REG - W.H. Ireland Group - Interim Results for the Six Months end 31 May 2017 <Origin Href="QuoteRef">WHI.L</Origin>

WH IrelandAnnouncement

24/07/2017 07:05

RNS Number : 8084L
W.H. Ireland Group PLC
24 July 2017
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
WH Ireland Group Plc
("WH Ireland" or the "Company" or the "Group")
Interim Results for the Six Months ended 31 May 2017
 Group revenue increased by 24% to 14.9m.
 Operating profit before exceptional items: 0.4m.
 Private Wealth Management AUMA increased to 3.1billion.
 Corporate and Institutional Broking transaction revenue increased by 239% to 2.8m.
 Private Wealth Management fee income rose by 23% to 5.4m; and
 Total Group recurring revenue increased to 6.5m (45% of total revenue).

Chairman's statement
It is encouraging to be able to report a substantial rebound in operating performance at WHIreland for the first six months of the current financial year, compared with a difficult period for the first half of 2016. 
The recovery in profitability has been driven by revenue growth in both divisions (Private Wealth Management and Corporate and Institutional Broking), the detail of which is outlined in the Chief Executive's statement. In addition to restoring profitability, we have bolstered our balance sheet through the previously announced sale of our Manchester office which has increased our cash balance substantially. 
We have announced our intention to change our accounting reference date from November to March, effective as of March 2018. This brings us into line with many of our competitors and will also reduce the duplication of reporting requirements in regard to our wider regulatory responsibilities.
Recurring revenues are now at 45% of total revenues. With a strong pipeline of business in our Corporate and Institutional Broking division and continued growth in our discretionary assets under management in our Private Wealth division, I am optimistic about the outlook for the second half of 2017 and the foundations for future growth into 2018.
Finally, I would like to acknowledge on behalf of the Board and Senior Management team the continued hard work and focus of all of our employees during the past six months. 
Tim Steel
21 July 2017
Chief Executive Officer's report
The past eighteen months has witnessed a period of significant change across every aspect of the Company, helping to establish the foundations of a leading advice driven and client focussed business. 
We welcomed Adam Pollock as Head of the Corporate and Institutional Broking division in March and he, along with the senior team in the division has not only maintained the momentum of the second half of last year but has accelerated it. Our pipeline of new business continues to grow and this bodes well for the current reporting period. 
The Private Wealth Management division has undergone significant change as a result of the transfer of our custody and operational functions to SEI (Europe) Limited. This new platform will provide us with the capabilities that we require in order to continue to grow our discretionary offering both in the UK and internationally.
The interim figures to 31 May 2017 are being compared against a difficult period last year but this should not detract from the excellent progress which has been reported. Contributing to the total WH Ireland Group revenue increase of 24% to 14.9million has been the following:
Private Wealth Management fees (including Wealth Planning) 
+ 23 % to 5.4million 
Corporate and Institutional Broking transaction revenue
+ 239 % to 2.8 million
Commission
+ 5 % to 4.5 million
Market Making and principal turn
+ 62 % to 0.5million
When our corporate retainer fees are aggregated with the management fees shown above, our recurring revenue across the Group is approaching the target of 50% which I communicated three years ago. This helps create the confidence within the Company to continue the investment in change which remains a key focus of the recent progression of WHIreland. Due to the nature of our business revenue lines, I believe that a recurring fee target approaching 65% should be achievable within the next three years, with the majority of this change being driven by the continued shift to management fees in the Private Wealth Management division.
It should also be noted that whilst we continue to expense a number of items in relation to the changes in the Private Wealth Management division we have and we will continue to maintain a tight control of overall costs (this is despite a number of specific cost lines overlapping during a short transitional period this year). Our single largest line of expense is fixed employment costs and I am pleased to be able to report that compared with last year direct employment costs have fallen by 0.5% and I expect to report a further decline for the period as a whole despite our investment in new people to help achieve our growth ambitions.
Private Wealth Management 
The division continues to focus upon its core strategic objective of increasing recurring fee income from the growth in clients and their advisers selecting our discretionary or advisory Wealth Management offering, and/or our Wealth Planning advice. This focus will accelerate over the next eighteen months as we look to supplement the internal momentum with a stronger profile externally. Total AUMA have grown to 3.1 billion as at 31 May 2017, of which discretionary fee paying and advisory represents over 60%. Our growth ambitions and targets for this division are high and will only be achieved in the medium term by a combination of organic and acquisitive growth.
Corporate and Institutional Broking
The division has regained significant positive momentum during the period under review. The emphasis remains upon providing leading advice to all of our clients, enhancing our corporate client list, and building a greater presence in the private company arena. To this end, we have recently launched an Investor Forum aimed at the ultra-high net worth/family office market in the UK and Internationally, whereby we introduce interesting private investment opportunities to this market. 
Outlook 
There is still much to do in order to achieve the goal of being recognised as a leading advice driven financial service company but significant progress has been made. With continued support from better financial market sentiment we believe WHIreland is well placed to grow both divisions and to achieve recognition for the successful development of the advice driven business model. I view the future of our Company with increasing confidence and optimism.
Richard Killingbeck
21 July 2017
For further information please contact: 
WH Ireland Group plc 
 www.whirelandplc.com
Richard Killingbeck, Chief Executive Officer
 +44(0) 20 7220 1666
SPARK Advisory Partners Limited
Mark Brady/Miriam Greenwood
 +44(0) 203 368 3551/3550
Montfort Communications
www.montfortcom.com
Nick Miles
+44 (0) 7973 130669/ +44 (0)203 514 0897
miles@montfortcom.com
Consolidate Statements
COMPREHENSIVE INCOME - UNAUDITED FOR THE HALF-YEAR ENDED 31 MAY 2017 
Half-year ended
Half-year ended
Year ended 30 November 2016
31 May 2017
31 May 2016
(audited)
Note
'000
'000
'000
Revenue
2
14,869
11,960
25,421
Administrative expenses
(14,945)
(13,626)
(28,454)
Operating loss
(76)
(1,666)
(3,033)
Operating profit/(loss) before exceptional items
374
 (1,098)
(1,253)
Exceptional items - regulatory fine related costs
-
(384)
(193)
- restructuring costs
(148)
(184)
(994)
- Project Discovery
(302)
-
(593)
Operating loss after exceptional items
(76)
(1,666)
(3,033)
Realised investment gains (gain/losses)
2
9
7
21
Fair value gains/(losses) on investments
72
(38)
(155)
Gain on sale of property, plant and equipment
343
-
-
Finance income
19
7
10
Finance expense
2
(7)
(96)
(47)
Profit/(loss) before tax
360
(1,786)
(3,204)
Tax (expense)/credit
(36)
269
460
Profit/(loss) for the period
324
(1,517)
(2,744)
Earnings per share
Basic
6
1.17p
 (5.95)p
(10.72)p
Diluted
6
1.12p
 (5.95)p
(10.72)p
Consolidated Statements
FINANCIAL POSITION - UNAUDITED FOR THE HALF-YEAR ENDED 31 MAY 2017 
Note
Half-year ended 31 May 2017
'000
Half-year ended
31 May 2016
'000
Year ended 
30 November 2016
(audited)
'000
ASSETS
Non-current assets
Property, plant and equipment
8
1,065
1,314
1,207
Goodwill
258
258
258
Intangible assets
3,486
3,586
3,582
Investments
3
187
227
118
Deferred tax asset
787
567
807
5,783
5,952
5,972
Current assets
Trade and other receivables
14,204
26,466
18,985
Assets held for sale
8
-
4,750
4,750
Trading investments
3
416
286
530
Cash and cash equivalents
4
9,852
6,890
6,657
24,472
38,392
30,922
Total assets
30,255
44,344
36,894
LIABILITIES 
Current liabilities
Trade and other payables
(12,340)
(26,141) (19,848)
Corporation Tax payable
(15)
(24) (52)
Obligations under finance leases
(282)
(331) (282)
Deferred consideration
(1,158)
(242) (1,130)
Borrowings
-
(174) (187)
Provisions for liabilities and charges
(23)
(50) (28)
(13,818)
(26,962) (21,527)
Non-current liabilities
Deferred tax liability
(92)
(126) (92)
Obligations under finance leases
(207)
(493) (352)
Accruals and deferred income
(270)
(285) (282)
Borrowings
-
(905) (807)
Deferred consideration
(2,153)
(2,968) (2,101)
Provisions for liabilities and charges
(21)
(35) (21)
(2,743)
(4,812) (3,655)
Total liabilities
(16,561)
(31,774) (25,182)
Total net assets
13,694
12,570 11,712
EQUITY
Sharecapital 5
1,390
1,290
1,309
Share premium
3,157
1,443
1,621
Available-for-sale reserve
7
7
7
Other reserves
982
982
982
Retained earnings
8,904
9,579
8,524
Treasury shares
(746)
(731)
(731)
Total equity
13,694
12,570
11,712
Consolidated Statements
CASH FLOWS - UNAUDITED FOR THE HALF-YEAR ENDED 31 MAY 2017 
Half-year ended 31 May 2017
'000
Half-year 
ended 31 
May 2016
'000
Year ended 30 November 2016
(audited)
'000
OPERATING ACTIVITIES 
Profit/(loss) for the period
324
(1,517)
(2,744)
Adjustments for
Depreciation, amortisation and impairment
290
147
475
Finance income
(19)
(7)
(10)
Finance expense
7
96
47
Taxation
35
(269)
(517)
Gain on sale of property, plant and equipment
(343)
-
-
Fair value (gain)/losses in investments
(71)
126
187
Non-cash adjustment for share based payments
56
90
262
Decrease/(increase) in trade and other receivables
4,781
(3,154)
4,327
(Decrease)/increase in trade and other payables
(7,520)
2,037
(4,259)
Decrease in provisions
(5)
(1,012)
(1,172)
Decrease in trading investments
114
1,646
1,402
Net cash used in operations
(2,351)
(1,817)
(2,002)
Income taxes paid
(52)
(238)
(236)
Net cash used in operating activities
(2,403)
(2,055)
(2,238)
INVESTING ACTIVITIES 
Proceeds from the sale of property, plant and equipment
5,093
-
-
Proceeds from the sale of investments
30
397
581
Interest received
19
7
10
Acquisition of investments
(28)
(390)
(526)
Payment of deferred consideration
-
(39)
-
Increase in intangible fixed asset
-
-
(189)
Acquisition of property, plant and equipment
(52)
(5)
(878)
Net cash generated from/(used in) investing activities
5,062
(30)
(1,002)
FINANCING ACTIVITIES 
Proceeds from issue of shares
1,602
1,129
1,326
Repayment of borrowings
(994)
(94)
(179)
Repayment of obligations under finance leases
(145)
(140) 515
Increase in deferred consideration
80
-
106
Interest paid
(7)
(96)
(47)
Net cash generated from/(used in) financing activities
536
799
1,721
Net increase/(decrease) in cash and cash equivalents
3,195
(1,286)
(1,519)
Cash and cash equivalents at beginning of period
6,657
8,176
8,176
Cash and cash equivalents at end of period
9,852
6,890
6,657
Consolidated Statements
CHANGES IN EQUITY - UNAUDITED FOR THE HALF-YEAR ENDED 31 MAY 2017 
Available
Share capital
Share premium
for sale reserve
Other reserves
Retained earnings
Treasury shares
Total equity
AS AT 1DECEMBER2015 '000
'000
'000
'000
'000
'000
'000
Balance at 1December2015 1,225
379
7
982
11,006
(731)
12,868
Loss and total comprehensive income fortheperiod -
-
-
-
(1,517)
-
(1,517)
CONTRIBUTIONS BY AND DISTRIBUTIONS 
TOOWNERS 
Recognition of share-based payments
-
-
- - 90
- 90
Share options exercised
5
50
- - -
- 55
Capital raise (note 5)
60
1,014
- - -
- 1,074
Total contributions by and distributions to owners
65
1,064
-
-
90
-
1,219
AS AT 1 JUNE 2016 
Balance at 1 June 2016
1,290
1,443
7
982
9,579
(731)
12,570
Loss and total comprehensive income for the period
-
-
-
-
(1,227)
-
(1,227)
CONTRIBUTIONS BY AND DISTRIBUTIONS 
TOOWNERS 
Recognition of share-based payments
-
-
- - 115
- 115
Share options exercised
19
178
- - -
- 197
Deferred tax on employee share options
-
-
- - 57
-  57
Capital raise (note 5)
-
-
- - -
- -
Total contributions by and distributions to owners
19
178
-
-
172
-
369
AS AT 1 DECEMBER 2016 
Balance at 1 December 2016
1,309
1,621
7
982
8,524
(731)
11,712
Profit and total comprehensive income for the period
-
-
-
-
324
-
324
CONTRIBUTIONS BY AND DISTRIBUTIONS 
TOOWNERS 
Recognition of share-based payments
-
-
-
-
56
-
56
Share options exercised
17
17
-
-
-
(15)
19
Capital raise (note 5)
64
1,519
-
-
-
-
1,583
Total contributions by and distributions to owners
81
1,536
-
-
56
(15)
1,658
Balance at 31 May 2017
1,390
3,157
7
982
8,904
(746)
13,694
Notes to the consolidated statements (unaudited)
1. BASIS OF PREPARATION
STATEMENT OF COMPLIANCE
Thefinancialinformationinthisinterimreporthasbeenpreparedinaccordancewiththedisclosurerequirementsofthe AlternativeInvestmentMarket("AIM")RulesandtherecognitionandmeasurementsofInternationalFinancialReporting Standards("IFRS"),asadoptedbytheEuropeanUnion("EU").
The interim report does not include all of the information required for full annual financial statements.
The accounting policies adopted by the Group in the preparation of its 2017 interim report are those which the Group currently expectstoadoptinitsannualfinancialstatementsfortheperiodending31March2018andareconsistentwiththosedisclosedin theannualfinancialstatementsfortheyearended30November2016.
The financial information for the period ended 31 May 2017 does not constitute the Company's statutory accounts. The statutory accounts for the year ended 30 November 2016 have been delivered to the Registrar of Companies in England and Wales. The auditorhasreportedonthoseaccounts.Itsreportwasunqualified,didnotdrawattentiontoanymattersbywayofemphasis,and didnotcontainastatementunderSection498(2)or498(3)oftheCompaniesAct2006.Thefinancialinformationforthehalfyear ended31May2017and31May2016isunaudited.
TheAIMRulesforCompaniesdonotrequireIAS34"InterimFinancialReporting"tobeapplied;thereforeithasnotbeenusedin thepreparationofthisinterimreport.
GOING CONCERN
ThefinancialstatementsoftheGrouphavebeenpreparedonagoingconcernbasis.Inmakingthisassessment,theDirectors haveprepareddetailedfinancialforecastsfortheperiodtoNovember2019whichconsiderthefundingandcapitalpositionof theGroup.Thoseforecastsmakeassumptionsinrespectoffuturetradingconditions,notablytheeconomicenvironmentand 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 considerablevariationinthetimingofcashinflows.Theforecaststakeintoaccountforeseeabledownsiderisks,basedonthe informationthatisavailabletotheDirectorsatthetimeoftheapprovalofthesefinancialstatements.
CertainactivitiesoftheGroupareregulatedbytheFinancialConductAuthority(FCA)whichisthestatutoryregulatorforfinancial servicesbusinessintheUKandhasresponsibilityforpolicy,monitoringanddisciplineforthefinancialservicesindustry.TheFCA requires the Group's capital resources to be adequate; that is sufficient in terms of quantity, quality and availability, in relation to its regulated activities. The Directors monitor the Group's regulatory capital resources on a daily basis and they have developed appropriate scenario tests and corrective management plans which they are prepared to implement to address any potential deficitasrequired.Theseactionsmayincludecostreductions,regulatorycapitaloptimisationprogramsorfurthercapitalraising. TheDirectorsconsiderthat,takingaccountofforeseeabledownsiderisks,regulatorycapitalrequirementswillcontinuetobemet.
TheDirectorsmostrecentlyrenewedtheGroup'sbankingfacilitiesinFebruary2015.Asanevergreenfacilitythereisno requirementtoupdatetheagreementannually,althoughaformalreviewoffacilitiesisundertakenatleastannually.
2. SEGMENTALREPORTING
THE GROUP HAS TWO OPERATING SEGMENTS
The Private Wealth Management division offers investment management advice and services to individuals and contains the Group'sWealthPlanningbusiness,givingadviceonandactingasintermediaryforarangeoffinancialproducts.TheCorporate &InstitutionalBrokingdivisionprovidescorporatefinanceandcorporatebrokingadviceandservicestocompaniesandactsas NominatedAdvisertoclientslistedonAIM.ItalsocontainstheGroup'sInstitutionalSalesandResearchbusiness,whichcarries outstockbrokingactivitiesonbehalfofcompaniesaswellasconductingresearchintomarketsofinteresttoitsclients.
Thesegment"OtherGroupcompanies"includesWHIrelandGroupplc,WHIreland(IOM)Limited,ReadycountLimitedand Stockholm InvestmentsLimited.
AllsegmentsarelocatedintheUKortheIsleofMan.Eachreportablesegmenthasasegmentmanager,whoisdirectly accountabletoandmaintainsregularcontactwith,theCEO.
No customer represents more than ten percent of the Group's revenue.
2. SEGMENTAL REPORTINGCONTINUED
The following tables represent revenue and profit information for the Group's business segments.
Private Wealth Management
Corporate & Institutional Broking
Head Office
Other Group companies
Group
AS AT 31 MAY 2017 
'000
'000
'000
'000
'000
REVENUE 
9,178
5,280
-
412
14,869
Segment result
(1,020)
716
-
228
(76)
Executive Board cost
179
179
(436)
78
-
Gain on sale of property, plant and equipment
-
-
-
343
343
Realised investment gains
-
9
-
-
9
Fair value gains/(losses) on investments
-
72
-
-
72
Finance income
-
-
-
19
19
Finance expense
(4)
(2)
-
(1)
(7)
(Loss)/profit before tax
(845)
974
(436)
667
360
Tax income/(expense)
102
(79)
-
(59)
(36)
(Loss)/profit for the period
(743)
895
(436)
608
324
Private
Corporate &
Wealth
Institutional
Other Group
Management Broking HeadOffice companies Group
AS AT 31 MAY 2016 
'000
'000
'000
'000
'000
REVENUE 
8,530
3,124
-
306
11,960
Segment result
(911)
(1,027)
-
272
(1,666)
Executive Board cost
186
186
(456)
84
-
Realised investment gains
-
7
-
-
7
Fair value gains/(losses) on investments
30
(68)
-
-
(38)
Finance income
6
-
-
1
7
Finance expense
(82)
(4)
-
(10)
(96)
(Loss)/profit before tax
(771)
(906)
(456)
347
(1,786)
Tax income/(expense)
144
165
-
(40)
269
(Loss)/profit for the period
(627)
(741)
(456)
307
(1,517)
Private
Corporate &
Wealth
Institutional
Other Group
Management Broking HeadOffice  companiesGroup
AS AT 30 NOVEMBER 2016 (AUDITED) 
'000
'000
'000
'000
'000
REVENUE 
17,091
7,581
-
749
25,421
Segment result
(1,641)
(744)
(819)
171
(3,204)
Executive Board cost
300
300
(725)
125
-
Realised investment gains/(losses)
29
(8)
-
-
21
Fair value gains/(losses) on investments
-
(155)
-
-
(155)
Finance income
8
-
-
2
10
Finance expense
(21)
(8)
-
(18)
(47)
Profit/(loss) before tax
(1,325)
(615)
(1,544)
280
(3,037)
Tax expense
218
122
109
11
460
(Loss)/profit for the period
(1,107)
(493)
(1,435)
291
(2,744)
3. INVESTMENTS
Half-year ended 31 May 2017
'000
Half-year ended 31 May 2016
'000
Year ended 30 November 2016
(audited)
'000
AVAILABLE FOR SALE INVESTMENTS
Fair value: unquoted
40
40
40
Total
40
40
40
OTHER INVESTMENTS
Fair value: quoted
9
102
4
Fair value: warrants
138
85
74
Total
147
187
78
Total investments
187
227
118
Quotedandunquotedinvestmentsincludeequityinvestmentsotherthanthoseinsubsidiaryundertakings.Warrantsmaybe receivedduringtheordinarycourseofbusiness;thereisnocashconsiderationassociatedwiththeacquisition.
Fairvalue,inthecaseofquotedinvestments,representsthebidpriceatthereportingdate.Inthecaseofunquotedinvestments, the fair value is estimated by reference to recent arm's length transactions. The fair value of warrants is estimated using established valuationmodels.
Half-year ended 31 May 2017
'000
Half-year ended 31 May 2016
'000
Year ended 30 November 2016
(audited)
'000
 
TRADING INVESTMENTS
Listed investments
416
286 530
Total
416
286 530
Investmentsaremeasuredatfairvalue,whichisdetermineddirectlybyreferencetopublishedpricesinanactivemarketwhere available.
4. CASH, CASH EQUIVALENTS AND BANK OVERDRAFTS
Forthepurposesofthestatementofcashflows,cashandcashequivalentscomprisecashinhandanddepositswithbanksand financialinstitutionswithamaturityofuptothreemonths.
Cash and cash equivalents represent the Group's money and money held for settlement of outstanding transactions.
Moneyheldonbehalfofclientsisnotincludedinthestatementoffinancialposition.Clientmoneyat31May2017was17.0m(31 May2016:111.6m;30November2016:130.6m).This decrease reflects the effect of the transfer of assets to SEI (Europe) Ltd. 
5. SHARECAPITAL
The total number of authorised ordinary shares is 34.5 million shares of 5p each (31 May 2016 and 30 November 2016: 34.5 million).Thetotalnumberofissuedordinarysharesis27.8millionsharesof5peach(31May2016:25.8millionand30November 2016:2.62million).
On6December2016,WHIrelandGroupplcplaced1,287,240ordinarysharesfromitsauthorisedsharecapitalatanissuepriceof 123p.
6. EARNINGS PER SHARE
Basicearningspershare(EPS)iscalculatedbydividingtheprofitattributabletoequityholdersoftheCompanybytheweighted averagenumberofordinarysharesinissueduringtheyear,excludingordinarysharespurchasedbytheCompanyandheldas treasuryshares.
Diluted EPS is the basic EPS, adjusted for the effect of conversion into fully paid shares of the weighted average number of all dilutive employee share options outstanding during the period. At 31 May 2017: nil (31 May 2016: nil and 30 November 2016: nil)optionswereexcludedfromtheEPScalculationastheywereanti-dilutive.Inaperiodwhenthecompanypresentspositive
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.
Reconciliation of the earnings and weighted average number of shares used in the calculations are set out below.
Half-year ended 31 May 2017
'000
Half-year ended 31 May 2016
'000
Year ended 30 November 2016
(audited)
'000
Weighted average number of shares in issue during the period
27,626
25,480
25,590
Effect of dilutive share options
1,341
764
1,042
28,967
26,244
26,632
'000
'000
'000
Earnings attributable to ordinary shareholders
 324
(1,517)
(2,744)
BASIC EPS
Continuing operations
 1.17p
(5.95)p
(10.72)p
DILUTED EPS
Continuing operations
 1.12p
(5.95)p
(10.72)p
7. DIVIDENDS
No interim dividend has been paid or proposed in respect of the current financial year (2016: nil).
8. AVAILABILITY OF INTERIMREPORT
Copies of this Report can be downloaded from the Company's website at www.whirelandplc.com

This information is provided by RNS
The company news service from the London Stock Exchange
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IR PGURAMUPMGAG