REG - W.H. Ireland Group - Final Results and Notice of AGM
27/09/2023 07:00
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RNS Number : 7512N W.H. Ireland Group PLC 27 September 2023
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 2023
Notice of AGM
WH Ireland announces its final results for the year ended 31 March 2023.
Financial & Operating Highlights
· Revenue of £26.7m (FY 2022: £32.0m)
· Underlying* loss before tax £2.0m (FY 2022: underlying profit
before tax of £1.4m)
· Statutory loss before tax £1.8m (FY 2022: profit before tax
£0.1m) reflecting impact of:
o Substantial fall in revenue as above
o Significant reduction in administration expenses to £27.6m (FY 2022:
£33.1m)
o Loss on investments of £2.7m (FY 2022: profit of £1.6m)
o Significant VAT rebate in Wealth Management of £2.2m (FY 2022: nil)
· Loss per share (basic) of 3.29p (FY 2022: profit of 0.13p)
· Cash and cash equivalents as at 31 March 2023 of £4.2m (FY 2022:
£6.4m)
o Cash and cash equivalents of £7.8m as at 22 September 2023, ahead of the
receipt of quarterly recurring cash from the Company's platform providers
(anticipated to be c. £2.5m), due imminently
· Group Assets under Management ("AUM") of £2.1bn (FY 2022:
£2.4bn)
*A reconciliation from underlying profits to statutory profits is shown within
the financial review on page 8.
Divisional Highlights
Wealth Management:
· Revenue of £14.4m (FY 2022: £15.8m), principally reflecting a
fall in commission income
· Returned to profitability during the year on an underlying and
statutory basis
· Continued improvement in the quality of the business with fee
income now representing 89% of total wealth management income (FY 2022: 85%)
· Discretionary managed assets ("DFM") at £1.00bn (FY2022:
£1.02bn)
· Wealth Management total AUM at £1.4bn (FY2022: £1.6bn)
Capital Markets:
· Revenue of £12.2m (FY 2022: £16.2m) reflecting significant
reduction in transaction fees, and despite increase in retainer fees and
commissions & trading income
· £111m funds raised for public and private corporate clients (FY
2022: £236m)
· Total equity transactions 25 (FY 2022: 38) reflecting very
challenging AIM market conditions
· Won 18 new quoted corporate clients to end the year with 90
quoted corporate clients (FY 2022: 88)
· Retained strong position as a top AIM broker: top three ranking
as corporate broker and top five as NOMAD
· Ultra High Net Worth and Family Office AUM of £0.7bn (FY 2022:
£0.7bn)
Current Trading and Outlook
· Challenging first half due to the continuing very difficult
market backdrop
· Successful £5m placing completed in August 2023 to restore
regulatory capital position
· Successful cost reduction exercise completed in September 2023 to
reduce annualised costs by c.£3.8m
· Stable platform to navigate challenging markets and to take
advantage of better market conditions in future
Commenting, Phillip Wale, Chief Executive Officer said:
"The market backdrop has been extremely challenging. While the FTSE 100 was
relatively resilient compared with overseas exchanges, the AIM market fell 22%
over the period and this severely impacted transactional business (and
particularly fundraisings) in our Capital Markets business.
"Following the fundraise in July, we have a stable platform to navigate
challenging markets and to take advantage of better market conditions in
future. After significant first half losses, the completion of our cost
reduction programme gives us the opportunity of returning to a break-even
position in the remainder of the financial year."
Annual General Meeting
The Company confirms that it will today post to shareholders the annual report
and accounts for the period ended 31 March 2023, 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 24 October 2023 at 10.00 a.m.
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)
Emma Gabriel / Harry Rees +44(0) 20 3523 8000
MHP Communications whireland@mhpgroup.com (mailto:whireland@mhpgroup.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 help clients to build a long term financial plan and investment
strategy for them and their families.
Capital Markets Division
Our Capital Markets Division is specifically focused on 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 public and private growth
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
Phillip Wale, Chief Executive's statement
Market backdrop
The market backdrop has been extremely challenging. While the FTSE 100 has
been relatively resilient compared with overseas exchange, the AIM All Share
Index fell 22% over the period. These market conditions severely impacted
transactional business (and particularly fundraisings) in our Capital Markets
Divisions.
The Financial Year 2023
Overall revenue fell 17% from the previous year from £32.0m to £26.7m, but
we also reduced administrative expenses by 17% from £33.1m to £27.6m.
However in the previous financial year we had benefited from gains on
investments (£1.6m), principally warrants or equity received in partial
payment of fees. Many of these investments are in smaller companies, and the
reversal in markets during the year saw a loss on investments of £2.7m. While
we benefitted from significant VAT rebates during the year of £2.2m, this led
to a loss overall for the business of £1.8m.
In October 2022, in response to continuingly poor market conditions the Board
engaged external corporate advisors to assist in a review of the strategy for
the group. As a result of this review the Board actively explored asset sales
of parts of the business.
Following the end of the period under review, the Group announced in July
2023, it had conditionally raised £5m through a placing of shares in the
Company. The placing with both new and existing shareholders was approved by
shareholders on 15 August 2023 (see note 33 for further details).
At the same time, the Group also commenced a cost reduction exercise, the
benefit of which is expected to take effect from Q3 of Financial Year ending
31 March 2024. The Directors believe the recent placing and the cost reduction
exercise gives the Group an improved chance of returning to a break-even
position and securing the future of the Group.
Clients
Our clients remain our priority and our central mission is to continue to
provide 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.
Employees
We have kept tight controls on costs throughout the year and finished the year
with 159 employees against 158 at the start of the period. A further fall in
headcount is expected after the year end following the cost reduction
exercise.
On behalf of the Board, I would like to express our appreciation for the
continuing hard work and loyalty of employees throughout a difficult period.
Shareholders
I would like to thank our shareholders for their continuing support and
welcome the new investors who joined in our most recent placing in July 2023.
Wealth Management (WM)
WM income was more resilient, but market falls still led to a reduction of
assets under management from £1.6bn to £1.4bn. This was the principal reason
for a fall in revenue of 9% (from £15.8m to £14.4m). However we also acted
to reduce costs, including the closure of our Cardiff office, and WM recorded
a small profit for the year, after receipt of the VAT rebate.
Capital Markets (CM)
CM revenue is derived from retainer income, earned from our role as NOMAD or
broker to clients, and transactional income. While retainer income held up
well, and we finished the year with 90 clients, against 88 at the beginning of
the period, transactional income was severely hit, with a particularly sharp
fall in corporate fundraisings. This led to an overall drop in CM revenue of
25%, from £16.2m to £12.2m.
Looking forward
Following the July fundraise after the year-end and together with the
implementation of our cost reduction programme, we believe the Group has an
improved chance of returning to a break-even position.
Financial review
Overview
The WH Ireland Group consists of a principal operating subsidiary, WH Ireland
Limited.
WH Ireland Limited consists of two business divisions: Wealth Management (WM),
which provides investment management solutions and financial advisory services
to retail clients and Capital Markets (CM) which provides a range of services
to both public and private companies, including day to day regulatory and
strategic corporate advice, institutional sales and broking services; and the
production of equity research. It also provides trading services to Funds,
High Net worth individuals and Family Offices.
Total assets managed by the Group are £2.1bn (FY22: £2.4bn). Of this total,
£1.4bn (FY22: £1.6bn) is held in WM with a further £0.7bn (FY22: £0.7bn)
within CM's Ultra High Net Worth business.
The Group's income is derived from activities conducted in the UK with a
number of retail, high net worth, ultra-high net worth, institutional and
corporate clients.
The average Group headcount for the year was 163 (FY22: 158) in the UK.
Strategy summary
Following the fundraise that took place after the year ended 31 March 2023
(see note 33 for further details), the Group's aim is to increase the value of
discretionary assets under management in WM. We also aim to continue to
service our new and existing corporate client list in CM, whilst sourcing new
transactional activity utilising our strong distribution capability in public
and private markets.
Group financial results summary
Year to Year to
31 Mar 2023 31 Mar 2022
£'000 £'000
Revenue 26,688 32,035
Administrative expenses (27,550) (33,062)
Expected credit loss (239) (81)
Operating loss (1,101) (1,108)
Net (loss) / gains on investments (2,683) 1,626
Finance income 10 1
Finance expense (224) (511)
Other income 2,175 -
(Loss) / profit before tax (1,823) 8
Taxation (121) 67
(Loss) /profit and total comprehensive income for the year (1,944) 75
Reconciliation between underlying and statutory profits
Underlying profit before tax is considered by the Board to be an accurate
reflection of the Group's performance when compared to the statutory results,
as this excludes income and expense categories which are deemed of a
non-recurring nature or non-cash operating item. Reporting at an underlying
level is also considered appropriate for external analyst coverage and peer
group benchmarking. A reconciliation between underlying and statutory profit
before tax for the year ended 31 March 2023 with comparative is shown below:
Year to Year to
31 Mar 2023 31 Mar 2022
£'000 £'000
Underlying (loss) / profit before tax (1,987) 1,397
Acquisition related items
- Deal structuring and integration costs - (446)
Amortisation of acquired brand and client relationships (496) (505)
Changes in fair value and finance cost of deferred consideration (173) (416)
Restructuring costs - (835)
Other income 1,957 -
Net changes in the value of non-current investments (1,124) 813
Total underlying adjustments 164 (1,389)
Statutory (loss) / profit before tax (1,823) 8
Underlying earnings per share
Weighted average number of shares in issue during the period (note 12) 59,206 59,692
Basic underlying earnings per share (3.36p) 2.34p
Deal restructuring and integration costs
These represent costs incurred in relation to the acquisition of Harpsden and
include the integration and retention costs of staff and the costs of the
transfer of assets on to the SEI operating platform.
Amortisation of acquired brand and client relationships
These intangible assets are created in the course of acquiring funds under
management and are amortised over their useful life which have been assessed
between two to 12 years. This charge has been excluded from underlying profit
as it is a significant non-cash item.
Changes in fair value and finance cost of deferred consideration
This comprises the fair value measurement arising on the deferred
consideration payments from acquisitions together with the associated finance
costs from the unwinding of the present value discount relating to the
Harpsden acquisition.
Restructuring costs
These costs relate to the restructuring costs within both WM and CM and the
resultant costs of redundancies of staff in the London office arising from the
closure of the Cardiff office.
Other income
During the year the Group received a refund of £2.2m from HMRC. This was
following confirmation from HMRC that the supply of certain Group services
were exempt from VAT during the period from 2017 to 2022. This is presented
net of commission payable to third parties of £218k.
Net changes in value of investments
As part of the fee arrangement with corporate clients in CM, there is often a
grant of warrants over shares or the issue of actual shares in addition to the
cash element of the fee. The value of such warrants and shares are credited to
revenue on the date of the fee note and then any changes in the valuation are
recorded as net gains or losses. In view of the nature of these gains or
losses, including non-cash, these gains or losses have been excluded from
underlying profit. Corresponding commission payable of £1,559k on the gain or
loss of these warrants are included in the net changes above.
Revenue
Wealth Management
The Wealth Management Division incorporates both investment management
services and financial planning advice from offices in London, Manchester,
Poole and Henley.
The strategy in this division is to focus our efforts on growing the number of
discretionary portfolios. This will be achieved by a mixture of organic growth
through new business initiatives, continued personal referrals and the
movement of existing advisory and execution clients to our discretionary
service.
Total WM AUM at 31 March 2023 was £1.4bn (FY22: £1.6bn) as detailed in the
table below. The majority of client assets are managed on the SEI platform
with a small balance of ex-Harpsden clients remaining on another third-party
platform.
Discretionary funds on SEI fell by 5.8% over the year (FY22: increased by
6.2%), due to net business outflows of £26.7m (FY22: net inflows £64.9m)
representing a loss of 2.6% of opening funds (FY22: a gain of 6.7%) and a
market performance reduction of £30.6m (FY22: £22.1m) due to negative market
conditions.
WM funds flow table for the year:
Discretionary Advisory Execution Only Custody* Total
£m £m £m £m £m
As at 1 April 2022 1,019.5 84.8 362.9 101.2 1,568.4
Inflows 115.2 3.5 44.7 18.7 182.1
Outflows (141.9) (6.8) (102.3) (22.0) (273.0)
Service switches (2.2) (24.5) 26.7 - -
Market Performance (30.6) (13.7) (22.3) (13.0) (79.6)
SEI at 31 March 2023 960.0 43.3 309.7 84.9 1,397.9
External platforms 36.2 - - - 36.2
Total WM AUM at 31 March 2023 996.2 43.3 309.7 84.9 1,434.1
*Custody represents discretionary managed assets held on our SEI platform by
New Horizons LLP a company with whom revenues are shared. Note that growth in
discretionary assets under management is represented by the sum of net
inflows, net service switches and market performance.
Total WM revenue fell by 8.8% to £14.4m (FY22: increased 19.2%). Market
conditions impacted on trading activity resulting in a reduction of commission
revenue in the year of 48.0% to £1.2m (FY22: £2.2m).
2023 2022
£'000 £'000
Management fees and wealth planning 13,223 13,549
Commissions 1,156 2,221
Other 64 67
Total 14,443 15,837
Capital Markets
Our Capital Markets Division is specifically focused on the public and private
growth company marketplace. The team's significant experience in this dynamic
segment means that we are able to provide a specialist service to each of its
respective participants. For companies, we raise public and private growth
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. Total CM AUM at 31
March 2023 was £0.7bn (FY22: £0.8bn). The client assets are managed on the
Pershing platform and the majority are held as execution only.
Total revenue for the year decreased by 24.4% to £12.2m (FY22: £16.2m) due
to challenging market conditions impacting on activity levels and the number
of transactions. The number of retained clients increased to 90 at the
year-end and an increase in retainer fees provided an uplift in retainer
revenue of 12.4% to £4.2m (FY22: £3.8m). The completion of three successful
IPOs (compared to five in the previous period) and fall in total number of
transactions to 25 (FY22: 38) were the drivers for the 48.6% decrease to
£5.1m (FY22: £9.9m) in transaction fees. CM also executed a wide range of
advisory work for its clients. Despite the market backdrop, trading and
commission revenue increased by 17.7% in the year.
2023 2022
£'000 £'000
Transaction fees 5,128 9,979
Retainer fees 4,234 3,769
Equity Commissions and Trading 2,883 2,450
Total 12,245 16,198
Transaction fees are further analysed as follows:
2023 2022
£'000 £'000
IPOs 934 1,878
Secondary equity issues 4,060 4,311
Other revenue incl. advisory and M&A 134 3,790
Total 5,128 9,979
Expenses
Total operational costs decreased by 16.7%. As part of cost of sales, third
party commission reduced by 87.6%, due to agreements that are revenue
contingent. Variable people costs, mainly related to bonus payments have
reduced by 40%.
2023 2022
£'000 £'000
Cost of sales - non-salaried staff costs (note 7) 605 4,895
Fixed non-people costs 10,826 10,464
Fixed people costs 14,243 14,577
Variable people costs 1,876 3,126
Total 27,550 33,062
Financial position and regulatory capital: Net assets decreased to £13.6m at
31 March 2023 (FY22: £15.4m) and tangible net assets (net assets excluding
intangible assets and goodwill) decreased by 14.1% to £6.5m (FY22: £7.6m).
The Investment Firms Prudential Regime (IFPR) applies to all solo-regulated
MiFID investment firms and WH Ireland is a non-SNI (small and
non-interconnected) MIFIDPRU investment firm.
Accordingly, the Group's regulatory capital requirement is its fixed overhead
requirement as defined by the Financial Conduct Authority (FCA). Due to market
conditions remaining challenging and losses incurred during the period, the
Group notified the FCA that it had fallen within its regulatory capital
planning buffer. The Group had further discussions with the FCA in order to
ensure that, in the absence of the injection of further capital pursuant to
the Placing, the Company could deliver a solvent wind down for the Group, if
required, in line with the Company's solvent wind down plan (SWDP). A solvent
wind down plan is a plan drawn up in accordance with regulatory requirements
in order to facilitate an orderly wind down of a regulated firm. After the
year-end the Group carried out a placing to raise £5m by way of the issue of
ordinary shares (further details can be found in note 33), to ensure that the
Group's own funds are in excess of its regulatory capital requirement.
Cost reduction exercises were also implemented after the year-end, including
certain members of senior management agreeing to sacrifice a proportion of
their salary in return for share options, alongside a collective consultation
regarding headcount reduction.
As a result, the Directors have reviewed the forward-looking position as part
of the going concern modelling and stress testing and in light of post
year-end events believe that the regulatory requirements will be met.
Future developments
The Group was subject to challenging market conditions resulting from a number
of well documented public events. The Directors believe that the combination
of the placing, approved by shareholders in August 2023, and the cost
reduction exercise gives the Group an improved chance of returning to a
break-even position. The funds from the placing have been used to provide
working capital, secure the current regulatory capital position and achieve a
more stable financial position for the Group against the current market
backdrop. Prior to the placing, the Board had actively explored asset sales.
The Directors will continue to assess the benefit of asset sales to
shareholders should any future market opportunities arise.
Key Performance Indicators
The following financial and strategic measures have been identified as the key
performance indicators (KPIs) of the Group's overall performance for the
financial year.
1. GROUP ASSETS UNDER MANAGEMENT *FY 2021 includes acquisition of Harpsden Wealth Management Limited.
The total value of funds under management has a direct impact on the Group's
revenue.
-11%
2. NUMBER OF RETAINED CAPITAL MARKETS CORPORATE CLIENTS
The number of retained clients has a direct relationship to the value of fees
earned from success fees and retainer income in Capital Markets.
+2
3. TOTAL REVENUE *FY 2021 revenue has been restated to reflect the reclassification from
revenue to net gains on investments.
The amount of revenue generated by Wealth Management and Capital Markets
together is one of the key growth indicators.
-16%
4. DISCRETIONARY AND ADVISORY ASSETS UNDER MANAGEMENT (WM)
Discretionary and advisory funds are the main income driver for our Wealth
Management business.
-10%
*FY 2021 includes
acquisition of Harpsden Wealth Management Limited.
Dividends
The Board does not propose to pay a dividend in respect of the financial year
(FY22: £nil).
Statement of Financial Position and Capital Structure
Maintaining a strong and liquid statement of financial position remains a key
objective for the Board, alongside its regulatory capital requirement. Due to
losses during the period, the group notified the FCA on 21 December 2022 that
it was within its Capital Planning Buffer of £2.8m, which forms part of its
regulatory capital requirement, and further losses in the final quarter of the
financial year meant that at the year-end the Group was £0.9m below the
regulatory capital requirement of £9.6m. The Group has been in discussion
with the FCA with regard to its capital position and having actively explored
the option of an asset sale, undertook a successful placing of shares
subsequent to the year-end as detailed in note 33 below in order to provide
working capital, secure the current regulatory capital position and achieve a
more stable financial position for the Group against the current market
backdrop. As at 31 March 2023, total net assets were £13.6m (FY22: £15.4m)
and net current assets £4.6m (FY22: £3.9m). Cash balances at year-end were
£4.2m (FY22: £6.4m).
Risks and Uncertainties
Risk appetite is established, reviewed and monitored by the Board. The Group,
through the operation of its Committee structure, considers all relevant risks
and advises the Board as necessary. The Group maintains a comprehensive risk
register as part of its risk management framework encouraging a risk-based
approach to the internal controls and management of the Group. The risk
register covers all categories including human capital risk, regulatory risk,
conduct (client) risk, competition, financial risk, IT and operational
resilience risk and legal risk. Each risk is ranked on impact and likelihood
and mitigating strategies are identified. In addition, the Executive Committee
which is formed of the Executive Directors, the Heads of the business
divisions, a representative from HR and Chief Risk and Compliance Officer meet
to assess and monitor these. An Executive Risk Committee has recently been
established to manage and monitor risks and report into the Board.
The Group has outsourced its internal audit function to Deloitte since April
2021. Deloitte formally report to Tom Wood, Chair of the Audit Committee with
Stephen Balonwu, Chief Risk and Compliance Officer, being the principal day to
day contact.
Liquidity and capital risk
The Group continues to focus on managing the costs of its business and
returning to growth and sustainable profitability whilst increasing the
proportion of recurring revenue with CM and the building of its discretionary
fee paying client base in WM to better fit the regulatory environment in which
it operates.
To mitigate risk, the Board continues to focus on ensuring that the financial
position remains robust and suitably liquid with sufficient regulatory capital
being maintained over the minimum common equity tier 1 capital requirements.
Regulatory capital and liquid assets are monitored on a daily basis.
Operational risk
Operational risk is the risk of loss to the Group resulting from inadequate or
failed internal processes, people and systems, or from external events.
Business continuity risk is the risk that serious damage or disruption may be
caused as a result of a breakdown or interruption, from either internal or
external sources, of the business of the Group. This risk is mitigated in part
by the number of branches across the UK and the Group having business
continuity and disaster recovery arrangements including business interruption
insurance.
The Group seeks to ensure that its risk management framework and control
environment is continuously evolving which Compliance and Risk monitor on an
ongoing basis.
Credit risk
The Board takes active steps to minimise credit losses including formal new
business approval, and the close supervision of credit limits and exposures,
and the proactive management of any overdue accounts. Additionally, risk
assessments are performed on an ongoing basis on all deposit taking banks and
custodians and our outsourced relationships.
Regulatory risk
The Company operates in a highly regulated environment in the UK. The
Directors monitor changes and developments in the regulatory environment and
ensure that sufficient resources are available for the Group to implement any
required changes. The impact of the regulatory environment on the Group's
management of its capital is discussed in note 27 of the financial statements.
Section 172 Statement
Broader Stakeholder Interests
Directors of the Group must consider Section 172 of the Companies Act 2006
which requires them to act in the way that would most likely promote the
success of the Group for the benefit of all its stakeholders. The Board and
its committees consider who its key stakeholders are, the potential impact of
decisions made on them taking into account a wider range of factors, including
the impact on the Company's operations and the likely consequences of
decisions made in the long-term. The Group's key stakeholders and how the
Board and the Group have engaged with them during the year is set out below.
Employees
The CEO and his management team on behalf of the Board engage with employees
through a variety of methods including periodic 'all staff' updates,
information and points of interest, staff forums, group meetings and Town Hall
meetings. Further details can be found in the corporate social responsibility
section on page 29.
Shareholders
Our shareholders have been pivotal in supporting the Group and its management
team and Board. The Board recognise and frequently discuss the importance of
good, open and constructive relationships with both potential new shareholders
as well as existing shareholders and is committed to this communication. The
way in which this has been achieved during the year has been by our Chief
Executive Officer, supported by the management team, maintaining regular
contact and meetings with individual and institutional shareholders, both
existing and potential, and communicating and discussing shareholders' views
with the Board. A number of Board members and employees also hold the Group's
shares and regular communications are provided. The Group's strategy and
results are presented to shareholders through meetings following announcements
of the final and interim results. Shareholders are also invited to meet the
Board and management team, who attend the Annual General Meeting. The annual
report and accounts for the year ended 31 March 2023 along with all past
accounts, regulatory communications and other material is set out on the
Group's website at https://www.whirelandplc.com/investor-relations
(https://www.whirelandplc.com/investor-relations) .
Regulators
The Board maintains continuous and open communication with our regulators at
the FCA as well as with the London Stock Exchange. Regular ongoing dialogue
has continued through the CEO and CFO with the FCA who receive regular
Management information. The FCA have approved the appointments of each member
of the Management team and the Board members as required.
Clients
Our clients are fundamental to the business of the Group and the Board
recognise that their interests are of paramount importance. Management of WM
and CM closely engage with clients to understand their objectives so that the
service provided by the business is appropriate. In WM the client's profile
and the suitability of the investment strategy provided is frequently assessed
by our professional investment managers and this is supplemented by a second
line of review from management and our compliance team. It is recognised that
the status of our clients can and does change in line with the environment and
vulnerable clients in particular are identified and discussed at management
and at Committee level to ensure that they are provided with the best possible
advice.
In CM the Group's objective is also to achieve the best outcome and this
applies equally to institutional corporate clients. Regular contact is
maintained with them across all departments including corporate broking,
corporate finance, trading and research. Our investor relations team arranges
meetings with investors, undertakes site visits and organises events for a
wide range of our clients' teams.
Community and Suppliers
The Board through its Executive Directors is keenly focused on its key
supplier relationships and regularly challenges and reviews its arrangements.
The Group openly encourages its offices and employees to engage in local
charitable, community groups and other causes. Further detail can be found on
page 31.
Each of the Board members consider that they have acted together, in good
faith in a way most likely to promote the success of the Group for the benefit
of its broader range of stakeholders as a whole taking into account section
172 (1) (a-f) of the Companies Act 2006.
The Strategic Report on pages 7 - 14 has been approved by the Board and signed
on its behalf by:
S Jackson
Chief Finance Officer
September 2023
Consolidated statement of comprehensive income
Year ended Year ended
31 March 2023 31 March 2022
Note £'000 £'000
Revenue 5 26,688 32,035
Administrative expenses (27,550) (33,062)
Expected credit loss (239) (81)
Operating loss 6 (1,101) (1,108)
Net (loss) / gains on investments 17, 21 (2,683) 1,626
Finance income 8 10 1
Finance expense 8 (224) (511)
Other income 9 2,175 -
(Loss) / profit before tax (1,823) 8
Taxation 10 (121) 67
(Loss) / profit and total comprehensive income for the year (1,944) 75
Earnings per share 12
From continuing operations
Basic (3.29p) 0.13p
Diluted - 0.12p
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
2023 2022 2023 2022
Note £'000 £'000 £'000 £'000
ASSETS
Non-current assets
Intangible assets 15 3,763 4,259 - -
Goodwill 14 3,539 3,539 - -
Investment in subsidiaries 16 - - 26,448 26,448
Property, plant and equipment 13 569 325 - 4
Investments 17 820 3,013 - -
Right of use asset 18 635 1,168 - -
Deferred tax asset 19 - 190 - -
Treasury note 28 - - 1,093 900
9,326 12,494 27,541 27,352
Current assets
Trade and other receivables 20 5,444 5,758 29 113
Other investments 21 2,049 1,912 - -
Cash and cash equivalents 22 4,234 6,446 - 1,246
11,727 14,116 29 1,359
Total assets 21,053 26,610 27,570 28,711
LIABILITIES
Current liabilities
Trade and other payables 23 (4,013) (6,681) (1,136) (2,357)
Lease liability 18 (319) (376) - -
Deferred consideration 24 (2,121) (2,412) (2,121) (2,412)
Deferred tax liability 19 (663) (732) - -
(7,116) (10,201) (3,257) (4,769)
Non-current liabilities
Lease liability 18 (293) (999) - -
(293) (999) - -
Total liabilities (7,409) (11,200) (3,257) (4,769)
Total net assets 13,644 15,410 24,313 23,942
Capital and reserves
Share capital 27 3,116 3,104 3,116 3,104
Share premium 27 19,014 19,014 19,014 19,014
Other reserves 981 981 228 228
Retained earnings (8,374) (6,789) 1,955 1,596
Treasury shares 28 (1,093) (900) - -
Shareholders' funds 13,644 15,410 24,313 23,942
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 (FY22:
£nil).
These financial statements were approved by the Board of Directors on 26
September 2023 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 2023 31 Mar 2022 31 Mar 2023 31 Mar 2022
Notes £'000 £'000 £'000 £'000
Operating activities:
(Loss) / profit for the year: (1,944) 75 - -
(1,944) 75 - -
Adjustments for non-cash items:
Depreciation and amortisation 13, 15, 18 1,093 1,229 - -
Finance income 8 (10) (1) - -
Finance expense 8 224 511 173 416
Tax 10 121 (67) - -
Non-cash adjustment for share option charge 7 359 470 359 470
Non-cash adjustment for investment gains 17, 21 2,683 (1,626) - -
Non-cash consideration for revenue (1,096) (1,651) - -
Non-cash adjustment for right of use assets 18 (125) - - -
Working capital changes:
Decrease / (increase) in trade and other receivables 314 (601) 88 (57)
(Decrease) / increase in trade and other payables (2,668) (942) (1,221) (603)
Net cash (used in) / generated from operations (1,049) (2,603) (601) 226
Income taxes received/(paid) 10 - - -
Net cash inflows / (outflows) from operating activities (1,049) (2,603) (601) 226
Investing activities:
Acquisition of property, plant and equipment 13 (475) (103) - (4)
Decrease / (increase) in loan receivables - - (193) (256)
Interest received 8 10 - - -
Movement in current asset investments 17, 21 430 1,933 - -
Net cash (used in) / generated from investing activities (35) 1,830 (193) (260)
Finance activities:
Proceeds from issue of share capital 27 12 34 12 34
Purchase of own shares by Employee Benefit Trust (193) (256) - -
Interest paid 8 - (2) - -
Deferred consideration paid 24 (464) - (464) -
Lease liability payments (483) (768) - -
Net cash (used in) / generated from financing activities (1,128) (992) (452) 34
Net (decrease) / increase in cash and cash equivalents (2,212) (1,765) (1,246) -
Cash and cash equivalents at beginning of year 6,446 8,211 1,246 1,246
Cash and cash equivalents at end of year 4,234 6,446 - 1,246
Reconciliation of Group and Company liabilities arising from financing
activities in the year:
As at Cash flows Non-cash As at
1 April 2022 changes 31 March 2023
Group £'000 £'000 £'000 £'000
Lease liability 1,375 (483) (280) 612
1,375 (483) (280) 612
Reconciliation of Group and Company liabilities arising from financing
activities in the prior 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
There are no Company liabilities arising from financing activities.
Consolidated and Company statement of 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 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
Loss and total comprehensive income for the year - - - (1,944) - (1,944)
Transactions with owners in their capacity as owners:
Employee share option scheme - - - 359 - 359
New share capital issued 12 - - - - 12
Purchase of own shares by Employee Benefit Trust - - - - (193) (193)
Balance at 31 March 2023 3,116 19,014 981 (8,374) (1,093) 13,644
Retained earnings include £10k (2022: £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 2021 3,101 18,983 228 1,126 - 23,438
Profit / (loss) and total comprehensive income for the year - - - - -
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
Profit / (loss) and total comprehensive income for the year - - - - - -
Transactions with owners in their capacity as owners:
Employee share option scheme - - - 359 - 359
New share capital issued 12 - - - - 12
Balance at 31 March 2023 3,116 19,014 228 1,955 - 24,313
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 (FY22:
£753k) and a (consolidated and company) capital redemption reserve of £228k
(FY22: £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 (FY22: £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 2024 which consider the
funding and capital position of the Group and Company. 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.
Certain activities of the Group are regulated by the FCA, 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 regular basis.
The Group had been in discussion with the FCA (including in respect of the
Group's relevant net asset and regulatory capital positions) in order to
ensure that, in the absence of the injection of further capital pursuant to
the Placing, the Company could deliver a solvent wind down for the Group, if
required, in line with the Company's solvent wind down plan (SWDP). A solvent
wind down plan is a plan drawn up in accordance with regulatory requirements
in order to facilitate an orderly wind down of a regulated firm, as further
described below. On the basis of the adverse current and forecast trading and
resultant losses, without further funding pursuant to the placing, the SWDP
would have been required to be implemented post year-end.
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. The significant market turbulence presented a range of challenges
to the business and as a result after the year-end the Group proceeded to
raise additional capital by way of placing of ordinary shares to existing
shareholders and new investors (further details can be found in note 33)
raising £5m. Additionally, cost reduction exercises were implemented and the
benefits expected to take effect from quarter 3 of the financial year. The
cost savings have been factored into the forecasts.
Whilst there always remains uncertainty over the economic environment, after
the year-end the business has improved its capital position and likelihood of
a return to a break-even position. 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 reduce 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 60% from
management's forecasts to create such a crisis situation within 18 months'
time.
Based on all the aforementioned, the Directors believe that regulatory capital
requirements will continue to be met and that the Group and Company 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: Property, Plant and Equipment - Proceeds before
Intended Use
- Amendments to IFRS 3: Reference to Conceptual Framework
- Amendments to IAS 37: Onerous Contracts - Cost
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 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.
IAS 1 (amendments) Non-current Liabilities with covenants 1 January 2024
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.
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 12
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 allow 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 19).
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.
The deferred tax asset of £190k was released during the period in light of
recent forecasts (FY22: £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 after 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. After 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 15).
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 on 31 March 2023 was £26.4m
(FY22: £26.4m) (see note 16).
At the year-ended 31 March 2023, the carrying values of the investments in
subsidiaries were assessed for indicators of impairment.
The value of Harpsden Wealth Managements Limited (Harpsden) forming part of
the total value of investments in subsidiaries, is tested as part of the
annual impairment of goodwill. Since this test showed no impairment due (see
note 19 for further detail) it has been viewed there is no requirement for a
further impairment to the carrying value of the related investment.
The value of WH Ireland Limited can be considered in the sum of two parts, for
the two divisions. The Wealth Management (WM) revenue, excluding Harpsden
(tested separately), is predominantly derived from the assets under
management. An AUM multiple was applied to obtain an indication of the value
of the total WM. Capital Markets was valued by a multiple of annual revenue
based on success fees and retainer fee revenue.
The total value of the two divisions together did not indicate an impairment
was necessary for WH Ireland Limited, therefore no adjustment has been made
for the year ended 31 March 2023.
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, see note 17 for details of
the fair value at 31 March 2023.
Deferred consideration
As described in note 24, 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 was previously discounted to
present value, however as at 31 January 2023 was fully unwound.
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 (FY22:
nil).
The following tables represent revenue and cost information for the Group's
business segments. The key line items below are not consistent with the
statement of comprehensive income.
Year ended 31 March 2023 Wealth Management Capital Markets Group and consolidation adjustments Group
£'000 £'000 £'000 £'000
Revenue 14,443 12,245 - 26,688
Direct costs (11,400) (11,604) - (23,004)
Contribution 3,043 641 - 3,684
Indirect costs (2,798) (1,994) (879) (5,671)
Underlying profit / (loss) before tax 245 (1,353) (879) (1,987)
Amortisation of acquired brand and client relationships (496) - - (496)
Changes in fair value and finance cost of deferred consideration (173) - - (173)
Other income 1,957 - - 1,957
Net changes in the value of non-current investment assets - (1,124) - (1,124)
Profit / (loss) before tax 1,533 (2,477) (879) (1,823)
Tax 69 - (190) (121)
Profit / (loss) for the year 1,602 (2,477) (1,069) (1,944)
Year ended 31 March 2023 Wealth Management Capital Markets Group
£'000 £'000 £'000
Statutory operating costs included the following:
Amortisation 496 - 496
Depreciation 141 90 231
Depreciation from Right of Use assets 218 148 366
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
Depreciation from Right of Use assets 267 168 435
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 2023 Wealth Management Capital Markets Group and consolidation adjustments Group
£'000 £'000 £'000 £'000
Point in time 1,528 8,011 - 9,539
Over time 12,915 4,234 - 17,149
14,443 12,245 - 26,688
Year ended 31 March 2022 Wealth Management Capital Markets Group and consolidation adjustments Group (continuing operations)
£'000 £'000 £'000 £'000
Point in time 2,443 12,429 - 15,187
Over time 13,394 3,769 - 13,554
15,837 16,198 - 28,741
The following movement of contract liabilities was recognised in the year:
As at 31 Mar 2022 Recognised in revenue Amounts deferred As at 31 Mar 2023
Group £'000 £'000 £'000 £'000
Contract liabilities 39 (39) 7 7
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 2023.
6. Operating profit/ (loss)
Year ended Year ended
31 Mar 2023 31 Mar 2022
Group £'000 £'000
Operating (loss)/profit is stated after charging/(crediting):
Depreciation of property, plant and equipment (note 13) 231 289
Amortisation of intangibles (note 15) 496 505
Short term and low value leases 112 59
IFRS 16 depreciation (note 18) 366 435
Employee benefit expense (note 7) 16,744 21,300
Restructuring and non-recurring legal and regulatory costs - 1,191
Other administrative expenses 9,326 9,083
Auditors' remuneration:
Audit of these financial statements 60 50
Amounts payable to the principal auditors and their associates in respect of:
- audit of financial statements of subsidiaries pursuant to legislation 115 95
- audit related assurance services 50 55
- audit of financial statements relating for prior year 50 -
27,550 33,062
Expected credit loss (note 20) 239 81
Total 27,789 33,143
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 £nil of grants during the year (FY22: £7k) 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 2023 31 Mar 2022
Group £'000 £'000
Wages and salaries 11,970 12,139
Bonuses 1,537 2,148
Social security costs 1,734 1,975
Other pension costs 539 508
15,780 16,770
Non salaried staff 605 4,895
Other administrative expenses 16,385 21,665
Charge for share options granted to employees (note 30) 359 470
Less amounts included within Restructuring and non-recurring costs - (835)
16,744 21,300
Year ended Year ended
31 Mar 2023 31 Mar 2022
Company £'000 £'000
Wages and salaries 207 260
The average number of persons (including Directors) employed during the year
was:
Year ended Year ended
Group 31 Mar 2023 31 Mar 2022
Executive and senior management 6 8
Capital Markets 50 42
Wealth Management 74 75
Support staff 30 26
Salaried staff 160 151
Non salaried staff 3 7
Total 163 158
Year ended Year ended
Company 31 Mar 2023 31 Mar 2022
Executive and senior management 4 4
The total amount paid to Directors in the period, including social security
costs was £0.9m (FY22: £1.6m).
8. Finance income and expense
Year ended Year ended
31 Mar 2023 31 Mar 2022
Group £'000 £'000
Bank interest receivable 10 1
Other interest - -
Finance income 10 1
-
Interest payable on lease liabilities 51 93
Fair value and present value discount of deferred consideration (see note 24) 173 416
Other interest - 2
Finance expense 224 511
9. Other income
Year ended Year ended
31 Mar 2023 31 Mar 2022
Group £'000 £'000
VAT refund 2,175 -
Total other income 2,175 -
During the year the Group received a refund of £2.2m from HMRC. This was
following confirmation from HMRC that the supply of certain Group services
were exempt from VAT during the period from 2017 to 2022.
10. Taxation
Year ended Year ended
31 Mar 2023 31 Mar 2022
Group £'000 £'000
Current tax expense:
United Kingdom corporation tax at 19% (FY22: 19%) - -
Total current tax - -
Deferred tax credit (note 19):
Current year 121 (67)
Effect of change in tax rate - -
Total deferred tax 121 (67)
Total tax in the statement of comprehensive income 121 (67)
The tax credit for the year and the amount calculated by applying the standard
United Kingdom corporation tax rate of 19% (FY22: 19%) to profit before tax
can be reconciled as follows:
Year ended Year ended
31 Mar 2023 31 Mar 2022
Group £'000 £'000
(Loss)/ profit before tax (1,823) 8
Tax expense using the United Kingdom corporation tax rate of 19% (FY22: 19%) (346) 2
Other expenses not tax deductible 334 183
Income not chargeable to tax (11) (6)
Movement in unrecognised deferred tax (60) (246)
Movement in recognised deferred tax 190 -
Amounts not recognised 14 -
Total tax credit in the statement of comprehensive income 121 (67)
11. Dividend
No dividend is proposed in respect of 2023 (FY22: none).
12. Earnings per share (EPS)
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 28).
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 2023 31 Mar 2022
Group
Weighted average number of shares in issue during the period 59,172 59,692
Effect of dilutive share options - 1,190
(thousands)
59,172 60,882
Total
Profit for the year attributable to ordinary shareholders (£'000) (1,944) 75
Basic (3.29p) 0.13p
Diluted - 0.12p
13. Property, plant and equipment
Group Company
Computers, Computers,
fixtures and fittings fixtures and fittings
£'000 £'000
Cost
At 31 March 2021 5,645 33
Additions 103 4
At 31 March 2022 5,748 37
Additions 475 -
Disposal - (4)
At 31 March 2023 6,223 33
-
Depreciation and impairment
At 31 March 2021 5,134 33
Depreciation charge 289 -
At 31 March 2022 5,423 33
Depreciation charge 231 -
At 31 March 2023 5,654 33
-
Net book values
At 31 March 2023 569 -
At 31 March 2022 325 4
Included in the above, are software costs capitalised in the year with a net
book value at 31 March 2023 of £116k (FY22: £nil).
14. 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 2023 31 Mar 2022
Group £'000 £'000
Beginning of year 3,539 3,539
End of year 3,539 3,539
Goodwill is assessed annually for impairment and the recoverability has been
assessed at 31 January 2023 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 cash-flows extrapolating the projections consistent with the
assumed indefinite useful life of the goodwill.
The Harpsden CGU recoverable amount was calculated as £10.0m (FY22:
£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 -2.6% to 5.0% (FY22: 5% to 13%). Cash outflows have been estimated at 5%
(FY22: 5%) annual increase where no other significant growth has been
forecasted. A pre-tax discount rate of 17.9% (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% (FY22: 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 the
following scenarios occurred:
· An increase in pre-tax discount rate from 17.9% to 21.0%
· A fall in perpetuity growth rate from 2% to -3%
· If there was no increase in AUM over the five-year forecast and
the subsequent terminal growth was 0%.
· A further fall in AUM in FY25 of 8%, no AUM growth in FY26 and 2%
and 5% growth in AUM in FY26 & FY27 respectively would result in a
break-even position
Further sensitivity was performed post year-end due to non-adjusting
subsequent events that could materially impact the results of the impairment
calculation. These events were not known at the reporting date and could not
reliably be measured at the time of approval of these finance statements as
certain elements remained under negotiation. For instance if AUM were to fall
in FY25 from FY24 forecasts by a further 14.6% an impairment charge would be
required. Given the uncertainty no impairment charge has been recognised at
the year-end 31 March 2023.
15. 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 2021 8,731 75 8,806
Additions - - -
At 31 March 2022 8,731 75 8,806
Additions - - -
At 31 March 2023 8,731 75 8,806
Amortisation
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
Charge for the year 468 28 496
At 31 March 2023 4,968 75 5,043
Net book values
At 31 March 2023 3,763 - 3,763
At 31 March 2022 4,231 28 4,259
During the year ended 31 March 2021, the group acquired client relationships
totalling £4.2m as part of the Harpsden acquisition and at the year ending 31
March 2023 the net book value was £3.37m (FY22: £3.72m) and remaining useful
economic life of 8 years (FY22: 9 years). An intangible asset was also
recognised representing the Harpsden brand totalling £75k and at the year
ending 31 March 2023 the net book value was fully amortised.
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
2023 the net book value was £367k (FY22: £489k) and remaining useful
economic life of 3 years (FY22: 4 years).
The company did not have any intangible assets either at 31 March 2023 or 31
March 2022.
16. Subsidiaries
Year ended Year ended
31 Mar 2023 31 Mar 2022
Company £'000 £'000
Beginning of year 26,448 26,448
End of year 26,448 26,448
Investments in subsidiaries are stated at cost less impairment.
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 all 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
17. Investments
Group
Quoted Unquoted Total
Financial assets at fair value through profit or loss £'000 £'000 £'000
At 31 March 2022 - 48 48
At 31 March 2023 - 48 48
Quoted Warrants* Total
Other financial assets at fair value through profit or loss £'000 £'000 £'000
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
Additions - 286 286
Fair value loss - (2,060) (2,060)
Disposals (1) (370) (371)
At 31 March 2023 - 820 820
Total investments at 31 March 2023 - 820 820
Total investments at 31 March 2022 1 3,012 3,013
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 25). The key inputs into this calculation are
the share price as at 31 March 2023, exercise price, risk free interest rate
and volatility which is based on the share price movements during the same
length as the remaining time of exercise.
Included in non-operational income is the fair value loss totalling £2,060k
(2022 gain: £1,072k).
Year ended Year ended
31 Mar 2023 31 Mar 2022
Net gains on investing activities £'000 £'000
Fair value (loss) / gain on warrants (2,060) 1,072
Fair value (loss) / gain on investments (623) 554
Total net gain on investing activities (2,683) 1,626
18. Right of use asset and lease liability
Leasehold Properties
£'000
Cost
At 31 March 2021 2,667
Additions -
At 31 March 2022 2,667
Additions 445
Disposals (1,185)
Deferred rent release 125
At 31 March 2023 2,052
Depreciation and impairment
At 31 March 2021 1,064
Charge for the year 435
At 31 March 2022 1,499
Charge for the year 366
Disposal (448)
At 31 March 2023 1,417
Net book values
At 31 March 2023 635
At 31 March 2022 1,168
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
2023 319 281 12 612
2022 376 956 43 1,375
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 2023 31 Mar 2022
Group £'000 £'000
Depreciation of right of use asset 366 435
Deferred rent release (125) -
Interest charge 51 85
Total charge 417 520
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 2023, 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 exercising its rights to
the break clauses.
The total cash outflow for leases, including short-term leases, in the year
ending 31 March 2023 was £540k (FY22: £827k)
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 2023 or 31 March 2022.
19. 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% (FY22: 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 2023 31 Mar 2022
Group £'000 £'000
Tax losses - 190
Intangible acquired on business combinations (663) (736)
Other - 4
Deferred tax liability (663) (542)
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 31 March 2022 190 190
As at 31 March 2023 - -
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. Based on
budgets for FY24 it was determined that while there is an improved chance of
return to a break-even position, there is uncertainty on when the deferred tax
asset will be realised in the foreseeable future. Therefore the deferred tax
asset has been reduced to nil and a tax charge has been recognised
accordingly.
Intangible asset amortisation Total
Group £'000 £'000
Deferred tax liabilities
As at 1 April 2021 799 799
Credit to the Consolidated statement of comprehensive income (67) (67)
As at 31 March 2022 732 732
Credit to the Consolidated statement of comprehensive income (69) (69)
As at 31 March 2023 663 663
The unrecognised tax losses and fixed asset timing differences amount to
£16.0m (FY22: £13.4m). No deferred tax has been recognised in respect of
these losses due to the uncertainty over the timing of future profits.
The Company had no deferred tax balances either at 31 March 2023 or 31 March
2022.
20. Trade and other receivables
Group Company
31 Mar 2023 31 Mar 2022 31 Mar 2023 31 Mar 2022
£'000 £'000 £'000 £'000
Trade receivables 643 751 - -
Other receivables 528 893 14 95
Accrued income 3,008 3,079 - -
Prepayments 1,265 1,035 15 18
5,444 5,758 29 113
The carrying value of trade and other receivable balances are denominated
fully in British pounds (FY22: 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 2023, trade receivables (net of provisions for impairment and doubtful
debts) comprised of the following:
Group Company
31 Mar 2023 31 Mar 2022 31 Mar 2023 31 Mar 2022
£'000 £'000 £'000 £'000
Not past due 17 194 - -
Up to 5 days due - 9 - -
from 6 to 15 days past due - 219 - -
From 16 to 30 days past due - 1 - -
From 31 to 45 days past due 467 113 - -
More than 45 days past due 159 215 - -
643 751 - -
Included in aged receivables more than 45 days past due is the provisions for
impairment of £254k (FY22: £502k).
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 £239k
(FY22: £81k 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 2023 31 Mar 2022 31 Mar 2023 31 Mar 2022
£'000 £'000 £'000 £'000
Opening balance 502 421 - -
Amount released from provision due to recovery (25) (57) - -
Amounts written off, previously fully provided (493) - - -
Amount charged to the statement of comprehensive income 264 138 - -
Closing balance 248 502 - -
21. Other investments
Group Company
31 Mar 2023 31 Mar 2022 31 Mar 2023 31 Mar 2022
£'000 £'000 £'000 £'000
Current asset investment 922 1,490 - -
Restricted cash 1,127 422 - -
Total 2,049 1,912 - -
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 £nil (FY22: £701k).
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 17.
22. Cash and cash equivalents
Group Company
31 Mar 2023 31 Mar 2022 31 Mar 2023 31 Mar 2022
£'000 £'000 £'000 £'000
Cash and cash equivalents 4,234 6,446 - 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 2023 for the
Group was £301k (FY22: £366k). There is no client money held in the Company
(FY22: £nil).
23. Trade and other payables
Group Company
31 Mar 2023 31 Mar 2022 31 Mar 2023 31 Mar 2022
£'000 £'000 £'000 £'000
Trade payables 1,148 2,963 12 84
Amounts due to Group companies - - 790 2,194
Other payables 89 319 - -
Tax and social security 588 886 - -
Deferred income 7 39 - 1
Accruals 2,181 2,474 334 78
4,013 6,681 1,136 2,357
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.
24. Deferred consideration
Group £'000
At 31 March 2021 1,996
Additions during the year: -
Charged to Statement of Comprehensive Income 416
Paid during the year -
At 31 March 2022 2,412
Additions during the year: -
Charged to Statement of Comprehensive Income 173
Paid during the year (464)
At 31 March 2023 2,121
The increase in deferred consideration in the year ended 31 March 2023
represents the fair value adjustment and unwinding of present value discount,
offset by the payment made to the former shareholders of Harpsden Wealth
Management Limited.
31 Mar 2023 31 Mar 2022
£'000 £'000
Included in current liabilities 2,121 2,412
Included in non-current liabilities - -
2,121 2,412
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%.
During the year £464k was paid to former shareholders of Harpsden Wealth
Management Limited (Harpsden) in relation to the deferred consideration due.
After the year-end further settlement to the former shareholders of Harpsden
of £654k was made by way of share issue, see note 33 for further details.
25. Financial risk management
The fair value of all 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 2023
Amortised cost Fair value through profit or loss Total
Group £'000 £'000 £'000
Financial assets
Other investments - 2,869 2,869
Trade and other receivables 4,179 - 4,179
Cash and cash equivalents 4,234 - 4,234
Financial liabilities
Trade and other payables 3,418 - 3,418
Deferred consideration 2,121 - 2,121
Lease liability 612 - 612
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
Deferred consideration 2,412 - 2,412
Lease Liability 1,375 - 1,375
The tables below summarise the Company's main financial instruments by
financial asset type:
31 March 2023
Amortised cost Fair value through profit or loss Total
Company £'000 £'000 £'000
Financial assets
Trade and other receivables 14 - 14
Cash and cash equivalents - - -
Financial liabilities
Trade and other payables 346 - 346
Group balances 790 - 790
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
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 20. 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 can
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 using 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 2023
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 3,418 - - 3,418
Lease liability 340 306 14 660
Deferred consideration 2,121 - - 2,121
5,879 306 14 6,199
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
The table below summarises the maturity profile of the Company's financial
liabilities based on contractual undiscounted payments:
31 March 2023
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 346 - - 346
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
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 monthly and reporting these to the Directors and Senior
Management. The Group has disposed of several of its investments during 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 £2,869k (FY22: £4,925k). See note 17 and 21.
Fair value measurement recognised in the statement of financial position
The following table provides an analysis of financial instruments that are
measured after 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 2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Unquoted equities - - - -
Financial instruments designated at fair value through profit or loss
Quoted equities - - - -
Other investments (note 17 & 21) 2,049 - 820 2,869
Deferred consideration - - (2,121) (2,121)
Total 2,049 - (1,301) 748
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 17 & 21) 1,211 - 2,964 4,175
Deferred consideration - - (2,412) (2,412)
Total 1,912 - 601 2,513
26. Capital management
The capital of the Group comprises share capital, share premium, retained
earnings and other reserves. The total capital at 31 March 2023 amounted to
£13.8m for the Group (FY22: £15.4m) and £24.3m for the Company (FY22:
£23.9m). The primary objective of the Group's capital management is to ensure
that it maintains a strong capital structure 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.
27. Share capital and share premium account
Number of Share Share
shares capital premium
£'000 £'000 £'000
As at 1 April 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
Shares issued:
On placing 225 12 -
Balance at 31 March 2023 62,311 3,116 19,014
At 31 March 2023 the total number of issued ordinary shares is 62.31 million
shares of 5p each (FY22: 62.09 million shares of 5p each). 0.23 million shares
were issued during the period (FY22: 0.06 million) in respect of vested
employee share options.
28. Treasury shares
Year ended 31 March 2023 Year ended 31 March 2022
Group £'000 £'000
At 31 March 900 644
Additions 193 256
At 31 March 1,093 900
At 31 March 2023 no shares in the Company were held in the EBT (FY22: nil
shares) and the ESOT held 3,017,418 shares (FY22: 2,639,500), at a nominal
value of 5p per share and represents the full balance above. This represents
4.84% of the called up share capital (FY22: 4.25%).
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
07-Apr-22 50,000 5p 22,500
04-May-22 50,000 5p 21,000
07-Jun-22 50,000 5p 19,425
06-Jul-22 50,000 5p 19,225
03-Aug-22 50,000 5p 18,250
07-Sep-22 50,000 5p 17,075
03-Oct-22 50,000 5p 14,925
25-Nov-22 50,000 5p 14,000
07-Dec-22 50,000 5p 14,500
17-Jan-23 50,000 5p 12,000
09-Feb-23 50,000 5p 11,000
13-Mar-23 50,000 5p 10,500
29. 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 28). Due to the
nature of these arrangements, the options contained in the JOE Agreements are
accounted for as share-based payments (note 30).
30. 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 29). 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 2023
CSOP ESOT ESOT 2019 LTIP 2020 EMI Option Plan 2022 EMI Option Plan
Options WAEP Options WAEP Options WAEP Options WAEP Options WAEP Options WAEP
Outstanding at beginning of year 35,502 84.50p 350,000 74.50p 50,000 92.5p 1,800,000 45.00p 3,644,170 37.34p - -
Granted - - - - - - - - - - 2,678,568 46.00p
Expired / forfeited (35,502) 84.50p (100,000) 74.50p - - (150,000) 45.00p (260,416) 48.00p -
Exercised - - - - - - - - (447,393) 48.00p - -
Outstanding at end of year - 0.00p 250,000 74.50p 50,000 92.50p 1,650,000 45.00p 2,936,361 44.45p 2,678,568 46.00p
Exercisable at end of year - 0.00p 250,000 74.50p 50,000 92.50p 1,650,000 45.00p 2,936,361 44.45p 2,678,568 46.00p
WA Life* - 0.50 yrs 3.01 yrs 7.10 yrs 10.68 yrs 9.32 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 2022
CSOP ESOT ESOT Unapproved Options 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.
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 2022 EMI Option Plan
Pricing model Black Scholes Monte Carlo N/A 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 01/04/22 - 01/11/22
Share price at grant (p) 56.5-83.0 74.5-114.5 125 45.0 & 49.0 42.0-56.5 30.0-45.00
Exercise price (p) 57.0-84.5 0.0-114.5 - 45.0 & 49.0 0.0-58.0 42.0-48.0
Expected volatility (%) 32.6332-33.2130 43.0000-37.0000 N/A 50 50 21-22
Expected life (years) 5 5 3 3 1-3 3
Risk-free rate (%) 1.2993-.0.7999 0.8000-1.9300 N/A 2 5 1.38-3.22
Expected dividend yield (%) - 0.67-2.19 N/A N/A N/A N/A
31. Capital commitments
There were no capital commitments for the Group or the Company as at 31 March
2023 (FY22: £nil).
32. 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 (FY22: £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 can 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 2023 or 31 March 2022.
The total compensation of key management personnel is shown below:
Year ended 31 March 2023 Year ended 31 March 2022
£'000 £'000
Short-term employee benefits 2,528 3,784
Post-employment benefits - 15
Termination benefits - 443
Share-based payment - -
2,528 4,242
The highest paid Director for 2023 was P Wale receiving emoluments of
£470,868 (FY22: £468,325).
Company
The Parent Company receives interest from subsidiaries in the normal course of
business. Total interest received during the year was £nil (FY22: £nil). In
addition, the Parent Company received a management charge of £879k (FY22:
£651k) from its subsidiary WH Ireland Limited. WH Ireland Limited also
charged the Parent Company £nil (FY22: £nil) for broker services.
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 16, 20 and 23 and
in detail in the following table:
Amounts owed by related parties Amounts owed to related parties
2023 2022 2023 2022
£'000 £'000 £'000 £'000
Readycount Limited - - - -
Stockholm Investments Limited - - - -
WH Ireland Limited - - 478 1,882
Harpsden Wealth Management Limited - - 295 295
WH Ireland Trustee Limited - - 17 17
- - 790 2,194
The net amount owed to related parties is £790k (FY22: £2,194k owed by
related parties) (see note 20 and 23).
33. Events after the reporting date
Placing
Following the year-end, as a result of the widely reported multi-year low
level of transactional activity in the financial capital markets the
Directors assessed it was unlikely there would be an improvement in CM
transactions activity or an uplift in AUM within the WM division during the
summer of 2023.
Discussions were held with the FCA and to ensure that, in the absence of the
injection of further capital pursuant to the placing, the Company could
deliver a solvent wind down for the Group, if required, in line with the
Group's solvent wind down plan (SWDP). A solvent wind down plan is a plan
drawn up in accordance with regulatory requirements to facilitate an orderly
wind down of a regulated firm, as further described below. Due to adverse
current and forecast trading and resultant losses, without further funding
pursuant to the placing, the SWDP would have been required to be implemented
on 31 July 2023. In total the placing raised gross proceeds of £5m by way of
166,666,667 ordinary shares at a price of 3p. The placing took place on 28
July 2023 and funds were received in August 2023.
To reduce costs, the Group has also commenced a collective consultation
regarding headcount reduction. In addition, it is proposed that certain senior
management team members would sacrifice a proportion of their salary in
consideration of being awarded with options to subscribe, at nil cost, for
such number of new ordinary shares at the placing price, as is equal to the
amount of salary sacrificed. This programme is anticipated to reduce annual
costs in the range of £3.75m to £4m. The full extent of the savings is
anticipated to be realised during calendar year Q4 2023.
The Directors believe that the combination of the placing and the cost
reduction exercise gives the Group an improved chance of returning to a
break-even position and securing the future of the Group. Accordingly, the
placing was undertaken to provide working capital, secure the current
regulatory capital position and achieve a more stable financial position for
the Group against the current market backdrop. Prior to the placing, the Board
had actively explored asset sales. The Directors will assess the benefit of
asset sales to shareholders should any future market opportunities arise.
Given the financial position of the Group and the timeframe within which funds
needed to be raised (including for regulatory reasons), the placing shares
were issued at a deep discount to the closing price on 27 July 2023. Since the
placing price was lower than the current nominal value of the ordinary shares,
the Group also proposed to carry out a sub-division of shares.
Settlement of deferred consideration
After the year-end further settlement to the former shareholders of Harpsden
of £654k was made pursuant to the original agreement. The part settlement was
made by way of share issue of 2,841,538 ordinary shares of 5p at an issue
price of 23p per share on 19 April 2023.
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