REG - W.H. Ireland Group - Interim Results
16/12/2022 07:00
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RNS Number : 9114J W.H. Ireland Group PLC 16 December 2022
16 December 2022
WH Ireland Group plc
("WH Ireland" or the "Company")
Interim Results for the Six Months ended 30 September 2022
Financial Highlights
§ Revenue of £14.3m (H12021: £17.0m(*))
o Wealth Management division revenue £7.3m (H12021: £7.8m)
o Capital Markets division revenue £7.0m (H12021: £9.2m)
§ Administrative expenses reduced by £2.2m year on year
§ Underlying loss before tax of (£0.9)m (H12021: profit of £1.1m)(+)
§ Statutory loss before tax of £(0.38)m (H12021: £0.3m)
§ Basic loss per share (0.59)p (H12021: earnings of 0.55p)(+)
§ Cash balances at £6.3m (31 March 2022: £6.4m; 30 September 2021:
£8.4m)
Divisional Highlights
§ Wealth Management (including Harpsden):
o Total group AUM of £2.1bn (H12021: £2.4bn)
o WM AUM held on SEI (UK) platform of £1.4bn (H12021: £1.6bn)
o Discretionary assets under management of £1.0bn (H12021: £1.2bn)
§ Capital Markets:
o Increase in number of corporate clients to 92 (H12021: 86)
o Won 13 new quoted corporate client retained mandates
o 19 transactions completed in H1 raising £37m (H12021: £193m)
Current trading and outlook
§ Challenging market environment has continued
§ With further tight control over costs, we expect to report a small loss for
the year as a whole
§ Net cash as at 9 December stood at £6.75m
§ Progressing development opportunities and recruitment (see separate
announcement issued today) in both divisions
Commenting, Phillip Wale, Chief Executive Officer said:
"Our first half was impacted as expected by the fall in markets and drop off
in transactions on AIM. In the circumstances, we reported a relatively
resilient performance and continued to develop the Group through selective
recruitment and complementary new services, such as our debt capital markets
team who completed another transaction this week. With a continued focus on
operational efficiencies, and the further development of our new and existing
offerings, I believe we are well placed to take advantage of a market
recovery."
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 7523 8000
MHP Communications whireland@mhpc.com
Reg Hoare / James Bavister +44 (0) 20 3128 8793
*The comparative information for the period end 30 September 2021 has been
reclassified to reflect the correct loss on discontinued operations, together
with a reclassification of investment gains to revenue as laid out in the
report and accounts year ending 31 March 2021. See note 1 for further
information.
(+)A reconciliation from underlying profits to statutory profits is shown
within the Chief Executive's statement below
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 and
effective choices about their money and how it can support their lifestyle
ambitions. By building a financial plan and investment strategy with us, our
clients are free to focus on the important things, like life.
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.
Chair's opening paragraph
Phillip Wale, our CEO, wrote in his last Annual Report that "the economic and
global environment is probably as testing as any I have experienced in my
career" and "we therefore remain cautious of the very short term". As many
of our peers have already reported, the very challenging market environment
has indeed continued. This has led to a loss for the period.
We remain committed to continuing to focus on our operational efficiencies
across the Group to ensure that the company is well positioned for market
recovery. We also remain committed to further alignment of shareholder and
employee interests.
Chief Executive's statement
Although our results are well down on last year's, we were close to financial
breakeven despite the very testing market conditions, reflecting the benefit
of lower costs and a significant VAT refund. Positively, we made good
operational progress during the period, including winning 13 new brokerships,
and launching our new Debt Capital business to complement our existing Equity
Capital Markets and Private Growth Capital businesses. Wealth Management also
made good progress enhancing its customer proposition and refining its
business model.
Group revenue of £14.2m for the six months to 30 September 2022 fell by 15.9%
against the comparative period last year, driven both by the fall in markets,
which impacted revenue for both divisions, and by the widely reported drop off
in transactions on AIM, which particularly affected Capital Markets.
Administration expenses fell by £2.2m, or 13.0%, reflecting both the
continuing efficiency measures undertaken and a reduction in variable employee
compensation. This resulted in an underlying loss for the period of £0.9m
(six months to 30 September 2021 £1.1m profit) and a statutory loss before
tax of £0.4m (six months to 30 September 2021 £0.3m profit). Net cash at
period end stood at £6.3m (31 March 2022 £6.4m, 30 September 2021 £8.4m).
Capital Markets
Despite the backdrop of a 23% fall in AIM index over the six months to 30
September 2022 and a 75% decline in total money raised over the same period,
we successfully delivered a number of Equity Capital Markets fundraises during
the period and won 13 new quoted corporate client retained mandates, taking
our total number of clients to 92 (2021: 86). This increase not only means an
immediate increase in revenue from retainers but should also position us to
benefit from increased transaction fees when market activity increases.
Success fees generated from fundraising are an important element of our
Capital Markets Division revenue and the significant drop in total funds
raised across the market during the period has correspondingly impacted our
own income
Our new Debt Capital Markets team, who joined the company in May 2022,
completed their first transaction during the period, and we remain confident
that they will significantly enhance the business once market conditions
improve. The team complements our existing Capital Markets and Private Growth
Capital expertise and creates a full Capital Markets offering enabling our
clients to undertake a variety of strategic fundraising options to ensure the
best possible outcome for their businesses.
The Private Growth Capital business continues to see an exciting pipeline of
opportunities, with two fundraises being completed in the period.
We have been proactive in selectively reducing certain costs, while at the
same time investing in other areas where we see commercial opportunities.
Wealth Management
The present market backdrop has also impacted our Wealth Management (WM)
revenues, through the impact of market falls on Assets Under Management (AUM)
and through a consequent reduction in new business opportunities. Despite this
there were some encouraging new business wins, good relative investment
performance and progress in enhancing our client proposition. Total WM AUM
fell 12.5% to £1.4bn. Discretionary AUM (our main focus) fell 9.1% to
£1bn. Net new discretionary AUM totalled £15.7m.
We have continued to make progress in improving the efficiency of the
business, focussing around our four offices in London, Manchester, Henley and
Poole. We have been encouraged by the rise in Financial Planning income as
we put added emphasis on this area of the business.
The Wealth Management business benefitted significantly during the period from
a refund from HMRC in respect of our VAT arising on services during earlier
periods, as set out further in the accounts.
Employees
As stated above we have continued to look for efficiencies and cost savings
across the group which has seen the total number of employees reduced to 156
from 163 a year ago whilst at the same time enhancing our capital market
division with the recruitment of an established debt capital team and private
growth capital expertise.
We remain grateful for the loyalty of employees and shareholders during this
challenging period.
Outlook
Market conditions have continued to be very challenging since the half year
end and are expected to continue to be so for the remainder of our financial
year. As a result, and with further tight control over costs, we expect to
report a small loss for the year as a whole. Cash & cash equivalents as at
9 December stood at £6.75m in line with the half year end.
With a continued focus on operational efficiencies and the further development
of our new and existing offerings, I believe we are well placed to take
advantage of a market recovery.
Independent Auditor's review
Conclusion
We have been engaged by WH Ireland Group plc ('the Company') to review the
condensed set of financial statements of the Company and its subsidiaries (the
'Group') in the interim financial report for the six months ended 30 September
2022 which comprises the consolidated statement of comprehensive income,
consolidated statement of financial position, consolidated statement of cash
flows, consolidated statement of changes in equity and the related explanatory
notes that have been reviewed. We have read the other information contained
in the interim financial report and considered whether it contains any
apparent material misstatements of fact or material inconsistencies with the
information in the condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the interim
financial report for the six months ended 30 September 2022 is not prepared,
in all material respects, in accordance with International Accounting Standard
34, "Interim Financial Reporting" as contained in UK-adopted International
Accounting Standards, and the AIM Rules for Companies.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ('ISRE (UK) 2410') issued for use in
the United Kingdom. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the Group are
prepared in accordance with UK-adopted International Accounting Standards.
The condensed set of financial statements included in this interim financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting" as contained in UK-adopted International
Accounting Standards.
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the Group and
the Company to cease to continue as a going concern.
Responsibilities of Directors
The interim financial report, is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the interim
financial report in accordance with International Accounting Standard 34,
"Interim Financial Reporting" as contained in UK-adopted International
Accounting Standards and the AIM Rules for Companies.
In preparing the interim financial report, the directors are responsible for
assessing the Group's and the Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the Group or the Company or to cease operations, or have no
realistic alternative but to do so.
Auditor's Responsibilities for the Review of the Financial Information
In reviewing the interim financial report, we are responsible for expressing
to the Company a conclusion on the condensed set of financial statements in
the interim financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the Company in accordance with International
Standard on Review Engagements (UK) 2410 "Review of Interim Financial
Information performed by the Independent Auditor of the Entity". Our review
work has been undertaken so that we might state to the Company those matters
we are required to state to them in an independent review report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company, for our review work,
for this report, or for the conclusions we have formed.
RSM UK Audit LLP
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
15 December 2022
Consolidated statement of comprehensive income
6 months ended 6 months ended 12 months ended
30 Sep 2022 30 Sep 2021* 31 Mar 2022
Note (unaudited) (unaudited) (audited)
£'000 £'000 £'000
Revenue 14,289 16,999 32,035
Administrative expenses (14,637) (16,823) (33,143)
Operating (loss)/ profit (348) 176 (1,108)
Other income 1 1,673 - -
Net (losses)/ gains on investments 1 (1,534) 503 1,626
Finance income 1 - 1
Finance expense 1 (176) (354) (511)
(Loss)/ profit before tax (384) 325 8
Taxation 33 - 67
(Loss)/ profit and total comprehensive income for the year (351) 325 75
Earnings per share 8
Basic (0.59p) 0.55p 0.13p
Diluted - 0.49p 0.12p
* The comparative revenue and net gains on investments have been restated.
Further details can be found in note 1.
Consolidated statement of financial position
30 Sep 2022 30 Sep 2021 31 Mar 2022
Note (unaudited) (unaudited) (audited)
£'000 £'000 £'000
ASSETS
Non-current assets
Intangible assets 4,006 4,512 4,259
Goodwill 6 3,539 3,539 3,539
Property, plant and equipment 679 376 325
Investments 3 1,402 1,783 3,013
Right of use asset 783 1,377 1,168
Deferred tax asset 190 190 190
10,599 11,777 12,494
Current assets
Trade and other receivables 5,833 5,652 5,758
Other investments 3 1,692 1,675 1,912
Cash and cash equivalents 4 6,303 8,377 6,446
13,828 15,704 14,116
Total assets 24,427 27,481 26,610
LIABILITIES
Current liabilities
Trade and other payables (5,159) (7,001) (6,681)
Lease liability (328) (516) (376)
Deferred consideration 5 (2,541) (1,291) (2,412)
Deferred tax liability (699) (772) (732)
(8,727) (9,580) (10,201)
Non-current liabilities
Lease liability (516) (1,224) (999)
Deferred consideration 5 - (1,011) -
(516) (2,235) (999)
Total liabilities (9,243) (11,815) (11,200)
Total net assets 15,184 15,666 15,410
Capital and reserves
Share capital 7 3,104 3,101 3,104
Share premium 19,014 18,983 19,014
Other reserves 981 981 981
Retained earnings (6,899) (6,755) (6,789)
Treasury shares (1,016) (644) (900)
Shareholders' funds 15,184 15,666 15,410
Signed on behalf of the board
P A Wale
15 December 2022
Consolidated statement of cash flows
6 months ended 6 months ended 12 months ended
30 Sep 2022 30 Sep 2021* 31 Mar 2022
Note (unaudited) (unaudited) (audited)
£'000 £'000 £'000
Operating activities:
(Loss)/profit for the period: (351) 325 75
(351) 325 75
Adjustments for:
Depreciation and amortisation 468 611 1,229
Finance income - - (1)
Finance expense 176 354 511
Tax (33) - (67)
Non-cash adjustment for share option charge 241 254 470
Non-cash adjustment for investment losses/(gains) 1,552 (336) (1,626)
Non-cash adjustment for revenue (161) (503) (1,651)
Increase in trade and other receivables (183) (951) (601)
Decrease in trade and other payables (1,842) (55) (942)
Net cash used in operations (133) (301) (2,603)
Net cash outflows from operating activities (133) (301) (2,603)
Investing activities:
Acquisition of property, plant and equipment (202) (4) (103)
Movement in current asset investments 550 815 1,933
Net cash gained from investing activities 348 811 1,830
Finance activities:
Proceeds from issue of share capital - - 34
Purchase of own shares by Employee Benefit Trust (116) - (256)
Interest paid - - (2)
Lease liability payments (242) (344) (768)
Net cash used in financing activities (358) (344) (992)
Net (decrease)/increase in cash and cash equivalents (143) 166 (1,765)
Cash and cash equivalents at beginning of period 6,446 8,211 8,211
Cash and cash equivalents at end of period 6,303 8,377 6,446
Consolidated statement of changes in equity
Share Share Other Retained Treasury Total
capital premium reserves earnings shares equity
£'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 period - - - 325 - 325
Employee share option scheme - - - 254 - 254
Balance at 30 September 2021 3,101 18,983 981 (6,755) (644) 15,666
Profit and total comprehensive income for the period (250) (250)
Employee share option scheme - - - 216 - 216
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
Balance at 1 April 2022 3,104 19,014 981 (6,789) (900) 15,410
Profit and total comprehensive income for the period (351) (351)
Employee share option scheme - - - 241 - 241
Purchase of own shares by Employee Benefit Trust - - - - (116) (116)
Balance at 30 September 2022 3,104 19,014 981 (6,899) (1,016) 15,184
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 AIM, a market operated by the London
Stock Exchange Group plc. The address of its registered office is 24 Martin
Lane, London, EC4R 0DR.
Basis of preparation
The condensed financial statements in this interim report for the six months
to 30 September 2022 has been prepared in accordance with IAS 34 Interim
Financial Reporting. This report has been prepared on a going concern basis
and should be read together with the Group's annual consolidated financial
statements as at and prepared to 31 March 2022 in accordance with UK-adopted
International Accounting Standards.
The accounting policies, presentation and methods of computation adopted by
the Group in the preparation of its 2022 interim report are those which the
Group currently expects to adopt in its annual financial statements for the
year ending 31 March 2023 which will be prepared in accordance with UK-adopted
International Accounting Standards and are consistent with those adopted in
the audited annual Report and Accounts for the period ended 31 March 2022.
The financial information in this report does not constitute the Company's
statutory accounts. The statutory accounts for the period ended 31 March 2022
have been delivered to the Registrar of Companies in England and Wales. The
auditor has reported on those accounts. Its report was unqualified, did not
draw attention to any matters by way of emphasis, and did not contain a
statement under Section 498(2) or 498(3) of the Companies Act 2006. The
financial information for the six months to 30 September 2022 is unaudited
(six months to 30 September 2021: unaudited).
Going concern
The condensed 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 March 2024 which consider the funding
and capital position of the Group. Those forecasts make assumptions in respect
of future trading conditions, notably the economic environment and its impact
on the Group's revenues and costs. In addition to this, the nature of the
Group's business is such that there can be considerable variation in the
timing of cash inflows. The forecasts take into account foreseeable downside
risks, based on the information that is available to the Directors at the time
of the approval of these financial statements.
The Directors have conducted full and thorough assessments of the Group's
business and the past financial year has provided a thorough test of those
assessments and the resilience of the business. The significant market
turbulence particularly in the preceding 12 months resulting from the Russian
invasion of Ukraine presented a range of challenges to the business.
An analysis of the potential downside impacts was conducted as part of the
going concern assessment to assess the potential impact on revenue and asset
values with a particular focus on the variable component parts of our overall
revenue, such as corporate finance fees and commission. Furthermore, reverse
stress tests were modelled to assess what level the Group's business would
need to be driven down to before resulting in a liquidity crisis or a breach
of regulatory capital. That modelling concluded that transactional,
non-contractual revenue would need to decline by more than 20% from
management's forecasts to create such a crisis situation within eighteen
months' time.
Based on all the aforementioned, the Directors believe that the Group has
sufficient liquidity to meet its liabilities for the next twelve months and
that the preparation of the financial statements on a going concern basis
remains appropriate. The Directors, conscious of the continuing, challenging
external market environment, will continue to prudently manage the capital and
liquidity position of the firm.
Net (losses)/ gains on investments
Warrants and investments may be received during the course of business and are
designated as fair value through profit or loss. At each reporting date the
warrants and investments are revalued and any gain or loss is recognised in
net (losses)/ gains on investments. On exercise of warrants and sale of
investments the gain or loss is also recognised in net (losses)/ gains on
investments.
Other income
During the period, the Group received confirmation from HMRC that the supply
of certain Group services was exempt from VAT. As a result, the Group received
a refund from HMRC in respect of VAT arising on those services during the
period from 1 April 2017 to 31 March 2021 of £1.7m (net £1.5m after advisory
costs). This has been treated as an adjusting item to the underlying profit in
view of its non-recurring nature.
Finance expense
Included within finance expenses is the fair value measurement arising on
deferred consideration payments from the acquisition of Harpsden together with
the associated net finance costs.
Prior period restatement
The income statement and cash flow statement for the six months ended 30
September 2021 have been restated to reflect the following errors which were
identified by management and corrected during the previous financial year:
· Net fair value gains of £503,000 arising on movements in
non-cash consideration after initial recognition and sales of investments were
incorrectly recorded within Revenue rather than within Net gains on
investments.
· Movements in current asset investments have been represented in
the cash flow statements as investing activities in accordance with IAS 7.
Movements in current asset investments have been restated to exclude non-cash
movements identified which were incorrectly included in calculating the cash
flow.
There was no impact upon the profit and total comprehensive income and net
increase in cash and cash equivalents as reported at 31 March 2021 and the net
assets as reported at 1 April 2020.
As originally reported Effect of restatement Group restated amounts
30 September 2021 £'000 £'000 £'000
Statement of Comprehensive Income
Revenue 17,502 (503) 16,999
Net gains on investments - 503 503
Consolidated and Company statement of cash flows
Operating activities (extract)
Non-cash adjustment for revenue - (503) (503)
Non-cash adjustment for investment gains - (336) (336)
Decrease/ (increase) in current asset investments 815 (815) -
(Increase)/ decrease in non-current asset investments (839) 839 -
Net cash (used in)/generated from operations 514 (815) (301)
Investing activities (extract)
Cash on investing activities - 815 815
Net cash (used in)/ generated from investing activities (4) 815 811
There was no impact upon the profit and total comprehensive income and net
increase in cash and cash equivalents as reported at 30 September 2021 and the
net assets as reported at 30 September 2021.
2. Segment information
The Group has two principal operating segments, Wealth Management (WM) and
Capital Markets (CM) and a number of minor operating segments that have been
aggregated into one operating segment.
WM offers investment management advice and services to individuals and
contains our Wealth Planning business, giving advice on and acting as
intermediary for a range of financial products. CM provides corporate finance
and corporate broking advice and services to companies and acts as Nominated
Adviser (Nomad) to clients traded on the AIM and contains our Institutional
Sales and Research business, which carries out stockbroking activities on
behalf of companies as well as conducting research into markets of interest to
its clients.
Both divisions are located in the UK. Each reportable segment has a segment
manager who is directly accountable to, and maintains regular contact with,
the Chief Executive Officer.
No customer represents more than ten percent of the Group's revenue (FY21:
nil).
The majority of the Group's revenue originates within the UK.
6 months ended 30 Sep 2022 Wealth Management Capital Markets Group and consolidation adjustments Group
(unaudited) £'000 £'000 £'000 £'000
Revenue 7,262 7,027 - 14,289
Direct costs (6,075) (6,243) - (12,318)
Contribution 1,187 784 - 1,971
Indirect costs (1,663) (1,171) - (2,834)
Underlying (loss) before tax (476) (387) - (863)
Amortisation (252) - - (252)
Changes in fair value and finance cost of deferred consideration (129) - - (129)
Net changes in the value of non-current investment assets - (645) - (645)
Other income 1,505 - - 1,505
Profit/ (loss) before tax 648 (1,032) - (384)
Taxation 33 - - 33
Profit/ (loss) for the period 681 (1,032) - (351)
Wealth Management Capital Markets Group and consolidation adjustments Group
6 months ended 30 Sep 2021*
(unaudited) £'000 £'000 £'000 £'000
Revenue 7,800 9,199 - 16,999
Direct costs (6,352) (6,622) - (12,974)
Contribution 1,448 2,577 - 4,025
Indirect costs (1,614) (795) (374) (2,783)
Underlying profit/(loss) before tax (166) 1,782 (374) 1,242
Acquisition related costs (405) - - (405)
Amortisation of acquired client relationships (218) - - (218)
Changes in fair value and finance cost of deferred consideration (306) - (306)
Restructuring costs (194) (102) - (296)
Net changes in the value of non-current investment assets - 308 - 308
Loss/ (profit) before tax (1,289) 1,988 (374) 325
Taxation - - - -
Loss/ (profit) for the period (1,289) 1,988 (374) 325
* The comparative revenue and net gains on investments have been restated.
Further details can be found in note 1.
12 months ended 31 Mar 2022 Wealth Management Capital Markets Group and consolidation adjustments Group
(audited) £'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 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
Loss/ (profit) before tax (2,093) 2,752 (651) 8
Taxation 67 - - 67
Loss/ (profit) for the year (2,026) 2,752 (651) 75
3. Investments
As at As at As at
30 Sep 2022 30 Sep 2021 31 Mar 2022
Investments £'000 £'000 £'000
Fair value: unquoted - 48 48
Fair value: quoted - 1 1
Fair value: warrants 1,402 1,734 2,964
Total investments 1,402 1,783 3,012
Quoted and unquoted investments include equity investments other than those in
subsidiary undertakings. Warrants may be received during the ordinary course
of business; there is no cash consideration associated with the acquisition.
Fair value, in the case of quoted investments, represents the bid price at the
reporting date. In the case of unquoted investments, the fair value is
estimated by reference to recent arm's length transactions. The fair value of
warrants is estimated using established valuation models. These investments
are included in non-current assets.
As at As at As at
30 Sep 2022 30 Sep 2021 31 Mar 2022
£'000 £'000 £'000
Other investments 1,692 1,675 1,912
Investments are measured at fair value, which is determined directly by
reference to published prices in an active market where available. Trading
investments are included in current assets.
4. Cash, cash equivalents and bank overdrafts
For the purposes of the statement of cash flows, cash and cash equivalents
comprise cash in hand and deposits with banks and financial institutions with
a maturity of up to three months.
Cash and cash equivalents represent the Group's money and money held for
settlement of outstanding transactions.
Money held on behalf of clients is not included in cash and cash equivalents.
Client money at 30 September 2022 was £0.4m (30 September 2021: £0.4m; 31
March 2022: £0.4m).
5. Deferred consideration
As at As at As at
30 Sep 2022 30 Sep 2021 31 Mar 2022
£'000 £'000 £'000
At beginning of period 2,412 1,996 1,996
Finance expense of deferred consideration 66 208 318
Change in fair value 63 98 98
Balance at end of period 2,541 2,302 2,412
Analysed as:
Included in current liabilities 2,541 1,291 2,412
Included in non-current liabilities - 1,011 -
Balance at end of period 2,541 2,302 2,412
Deferred consideration relates to the acquisition of Harpsden Wealth
Management Limited 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%. The
total cash consideration of £2.5m was recognised at its fair value of £2m on
acquisition.
During the six months ended 30 September 2022, the fair value of the estimated
deferred consideration for Harpsden Wealth Management Limited was revalued by
£63k due to the estimated timing of when the consideration will fall due.
During the six months ended 30 September 2022 the Group also recognised a
finance expense of £66k on the deferred consideration. The fair value of the
Harpsden deferred consideration at 30 September 2022 was £2.5m. The first
payment has not been paid.
6. 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:
As at As at As at
30 Sep 2022 30 Sep 2021 31 Mar 2022
Group £'000 £'000 £'000
Beginning of year 3,539 3,539 3,539
Acquisition of subsidiaries - - -
End of year 3,539 3,539 3,539
Goodwill is assessed annually for impairment and the recoverability has been
assessed at 31 January 2022 by comparing the carrying value of the CGU to
which the goodwill is allocated, against its recoverable amount. The Harpsden
CGU recoverable amount was calculated as £10.9m and the carrying value of the
CGU was £6.4m.
Forecasts have been re-visited due to changes in the economic environment.
Market decline has caused a reduction in revenue growth and the increase in
market interest rates has caused the discount rate used in the value in use
calculation to increase. The revised pre-tax discount rate is 17.2% (31 Mar
2022: 14.7%) and the revised recoverable amount of the CGU is £7.2m. Compared
against the carrying value at 30 September 2022 of £6.3m, indicating no
impairment. Client retention remained unchanged for the six months to 30
September 2022, indicating the reduction in revenue was due to the market
decline, a factor outside the control of management. Therefore future changes
to the headroom remains subject to market uncertainty.
7. Share capital
The total number of ordinary shares in issue is 62.09 million (30 September
2021: 62.05 million; 31 March 2022: 62.09 million).
8. Earnings per share
Basic earnings per share (EPS) is calculated by dividing the profit
attributable to equity holders of the Company by the weighted average number
of ordinary shares in issue during the year, excluding ordinary shares
purchased by the Company and held as treasury shares.
Diluted EPS is the basic EPS, adjusted for the effect of conversion into fully
paid shares of the weighted average number of all dilutive employee share
options outstanding during the period. At 30 September 2022: 6.48m (30
September 2021: 6.48m; 31 March 2021: 6.48m) options were excluded from the
EPS calculation as they were anti-dilutive. In a period 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.
Reconciliation of the earnings and weighted average number of shares used in
the calculations are set out below.
As at As at As at
30 Sep 2022 30 Sep 2021 31 Mar 2022
Weighted average number of shares in issue during the period ('000) 59,409 58,690 59,692
Effect of dilutive share options (thousands) - 7,162 1,190
59,409 65,852 60,882
(Loss)/ profit for the year (351) 325 75
Basic EPS (0.59p) 0.55p 0.13p
Diluted EPS - 0.49p 0.12p
9. Dividends
No interim dividend has been paid or proposed in respect of the current
financial period (30 September 2021: nil; 31 March 2022: nil).
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