W.H. IRELAND GROUP PLC

Earnings Release • Jul 20, 2015

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RNS Number : 5456T

W.H. Ireland Group PLC

20 July 2015

The following amendments have been made to the Half Year Results announcement released on 20 July 2015 at 7.00am under RNS No 4414T.

In Note 2 Segmental reporting, in the table representing revenue and profit information for the Group's business segments for the half year ended 31 May 2015, all figures marked with an asterisk have been amended.

All other details remain unchanged.

The full amended text is shown below.

Monday, 20 July 2015

WH Ireland Group plc

("WH Ireland", "the Group" or "the Company")

Half Year Results

WH Ireland, the financial services group that provides corporate broking and private wealth management services, today announces its results for its half year ended 31 May 2015.

Highlights

·      Group revenue increased 9% to £15.94m (2014: £14.69m)

o  34% increase in recurring revenues to £5.13m (2014: £3.83m)

·      Operating profit of £0.31m (2014: £0.12m)

·      Profit before tax of £0.59m (2014: £0.20m)

·      Basic earnings per share of 1.86p (2014: 0.58p)

Private Wealth Management

·      Total funds under management and control of £2.8bn up 3.7% from year end (30 November 2014: £2.7bn)

o  Strong increase in discretionary assets under management of 16% to £0.83bn (30 November 2014: £0.72bn)

·      Management fee income increased by 55% to £3.4m (2014: £2.2m)

Corporate Broking

·      Further growth in number of retained corporate clients to 98 (2014: 92)

·      Retainer fee income rose by 7% to £1.68m (2014: £1.57m)

·      Increased flow of secondary placings with 15 transactions completed 

Richard Killingbeck, Chief Executive, said:

"We have reported an improved and profitable first half performance with increased discretionary funds under management in Private Wealth Management and increased numbers of clients in Corporate Broking.

"The actions we have taken in order to achieve the margins that the Company is capable of producing will begin to benefit the second half and beyond. We remain cautiously optimistic and look forward to the next six months with confidence."

For further information please contact:

WH Ireland Group plc	www.wh-ireland.co.uk
Richard Killingbeck, Chief Executive Officer Miles Nolan, Head of Communications	+44(0) 20 7220 1666
SPARK Advisory Partners Limited
Mark Brady/Miriam Greenwood	+44(0) 20 3368 3551/3550
MHP Communications
Reg Hoare / Jade Neal / Jamie Ricketts	+44(0) 20 3128 8100
	whireland@mhpc.com

Chairman's Statement

Introduction

It is pleasing to report a profitable first half to the year with further progress being made in most areas of our business. There remains a considerable amount of work to be done if we are to achieve the returns that the Board believes the Company is capable of producing but, under difficult market conditions, it is reassuring to see our recurring revenues growing strongly.

Dividend

In line with previous years, the Board is continuing with its policy of only recommending the payment of a final dividend in respect of its financial year end; this will be declared at the time of the 2014/5 results announcement in February 2016.

Conclusion

The second half of the year will face the headwind of various macro-economic uncertainties.  Currently the most topical are the volatile market conditions in China and the demise of the Greek economy with the attendant uncertainty about her continued participation in the Euro experiment.  Nevertheless the cautious optimism that I expressed at the year-end remains appropriate and we look forward to the next six months with confidence.

Rupert Lowe

Chairman

Chief Executive's Statement

Overview

The first six months of the year has witnessed considerable progress in both of our divisions in delivering our stated ambition of achieving a greater share of our revenue from recurring revenue streams.  

The Private Wealth Management division has continued to grow its management fee income with an increase of over 50% being achieved when compared with the same period last year.  This growth reflects the continued focus on discretionary and advisory fee paying assets from both new and existing clients.  

Within the Corporate Broking division continuing growth in the number of corporate clients has resulted in further increases to retainer income and a consequential increase in the number of client-related corporate transactions undertaken during the first half.

Outlook

Despite this solid progress, there remains a lot of work to be undertaken in order to achieve the gross margin levels and returns that the Chairman refers to above.  The rationalisation of office locations and reductions in the cost base will begin to have a positive impact in the second half of our financial year.  Further, we are continuing to focus a significant amount of time and effort in bringing efficiencies to bear within our operational platform whilst at the same time ensuring that we have the ability to service our growing discretionary client base.  Various internal projects have begun this year which will take some time to be completed but which should begin to benefit the business in 2016 and beyond.

Richard Killingbeck

Chief Executive Officer

Consolidated statement of comprehensive income - unaudited

for the half year ended 31 May 2015		Half year	Half year		Year
		ended	ended		ended
		31 May	31 May		30 November
		2015	2014		2014
					(audited)
	Note	£'000	£'000		£'000
Revenue	2	15,942	14,691		30,043
Administrative expenses		(15,626)	(14,564)		(29,353)
Operating profit		316	127		690
Other income		-	-		12
Investment (losses)/gains		(98)	(2)		(2)
Fair value gains/(losses) on investments		385	87		(221)
Finance income		16	14		25
Finance expense		(26)	(23)		(48)
Profit before tax		593	203		456
Tax expense		(141)	(64)		(119)
Profit and total comprehensive income for the period		452	139		337
Earnings per share for profit attributable to the ordinary equity holders of the parent during the period
Basic	6	1.86p		0.58p		1.42p
Diluted	6	1.82p		0.55p		1.34p

Consolidated statement of financial position - unaudited

as at 31 May 2015		31 May	31 May	30 November
		2015	2014	2014
				(audited)
	Note	£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment		5,500	5,700	5,595
Goodwill		258	319	258
Intangible assets		3,502	476	463
Investments	3	456	532	579
Deferred tax asset		350	375	360
		10,066	7,402	7,255
Current assets
Trade and other receivables		20,919	33,098	38,345
Trading investments		261	1,180	890
Cash and cash equivalents	4	5,903	8,643	7,490
		27,083	42,921	46,725
Total assets		37,149	50,323	53,980
Liabilities
Current liabilities
Trade and other payables		(17,685)	(34,191)	(37,919)
Corporation tax payable		(443)	(192)	(308)
Obligations under finance leases		(119)	(119)	(119)
Borrowings		(174)	(175)	(179)
Provisions for liabilities and charges		(45)	(412)	(189)
		(18,466)	(35,089)	(38,714)
Non-current liabilities
Deferred tax liability		(205)	(393)	(205)
Obligations under finance leases		(50)	(159)	(109)
Accruals and deferred income		(3,461)	(363)	(347)
Borrowings		(1,081)	(1,255)	(1,169)
Provisions for liabilities and charges		(35)	(21)	(21)
		(4,832)	(2,191)	(1,851)
Total liabilities		(23,298)	(37,280)	(40,565)
Total net assets		13,851	13,043	13,415
Equity
Share capital	5	1,222	1,192	1,193
Share premium		343	95	101
Available-for-sale reserve		7	7	7
Other reserves		982	982	982
Retained earnings		12,033	11,549	11,895
Treasury shares		(736)	(782)	(763)
Total equity		13,851	13,043	13,415

Consolidated statement of cash flows - unaudited

for the half year ended 31 May 2015

	Half year	Half year	Year
	ended	ended	ended
	31 May	31 May	30 November
	2015	2014	2014
			(audited)
	£'000	£'000	£'000
Operating activities:
Profit for the period	452	139	337
Adjustments for:
Depreciation, amortisation and impairment	169	235	474
Finance income	(16)	(14)	(25)
Finance expense	26	23	48
Taxation	141	64	119
Gain in investments	(363)	(155)	(202)
Non-cash adjustment for share based payments	108	99	205
Decrease/(increase) in trade and other receivables	17,425	3,594	(1,653)
(Decrease)/increase in trade and other payables*	(20,172)	(554)	3,158
(Decrease)/increase in provisions	(130)	68	(155)
Decrease/(increase) in trading investments	629	(333)	(43)
Net cash (used in)/generated from operations	(1,731)	3,166	2,263
Income taxes received/(paid)	4	-	(112)
Net cash (used in)/generated from operating activities	(1,727)	3,166	2,151
Investing activities*:
Proceeds from sale of investments	646	70	70
Interest received	16	14	25
Acquisition of investments	(160)	-	-
Acquisition of property, plant and equipment	(60)	(201)	(261)
Net cash generated from investing activities	442	(117)	(166)
Financing activities:
Proceeds from issue of shares	313	96	132
Repayment of borrowings	(93)	(59)	(181)
Repayment of obligations under finance leases	(48)	(99)	(102)
Interest paid	(26)	(23)	(48)
Interest paid: Finance leases	(11)	(10)	(17)
Dividends paid	(437)	(357)	(325)
Net cash used in financing activities	(302)	(452)	(541)
Net (decrease)/increase in cash and cash equivalents	(1,587)	2,597	1,444
Cash and cash equivalents at beginning of period	7,490	6,046	6,046
Cash and cash equivalents at end of period	5,903	8,643	7,490
Cash and cash equivalents at the end of the period comprise of:
Clients' settlement cash	107	4,895	172
Group cash	5,796	3,748	7,318
Cash and cash equivalents at end of period	5,903	8,643	7,490

*The investing activities and movement in trade and other payables for the half-year ended 31 May 2015, do not include the acquisition of intangibles for deferred payments of £3.05m, treated as a non cash item.

Consolidated statement of changes in equity - unaudited			Available
	Share	Share	for-sale	Other	Retained	Treasury	Total
	capital	premium	reserve	reserves	earnings	shares	equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 December 2013	1,185	6	7	982	11,668	(782)	13,066
Profit and total comprehensive income for the period	-	-	-	-	139	-	139
Contributions by and distributions to owners
Recognition of share-based payments	-	-	-	-	99	-	99
Share options exercised	7	89	-	-	-	-	96
Dividends (note 7)	-	-	-	-	(357)	-	(357)
Total contributions by and distributions to owners	7	89	-	-	(258)	-	(162)
Balance at 31 May 2014	1,192	95	7	982	11,549	(782)	13,043
Profit and total comprehensive income for the period	-	-	-	-	198	-	198
Contributions by and distributions to owners
Recognition of share-based payments	-	-	-	-	106	-	106
Share options exercised	1	6	-	-	10	19	36
Dividends (note 7)	-	-	-	-	32	-	32
Total contributions by and distributions to owners	1	6	-	-	148	19	174
Balance at 30 November 2014	1,193	101	7	982	11,895	(763)	13,415
Profit and total comprehensive income for the period	-	-	-	-	452	-	452
Contributions by and distributions to owners
Recognition of share-based payments	-	-	-	-	108	-	108
Share options exercised	29	242	-	-	15	27	313
Dividends (note 7)	-	-	-	-	(437)	-	(437)
Total contributions by and distributions to owners	29	242	-	-	(314)	27	(16)
Balance at 31 May 2015	1,222	343	7	982	12,033	(736)	13,851
for the half year ended 31 May 2015

Notes to the interim report and financial information

for the half year ended 31 May 2015

1. Basis of preparation

Statement of compliance

The financial information in this interim report has been prepared in accordance with the disclosure requirements of the Alternative Investment Market ("AIM") Rules and the recognition and measurements of International Financial Reporting Standards (IFRS), as adopted by the European Union (EU).

The interim report does not include all of the information required for full annual financial statements.

The accounting policies adopted by the Group in the preparation of its 2015 interim report are those which the Group currently expects to adopt in its annual financial statements for the year ending 30 November 2015 and are consistent with those disclosed in the annual financial statements for the year ended 30 November 2014.

The financial information for the period ended 31 May 2015 does not constitute the Company's statutory accounts.  The statutory accounts for the year ended 30 November 2014 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 half year ended 31 May 2015 and 31 May 2014 is unaudited.

The AIM Rules for Companies do not require IAS 34 "Interim Financial Reporting" to be applied; therefore it has not been used in the preparation of this interim report.

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 November 2017 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.

Certain activities of the Group are regulated by the Financial Conduct Authority (FCA) which is the statutory regulator for financial services business in the UK and has responsibility for policy, monitoring and discipline for the financial services industry.  The FCA requires the Group's capital resources to be adequate; that is sufficient in terms of quantity, quality and availability, in relation to its regulated activities.  The Directors monitor the Group's regulatory capital resources on a daily basis and they have developed appropriate scenario tests and corrective management plans which they are prepared to implement to address any potential deficit as required.  These actions may include cost reductions, regulatory capital optimisation programmes or further capital raising.  The Directors consider that, taking account of foreseeable downside risks, regulatory capital requirements will continue to be met.

The Directors have renewed the Group's banking facilities, confirming that these will be available until 28 February 2016.

2. Segmental reporting

The Group has two operating segments. 

The Private Wealth Management division offers investment management advice and services to individuals and contains the Group's Wealth Planning business, giving advice on and acting as intermediary for a range of financial products.  The Corporate Broking division provides corporate finance and corporate broking advice and services to companies and acts as Nominated Adviser to clients listed on AIM.  It also contains the Group's 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.

All divisions are located in the UK or the Isle of Man.  Each reportable segment has a segment manager who is directly accountable to and maintains regular contact with the CEO. 

No customer represents more than ten percent of the Group's revenue.

The following tables represent revenue and profit information for the Group's business segments:

Half year ended 31 May 2015

	Private Wealth	Corporate	Head	Other Group
	Management	Broking	Office	Companies	Group
	£'000	£'000	£'000	£'000	£'000
Revenue	10,915	4,869	-	158	15,942
Segment result	501	(283)	-	98	316
Executive Board cost	169	169	(454)	116	-
Other Income	-	-	-	-	-
Investment gains	(8)	(90)	-	-	(98)
Fair value gains/(losses) on investments	(11)	396	-	-	385
Finance income	15	-	-	1	16
Finance expense	(11)	(4)	-	(11)	(26)
Profit/(loss) before tax	655	189	(454)	203	593
Tax (expense)/income	(22)	(130)	-	11	(141)
Profit/(loss) for the year	633*	59*	(454)	214*	452*

Half year ended 31 May 2014

	Private Wealth	Corporate	Head	Other Group
	Management	Broking	Office	Companies	Group
	£'000	£'000	£'000	£'000	£'000
Revenue	10,077	4,540	-	74	14,691
Segment result	326	(118)	-	(81)	127
Executive Board cost	188	188	(476)	100	-
Other Income	-	-	-	-	-
Investment losses	-	(2)	-	-	(2)
Fair value gains on investments	-	87	-	-	87
Finance income	12	1	-	1	14
Finance expense	(8)	(3)	-	(12)	(23)
Profit/(loss) before tax	518	153	(476)	8	203
Tax (expense)/income	(17)	(96)	-	49	(64)
Profit/(loss) for the year	501	57	(476)	57	139

Year ended 30 November 2014 (audited)

	Private Wealth	Corporate	Head	Other Group
	Management	Broking	Office	Companies	Group
	£'000	£'000	£'000	£'000	£'000
Revenue	20,328	9,538	-	177	30,043
Segment result	229	616	-	(155)	690
Executive Board cost	347	347	(897)	203	-
Other Income	12	-	-	-	12
Investment losses	-	(2)	-	-	(2)
Fair value losses on investments	(24)	(197)	-	-	(221)
Finance income	22	1	-	2	25
Finance expense	(17)	(6)	-	(25)	(48)
Profit/(loss) before tax	570	759	(897)	25	456
Tax (expense)/income	(31)	(181)	-	93	(119)
Profit/(loss) for the year	539	578	(897)	118	337

3. Investments

	Half year	Half year	Year
	ended	ended	ended
	31 May	31 May	30 November
	2015	2014	2014
			(audited)
	£'000	£'000	£'000
Available-for-sale investments
Fair value:         unquoted	93	247	93
	93	247	93
Investments at fair value through the income statement
Fair value:         quoted	196	41	284
warrants	167	244	202
	363	285	486
Total investments	456	532	579

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.

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 and the Company's money and money held for settlement of outstanding transactions. 

Money held on behalf of clients is not included in the statement of financial position.  Client money at 31 May 2015 was £130.8m (31 May 2014: £101.6m; 30 November 2014: £107.2m).

5. Share capital

The total number of authorised ordinary shares is 34.5 million shares of 5p each (31 May 2014 and 30 November 2014: 34.5 million).  The total number of issued ordinary shares is 24.4 million shares of 5p each (31 May 2014: 23.8 million and 30 November 2014: 23.9 million).

6. Earnings per share

Basic earnings per share (EPS) is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares.

Diluted EPS is the basic EPS, adjusted for the effect of conversion into fully paid shares of the weighted average number of all dilutive employee share options outstanding during the period.  34,838 options over shares are excluded from the EPS calculation.  At 31 May 2014: nil and 30 November 2014: nil options were excluded from the EPS calculation as they were anti-dilutive.  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:

	Half year	Half year	Year
	ended	ended	ended
	31 May	31 May	30 November
	2015	2014	2014
			(audited)
	'000	'000	'000
Weighted average number of shares in issue during the period	24,268	23,763	23,763
Effect of dilutive share options	611	1,243	1,308
	24,879	25,006	25,071
	£'000	£'000	£'000
Earnings attributable to ordinary shareholders	593	139	337
Basic EPS
Continuing operations	2.44p	0.58p	1.42p
Diluted EPS
Continuing operations	2.38p	0.55p	1.34p

7. Dividends

A final dividend of 2.0p per share, in respect of the year ended 30 November 2014, was approved by shareholders at the Annual General Meeting held on 26 March 2015.  This was subsequently paid on 10 April 2015.  No interim dividend has been paid or proposed in respect of the current financial year (2014: nil).

8. Contingent liabilities

In April 2014, the FCA instigated an investigation into WH Ireland Limited, the principal operating subsidiary of

WH Ireland Group plc, in respect of its control procedures required by Principle 3 of the FCA Rules of Business.  The investigation is in relation to the period between 1st January 2013 until 19th June 2013.

The Directors continue to cooperate fully with the FCA and are in ongoing dialogue in the hope of seeking clarity and timely resolution of the matter.  There is insufficient information at the date of these financial statements to allow the Board to make a reliable estimate of the effect on the Group's financial position.  The Directors have therefore made no provision in these financial statements in respect of this matter.

9. Availability of Interim Report

Copies of this Report and the Company's shareholder presentation can be downloaded from the Company's website at www.wh-ireland.co.uk.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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