29th Feb 2008 07:01
W.H. Ireland Group PLC29 February 2008 WHI WH IRELAND GROUP PLC ("WH Ireland" or "the Group") Preliminary Results for the year ended 30 November 2007 Quoted on AIM, WH Ireland is an established financial services group with fourdistinct activities, stockbroking, corporate finance, financial services andinvestments. Highlights • Group turnover increased by 41% to £42.73m (2006: £30.34m) • Profit before tax of £3.80m (2006 restated: £3.67m) • Basic earnings per share of 14.89p (2006 restated: 14.78p) • Net assets of 114.3p per share (2006 restated: 94.6p) - newly refurbished head office property revalued at £8.25m (November 2006: £4.93m) • Final dividend of 3.0p (2006: 3.0p), making a total dividend for the year of 5.0p (2006: 4.4375p) • Particularly strong contribution from Australian business - further increased stake in the business to 76.59% this year • Further growth in stockbroking - addition of two new fund management teams - substantial new office opened in Bristol • Total funds under management and control of £1.77bn (2006: £1.36bn) - WH Ireland UK Growth Trust grown to £88m • Acquisition of IFA businesses in Bristol for initial consideration of £1.25m Commenting on results, Chief Executive, Laurie Beevers, said, "These results are encouraging, especially when viewed against the backdrop ofmarket turbulence. During the year, we have undergone a period of substantialchange and strengthening of the Group and, as a result of continuing investment,we have expanded the scope and intrinsic value of our business, the fullbenefits of which will come through in the future. "Our diversified approach is aimed at de-risking the Group, where possible, andour strong balance sheet gives us the confidence to continue to develop allfacets of the business, both in the UK and Australia." Laurie Beevers Tel: 020 7448 1000 (today)WH Ireland Tel: 0161 832 6644 Zoe Biddick Tel: 020 7448 1000Biddicks Tom Durie Tel: 020 7710 7600Oriel Securities Limited CHAIRMAN'S STATEMENT Results and Dividend Despite a tougher trading environment for the second half of the year, it ispleasing to report the fifth consecutive year of pre tax profits growth for theGroup. The figures encompass a period of substantial change and strengthening of theGroup; principally the focused move towards fund management within thestockbroking business which has led to an increase of 30% in funds undermanagement to £1.77 billion (2006: £1.36 billion) and the revaluation to £8.25million of the Manchester property following a major refurbishment, representinga rise of 67%. Our Net Asset Value has increased to £19.66 million (2006restated: £15.37 million), up 27%. Turnover rose 41% to £42.73 million (2006:£30.34 million). Our pre tax profits have shown a more modest increase to £3.80million (2006 restated: £3.68 million) with EPS of 14.89p (2006 restated:14.78p). Investment across the business both in the addition of new client advisers andthe implementation of new systems, and an increased regulatory burden has heldback significant profit progress. Therefore, despite a substantial increase inboth turnover and funds under management and control which will underpin futuredevelopment, pre tax profit saw a modest increase on the previous year.However, as a result of continuing investment in and expansion of our business,we have considerably increased both its scope and intrinsic value, the fullbenefits of which will come through in future years. The make up of these operating profits reflects our growing spread of activitiesand our diversified investment portfolio. Our profits now, on a regular basis,derive from a blend of stockbroking, corporate finance, investment management,investment banking and our associated companies. We aim to achieve the bestpossible return from all our activities, but inevitably, with these diversifiedsources of income, from year to year, the mix of profits may well vary quitesignificantly. The carried interest costs (of £1,134,782) are included in administrativeexpenses. The associated profits of these transactions are shown below theoperating profit line. In previous years the Group took advantage of true andfair override of the Companies Act to net off costs against revaluation gains oninvestments to eliminate this charge from administrative expenses. The Group has grown very significantly over the last ten years and especiallyduring the seven years we have been a public company. We have taken theopportunity during those years, not only to increase our dividends substantiallybut also to increase and broaden the net asset base of the company which hasgrown from £1.90 million when we joined AIM in August 2000 to £19.66 million atthe year end. We are proposing a final dividend of 3p per share, making a total dividend of 5pfor the year as a whole (2006: 4.4375p) +12.7% which is covered nearly 3 timesby earnings. The dividend will be paid on 25 April 2008 to holders on theregister on 7 March 2008. As in the last few years, a scrip dividendalternative will be available. Trading Stockbroking has seen significant fluctuations during the year with a verystrong first half. This was followed by a more subdued second half of the yearwhen the impact of a variety of factors - principally the difficulties inAmerica resulting from reckless lending in the sub-prime property market,negatively impacted on UK, European and North American equity markets. Our corporate finance division has continued to perform well with more workbeing undertaken for our existing clients as our portfolio has grown. Our 78 AIMclients provide a level of retainer income which underpins the department'sperformance. Our business in Australia continues to perform well and had an excellent year.We have great confidence in the management team there, and have increased ourshareholding further to 76.59% of the equity, the remainder being largely heldby Directors and outside investors. This has proved a worthwhile merger for bothparties and we congratulate our colleagues once again on their results. Our financial services business has continued to grow and made an acquisition inthe last few weeks of the financial year in Bristol. Our stockbroking andfinancial services activities in Cardiff now share one office. The year has seenincreased sales but the development of further infrastructure, includingsignificantly higher compliance costs, has meant that profits in this divisionwere lower than in the previous year, although steps have been taken which webelieve will lead to an improved performance in this area during the coming yeargiven a reasonable trading environment. Systems are a major feature of modern investment management and we continue toupgrade the quality of our systems with the move to a new back officeinfrastructure now being complete. Our accounting platform has also beenupgraded which will give us faster delivery of accurate client and managementinformation. The introduction of further regulations and accounting changesincluding MIFID, CRD and ICAAP have significantly added to the workload of ourcompliance and finance departments. The implementation costs of compliance procedures and regulation generally hascontinued to rise with ever more demands being made by regulators in theirendeavour to create a risk free world. We believe we always treat our customersfairly - a commitment which is engrained in our ethos and culture and whichpermeates throughout the firm. We strongly support the need for supervision andregulation in our industry, but the costs cannot be underestimated. Strategy We have a clearly developed strategy to continue to grow the business. Webelieve that we should play to our strengths and develop the business in areasof financial services which we understand and which can provide a profitablereturn. We also believe in maintaining a number of profit streams to providegreater stability when markets fluctuate. That spread of interests does not meanwe cannot move quickly to exploit opportunities in the market where these openup, as is shown by our successful development of our position on AIM and ourinvestment in Australia. We believe that, for a company of our size operating inmarkets which can be volatile, a broadly based business supported by strongasset backing is the best way forward. Investments As previously mentioned, the single most significant balance sheet investment isthat of our head office building in the centre of Manchester. Following oursubstantial refurbishment of the building, it was professionally revalued inSeptember at £8.25 million, an uplift of £3.32 million, including the cost ofrefurbishment of £1.43 million. Board I would like to thank my colleagues on the Board for their hard work and goodcounsel as always. I would also like to thank all our loyal staff who haveendured the upheaval due to system changes, increased volumes and office moveswith good grace and their usual commitment to the job. During the year our Finance Director, Derek Ashford, resigned to start his ownprivate, accountancy practice and we wish him well and thank him for hiscontribution. We have further strengthened the finance department and we intendto make a replacement in that role in due course. As you will be aware we have had a number of approaches from various parties tomerge with or make an offer for our business. These discussions were largelypreliminary in nature and have not been progressed as was announced on 8February 2008. We remain committed to enhancing shareholders value. Outlook The outlook for all companies in the financial services industry is uncertainand, while stockbroking volumes in the first two months are ahead of last year,February has been a touch disappointing. Our continued profit performance willdepend on activity, particularly on AIM, and in the first three months of ouryear our level of transactions has held up well. Meanwhile, we have establishedstrong foundations for the future, with good people and a strong balance sheetwhich should enable us to take advantage of opportunities for the ongoingdevelopment of our business. Sir David Trippier RD JP DL MSIChairman CHIEF EXECUTIVE'S REPORT The year under review has seen a repeat of the previous year's pattern, namely agood first six months followed by a much tougher second half. Clearly theemergence of the credit crunch issues resulting from the uncertainty surroundingsub-prime bank exposure initially in the US and the UK market in late August,eroded confidence in the latter part of our year. This resulted in considerablevolatility and led to very demanding stockmarket conditions. It is against thisbackground that these results and the ongoing prospects for the development ofthe business need to be viewed. Stockbroking and Investment Management Stockbroking remains the largest activity within the Group, accounting for overhalf of our turnover. It has seen further growth over the past 12 months withthe integration of two fund management teams; one in London, the other inManchester. It is very much part of our strategy to further strengthen the fundmanagement area of our business. This expansion has resulted initially inadditional costs but should lead to improved quality of earnings in the mediumterm. We are always looking for opportunities to grow our stockbroking presence. Atthe same time we remain alert to the need to rationalise our costs, whereappropriate. Our national office network continues to evolve, we have opened asubstantial office in the centre of Bristol and closed our small Blackburnoffice, relocating the business to, and thereby expanding, our existing officein Lancaster. In addition to these developments, we have relocated both ourBirmingham and Leeds offices into significantly improved and refurbished newpremises. The WH Ireland UK Growth Trust, launched in July 2006, has achieved an excellentperformance and has now grown to £88m in size. Since the period close, we haveannounced our intention, subject to market conditions, to launch a complementaryfund, the WH Ireland Income Plus unit trust, in the current financial year. DJ Carmichael Pty Ltd, the subsidiary of WHI Australia Pty, has had a very goodyear making a significant contribution to the group, aided to some degree by theongoing boom in the commodity sector, in which they have particular strength. Corporate Finance Corporate Finance has had another highly successful year, completing 11 AIMIPOs, 17 secondary fundraisings and one advisory transaction, raising a total of£116 million for our corporate clients. We remain one of the leading Nominated Advisers in terms of number of corporateclients and it is pleasing to report that the total of annual retainers which wecurrently receive comfortably exceeds our basic employment costs in this area.In order to develop our client service and bearing in mind the recent AIM rulechanges, we have continued to increase our staffing levels, principally inLondon and Manchester. We have highly qualified teams in our four corporatefinance locations in London, Manchester, Birmingham and Leeds and all officescontinue to have a good workload. Financial Services Financial Services has had a somewhat quiet year as we continue to transitionthe business from a model of earning upfront fees to one of creating recurringrevenue. However, as with the other parts of our business, we are keen toexpand when opportunities arise and this was amply reflected with the purchasein October for an initial consideration of £1.25 million of two privatefinancial advisory businesses with strong recurring income streams. Based tothe north of Bristol, they further increase our presence in the South-West. Investments Our portfolio of listed and unlisted investments held by WH Ireland and DJCarmichael has had another highly satisfactory year during which we havecrystallised a number of gains. As reported previously, we have substantially refurbished our head officeproperty in the centre of Manchester to a high standard, including new entrance,lifts, shopfronts with air conditioning throughout. Of the five floors, WHIreland occupies three; the first floor having been fully let with a goodcovenant, leaving only the ground floor still to be occupied. Discussions areongoing with various potential tenants. During the year we further increased to 24.67% our shareholding in UltimateFinance Group plc, an AIM quoted company specialising in invoice discounting andfactoring. Due to the investment in the Manchester refurbishment, the Bristol IFA purchaseand working capital requirements in the normal course of our business, our yearend cash resources are lower than last year's November figure. Our total netasset value (before minority interests) was £19.30 million, equivalent to 112.2pper share (2006 restated: 91.6p). Outlook Market conditions, as I have already stated, deteriorated during the second halfof our year and we are yet to see signs of a significant or sustained recovery.Current economic forecasts suggest that the year will prove testing in manyrespects but our corporate finance operation continues to be active. Our diversified approach is aimed at de-risking the business, where possible,and our strong balance sheet gives us the confidence to continue to develop allfacets of the business, both in the UK and Australia. Laurie Beevers Chief Executive Consolidated Profit and Loss Account for the Year Ended 30 November 2007 Year ended Restated Year ended 30 November 30 November 2007 2006 Note £ £Group turnoverContinuing operations 42,685,210 29,645,609Acquisitions 42,201 695,787 2 42,727,411 30,341,396Administrative expenses* (41,625,921) (28,248,776)Group operating profitContinuing operations 1,088,150 2,696,286Acquisitions 13,340 (603,666) 1,101,490 2,092,620Share of operating profit before tax in Associates 157,609 210,503Total operating profit: Group and share of Associates 1,259,099 2,303,123Profit on disposal of fixed assets 34,099 10,463Profit on disposal of investments 7 1,360,531 1,257,809Fair value gains on investments 7 1,004,222 -Amounts written off investments 7 (46,061) (25,544)Income from investments 35,984 31,775 3,647,874 3,577,626Other interest receivable and similar income 751,859 516,461Interest payable and similar charges (595,580) (421,978)Profit on ordinary activities before taxation 3,804,153 3,672,109Tax on profit on ordinary activities 3 (1,222,581) (1,228,034)Profit on ordinary activities after taxation 2,581,572 2,444,075Minority interest (113,754) (60,149)Profit for the financial year 2,467,818 2,383,926 Earnings per share restatedBasic 5 14.89p 14.78pDiluted 5 13.56p 13.36p * The Carried Interest Bonus costs of £1,134,781 are provided in administrativeexpenses. In previous years, the Company took advantage of the true and fairoverride to offset revaluation gains on investments and eliminated this chargefrom administrative expenses. Consolidated Statement of Total Recognised Gains and Losses for the Year Ended 30 November 2007 Year ended Restated* Year ended 30 November 30 November 2007 2006 Note £ £Profit for the financial year 2,467,818 2,383,9261Unrealised gain on revaluation of properties 7 1,898,983 -Net loss from changes in fair value of available for sale 7 (1,736,466) -investmentsUnrealised surplus on revaluation of fixed asset - 548,886investmentsProfit on disposal transferred to income during the (400,855) -periodTaxation on current year's realised surplus on - (625,535)revaluation of fixed assetsCurrency translation differences 164,137 (127,184)Total recognised gain for the year 2,393,617 2,180,093Prior year adjustment (note 1) 82,573(2)Total 2,476,190 1. After having deducted £37,030 for the additional FRS 20 expense in the yearand the net credit impact of £48,457 relating to changes in accounting policiesof the treatment of put call options in WHIA. 2. The cumulative additional FRS 20 expense in respect of prior periods, net ofdeferred tax. Note Of Historical Cost Profits And Losses For the Year Ended 30 November 2007 Year ended Restated* Year ended 30 November 30 November 2007 2006 Note £ £Reported profit on ordinary activities before tax 3,804,153 3,672,109Unrealised fair value movements 7 (1,004,222) -Realisation of investment revaluation gains - 2,084,321Historical cost profit on ordinary activities before 2,799,931 5,756,430taxation Historical cost profit retained for the year after the 1,577,350 4,528,396provisions for taxation and minority interest * See Note 1 Consolidated Balance Sheet as at 30 November 2007 2007 2007 Restated* Restated* 2006 2006 Note £ £ £ £Fixed assetsIntangible assets 4,474,639 3,509,706Negative goodwill (143,716) (143,204) 4,330,923 3,366,502Tangible assets 9,790,378 6,105,899Investments- Investments 7 5,690,456 4,767,838- Investments in Associates 945,648 837,191 6,636,104 5,605,029 20,757,405 15,077,430Current assetsDebtors 99,875,349 76,387,142Investments - 11,268Cash at bank and in hand 8,001,885 14,819,199 107,877,234 91,217,609Creditors: amounts falling due within one year (102,883,028) (85,337,320)Net current assets 4,994,206 5,880,289Total assets less current liabilities 25,751,611 20,957,719Creditors: amounts falling due after more than (5,955,057) (5,574,115)one yearProvisions for liabilities and charges (136,349) (16,980)Net assets 19,660,205 15,366,624 Consolidated Balance Sheet (cont.) as at 30 November 2007 2007 Restated* 2006 Note £ £Capital and reserves Called up share capital 860,046 812,017Share premium account 2,613,325 1,785,965Capital redemption reserve 228,083 228,083Merger reserve 490,511 490,511Other reserves 753,704 753,704Revaluation reserve 2,565,953 2,844,042Available for sale reserve 851,422 -Profit and loss account 11,223,170 8,043,886Treasury shares (286,963) (86,561)Equity shareholders' funds 19,299,251 14,871,647Minority interest (all equity) 360,954 494,977Total capital employed 19,660,205 15,366,624 Consolidated Cash Flow Statement for the Year Ended 30 November 2007 Year ended Restated Year ended 30 November 30 November 2007 2006 £ £Net cash (outflow) / inflow from operating activities (2,796,045) 7,263,974Returns on investments and servicing of finance 352,914 261,868Taxation (2,707,277) (857,762)Capital expenditure and financial investment (647,367) 2,762,903Acquisitions and disposals (1,506,766) (616,836)Equity dividends paid (583,790) (479,465)Cash (outflow) / inflow before financing (7,888,331) 8,334,682Financing 112,780 (870,031)(Decrease) / Increase in cash in the year (7,775,551) 7,464,651 Analysis of Net Cash Other At beginning Cash non-cash Exchange At end of year Flow changes movements of year £ £ £ £ £Cash at bank and in hand 14,819,199 (6,873,791) - 56,477 8,001,885Overdrafts (46,199) (901,760) - - (947,959) 14,773,000 (7,775,551) - 56,477 7,053,926Debt due within one year (314,727) 66,448 (287,760) (5,473) (541,512)Debt due after one year (3,594,718) - 287,760 - (3,306,958)Finance leases (3,887) 3,887 - - -Total 10,859,668 (7,705,216) - 51,004 3,205,456 Reconciliation of Movement in Equity Shareholders' Funds for the Year Ended 30 November 2007 Group Company 2007 Restated* 2007 Restated * 2006 2006 £ £ £ £Profit/(loss) for the financial year before dividends 2,467,818 2,372,177 (343,724) 597,250Dividend - restatement adjustment - (400,410) - (400,410)Dividend - current year - (233,084) - (233,084)Put call option adjustment - 5,713 - -Restated profit/(loss) for the financial year 2,467,818 1,744,396 (343,724) (36,244)Dividend - final (488,490) - (488,490) -Dividends - interim (337,173) - (337,173) -Share based payment 39,715 37,030 39,715 37,030Restatement adjustment - FRS 26 relating to available for 2,144,948 - - -sale equity shares(Deficit) /Surplus on available for sale reserve (1,736,466) 548,886 (196,091) (56,964)Transfer of revaluation from available for sale reserve on (400,855) -disposalSurplus on property revaluation reserve 1,898,983 - - -Tax in respect of current year realised surplus on - (625,535) - -revaluationIssued share capital 48,030 - 48,030 -Shares issued in payment of scrip dividends in the year 232,497 153,866 232,497 153,866Shares issued on acquisition of subsidiary undertaking 243,056 - 243,056 -Shares issued on exercise of options 351,807 85,652 351,807 85,652Shares bought back for cancellation - (45,250) - (45,250)Treasury shares acquired (200,402) (86,561) (200,402) (86,561)Exchange rate adjustments 164,136 (127,184) - -Increase in shareholders' funds during the year 4,427,604 1,685,300 (650,775) 51,529Opening equity shareholders' funds 14,871,647 13,186,347 4,603,902 4,552,373Restatement adjustment - FRS 26 relating to assets at fair 1,333,277 - 219,394 -value through the profit and loss accountRestatement adjustment - FRS 26 relating to assets at fair (1,333,277) - (219,394) -value through the profit and loss accountClosing equity shareholders' funds 19,299,251 14,871,647 3,953,127 4,603,902 1. Accounting policies The Group has maintained consistent accounting policies in the preparation ofthis preliminary announcement except as noted below. During the year the Group adopted the following new standards for the firsttime: • FRS 20 'Share-based payments'; • FRS 23 'The Effects of Changes in Foreign Exchange Rates', and; • FRS 26 'Financial Instruments: Recognition and Measurement'. The figures for the year ended 30 November 2006 have been restated to complywith FRS 20 as if the policy had been adopted throughout the year. Impact of the new standards • FRS 20 'Share-based payments' - Following a restatement of thecomparative figures to include amendments required to reflect the impact of FRS20, the profits for the year months ended 30 November 2006 have been reduced bya charge of £37,030. A total of £82,573 is shown in the statement of totalrecognised gains and losses being the total of the FRS 20 charge for the yearended 30 November 2006 of £37,030 and £45,543 as the total of the FRS 20 chargefor previous periods. As the awards are all equity-settled, a correspondingcredit arises directly in equity and the restatement has no effect on retainedprofits. A charge of £39,715 has been made in this year's profit to reflect thecharge for the year ended 30 November 2007. • FRS 23 'The Effects of Changes in Foreign Exchange Rates' - The Groupis required to adopt FRS 23 from the date it adopts FRS 26. No material impactarose on adoption, including on translation of the Group's Australiansubsidiary. • FRS 26 'Financial Instruments: Recognition and Measurement' - TheGroup has taken advantage of the exemption available not to restate comparativeamounts. As a result, the effect of the implementation of FRS 26 on the accountsis to adjust opening reserves by a transfer of £1,333,277 from revaluationreserve to retained profits in relation to financial assets now at fair valuethrough the profit and loss account but previously revalued through thestatement of total recognised gains and losses. The revaluation gains and losseshave been recognised in the available for sale reserve. Additionally, a transferof £2,177,072 has been made from revaluation reserves to available for salereserve and an adjustment of £2,144,948 has been made to the available for salereserve to reflect the increase in value of assets available for sale to theirfair value as at 30 November 2006. • In the current year, the profit and loss account includes a gain of£1,004,222 for the increase in fair value of financial assets held at fair valuethrough profit and loss and the revaluation reserve has been reduced by£1,736,466 relating to the decrease in fair value for the period of assetsclassified as available for sale. The carried interest bonus charge toadministration expenses was £1,134,781. Put Call Option In addition the Group has revised its treatment of the options outstanding overminority share interests in WH Ireland Australia Pty Ltd. As part of the Group's acquisition of a majority stake in DJ Carmichael (part ofWHI Australia), 51% interest being acquired in June 2005, there is an option forminority shareholders to put a proportion of their shares to the Group in afuture period (31 March 2009 to 30 September 2009). The amounts which can be putto the Group under these options vary depending on other purchases of sharesmade by the Group but at 30 November 2007 represent 12% of the share capital ofDJ Carmichael (2006: 23%). Additionally, the Group has a call option over thefull minority interest. In combination with the put options, the call option hasthe effect of creating a forward purchase agreement over the element of sharescovered by the put options. The consideration payable under these options isformula driven but considered by the Directors as equating to market value ofthose shares at the point of exercise. Previously, this resulting obligation to the minority shareholders was disclosedin the in the financial statements with no financial entries posted within theaccounts. In the light of emerging accounting practice the Group has amended itsaccounting policy in respect of these put option to account for this ascontingent consideration from the date of the original acquisition, withcorresponding adjustments to goodwill. Under this revised accounting policy the Group consolidates a higher proportionof the results of DJ Carmichael to reflect the higher ownership which wouldarise if, as is considered likely by the Directors, these put-options areexercised. Consequently, the minority interest reserve has been reduced. Theimpact on the profit after tax is minimal, however, there is a reduction in theprofit previously attributable to the minority interests, which is nowattributable to the Group. The effects of the changes in the reported Group financial statements for 2006are tabulated below. 1 December 30 November 2005 2006Balance Sheet £ £Decrease / (increase) in negative goodwill (see Note 13) 43,492 (110,141)Increase in liabilities for put call options (647,112) (379,123)Decrease in minority interest 603,620 494,976Increase in reserves - (5,712) As a result of these changes, the related balances within the 2006 comparativefigures have been restated. Financial Instruments As noted above, the Group has elected to apply FRS 26 from 1 December 2006 andin accordance with the exemption available in the standard has not restatedcomparative information. The Company has elected to classify its financialassets under the following headings: Quoted and unquoted equity shares - Equity investments, other than those insubsidiary undertakings and those equities which form part of the carriedinterest scheme (see below), that are held for an indefinite period of time arecategorised as available for sale financial assets. These are measured at fairvalue at each reporting date with gains and losses on revaluation taken to theavailable for sale reserve through the statement of total recognised gains andlosses, with the exception of a number of unlisted investments which are held atcost as no reliable fair values are available. In the case of listedinvestments, the fair value represents the quoted bid price of the investment atthe balance sheet date. The fair value of unlisted investments is estimated byreference to recent arm's length transactions. When available for sale financialassets are derecognised, the cumulative gain or loss previously recognised inthe statement of total recognised gains and losses is recycled to the profit andloss account. Warrants and those equities which form part of the carried interest scheme (seenote below) - these are classified as financial assets held at fair valuethrough the profit and loss account and are measured at fair value at eachreporting date with all gains and losses credited or charged to the profit andloss account as appropriate. In the case of warrants, the fair value isestimated using established valuation models. Loans and receivables - trade receivables are measured on initial recognition atfair value. An appropriate provision for irrecoverable amounts is recognised inthe profit and loss account where there is objective evidence that the asset isimpaired. Carried Interest Bonus Scheme The Group provides for bonuses payable under the Carried Interest Bonus Schemeunder which bonuses may be payable to certain corporate finance personnel whencertain warrants or shares acquired as part of a corporate finance transactionare ultimately sold at a profit. For 2007, these costs (£1,134,781) have beendebited to administrative expenses. During 2006, in order to show a true and fair view of the Carried Interest BonusScheme the Directors departed from the prescribed accounting treatment andoff-set revaluation gains on investments to eliminate this charge. 2. Segmental reporting a) By geographical location UK Australia Total30 November 2007 £ £ £Turnover 32,655,130 10,072,281 42,727,411Results - profit before interest and tax 2,232,692 1,415,182 3,647,874Net assets 16,044,723 3,615,482 19,660,205 UK Australia Total30 November 2006 £ £ £Turnover 24,382,031 5,959,365 30,341,396Restated Results - profit before interest and tax 3,118,141 459,485 3,577,626Restated net assets 12,757,819 2,608,805 15,366,624 b) Turnover by activity 30 November 30 November 2007 2006 £ £Stockbroking 29,019,071 19,838,727Corporate finance 11,810,361 8,348,001Financial services 1,863,697 2,099,192Other 34,282 55,476Total 42,727,411 30,341,396 No analysis of operating profit and net assets has been given by activity as allexpenses, assets and liabilities relate jointly to these segments. Anyallocation of these items would be arbitrary. 3. TAXATION The tax charged to the profit and loss of £1,222,581 represents a tax charge of32.14% (2006 restated: £1,228,034 and 33.44%). 4. DIVIDEND A final dividend for the year ended 30 November 2006 totalling £488,490 wassatisfied by the payment in cash of £340,271 paid on 7 April 2007. On the sameday 122,386 new ordinary shares of 5p each were issued at 121.1p per share inrelation to the scrip dividend alternative. An interim dividend for the year ended 30 November 2007 totalling £377,173 wassatisfied by the payment in cash of £283,389 paid on 11 August 2007. On the sameday 63,369 new ordinary shares of 5p each were issued at 148p per share inrelation to the scrip dividend alternative. 5. Earnings per share Year ended Restated Year ended 30 November 30 November 2007 2006Profit for the year used for the basic calculation £2,467,818 £2,383,926Weighted average number of shares used in the basic calculation 16,573,548 16,124,635Weighted average number of options outstanding for the period 1,619,354 1,715,123Weighted average number of shares used in the diluted calculations 18,192,902 17,839,758 6. INVESTMENT IN SUBSIDIARY UNDERTAKINGS During the year the Group's holding in WHI Australia Pty Ltd was increased by afurther 16.65% for a total consideration of £344,715, taking the Group's holdingto 76.59%. The acquisition gave rise to negative goodwill of £135,916. During the year the Group bought the incorporated companies of ARE Business andProfessional Limited, SRS Business and Professional Ltd and the assets andliabilities of the unincorporated business of Robbie East for a totalconsideration of £1,250,040 being £1,000,039 cash and £250,001 of WH IrelandGroup plc shares. 7. Investments Unquoted Quoted investments Warrants investments TotalGroup (excluding investments in £ £ £ £Associates)Cost or valuationAt beginning of year (as previously 350,071 2,013,373 2,404,394 4,767,838stated)Restatement adjustment - FRS 26 relating 2,144,948 -- -- 2,144,948to available for sale equity sharesAt beginning of year (as restated) 2,495,019 2,013,373 2,404,394 6,912,786Additions 15,000 -- 601,455 616,455Fair value adjustments - P&L account -- 765,884 238,338 1,004,222Revaluation adjustment - Available for (1,310,909) -- (425,557) (1,736,466)sale reserveExchange rate adjustments -- -- 45,863 45,863Diminution in value -- -- (46,041) (46,061)Disposals (16) (359,498) (746,829) (1,106,343)At end of year 1,199,094 2,419,759 2,071,623 5,690,456 Warrants and quoted investments with carried interest attached are revalued atfair value through the profit and loss account whereas unquoted and quotedinvestments without carried interest attached are revalued through theavailable for sale reserve. The historical cost value of the above quoted investments at the year end was£1,035,246 (2006: £1,374,684). The potential tax charge arising if the above quoted investments were sold attheir market value is £290,214 (2006: £330,118). Profit on Disposal of Investments: Year ended Year ended 30 November 30 November 2007 2006 £ £Gross profit on disposal of investments 1,355,493 1,443,487Profit / (Loss) on disposal of current asset investments 5,038 (10,524)Carried Interest Bonus (see note 1) - (165,154)Net profit on disposal of investments 1,360,531 1,257,809 8. FINANCIAL INFORMATION The financial information in this press release, which has not been audited,does not constitute Statutory Accounts within the meaning of Section 240 of theCompanies Act 1985. The Annual Report and Accounts for the year ended 30 November 2007 will bedelivered to the Registrar of Companies following the Company's Annual GeneralMeeting. Accounts for the year ended 30 November 2006 have been filed with theRegistrar of Companies, and these accounts contain an unqualified audit reportand did not contain any statements under Section 237(2) or (3) of the CompaniesAct 1985. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
WHIreland