity as owners:
Employee share option scheme - - - 90 - 90
New share capital issued 666 4,669 - - - 5,335
Other movements - - - 3 - 3
Balance at 31 March 2021 3,101 18,983 981 (7,334) (644) 15,087
Profit and total comprehensive income for the year - - - 75 - 75
Transactions with owners in their capacity as owners:
Employee share option scheme - - - 470 - 470
New share capital issued 3 31 - - - 34
Purchase of own shares by Employee Benefit Trust - - - - (256) (256)
Balance at 31 March 2022 3,104 19,014 981 (6,789) (900) 15,410
Retained earnings include £10k (2021: £10k) ESOT reserve.
Share Share Other Retained Treasury Total
capital premium reserves earnings shares equity
Company £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 April 2020 2,435 14,314 228 6,385 - 23,362
Loss and total comprehensive income for the year - - (5,347) - (5,347)
Transactions with owners in their capacity as owners:
Employee share option scheme - - - 90 - 90
New share capital issued 666 4,669 - - - 5,335
Other movements - - - (2) (2)
Balance at 31 March 2021 3,101 18,983 228 1,126 - 23,438
Profit/(loss) after tax - - - - - -
Transactions with owners in their capacity as owners:
Employee share option scheme - - - 470 - 470
New share capital issued 3 31 - - - 34
Balance at 31 March 2022 3,104 19,014 228 1,596 - 23,942
The nature and purpose of each reserve, whether consolidated or Company only,
is summarised below:
Share premium
The share premium is the amount raised on the issue of shares that is in
excess of the nominal value of those shares and is recorded less any direct
costs of issue.
Other reserves
Other reserves comprise a (consolidated) merger reserve of £753k (FY21:
£753k) and a (consolidated and company) capital redemption reserve of £228k
(FY21: £228k).
Retained earnings
Retained earnings reflect accumulated income, expenses, gains and losses,
recognised in the statement of comprehensive income and the statement of
recognised income and expense and is net of dividends paid to shareholders.
It includes £10k (FY21: £10k) of ESOT reserve.
Treasury shares
Purchases of the Company's own shares in the market are presented as a
deduction from equity, at the amount paid, including transaction costs. That
is, shares are shown as a separate class of shareholders' equity with a debit
balance. This includes shares in the company held by the EBT or ESOT, both of
which are consolidated within the consolidated figures.
Notes to the financial statements
1. General information
WH Ireland Group plc is a public company incorporated in the United Kingdom.
The shares of the Company are traded on the AIM, a market of the London Stock
Exchange Group plc. The address of its registered office is 24 Martin Lane,
London, EC4R 0DR.
Basis of preparation
The consolidated and parent company financial statements have been prepared in
accordance with International Accounting Standards as adopted by the UK and in
accordance with the Companies Act 2006. The principal accounting policies
adopted in the preparation of the consolidated financial statements are set
out in note 3. The policies have been consistently applied to all the years
presented, unless otherwise stated.
The consolidated financial statements are presented in British Pounds (GBP),
which is also the Group's functional currency. Amounts are rounded to the
nearest thousand, unless otherwise stated.
Going concern
The financial statements of the Group have been prepared on a going concern
basis. In making this assessment, the Directors have prepared detailed
financial forecasts for the period to September 2023 which consider the
funding and capital position of the Group. Those forecasts make assumptions in
respect of future trading conditions, notably the economic environment and its
impact on the Group's revenues and costs. In addition to this, the nature of
the Group's business is such that there can be considerable variation in the
timing of cash inflows. The forecasts take into account foreseeable downside
risks, based on the information that is available to the Directors at the time
of the approval of these financial statements.
The Directors have conducted full and thorough assessments of the Group's
business and the past financial year has provided a thorough test of those
assessments and the resilience of the business. The significant market
turbulence particularly in H2 resulting from the Russian invasion of Ukraine
presented a range of challenges to the business. The business reacted well and
with increasing levels of recurring revenue supplementing a buoyant
performance by CM delivering a profit for the twelve months.
Whilst there always remains uncertainty over what the future impact will be on
the economy, the business has improved its resilience. By executing its first
acquisition WM has increased the total value of assets under management, and
importantly the proportion of that total represented by discretionary managed
assets. CM has been appointed by several new clients and completed a record
number of IPOs.
Certain activities of the Group are regulated by the Financial Conduct
Authority, the statutory regulator for financial services business in the UK
which has responsibility for policy, monitoring and discipline for the
financial services industry. The FCA requires the Group's capital resources to
be adequate; that is sufficient in terms of quantity, quality and
availability, in relation to its regulated activities. The Directors monitor
the Group's regulatory capital resources on a daily basis and they have
developed appropriate scenario tests and corrective management plans which
they are prepared to implement to address any potential deficit as required.
Further actions open to the Directors include incremental cost reductions,
regulatory capital optimisation programmes or further capital raising.
An analysis of the potential downside impacts was conducted as part of the
going concern assessment to assess the potential impact on revenue and asset
values with a particular focus on the variable component parts of our overall
revenue, such as corporate finance fees and commission. Furthermore, reverse
stress tests were modelled to assess what level the Group's business would
need to be driven down to before resulting in a liquidity crisis or a breach
of regulatory capital. That modelling concluded that transactional,
non-contractual revenue would need to decline by more than 70% from
management's forecasts to create such a crisis situation within eighteen
months' time.
Based on all the aforementioned, the Directors believe that regulatory capital
requirements will continue to be met and that the Group has sufficient
liquidity to meet its liabilities for the next twelve months and that the
preparation of the financial statements on a going concern basis remains
appropriate.
2. Adoption of new and revised standards
New and amended standards that are effective for the current year
A number of new or amended standards became applicable for the current
reporting period and as a result the group and company has applied the
following standards:
- Amendments to IFRS 16: COVID-19 related rent concessions (effective for
periods commencing on or after 1 June 2020
- Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16: Interest Rate Benchmark
Reform, phase 2.
The above requirements did not have a material impact on the financial
statements of the group or company.
New standards, interpretations and amendments not yet effective
Name Description Effective date
IAS 16 (amendments) Property, Plant and Equipment - Proceeds before Intended Use 1 January 2022
Annual Improvements 2018-2020 Cycle Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 4) 1 January 2022
IFRS 3 (amendments) Reference to the Conceptual Framework 1 January 2022
IAS 37 (amendments) Onerous Contracts - Cost of Fulfilling a Contract 1 January 2022
IAS 1 (amendments) Presentation of Financial Statements: Classification of Liabilities as Current 1 January 2023
or Non-Current and Classification of Liabilities as Current or Non-Current -
Deferral of Effect Date
The Directors do not expect the adoption of these standards and amendments to
have a material impact on the Financial Statements.
3. Significant accounting policies
Basis of consolidation
Where the company has control over an investee, it is classified as a
subsidiary. The company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
from the investee and the ability of the investor to use its power to affect
those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the company and
its subsidiaries ("the Group") as if they formed a single entity. Intercompany
transactions and balances between group companies are therefore eliminated in
full. The consolidated financial statements incorporate the results of
business combinations using the acquisition method. In the statement of
financial position, the acquiree's identifiable assets, liabilities and
contingent liabilities are initially recognised at their fair values at the
acquisition date. The results of acquired operations are included in the
consolidated statement of comprehensive income from the date on which control
is obtained until the date on which control ceased.
In the Company's accounts, investments in subsidiary undertakings are stated
at cost less any provision for impairment.
Business combinations
All business combinations are accounted for by applying the purchase method.
The purchase method involves recognition, at fair value, of all identifiable
assets and liabilities, including contingent liabilities, of the subsidiary at
the acquisition date, regardless of whether or not they were recorded in the
financial statements of the subsidiary prior to acquisition. The cost of
business combinations is measured based on the fair value of the equity or
debt instruments issued and cash or other consideration paid, plus any
directly attributable costs. Any directly attributable costs relating to
business combinations before or after the acquisition date are charged to the
statement of comprehensive income in the period in which they are incurred.
Goodwill arising on a business combination represents the excess of cost over
the fair value of the Group's share of the identifiable net assets acquired
and is stated at cost less any accumulated impairment losses. The cash
generating units to which goodwill is allocated are tested annually for
impairment. Any impairment is recognised immediately in administrative
expenses in the statement of comprehensive income and is not subsequently
reversed. On disposal of a subsidiary the attributable amount of goodwill that
has not been subject to impairment is included in the determination of the
profit or loss on disposal.
Discontinued operations
The Group presents its results from its discontinued operations separately
from its continuing operations. In line with IFRS 5, an operation is classed
as discontinued if it has been or in the process of being disposed, represents
either a separate major line of business or a geographical area of operations
or is part of a single co-ordinated plan to dispose of a separate major line
of business or geographical area of operation.
Prior period restatements
The income statement and cash flow statement for the year ended 31 March 2021
has been restated to reflect the following errors which have been identified
by management and corrected during the current financial year:
· Net fair value gains of £818,000 arising on movements in
non-cash consideration after initial recognition and sales of investments were
incorrectly recorded within Revenue rather than within Net gains on
investments.
· Movements in current asset investments have been represented in
the cash flow statements as investing activities in accordance with IAS 7.
Movements in current asset investments have been restated to exclude non-cash
movements identified which were incorrectly included in calculating the cash
flow.
· The calculation of dilutive earnings per share used an incorrect
dilutive share figure.
There was no impact upon the profit and total comprehensive income and net
increase in cash and cash equivalents as reported at 31 March 2021 and the net
assets as reported at 1 April 2020.
As originally reported Effect of restatement Group restated amounts
31 March 2021 £'000 £'000 £'000
Statement of Comprehensive Income
Revenue 29,559 (818) 28,741
Net gains on investments - 818 818
Consolidated and Company statement of cash flows
Operating activities (extract)
Non-cash consideration for revenue - (3,988) (3,988)
Non-cash adjustment for investment gains - (48) (48)
Trade and other receivables 1,815 160 1,975
Movement in current asset investments (1,706) 1,706 -
Net cash (used in)/ generated from operations 5,094 (2,170) 2,924
Investing activities (extract)
Movement in current asset investments - 2,170 2,170
Earnings per share
Effect of dilutive share options (£'000) 9,614 (8,931) 683
Diluted From continuing operations 2.07p 0.36p 2.43p
Total diluted 1.93p 0.33p 2.26p
A restated comparative balance sheet has not been produced as there was no
change to the statement of financial position following the restatements.
The net effect of these restatements on the statement of cash flows was nil.
Assets and liabilities held for sale
An asset or liability is classified as held for sale if its carrying value is
intended to be recovered through its sale rather than its continuing use,
management is committed to a plan to sell, the asset is available for
immediate sale, an active programme to locate a buyer has been initiated, the
sale is highly probable within 12 months of classification as held for sale
and the actions required to complete the transaction indicate it is unlikely
it will be significantly changed or withdrawn. Assets held for sale are
measured at the lower of their carrying amount and fair value less costs to
sell. Any impairment losses is recognised through the consolidated
comprehensive income.
Revenue
WEalth management (WM)
Management and custody fees
Investment management fees are recognised in the period in which the related
service is provided. It is a variable fee based on the average daily market
value of assets under management and is invoiced on a calendar quarter basis
in arrears. The performance obligation is satisfied over time as the
contractual obligations are on ongoing throughout the period under contract.
The revenue accrued but not yet invoiced is recognised as a contract asset.
Initial and ongoing advisory fees
Initial advisory fees are charged to clients on a fixed one-off fee agreement.
The performance obligation is satisfied as the initial advice is provided.
Ongoing advisory fees are variable fees based on the average daily market
value of assets under management and invoiced on a calendar quarter basis in
arrears. Both initial and ongoing advisory fees are recognised in the period
in which the related service is provided. The performance obligation of
ongoing advice is satisfied over time as the contractual obligations are
ongoing throughout the period under contract. The revenue accrued but not yet
invoiced is recognised as a contract asset.
Commission and transaction charges
Commission is recognised when receivable in accordance with the date of
settlement. It is a variable fee based on a percentage of the transaction and
therefore the performance obligation is satisfied at the date of the
underlying transaction. The transaction price is calculated based on the
agreed percentage of the underlying consideration of the trade. The underlying
consideration being the number of shares multiplied by the share price at the
time of the underlying transaction.
CApital markets (cM)
Commission
Brokerage commission is recognised when receivable in accordance with the date
of settlement. It is a variable fee based on a percentage of the transaction
and therefore performance obligation is satisfied at the date of the
underlying transaction. The transaction price is calculated based on the
agreed percentage of the underlying consideration of the trade. The underlying
consideration being the number of shares multiplied by the share price at the
time of the underlying transaction.
Corporate finance advisory fees
Corporate finance advisory fees are fixed fees agreed on a deal by deal basis
and might include non-cash consideration received in the form of shares, loan
notes, warrants or other financial instruments recognised at the fair value on
the date of receipt and therefore the performance obligation is satisfied at a
point in time when the Group has fully completed the performance obligations
per the contract.
Retainer fees
Retainer fees are recognised over the length of time of the agreement. Fees
are fixed and invoiced quarterly in advance based on the agreed engagement
letter. The performance obligation is satisfied over time as the contractual
obligations are on ongoing throughout the period under contract. The deferred
revenue is recognised as a contract liability.
Corporate placing commissions
Corporate placing commissions are variable fees agreed on a deal by deal basis
based on a percentage of the funds raised as part of a transaction. This
includes non-cash consideration received in the form of shares, loan notes,
warrants or other financial instruments recognised at the fair value on the
date of receipt. Given that fees related to this work are success based, there
is a significant risk of reversal of the variable revenue and therefore the
performance obligation is satisfied at a point in time when the transaction is
completed. The combination of corporate placing commissions and corporate
finance advisory fees are referred to as corporate success fees.
Employee benefits
The Group contributes to employees' individual money purchase personal pension
schemes. The assets of the schemes are held separately from those of the Group
in independently administered funds. The amount charged to the statement of
comprehensive income represents the contributions payable to the schemes in
respect of the period to which they relate.
Short term employee benefits are those that fall due for payment within twelve
months of the end of the period in which employees render the related service.
The cost of short term benefits is not discounted and is recognised in the
period in which the related service is rendered. Short term employee benefits
include cash-based incentive schemes and annual bonuses.
Share-based payments
The share option programmes allows Group employees to receive remuneration in
the form of equity-settled share-based payments granted by the Company.
The cost of equity-settled transactions with employees is measured by
reference to the fair value at the date at which they are granted. The fair
value of the options granted is measured using an option valuation model. The
cost of equity-settled transactions is recognised, together with a
corresponding increase in equity, over the period in which the performance or
service conditions are fulfilled (the vesting period), ending on the date on
which the relevant employees become fully entitled to the award (the vesting
date). The cumulative expense recognised for equity settled transactions, at
each reporting date until the vesting date, reflects the extent to which the
vesting period has expired and the Group's best estimate of the number of
equity instruments that will ultimately vest. The statement of comprehensive
income charge or credit for a period represents the movement in cumulative
expense recognised at the beginning and end of that period.
Where the terms of an equity-settled award are modified, an incremental value
is calculated as the difference between the fair value of the repriced option
and the fair value of the original option at the date of re-pricing. This
incremental value is then recognised as an expense over the remaining vesting
period in addition to the amount recognised in respect of the original option
grant.
Where an equity-settled award is cancelled or settled (that is, cancelled with
some form of compensation) it is treated as if it had vested on the date of
cancellation and any expense not yet recognised for the award is recognised
immediately.
However, if a new award is substituted for the cancelled award and is
designated as a replacement award on the date that it is granted, the
cancelled and new awards are treated as if they were a modification of the
original award, as described in the previous paragraph. Any compensation paid
up to the fair value of the award is accounted for as a deduction from equity.
Where an award is cancelled by forfeiture, when the vesting conditions are not
satisfied, any costs already recognised are reversed (subject to exceptions
for market conditions).
In all instances, the charge/credit is taken to the statement of comprehensive
income of the Group or Company by which the individual concerned is employed.
Employee Benefit Trust (EBT)
The cost of purchasing own shares held by the EBT are shown as a deduction
against equity. The proceeds from the sale of own shares held increase equity.
Neither the purchase nor sale of own shares leads to a gain or loss being
recognised in the consolidated statement of comprehensive income.
Employee Share Ownership Trust (ESOT)
The Company has established an ESOT. The assets and liabilities of this trust
comprise shares in the Company and loan balances due to the Company. The Group
includes the ESOT within these consolidated Financial Statements and therefore
recognises a Treasury shares reserve in respect of the amounts loaned to the
ESOT and used to purchase shares in the Company. Any cash received by the ESOT
on disposal of the shares it holds, will be used to repay the loan to the
Company.
Treasury shares
The costs of purchasing Treasury shares are shown as a deduction against
equity. The proceeds from the sale of own shares held increase equity. Neither
the purchase nor sale of treasury shares leads to a gain or loss being
recognised in the consolidated statement of comprehensive income.
Income taxes
Income tax on the profit or loss for the years presented, comprising current
tax and deferred tax, is recognised in the statement of comprehensive income
except to the extent that it relates to items recognised directly in equity,
in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using rates enacted or substantively enacted at the reporting year end date
and any adjustment to tax payable in respect of previous years.
· Deferred tax is provided for temporary differences, at the
reporting year end date, between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes. The following
temporary differences are not provided for;
· goodwill which is not deductible for tax purposes;
· the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit; and
· temporary differences relating to investments in subsidiaries to
the extent that they will probably not reverse in the foreseeable future.
The amount of deferred tax provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the reporting period end
date (note 21).
A deferred tax asset is recognised for all deductible temporary differences
and unused tax losses only to the extent that it is probable that future
taxable profits will be available against which the assets can be utilised. A
deferred tax asset has been recognised, £190k (FY21: £190k).
Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and
impairment. Depreciation is calculated, using the straight line method, to
write down the cost or revalued amount of plant and equipment over the assets'
expected useful lives, to their residual values, as follows:
Computers, fixtures and
fittings
- 4 to 7 years
Intangible assets
Measurement
Intangible assets with finite useful lives that are acquired separately are
measured, on initial recognition at cost. Following initial recognition, they
are carried at cost less accumulated amortisation and any accumulated
impairment. The cost of intangible assets acquired in a business combination
is their fair value at the date of acquisition.
Intangible assets other than goodwill are amortised over the expected pattern
of their consumption of future economic benefits, to write down the cost of
the intangible assets to their residual values as follows:
Client relationships
- 10 to 12 years
Brand
- 2
years
The amortisation period and method for an intangible asset are reviewed at
least at each financial year end. Changes in the expected useful life or the
expected pattern of consumption of future economic benefits embodied in the
asset or its residual value are accounted for by changing the amortisation
period or method.
Impairment
The carrying amounts of the Group's intangible assets, excluding goodwill, are
reviewed when there is an indicator of impairment and the asset's recoverable
amount is estimated.
The recoverable amount is the higher of the asset's fair value less costs to
sell (or net selling price) and its value-in-use. Value-in- use is the
discounted present value of estimated future cash inflows expected to arise
from the continuing use of the asset and from its disposal at the end of its
useful life. Where the recoverable amount of an individual asset cannot be
identified, it is calculated for the smallest cash-generating unit (CGU) to
which the asset belongs. A CGU is the smallest identifiable group of assets
that generates cash inflows independently.
When the carrying amount of an asset (or CGU) exceeds its recoverable amount,
the asset (or CGU) is considered to be impaired and is written down to its
recoverable amount. An impairment loss is immediately recognised as an
expense. Any subsequent reversal of impairment credited to the statement of
comprehensive income shall not cause the carrying amount of the intangible
asset to exceed the carrying amount that would have been determined had no
impairment been recognised.
Impairment of assets
Goodwill and other intangible assets that have an indefinite life are not
subject to amortisation, they are tested annually for impairment. Other assets
are tested for impairment when any changes in circumstance indicate the
carrying amount is possibly not recoverable. An impairment loss is recognised
when the asset's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset's fair value less costs to sell
and the value in use. Goodwill is allocated to cash generating units for the
purpose of assessing impairment, assets (excluding goodwill) are grouped
together based on the assets that independently generates cash flow whose cash
flow is largely independent of the cash flows generated by other assets (cash
generating units).
Leased assets
Measurement and recognition of leases as a lessee
For any new lease contracts entered into on or after 1 April 2019, as
permitted under IFRS 16, the Group recognises a right of use asset and a lease
liability except for:
· Leases with a term of 12 months or less from the lease
commencement date
· Leases of low value assets
Lease liabilities are measured at the present value of the unpaid lease
payments discounted using an incremental borrowing rate.
Right of use assets are initially measured at the amount of the lease
liabilities plus initial direct costs, costs associated with removal and
restoration and payments previously made. Right of use assets are amortised on
a straight line basis over the term of the lease.
Lease liabilities are subsequently increased by the interest charge using the
incremental borrowing rate and reduced by the principal lease.
Financial instruments
Financial assets and financial liabilities are recognised in the Group's
balance sheet when the Group becomes a party to the contractual provisions of
the instrument.
Financial assets and liabilities
Investments are recognised and derecognised on the trade date where the
purchase or sale of an investment is under a contract whose terms require
delivery of the investment within the timeframe established by the market
concerned, and are initially measured at fair value, plus transaction costs,
except for those financial assets classified as at fair value through profit
or loss, which are initially measured at fair value.
Assets and liabilities are presented net where there is a legal right to
offset and an intention to settle in that way.
The three principal classification categories for financial assets are:
measured at amortised cost, fair value through other comprehensive income
(FVOCI) and fair value through profit or loss (FVTPL). The classification of
financial assets under IFRS 9 is generally based on the business model in
which a financial asset is managed and its contractual cash flow
characteristics.
Financial assets are not reclassified subsequent to their initial recognition
unless the Group changes its business model for managing financial assets, in
which case all affected financial assets are reclassified on the first day of
the first reporting period following the change in the business model.
A financial asset is measured at amortised cost if it meets both of the
following conditions and is not designated as at FVTPL:
· it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
· its contractual terms give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount
outstanding.
On initial recognition of an equity investment that is not held for trading,
the Group may irrevocably elect to present subsequent changes in the
investment's fair value in OCI. This election is made on an
investment-by-investment basis.
All financial assets not classified as measured at amortised cost or FVOCI as
described above are measured at FVTPL. This includes all derivative financial
assets. On initial recognition, the Group may irrevocably designate a
financial asset that otherwise meets the requirements to be measured at
amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would otherwise arise.
Assets held at FVTPL are subsequently measured at fair value. Net gains and
losses, including any interest or dividend income, are recognised in profit or
loss.
Financial assets at amortised cost are subsequently measured at amortised cost
using the effective interest method. The amortised cost is reduced by
impairment losses. Trade receivables and other receivables are measured and
carried at amortised cost using the effective interest method, less any
impairment. If impaired, the carrying amount of other receivables is reduced
by the impairment loss directly and a charge is recorded in the Income
Statement. For trade receivables, the carrying amount is reduced by the
expected credit lifetime losses under the simplified approach permitted under
IFRS9. Subsequent recoveries of amounts previously written off are credited
against the allowance account and changes in the carrying amount of the
allowance account are recognised in the Income Statement.
Equity investments at OCI are subsequently measured at fair value. Dividends
are recognised as income in profit or loss unless the dividend clearly
represents a recovery of part of the cost of the investment. Other net gains
and losses are recognised in OCI and are never reclassified to profit or loss.
The following financial assets & liabilities are held at FVTPL;
investments and deferred consideration. The following financial assets and
liabilities are held at amortised cost; Cash and cash equivalents, trade and
other receivables, accrued income, trade and other lease liabilities.
Trade payables
Trade payables principally comprise amounts outstanding for trade purchases
and ongoing costs. The Directors consider that the carrying amount of trade
payables approximates to their fair value.
Deferred consideration
Deferred consideration is recognised at the discounted present value of
amounts payable. Subsequent to initial recognition, it is rebased over the
period in which the consideration is payable, with the unwinding of the
discount being taken to the statement of comprehensive income.
4. Critical accounting judgements and key sources of estimation and uncertainty
The preparation of financial statements in accordance with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these
estimates.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including reasonable expectations of future
events. The estimates and judgements that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below:
Amortisation and impairment of non-financial assets
As noted above, the Group estimates the useful economic lives of intangible
assets, in order to calculate the appropriate amortisation charge. This is
done by the Directors using their knowledge of the markets and business
conditions that generated the asset, together with their judgement of how
these will change in the foreseeable future.
Where an indicator of impairment exists, value in use calculations are
performed to determine the appropriate carrying value of the asset. The value
in use calculation requires the Directors to estimate the future cash flows
expected to arise for the CGU and a suitable discount rate in order to
calculate present value. Where the actual future cash flows are less than
expected, a material impairment loss may arise (see note 16).
Goodwill is subject to an annual impairment review which is performed by
comparing the balance value with the recoverable amount of the asset or it's
CGU. The recoverable amount is the higher of the value in use and fair value
to sell less costs.
Investments in subsidiaries
Where an indicator of impairment exists, management uses its judgement to
assess the carrying value of the asset by determining the fair value by
independent assessment of the carrying value of the business units and by
comparative analysis against other similar businesses in the peer group. The
carrying value of investments in subsidiaries at 31 March 2022 was £26.4m
(FY21: £26.4m) (see note 17).
Investments
Included in investments are unlisted shares totalling a value of £701k.
Judgement has been applied to the value of these shares based on recent
transactions around the year end 31 March 2022. If the share price were to
change by 2% the value of this investment would change by £7k. Further
details are provided in note 23.
Warrants
Included in non-current investments are warrants valued at the estimated fair
value at the reporting date. These values are obtained by applying an
appropriate valuation model for which most of the inputs are based on
contracts and external sources. Therefore no reasonable change in assumptions
would lead to a material change in the fair value.
Deferred consideration
As described in note 26, the Group has a deferred consideration balance in
respect of the acquisition in December 2020 of Harpsden Wealth Management
Limited. The expected future payment is recognised at its fair value, this
being the estimate of future payments due. This has been discounted to present
value using an estimated discount rate of 13.5% (2021: 13.5%).
5. Segment information
The Group has two principal operating segments, Wealth Management (WM) and
Capital Markets (CM) and a number of minor operating segments that have been
aggregated into one operating segment.
WM 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. CM provides corporate finance
and corporate broking advice and services to companies and acts as Nominated
Adviser (Nomad) to clients traded on the AIM 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.
Both divisions are located in the UK. 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 (FY21:
nil).
The majority of the Group's revenue originates within the UK with a
non-material element originating overseas in the Isle of Man which has been
included in "Other Group companies" for the prior period of the year up until
the sale of the IoM entity in August 2020.
The following tables represent revenue and cost information for the Group's
business segments:
Year ended 31 March 2022 Wealth Management Capital Markets Group and consolidation adjustments Group
£'000 £'000 £'000 £'000
Revenue 15,837 16,198 - 32,035
Direct costs (13,072) (12,475) - (25,547)
Contribution 2,765 3,723 - 6,488
Indirect costs (3,013) (1,427) (651) (5,091)
Underlying profit/(loss) before tax (248) 2,296 (651) 1,397
Acquisition related costs (446) - - (446)
Amortisation of acquired brand and client relationships (505) - - (505)
Changes in fair value and finance cost of deferred consideration (416) - - (416)
Restructuring costs (478) (357) - (835)
Net changes in the value of non-current investment assets - 813 - 813
Profit/(loss) before tax (2,093) 2,752 (651) 8
Tax 67 - - 67
Profit/(loss) for the year (2,026) 2,752 (651) 75
Year ended 31 March 2022 Wealth Management Capital Markets Group
£'000 £'000 £'000
Statutory operating costs included the following:
Amortisation 505 - 505
Depreciation 199 90 289
Year ended 31 March 2021 Wealth Management Capital Markets Group and consolidation adjustments Less Discontinued Operations Group (continuing operations)
£'000 £'000 £'000 £'000 £'000
Revenue 13,291 15,467 467 (484) 28,741
Direct costs (10,271) (11,120) (569) 570 (21,390)
Contribution 3,020 4,347 (102) 86 7,351
Indirect costs (3,099) (1,312) (1,459) - (5,870)
Underlying profit/(loss) before tax (79) 3,035 (1,561) 86 1,481
Acquisition related costs (465) (465)
Amortisation of acquired client relationships (219) - - - (219)
Dual running operating platform costs (35) - - - (35)
Restructuring costs (91) (38) - - (129)
Net changes in the value of non-current investment assets 414 - - 414
Profit/(loss) before tax (889) 3,411 (1,561) 86 1,047
Tax 2 - 190 - 192
Profit/(loss) for the year (887) 3,411 (1,371) 86 1,239
Year ended 31 March 2021 Wealth Management Capital Markets Group and consolidation adjustments Less Discontinued Operations Group (continuing operations)
£'000 £'000 £'000 £'000 £'000
Statutory operating costs included the following:
Amortisation 219 - - - 219
Depreciation 381 140 6 (6) 521
Segment assets and segment liabilities are reviewed by the Chief Executive
Officer based on the consolidated statement of financial position.
Accordingly, this information is replicated in the Group Consolidated
statement of financial position. As no measure of assets or liabilities for
individual segments is reviewed regularly by the Chief Executive Officer, no
disclosure of total assets or liabilities has been made.
The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies.
Revenue disaggregated by division and timing of recognition below:
Year ended 31 March 2022 Wealth Management Capital Markets Group and consolidation adjustments Group
£'000 £'000 £'000 £'000
Point in time 2,443 12,429 - 14,872
Over time 13,394 3,769 - 17,163
15,837 16,198 - 32,035
Year ended 31 March 2021 Wealth Management Capital Markets Group and consolidation adjustments Less Discontinued Operations Group (continuing operations)
£'000 £'000 £'000 £'000 £'000
Point in time 3,419 11,786 35 (53) 15,187
Over time 9,872 3,681 432 (431) 13,554
13,291 15,467 467 (484) 28,741
The following movement of contract liabilities was recognised in the year:
As at 31 Mar 2021 Recognised in revenue Amounts deferred As at 31 Mar 2022
Group £'000 £'000 £'000 £'000
Contract liabilities 372 (372) 39 39
Contract liabilities relate to deferred recognition of retainer fees invoices
quarterly. During the year the billing period was aligned to the financial
year quarters causing a reduction in contract liabilities at the year end 31
March 2022.
Year ended Year ended
31 Mar 2022 31 Mar 2021
Group £'000 £'000
Operating (loss)/profit is stated after charging/(crediting):
Depreciation of property, plant and equipment (note 13) 289 521
Amortisation of intangibles (note 16) 505 219
Short term and low value leases 59 -
IFRS 16 depreciation (note 19) 435 502
Employee benefit expense (note 7) 21,300 19,260
Restructuring and non-recurring legal and regulatory costs 1,191 616
Other administrative expenses 9,083 7,097
Auditors' remuneration:
Audit of these financial statements 50 52
Amounts payable to the principal auditors and their associates in respect of:
- audit of financial statements of subsidiaries pursuant to legislation 95 106
- audit related assurance services 55 17
33,062 28,390
Expected credit loss (note 22) 81 28
Total 33,143 28,418
Other administrative expenses are incurred in the ordinary course of the
business and do not include any non-recurring items.
7. Employee benefit expense
The Group claimed £7k of grants during the year (FY21: £180k) from the UK
Government through the Coronavirus Job Retention Scheme. No staff remained on
furlough from 30 June 2021.
Non-salaried staff are commission-only brokers and therefore do not receive a
salary.
Year ended Year ended
31 Mar 2022 31 Mar 2021
Group £'000 £'000
Wages and salaries 12,139 9,162
Bonuses 2,148 3,801
Social security costs 1,975 1,634
Other pension costs 508 401
16,770 14,998
Non salaried staff 4,895 4,301
Other administrative expenses 21,665 19,299
Charge for share options granted to employees (note 32) 470 90
Less amounts included within Restructuring and non-recurring costs (835) (129)
21,300 19,260
Year ended Year ended
31 Mar 2022 31 Mar 2021
Company £'000 £'000
Wages and salaries 260 167
The average number of persons (including Directors) employed during the year
was:
Year ended Year ended
Group 31 Mar 2022 31 Mar 2021
Executive and senior management 8 8
Corporate Broking 42 35
Wealth Management 75 64
Support staff 26 24
Salaried staff 151 131
Non salaried staff 7 8
Total 158 139
Year ended Year ended
Company 31 Mar 2022 31 Mar 2021
Executive and senior management 4 5
The total amount paid to Directors in the period, including social security
costs was £1.6m (FY21: £1.0m). Full details of Directors' remuneration,
including that of the highest paid Director, are disclosed in the Remuneration
Report.
8. Finance income and expense
Year ended Year ended
31 Mar 2022 31 Mar 2021
Group £'000 £'000
Bank interest receivable 1 2
Finance income 1 2
-
Interest payable on lease liabilities 93 95
Fair value and present value discount of deferred consideration (see note 26) 416 -
Other interest 2 1
Finance expense 511 96
9. Taxation
Year ended Year ended
31 Mar 2022 31 Mar 2021
Group £'000 £'000
Current tax expense:
United Kingdom corporation tax at 19% (FY21: 19%) - -
Total current tax - -
Deferred tax credit (note 21):
Current year (67) (192)
Effect of change in tax rate - -
Total deferred tax (67) (192)
Total tax in the statement of comprehensive income (67) (192)
The tax credit for the year and the amount calculated by applying the standard
United Kingdom corporation tax rate of 19% (FY21: 19%) to profit before tax
can be reconciled as follows:
Year ended Year ended
31 Mar 2022 31 Mar 2021
Group £'000 £'000
Profit before tax 8 1,047
Tax expense using the United Kingdom corporation tax rate of 19% (FY21: 19%) 2 199
Other expenses not tax deductible 183 4,845
Income not chargeable to tax (6) (4,753)
Movement in unrecognised deferred tax (246) (522)
Difference in overseas tax rates - 39
Total tax credit in the statement of comprehensive income (67) (192)
10. Discontinued operations and assets & liabilities held for sale
2021 - Disposal of WH Ireland (IOM) Limited
The Group announced its intention to sell its subsidiary WH Ireland (IOM)
Limited on 29 June 2020, and the sale subsequently completed on 21 August
2020. In accordance with IFRS 5 non-current assets held for sale and
discontinued operations, the results for WH Ireland (IOM) Limited were
included in discontinued operations in the prior period; its assets and
liabilities were classified as held for sale and recorded at the lower of the
carrying value and fair value less costs to sell. The associated assets and
liability were therefore presented as held for sale in the prior year's
financial statements.
Financial performance and cash flow information
Year ended
31 Mar 2021
£'000
Revenue 484
Administrative expenses (433)
Operating profit 51
Loss on disposal of discontinued operations (137)
Finance income -
Finance expense -
(Loss) before tax (86)
Tax -
(Loss) from discontinued operations (86)
Year ended
31 Mar 2021
£'000
Net cash generated from operations 163
Net cash generated from investing activities 1
Net cash used in financing activities (997)
Net decrease in cash and cash equivalents (833)
Assets and liabilities of disposal group classified as held for sale
The assets and liabilities relating to WH Ireland (IOM) Limited were
reclassified as held for sale at 31 March 2020. As at 31 March 2021, these
were all nil values as the sale of WH Ireland (IOM) Limited completed on 21
August 2020.
11. Dividend
No dividend is proposed in respect of 2022 (FY21: none).
12. Earnings per share
Basic EPS is calculated by dividing the profit or loss 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
(note 29).
Diluted EPS is the basic EPS, adjusted for the effect of the conversion into
fully paid shares of the weighted average number of all employee share options
outstanding. In a year when the Company presents positive earnings
attributable to ordinary shareholders, anti-dilutive options represent options
issued where the exercise price is greater than the average market price for
the period.
Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below:
Year ended Year ended
31 Mar 2022 31 Mar 2021*
Group
Weighted average number of shares in issue during the period 59,692 50,249
Effect of dilutive share options 1,190 683
(thousands)
60,882 50,932
From continuing operations
Profit for the year attributable to ordinary shareholders (£'000) 75 1,239
Basic 0.13p 2.47p
Diluted 0.12p 2.43p
From discontinued operations
Loss for the year attributable to ordinary shareholders (£'000) - (86)
Basic - (0.17p)
Diluted - -
Total
Profit for the year attributable to ordinary shareholders (£'000) 75 1,153
Basic 0.13p 2.30p
Diluted 0.12p 2.26p
*The comparative dilutive share options have been restated, further details
can be found in note 3.
13. Property, plant and equipment
Group Company
Computers, Computers,
fixtures and fittings fixtures and fittings
£'000 £'000
Cost
At 31 March 2020 5,444 33
Additions 201 -
At 31 March 2021 5,645 33
Additions 103 4
At 31 March 2022 5,748 37
-
Depreciation and impairment
At 31 March 2020 4,613 33
Depreciation charge 521 -
At 31 March 2021 5,134 33
Depreciation charge 289 -
At 31 March 2022 5,423 33
-
Net book values
At 31 March 2022 325 4
At 31 March 2021 511 -
14. Business Combinations
2021 - Acquisition of Harpsden Wealth Management Limited
On 22 December 2020, WH Ireland Group Plc acquired Harpsden Wealth Management
Limited (Harpsden) for a total consideration of £7.4m.
The fair value of the assets and liabilities of Harpsden as at the date of
acquisition are as per the table below:
Book value Adjustments Fair value
£'000 £'000 £'000
Net Assets at date of acquisition:
Intangible assets - 4,225 4,225
Tangible assets 13 - 13
Debtors 309 - 309
Cash 671 - 671
Creditors (523) - (523)
Deferred tax liability - (803) (803)
Net assets acquired 470 3,422 3,892
Goodwill arising on acquisition 3,539
Total 7,431
Discharged by:
Initial cash consideration 5,300
Deferred consideration payable 2,585
Effect of discounting of deferred consideration (589)
Costs associated with acquisition 135
Total 7,431
In the period from acquisition to 31 March 2021, the Harpsden acquisition
earned revenue of £782k and statutory profit before tax of £125k.
15. Goodwill
Goodwill acquired in a business combination is allocated to a cash generating
unit (CGU) that will benefit from that business combination.
The carrying amount of goodwill acquired in the acquisition of Harpsden Wealth
Management is set out below:
Year ended Year ended
31 Mar 2022 31 Mar 2021
Group £'000 £'000
Beginning of year 3,539 -
Acquisition of subsidiaries - 3,539
End of year 3,539 3,539
Goodwill is assessed annually for impairment and the recoverability has been
assessed at 31 January 2022 by comparing the carrying value of the CGU to
which the goodwill is allocated against its recoverable amount. The
recoverable amount is the higher of the CGU's fair value less cost to sell and
the value in use. The value in use has been calculated using pre-tax
discounted cash flow projections based on the most recent budgets and
forecasts approved by the board of directors.
The projections cover a five year period and a terminal multiple has been
applied to the cashflows extrapolating the projections consistent with the
assumed indefinite useful life of the goodwill.
The Harpsden CGU recoverable amount was calculated as £10.94m, indicating
that there is no impairment. The main underlying assumptions used in the
calculations are the pre-tax discount rate, the short term growth in revenue
and expenditure and the long term growth rate to perpetuity. The revenue
growth used in the cash flow forecast is based on the AUM forecasts multiplied
by the relevant yields. AUM forecasted growth ranges from 5% to 13%. Cash
outflows have been estimated at 5% annual increase where no other significant
growth has been forecasted. A pre-tax discount rate of 14.7% has been used.
This is based on the Group's assessment of the risk-free rate of interest and
specific risks relating to Harpsden. A 2% long-term growth rate has been
applied, which is prudent when compared against the growth rates used in the
forecast calculations for the first five years.
Sensitivity analysis has been performed and no impairment would arise if
either of the following occurred:
· An increase in pre-tax discount rate from 14.7% to 16.7%
· A fall in perpetuity growth rate from 2% to -3%
· No AUM growth in the first year of the forecast
An impairment would arise if there was no increase in AUM over the five year
forecast and the subsequent terminal growth was 0%.
16. Intangible assets
Client relationships arise when the group acquires a broker business with an
existing client base. The assets below represent the fair value of future
benefits arising from these client relationships. Amortisation of client
relationships is charged to administrative expenses in the consolidated
statement of comprehensive income on a straight line basis over the estimated
useful lives (2 to 12 years). No impairment indicators were present for the
acquired client relationship contracts.
Client
relationships Brand Total
Group £'000 £'000 £'000
Cost
At 31 March 2020 4,581 - 4,581
Additions 4,150 75 4,225
At 31 March 2021 8,731 75 8,806
Additions - - -
At 31 March 2022 8,731 75 8,806
Amortisation
At 31 March 2020 3,823 - 3,823
Charge for the year 210 9 219
At 31 March 2021 4,033 9 4,042
Charge for the year 467 38 505
At 31 March 2022 4,500 47 4,547
Net book values
At 31 March 2022 4,231 28 4,259
At 31 March 2021 4,698 66 4,764
During the year ended 31 March 2021, the group acquired client relationships
totalling £4.2m as part of the Harpsden acquisition (note 14) and at the year
ending 31 March 2022 the net book value was £3.72m and remaining useful
economic life of 9 years. An intangible asset was also recognised representing
the Harpsden brand totalling £75k and at the year ending 31 March 2022 the
net book value was £28k and remaining useful economic life of 1 year.
An intangible asset was recognised relating to the client relationships
brought in by Robert Race when he joined the group. At the year ended 31 March
2022 the net book value was £489k and remaining useful economic life of 4
years.
The company did not have any intangible assets either at 31 March 2022 or 31
March 2021.
17. Subsidiaries
Year ended Year ended
31 Mar 2022 31 Mar 2021
Company £'000 £'000
Beginning of year 26,448 19,298
Additions - 7,433
Disposals - (283)
End of year 26,448 26,448
Investments in subsidiaries are stated at cost less impairment.
During the financial year the Group raised £Nil (FY21: £5.3m) by way of
placings to existing and new shareholders. In the prior year the Group used
the placings to fund the purchase of Harpsden Wealth Management Limited.
The Company's subsidiaries, all of which are included in the consolidated
financial statements, are presented below:
Subsidiary Country of incorporation Principal activity Class of shares Proportion held by Group Proportion held by Company
WH Ireland Limited England & Wales WM and CIB Ordinary 100% 100%
Harpsden Wealth Management Limited England & Wales WM Ordinary 100% 100%
WH Ireland (Financial Services) Limited England & Wales Dormant Ordinary 100% -
Readycount Limited England & Wales Dormant Ordinary 100% 100%
Stockholm Investments Limited England & Wales Dormant Ordinary 100% 100%
ARE Business and Professional Limited England & Wales Dormant Ordinary 100% -
SRS Business and Professional Limited England & Wales Dormant Ordinary 100% -
WH Ireland Nominees Limited England & Wales Nominee Ordinary 100% -
WH Ireland Trustee Limited England & Wales Trustee Ordinary 100% -
Fitel Nominees Limited England & Wales Nominee Ordinary 100% -
The registered office of Harpsden Wealth Management Limited is Newtown House,
Newtown Road, Henley-on-Thames, Oxfordshire RG9 1HG.
The registered office of all other companies listed above is 24 Martin Lane,
London, EC4R 0DR.
The following dormant subsidiaries are guaranteed by the Company and therefore
take advantage of the Companies Act (2006) in obtaining exemption from an
individual audit:
Subsidiary Country of incorporation Company registration number
WH Ireland (Financial Services) Limited England & Wales 4279349
Readycount Limited England & Wales 3164863
Stockholm Investments Limited England & Wales 4215675
ARE Business and Professional Limited England & Wales 3681185
SRS Business and Professional Limited England & Wales 4238969
WH Ireland Nominees Limited England & Wales 2908691
WH Ireland Trustee Limited England & Wales 3559373
Fitel Nominees Limited England & Wales 1401140
18. Investments
Group
Quoted Unquoted Total
Financial assets at fair value through profit or loss £'000 £'000 £'000
At 31 March 2021 - 48 48
At 31 March 2022 - 48 48
Quoted Warrants* Total
Other financial assets at fair value through profit or loss £'000 £'000 £'000
At 31 March 2020 1 229 230
Additions* - 823 823
Fair value gain* - 46 46
Disposals* - (48) (48)
At 31 March 2021 1 1,050 1,051
Additions - 850 850
Fair value gain - 1,072 1,072
Disposals - (8) (8)
At 31 March 2022 1 2,964 2,965
Total investments at 31 March 2022 1 3,012 3,013
Total investments at 31 March 2021 1 1,098 1,099
* The comparative additions and fair value gain have been restated. Further
details can be found in note 3 of these financial statements
Financial assets at fair value through profit or loss include equity
investments other than those in subsidiary undertakings. These are measured at
fair value with fair value gains and losses recognised through profit and
loss.
Other investments, in the main, comprise financial assets designated as fair
value through profit or loss and include warrants and equity investments.
Warrants may be received during the ordinary course of business and are
designated as fair value through profit or loss. There is no cash
consideration associated with the acquisition.
Fair value, in the case of quoted investments, represents the bid price at the
reporting year end 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.
The fair value of the warrants was determined using the Black Scholes model
and grouped within level 3 with fair value measurements derived from formal
valuation techniques (see note 27). The key inputs into this calculation are
the share price as at 31 March 2022, exercise price, risk free interest rate
and volatility which is based on the share price movements during the period 1
December 2021 to 31 March 2022.
Included in non-operational income is the fair value gain totalling £1,072k
(2021: £46k).
Year ended Year ended
31 Mar 2022 31 Mar 2021*
Net gains on investing activities ref £'000 £'000
Fair value gain on warrants 1,072 46
Fair value gain on investments 23 554 772
*The comparative information for the year end 31 March 2021 has been restated 1,626 818
to reflect the correct net gains on investment from revenue, further details
can be found in note 3 of these financial statements.
Total net gain on investing activities
Total net gain on investing activities
1,626
818
19. Right of use asset & lease liability
Leasehold Properties
£'000
Cost
At 31 March 2020 3,036
Adjustment for deferred rent invoices (50)
Correction of calculation of right of use asset (319)
At 31 March 2021 2,667
Additions -
At 31 March 2022 2,667
Depreciation and impairment
At 31 March 2020 562
Charge for the year 502
At 31 March 2021 1,064
Charge for the year 435
At 31 March 2022 1,499
Net book values
At 31 March 2022 1,168
At 31 March 2021 1,603
Maturity of discounted lease payments in relation to non-cancellable leases
The table below represents the minimum lease payments in relation to
non-cancellable leases where the group is a lessee:
Group
Payable within 1 year Payable in 2 to 5 years Payable after more than 5 years Total contractual payments
Group £'000 £'000 £'000 £'000
2022 376 956 43 1,375
2021 552 1,295 211 2,058
The following represents the lease expense in relation to leases which is
recognised in the statement of comprehensive income:
Year ended Year ended
31 Mar 2022 31 Mar 2021
Group £'000 £'000
Depreciation of right of use asset 435 502
Interest charge 85 95
Total charge 520 597
Nature of leases
The Group leases a number of properties in the jurisdictions it operates.
These leases are usually for a fixed term although the Group sometimes
negotiates break clauses in its leases. On a case-by-case basis, the Group
will consider whether the absence of a break clause would expose the group to
excessive risk. Typically factors considered in deciding to negotiate a break
clause include:
· the length of the lease term;
· the economic stability of the environment in which the property
is located; and
· whether the location represents a new area of operations for the
Group
As at 31 March 2022, the carrying amounts of the lease liabilities are not
reduced by the amounts that would not be paid as a result of exercising the
break clauses because the Group does not anticipate to exercise its rights to
the break clauses.
The total cash outflow for leases, including short-term leases, in the year
ending 31 March 2022 was £827k (FY21: £898k)
Payments associated with short-term leases and all leases of low-value assets
are recognised on a straight-line basis in administrative expenses. Short-term
leases are leases with a lease term of 12 months or less without a purchase
option.
The Company did not have any right of use assets or lease liabilities either
at 31 March 2022 or 31 March 2021.
20. Subordinated loan
Year ended Year ended
31 Mar 2022 31 Mar 2021
Company £'000 £'000
Beginning of year - 985
Disposals - (985)
End of year - -
This interest-free, subordinated loan was originally issued to WH Ireland
(IOM) Limited on 31 March 2014 and was increased in line with the needs of the
subsidiary. As part of the agreement for the sale of WH Ireland (IOM) Limited,
announced on 29 June 2020, the subordinated loan was repaid on completion, 21
August 2020. Accordingly, the loan was classified as a current asset in the
prior year. The impact of applying IFRS 9 has been considered and probability
of default was assessed and consequently, it was determined that the expected
credit loss is nil.
21. Deferred tax assets and liabilities
Deferred tax is provided for temporary differences, at the reporting year end
date, between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes using a tax rate of 19% (FY21: 19%).
A deferred tax asset is recognised for all deductible temporary differences
and unutilised tax losses only to the extent that it is probable that future
taxable profits will be available against which the assets can be utilised.
Deferred tax assets are reduced to the extent that it is no longer probable
that the related tax benefit will be realised.
A net deferred tax liability has been recognised in the year:
Year ended Year ended
31 Mar 2022 31 Mar 2021
Group £'000 £'000
Tax losses 190 190
Intangible acquired on business combinations (736) (803)
Other 4 4
Deferred tax liability (542) (609)
The change in deferred tax assets and liabilities during the year was as
follows:
Trading losses carried forward Total
Group £'000 £'000
Deferred tax asset
As at 1 April 2020 190 190
Charge to the Consolidated statement of comprehensive income - -
As at 31 March 2021 190 190
As at 31 March 2022 190 190
The carrying amount of the deferred tax asset is reviewed at each reporting
date and is only recognised to the extent that it is probable that future
taxable profits of the Group will allow the asset to be recovered.
Intangible asset amortisation Total
Group £'000 £'000
Deferred tax liabilities
As at 1 April 2020 - -
Adjustment on acquisition of business combination 803 803
Other (4) (4)
As at 31 March 2021 799 799
Credit to the Consolidated statement of comprehensive income (67) (67)
As at 31 March 2022 732 732
The unrecognised tax losses and fixed asset timing differences amount to
£13.4m (FY21: £16.0m).
The Company had no deferred tax balances either at 31 March 2022 or 31 March
2021.
22. Trade and other receivables
Group Company
31 Mar 2022 31 Mar 2021 31 Mar 2022 31 Mar 2021
£'000 £'000 £'000 £'000
Trade receivables 751 1,322 - -
Other receivables 893 1,065 95 47
Accrued income 3,079 2,139 - -
Prepayments 1,035 630 18 9
5,758 5,156 113 56
The carrying value of trade and other receivable balances are denominated
fully in British pounds (FY21: 100%).
Accrued income relates to management fee accruals. Management fees are accrued
on a monthly basis and reconciled to fees collected quarterly. Consideration
to IFRS 9 has been made and it has been determined that there is a low
probability of default and therefore the expected credit loss is not material.
The impact of applying IFRS 9 to intercompany balances for the Company has
been considered and probability of default was assessed and consequently, it
was determined that the expected credit loss is not material.
Fees and charges owed by clients are generally considered to be past due where
they remain unpaid five working days after the relevant billing date. At 31
March 2022, trade receivables (net of provisions for impairment and doubtful
debts) comprised of the following:
Group Company
31 Mar 2022 31 Mar 2021 31 Mar 2022 31 Mar 2021
£'000 £'000 £'000 £'000
Not past due 194 496 - -
Up to 5 days due 9 - - -
from 6 to 15 days past due 219 42 - -
From 16 to 30 days past due 1 148 - -
From 31 to 45 days past due 113 68 - -
More than 45 days past due 215 568 - -
751 1,322 - -
Included in aged receivables more than 45 days past due is the provisions for
impairment of £502k (FY21: £421k).
Trade receivables are largely amounts due from retainer clients, who are
invoiced on a quarterly basis in advance. The Group's policy is to allow 30
days for payment. Consequently, these receivables have no significant
financing component and the Group have applied the simplified approach in line
with IFRS 9. Calculation of loss allowances are measured at an amount equal to
lifetime expected credit losses (ECLs). The approach taken by the Group in
arriving at the expected credit loss is as follows:
Step 1: The Group have determined the appropriate brackets by grouping each
trade receivables based on the ageing structure.
Step 2: Having determined the appropriate groupings, a historical loss rate
(adjusted for forward looking information) was calculated for each age bracket
by reviewing the pattern of payment of trade receivables over the past 12
months.
Step 3: This historical loss rate (adjusted for forward looking information)
has been applied to each ageing bracket of trade receivables as at the balance
sheet date to arrive at an expected credit loss for each grouping. All trade
receivables over 365 days have a 100% historical loss rate loss applied to
them.
Based on the above, the group recognised an expected credit loss of £81k
(FY21: £28k expected credit loss).
The maximum exposure to credit risk, before any collateral held as security,
is the carrying value of each class of receivable set out above.
The Directors consider that the carrying amounts of trade and other
receivables approximate their fair value.
Movements in impairment provisions were as follows:
Group Company
31 Mar 2022 31 Mar 2021 31 Mar 2022 31 Mar 2021
£'000 £'000 £'000 £'000
Opening balance 421 458 - -
Amount released from provision due to recovery (57) (57) - -
Amounts written off, previously fully provided - (65) - -
Amount charged to the statement of comprehensive income 138 85 - -
Closing balance 502 421 - -
23. Other investments
Group Company
31 Mar 2022 31 Mar 2021 31 Mar 2022 31 Mar 2021
£'000 £'000 £'000 £'000
Current asset investment 1,490 962 - -
Restricted cash 422 1,528 - -
Total 1,912 2,490 - -
Current asset investments represent short-term principal positions in the form
of listed and unquoted investments which are held at market value.
Included in current asset investments are unquoted investments totalling a
value of £701k. Judgement has been applied to the value of these shares based
on recent transactions around the year end 31 March 2022. If the share price
were to change by 2% the value of this investment would change by £7k.
Restricted cash represents monies held by the Group which have some
restrictions on their conversion to cash.
Included in non-operational income is the fair value gain and the sale of
investments. Further details can be found in note 18.
24. Cash and cash equivalents
Group Company
31 Mar 2022 31 Mar 2021 31 Mar 2022 31 Mar 2021
£'000 £'000 £'000 £'000
Cash and cash equivalents 6,446 8,211 1,246 1,246
For the purposes of the cash flow statement, 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 and the Company's money and
money held for settlement of outstanding transactions.
Money held on behalf of clients is not included in cash and cash equivalents
on the statement of financial position. Client money at 31 March 2022 for the
Group was £366k (FY21: £401k). There is no client money held in the Company
(FY21: £nil).
25. Trade and other payables
Group Company
31 Mar 2022 31 Mar 2021 31 Mar 2022 31 Mar 2021
£'000 £'000 £'000 £'000
Trade payables 2,963 1,897 84 35
Amounts due to Group companies - - 2,194 2,824
Other payables 319 618 - -
Tax and social security 886 662 - -
Deferred income 39 372 1 1
Accruals 2,474 4,074 78 100
6,681 7,623 2,357 2,960
The Directors consider that the carrying amounts of trade and other payables
approximate their fair value.
Deferred income relates to retainer fees invoiced in advance and spread over
the length of the period, typically quarterly. The balance at year end was
fully recognised in the following financial year.
Amounts due to Group companies are unsecured, interest free and repayable on
demand.
26. Deferred consideration
Group £'000
At 31 March 2020 -
Additions during the year: 1,996
Paid during the year -
At 31 March 2021 1,996
Additions during the year: -
Charged to Statement of Comprehensive Income 416
At 31 March 2022 2,412
The increase in deferred consideration in the year ended 31 March 2022
represents the fair value adjustment and unwinding of present value discount.
31 Mar 2022 31 Mar 2021
£'000 £'000
Included in current liabilities 2,412 1,087
Included in non-current liabilities - 909
2,412 1,996
Deferred consideration relates to the acquisition of Harpsden and the maximum
amounts payable over a two year period. The following assumptions were made:
revenue growth of 2%, attrition rate of 3% for larger clients and 10% for
smaller clients, discount rate of 13.5%.
27. Financial risk management
The fair value of all of the Group's and the Company's financial assets and
liabilities approximated to their carrying value at the reporting year end
date. The carrying amount of non-current financial instruments, including
floating interest rate borrowing, are not significantly different from the
fair value of these instruments based on discounted cash flows. The
significant methods and assumptions used in estimating fair values of
financial instruments are summarised below:
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include equity
investments, other than those in subsidiary undertakings. In the case of
listed investments, the fair value represents the quoted bid price at the
reporting period end date. The fair value of unlisted investments is estimated
by reference to recent arm's length transactions.
Other investments
Other investments include warrants and equity investments, categorised as fair
value through profit or loss. In the case of listed investments, the fair
value represents the quoted bid price at the reporting year end date. The fair
value of unlisted investments is estimated by reference to recent arm's length
transactions. In the case of warrants, the fair value is estimated using
established valuation models.
Trade receivables and payables
The carrying value less impairment provision of trade receivables and payables
is assumed to approximate to their fair values due to their short-term nature.
Borrowings
Borrowings are measured at amortised cost using the effective interest rate
method. The tables below summarise the Group's main financial instruments by
financial asset type:
31 March 2022
Amortised cost Fair value through profit or loss Total
Group £'000 £'000 £'000
Financial assets
Investments - 48 48
Other investments - 4,877 4,877
Trade and other receivables 4,723 - 4,723
Cash and cash equivalents 6,446 - 6,446
Financial liabilities
Trade and other payables 5,756 - 5,756
Lease liability 1,375 - 1,375
31 March 2021
Amortised cost Fair value through profit or loss Total
Group £'000 £'000 £'000
Financial assets
Investments - 48 48
Other investments - 3,541 3,541
Trade and other receivables 4,526 - 4,526
Cash and cash equivalents 8,211 - 8,211
Financial liabilities
Trade and other payables 6,589 - 6,589
Lease Liability 2,058 - 2,058
The tables below summarise the Company's main financial instruments by
financial asset type:
31 March 2022
Amortised cost Fair value through profit or loss Total
Company £'000 £'000 £'000
Financial assets
Trade and other receivables 95 - 95
Cash and cash equivalents 1,246 - 1,246
Financial liabilities
Trade and other payables 162 - 162
Group balances 2,194 - 2,194
31 March 2021
Amortised cost Fair value through profit or loss Total
Company £'000 £'000 £'000
Financial assets
Trade and other receivables 47 - 47
Cash and cash equivalents 1,246 - 1,246
Financial liabilities
Trade and other payables 135 - 135
Group balances 2,824 - 2,824
Risks
The main risks arising from the Group's financial instruments are credit risk,
liquidity risk and market risk. Market risk comprises, interest rate risk and
other price risk. The Directors review and agree policies for managing each of
these risks which are summarised below:
Credit risk
Credit risk is the risk that clients or other counterparties to a financial
instrument will cause a financial loss by failing to meet their obligations.
Credit risk relates, in the main, to the Group's trading and investment
activities and is the risk that third parties fail to pay amounts as they fall
due. Formal credit procedures include approval of client limits, approval of
material trades, collateral in place for trading clients and chasing of
overdue accounts. Additionally, risk assessments are performed on banks and
custodians.
The maximum exposure to credit risk at the end of the reporting period is
equal to the statement of financial position figure. The impairment policy can
be found in note 22. There were no other past due, impaired or unsecured
debtors.
Financial assets that are neither past due nor impaired in respect of trade
receivables relate mainly to accrued management fees.
The credit risk on liquid funds, cash and cash equivalents is limited due to
deposits being held at the Group's main bank with a credit rating of "A",
assigned by Standard and Poor's.
There has been no change to the Group's exposure to credit risk or the manner
in which it manages and measures the risk during the period.
The credit risk in the Company principally comes from intercompany balances
and subordinated loan. Since these are all within the Group, the Directors are
able to closely monitor the risk of default on a regular basis to minimise any
potential losses.
Liquidity risk
Liquidity risk is the risk that obligations associated with financial
liabilities will not be met. The Group monitors its risk to a shortage of
funds by considering the maturity of both its financial investments and
financial assets (for example, trade receivables) and projected cash flows
from operations.
The Group's objective is to maintain the continuity of funding through the use
of bank facilities where necessary, which are reviewed annually with the
Group's Banker, the Bank of Scotland. Items considered are limits in place
with counterparties which the bank are required to guarantee, payment facility
limits, as well as the need for any additional borrowings.
The table below summarises the maturity profile of the Group's financial
liabilities based on contractual undiscounted payments:
31 March 2022
Payable within 1 year Payable in 2 to 5 years Payable after more than 5 years Total contractual payments
Group £'000 £'000 £'000 £'000
Trade and other payables 5,756 - - 5,756
Lease liability 568 1,032 31 1,631
Deferred consideration 2,500 - - 2,500
8,824 1,032 31 9,887
31 March 2021
Payable within 1 year Payable in 2 to 5 years Payable after more than 5 years Total contractual payments
Group £'000 £'000 £'000 £'000
Trade and other payables 6,589 - - 6,589
Lease liability 634 1,425 206 2,265
Deferred consideration 1,250 1,250 - 2,500
8,473 2,675 206 11,354
The table below summarises the maturity profile of the Company's financial
liabilities based on contractual undiscounted payments:
31 March 2022
Payable within 1 year Payable in 2 to 5 years Payable after more than 5 years Total contractual payments
Company £'000 £'000 £'000 £'000
Trade and other payables 162 - - 162
31 March 2021
Payable within 1 year Payable in 2 to 5 years Payable after more than 5 years Total contractual payments
Company £'000 £'000 £'000 £'000
Trade and other payables 135 - - 135
Market Risk
Interest rate risk
The Group's exposure to the risk of changes in market interest rates relates
to the Group's amount of interest receivable on cash deposits. The maximum
exposure for interest is not significant.
Other price risk
Other price risk is the risk that the fair value or future cash flows of a
financial instrument will fluctuate because of changes in market prices (other
than those arising from interest rate risk) whether those changes are caused
by factors specific to the individual financial instrument or its issuer or
factors affecting all similar financial instruments traded in the market.
Other investments are recognised at fair value and subject to changes in
market prices.
The Group manages other price risk by monitoring the value of its financial
instruments on a monthly basis and reporting these to the Directors and Senior
Management. The Group has disposed of a number of its investments during the
course of the year, which has helped mitigate risk. However, the risk of
deterioration in prices remains high whilst the market continues to be
volatile.
The risk of future losses is limited to the fair value of investments as at
the year-end of £4,925k (FY21: £3,589k). See note 18 and 23.
Fair value measurement recognised in the statement of financial position
The following table provides an analysis of financial instruments that are
measured subsequent to initial recognition at fair value, grouped into Levels
1 to 3 based on the degree to which the fair value is observable:
· Level 1 at fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets and liabilities;
· Level 2 fair value measurements are those derived from inputs
other than the quoted price included within Level 1 that are observable for
the asset or a liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices); and
· Level 3 fair value measurements are those derived from formal
valuation techniques that include inputs for the asset or liability that are
not based on observable market data (unobservable inputs). The valuation
technique used in determining the fair value is the Black Scholes model. The
key inputs into this calculation are the share price as at 31 March 2022,
exercise price, risk free interest rate and volatility which is based on the
share price movements during the period 1 December 2021 to 31 March 2022.
31 March 2022
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Unquoted equities 701 - 48 749
Financial instruments designated at fair value through profit or loss
Quoted equities - - 1 1
Other investments (note 18 & 23) 1,211 - 2,964 4,175
Deferred consideration - - (2,412) (2,412)
Total 1,912 - 601 2,513
31 March 2021
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Unquoted equities - - 48 48
Financial instruments designated at fair value through profit or loss
Quoted equities - - - -
Other investments (note 18 & 23) 2,490 - 1,051 3,541
Deferred consideration - (1,996) (1,996)
Total 2,490 - (897) 1,593
28. Capital management
The capital of the Group comprises share capital, share premium, retained
earnings and other reserves. The total capital at 31 March 2022 amounted to
£15.4m for the Group (FY21: £15.1m) and £23.9m for the Company (FY21:
£23.4m). The primary objective of the Group's capital management is to ensure
that it maintains a strong capital structure in order to support the
development of its business, to maximise shareholder value and to provide
benefits for its other stakeholders.
These objectives are met by managing the level of debt and setting dividends
paid to shareholders at a level appropriate to the performance of the
business.
Certain activities of the Group are regulated by the FCA which is the
statutory regulator for financial services business and has responsibility for
policy, monitoring and discipline for the financial services industry. The FCA
requires the Group's resources to be adequate, that is, sufficient in terms of
quantity, quality and availability, in relation to its regulated activities.
The Group monitors capital on a daily basis by measuring movements in the
Group regulatory capital requirement and through its Internal Capital Adequacy
and Risk Assessment Process (ICARA), which was formerly through its Internal
Capital Adequacy Assessment Process (ICAAP). Compliance with FCA minimum
common equity tier 1 regulatory capital requirements was maintained during the
year and the Group is satisfied that there is and will be, sufficient capital
to meet these regulatory requirements for the foreseeable future.
29. Share capital and share premium account
Number of Share Share
shares capital premium
£'000 £'000 £'000
As at 1 April 2020 48,699 2,435 14,314
Shares issued:
On placing 13,323 666 4,669
Balance at 31 March 2021 62,022 3,101 18,983
Shares issued:
On placing 64 3 31
Balance at 31 March 2022 62,086 3,104 19,014
At 31 March 2022 the total number of issued ordinary shares is 62.09 million
shares of 5p each (FY21: 62.02 million shares of 5p each). 0.06million
shares were issued during the period (FY21: 13.32 million).
On 11 March 2021 a new NED scheme was announced which would issue ordinary
shares to certain Non-Executive director's in lieu of 25% of the fees that
would otherwise be due to them.
The following ordinary shares have been issued to Non-Executive directors
under the NED scheme
Number of Amount paid
shares Nominal value per share
£'000 £'000 £'000
30-Jul-20 31,248 5p 48p
16-Mar-21 41,664 5p 48p
30-Jul-21 30,545 5p 58p
11-Feb-22 33,897 5p 50.7p
On 27 November 2020 the Group issued 13,250,000 ordinary shares by way of
placing at a price of 40p per share to support the acquisition of Harpsden
Wealth Management Limited.
30. Treasury shares
Year ended 31 March 2022 Year ended 31 March 2021
Group £'000 £'000
At 31 March 644 644
Additions 256 -
At 31 March 900 644
At 31 March 2022 no shares in the Company were held in the EBT (FY21: nil
shares) and the ESOT held 2,639,500 shares (FY21: 2,139,500), at a nominal
value of 5p per share and represents the full balance above. This represents
4.25% of the called up share capital (FY21: 3.45%).
During the year the Company's Employee Share Option trust (ESOT) purchased the
following ordinary shares in the Company
Number of shares Nominal value Total consideration
Date of issue £'000 £'000 £'000
15-Jun-21 50,000 5p 28,250
20-Jul-21 50,000 5p 29,000
05-Aug-21 40,000 5p 22,800
09-Sep-21 50,000 5p 29,000
25-Oct-21 50,000 5p 27,430
08-Nov-21 50,000 5p 25,500
13-Dec-21 50,000 5p 25,000
05-Jan-22 50,000 5p 23,500
09-Feb-22 50,000 5p 22,750
09-Mar-22 50,000 5p 22,750
31. Employee Benefit Trusts (EBT)
The WH Ireland EBT was established in October 1998 and the WH Ireland Group
plc Employee Share Ownership Trust (ESOT) was established in October 2011,
both for the purpose of holding and distributing shares in the Company for the
benefit of the employees. All costs of the EBT and ESOT are borne by the
Company or its subsidiary WH Ireland Limited.
Joint Ownership Arrangements (the 'JOE Agreements') are in place in relation
to 400,000 shares between the trustees of the ESOT and a number of employees
(the 'Employees'). Under the JOE Agreements, the option for the Employees to
acquire the interest that the trustees of the ESOT has in the jointly owned
shares, lapses when an employee is deemed to be a Bad Leaver. If an Employee
ceases to be an employee of the Group, other than in the event of critical
illness or death, the Employee is deemed to be a Bad Leaver.
The shares carry dividend and voting rights though these have been waived by
all parties to the JOE Agreements. Due to the consolidation of the ESOT into
the Group accounts, these shares are shown in Treasury (note 30). Due to the
nature of these arrangements, the options contained in the JOE Agreements are
accounted for as share-based payments (note 32).
32. Share-based payments
The Group had two schemes for the granting of non-transferable options to
employees during the reporting period; the approved Company Share Ownership
Plan (CSOP) and a Save as You Earn Schemes (SAYE). In addition, options are
held in the ESOT (note 30). SAYE matures in July 2025.
Company Share Ownership Plan (CSOP)
Under the terms of the Unapproved Options, options over the Company's shares
may be granted on a discretionary basis to employees and consultants of the
Group (including Directors) at a price to be agreed between the Company and
the relevant option holder. Under the terms of the options granted, such
options vest on the third anniversary of the award dates; are exercisable at
the market price at the time the option was issued and are exercisable for ten
years after the vesting date.
Movements in the number of share options outstanding that were issued post 7
November 2002 and their related weighted average exercise prices (WAEP) are as
follows:
31 March 2022
CSOP ESOT ESOT 2019 LTIP 2020 EMI Option Plan
Options WAEP Options WAEP Options WAEP Options WAEP Options WAEP
Outstanding at beginning of year 127,002 64.69p 350,000 74.50p 50,000 92.50p 1,800,000 45.00p 4,330,719 40.43p
Granted - - - - - - - - 387,929 25.78p
Expired / forfeited (91,500) 57.00p - - - - - - (1,074,478) 45.60p
Exercised - - - - - - - - - -
Outstanding at end of year 35,502 84.50p 350,000 74.50p 50,000 92.50p 1,800,000 45.00p 3,644,170 37.34p
Exercisable at end of year 35,502 84.50p 350,000 74.50p 50,000 92.50p - - - -
WA Life* 0.08 yrs 1.50 yrs 4.01 yrs 8.03 yrs 10.26 yrs
* WA Life represents the weighted average contractual life in years to the
expiry date for options outstanding at the end of the year.
31 March 2021
CSOP ESOT ESOT Unapproved Options 2020 EMI Option Plan
Options WAEP Options WAEP Options WAEP Options WAEP Options WAEP
Outstanding at beginning of year 142,002 63.88p 650,000 40.12p 70,000 92.50p 1,800,000 46.00p - -
Granted - - - - - - - 4,330,719 40.43p
Expired / forfeited (15,000) 57.00p (300,000) 0.00p (20,000) 92.50p - - - -
Exercised - - - - - - - - - -
Outstanding at end of year 127,002 64.69p 350,000 74.50p 50,000 92.50p 1,800,000 45.00p 4,330,719 40.43p
Exercisable at end of year 127,002 64.69p 350,000 74.50p 50,000 92.50p - 45.00p - 40.43p
WA Life* 0.73 yrs 2.5 yrs 5.01 yrs 9.03 yrs 12.46 yrs
* WA Life represents the weighted average contractual life in years to the
expiry date for options outstanding at the end of the year.
The pricing models used to value these options and their inputs are as
follows:
Pricing Models
CSOP ESOT ESOT 2019 LTIP 2020 EMI Option Plan
Pricing model Black Scholes Monte Carlo N/A N/A N/A
Date of grant 02/11/11-24/05/12 28/10/13-13/4/16 30/05/17 28/06/19 & 28/12/19 01/11/20 - 01/09/21
Share price at grant (p) 56.5-83.0 74.5-114.5 125 45.0 & 49.0 42.0-56.5
Exercise price (p) 57.0-84.5 0.0-114.5 - 45.0 & 49.0 0.0-58.0
Expected volatility (%) 32.6332-33.2130 43.0000-37.0000 N/A 50 50
Expected life (years) 5 5 3 3 1-3
Risk-free rate (%) 1.2993-.0.7999 0.8000-1.9300 N/A 2 5
Expected dividend yield (%) - 0.67-2.19 N/A N/A N/A
33. Capital commitments
There were no capital commitments for the Group or the Company as at 31 March
2022 (FY21: £nil).
34. Related party transactions
Group
Services rendered to related parties were on the Group's normal trading terms
in an arms' length transaction. Amounts outstanding are unsecured and will be
settled in accordance with normal credit terms. No guarantees have been given
or received. No provision (FY21: £nil) has been made for impaired receivables
in respect of the amounts owed by related parties.
Key management personnel include Executive and Non-Executive Directors of WH
Ireland Group plc and all its subsidiaries. They are able to undertake
transactions in stocks and shares in the ordinary course of the Group's
business, for their own account and are charged for this service, as with any
other client. The transactions are not material to the Group in the context of
its operations, but may result in cash balances on the Directors' client
accounts owing to or from the Group at any one point in time. The charges made
to these individuals and the cash balances owing from/due to them are
disclosed in the table below. There are no other material contracts between
the Group and the Directors.
No transactions occurred with key management personnel and other relates
parties during the year ended 31 March 2022 or 31 March 2021.
The total compensation of key management personnel is shown below:
Year ended 31 March 2022 Year ended 31 March 2021
£'000 £'000
Short-term employee benefits 3,784 1,685
Post-employment benefits 15 -
Termination benefits 443 -
Share-based payment - -
4,242 1,685
The highest paid Director for 2022 was P Wale receiving emoluments of
£468,325 (FY21: £354,831).
Company
The Parent Company receives interest from subsidiaries in the normal course of
business. Total interest received during the year was £nil (FY21: £nil). In
addition, the Parent Company received a management charge of £651k (FY21:
£453k) from its subsidiary WH Ireland Limited. WH Ireland Limited also
charged the Parent Company £nil (FY21: £nil) for broker services.
During the comparative year, the intercompany balances with Stockholm
Investments Limited and Readycount Limited were converted into loans and then
released through a deed of release.
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation. The captions in the primary
statements of the Parent Company include amounts attributable to subsidiaries.
These amounts have been disclosed in aggregate in the notes 17, 22 and 25 and
in detail in the following table:
Amounts owed by related parties Amounts owed to related parties
2022 2021 2022 2021
£'000 £'000 £'000 £'000
Readycount Limited - - - -
Stockholm Investments Limited - - - -
WH Ireland Limited - - 1,882 2,807
Harpsden Wealth Management Limited - - 295 -
WH Ireland Trustee Limited - - 17 17
- - 2,194 2,824
The net amount owed to related parties is £2,194k (FY21: £2,824k owed by
related parties) (see note 22 and 25).
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