30th Jul 2007 07:01
W.H. Ireland Group PLC30 July 2007 WHI.L WH IRELAND GROUP PLC ("WH Ireland" or "the Group") Interim results for the six months ended 31 May 2007 Quoted on AIM, WH Ireland is an established financial services group with fourdistinct activities, corporate finance, financial services, investments andstockbroking. Highlights • Turnover up by 35% to £21.5m (2006: £15.9m) • Total operating profit increased by 54% to £2.0m (2006: £1.3m) • Pre tax profit up 58% to a record £3.69m (2006: £2.33m) • Basic earnings per share 15.49p (2006: 8.8p) up 76% • Net assets (before minority interests) per ordinary share 114.95p (2006: 86.13p), up 33% • Dividend increased by 39% to 2.0p per share (2006: 1.4375p) • Total funds under management and control have grown to £1.5bn (2006:£1.1bn) up by 36% • WH Ireland UK Growth Trust out performs its benchmarks and grows to over £60m • Strong performance from the corporate finance division • Further consolidation of our presence in Australia by increasing our stake in WHI Australia Pty Ltd to 76.63% • Opening of a new office in Bristol • Consolidation of our Leeds office with the opening of new premises at Canal Wharf Commenting on the results, Laurie Beevers, WH Ireland's Chief Executive, said; "We are delighted to be reporting on record results as we reap the benefits ofthe investment we have made in the development and diversification of the Groupinto a broadly based investment banking business. At the same time, our balancesheet has continued to grow strongly such that we remain well placed to continueto invest cautiously and steadily as opportunities arise. We look forward tocontinued progress". Press enquiries W H Ireland Group plc Tel: 020 7448 1000 (today) Laurie Beevers Chief Executive Tel: 0161 832 6644 Mobile: 07903 164004 Biddicks Tel: 020 7448 1000 Zoe Biddick or Sophie Lane CHAIRMAN'S STATEMENT Results and dividend I am delighted to report record results for the six months ended 31 May 2007.Turnover up by 35% to £21.54 million (2006: £15.90 million) has led to a 55%increase in Group operating profit to a record £1.88 million (2006: £1.21million) whilst a continuing contribution from profits in associated companieshas taken total operating profit up to approximately £2 million (2006: £1.3million). Despite lower investment profits during the period, the impact of theimplementation of FRS 26 has resulted in an unrealised gain on the value ofcertain investments being taken to profit for the first time amounting to £0.99million. As a result, pre tax profit for the period has grown by 58% to a record£3.69 million (2006: £2.33 and earnings per share are 76% higher at a record15.49p (2006: 8.8p). Our balance sheet has continued to grow strongly with the value of theinvestments, both quoted and unquoted, now being shown at their "fair value" asrequired by FRS 26. The carrying value of investments has increased by £3.9million to £8.3 million and equity shareholders' funds (excluding minorityinterests) now stand at £18.9 million, equivalent to 114.95p per ordinary share(2006: £86.13p). Net cash at the end of the period stood at £11.4 million,equivalent to 69.2p per ordinary share (2006: 48.4p per ordinary share) Our strong balance sheet and substantial net cash have enabled us to increasethe interim dividend by 39% to 2.0p per share (2006: 1.4375p per share), to bepaid on 28 September 2007 to shareholders on the register on 10 August 2007.Once again, a scrip dividend alternative will be offered. Trading We have continued to grow the Group into a broadly based investment bankingbusiness. Whilst UK stockbroking is undoubtedly our core activity, we have usedthe cash flow emanating from this area and the opportunities which have arisento develop from that base. By broadening and diversifying our income streams andstrengthening our balance sheet, we believe we have substantially reduced ouroperational risk. In particular, we have continued to develop our corporatefinance business with the opening of a fourth office in Leeds and thecommencement of a fledgling mergers and acquisitions operation. The division nowacts for 83 corporate clients, of which 78 are quoted on AIM. In the period under review we acted upon four AIM flotations and nine secondaryfundraisings, raising in excess of £60m for our corporate clients. Figures for the half year include a significant contribution to both turnoverand operating profit from our Australian subsidiary WHI Australia Pty Limited("WHIA"), the holding company of DJ Carmichael Pty Limited ("DJC"), the Perthheadquartered stockbroking and corporate finance boutique. In the period underreview, DJC opened a new corporate finance office in Melbourne and is looking tocontinue to build a retail presence there as well. We have recently furtherconsolidated our position in Australia by increasing our stake in WHIA by 16.65%to take our total holding up to 76.63%. While our financial services business returned a lower profit than in thecomparable period last year, this reflects ongoing structural change in thisdivision with a view to increasing levels of recurring income as opposed toinitial fees. We have moved the Cardiff based part of this business into ourcity centre stockbroking office in order to accommodate further expansion. Wecontinue to look at opportunities to expand this division in a meaningfulfashion. We have continued our policy of acquiring individuals and teams for ourstockbroking business and also upgrading the working environment for all ouremployees. As a result, we have opened a new office in Bristol and consolidatedthe two offices in Leeds into refurbished premises at Canal Wharf. Our funds under management and control now stand at in excess of £1.5bn and ourstaff numbers in the UK and Australia now total in excess of 300. We expectfurther additions to both investment advisers and funds under management in thenear future. During the period under review, the WH Ireland UK Growth Trust , the principalobjective of which is to provide long term capital growth from a concentratedportfolio of assets including securities predominately comprising the FTSE 350index, out-performed both its primary peer benchmark and the UK stock market asmeasured by the FTSE 350 Index, returning in excess of 13.3% for the period.Significant growth of new money into the fund enabled it to grow to in excess of£60m. Property The refurbishment of our Manchester head office is now substantially completeand we intend to revalue the property in our full year's accounts. At thatstage, we anticipate a highly significant uplift in value over and above thecurrent book value of £5.7m. Investments We are pleased with the progress of our investments in our associated companies,Ultimate Finance Group plc and Acceleris Ventures Limited, which together made auseful contribution to total operating profit in the period under review.Although our accounts for the year ended 30 November 2006 included the sale ofthe balance of our shares in the London Stock Exchange, the carrying value ofthe remainder of our equity and warrant investments increased during the periodby 47% to £8.3m, due principally to inclusion for the first time of our unquotedinvestments in Euroclear and MNSS at "fair values". Outlook Since the half-year end, the Group has continued to make good progress. Inparticular, the corporate finance division has acted as Nominated Adviser in afurther admission to AIM and another admission is pending. In addition, it actedin 3 secondary fundraisings and as adviser in a further 2 transactions. Thecontinued takeover activity in the UK and overseas has encouraged the level ofstockbroking business although the market is experiencing yet another period ofvolatility, impacted upon by worries over the US sub-prime mortgage debacle,higher interest rates and expectations of lower US economic growth. However, wecontinue to invest cautiously and steadily as opportunities arise and we areconfident that, providing markets remain stable, we will continue to progress. As always, I would to take this opportunity to thank our shareholders,stakeholders, clients and staff for their continued loyalty and support. Sir David Trippier RD JP DLChairman27 July 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the six months ended 31 May 2007 Unaudited Restated* Restated* 6 months Unaudited Audited ended 6 months 12 months 31 May ended ended 2007 31 May 30 November 2006 2006 £'000 £'000 £'000Group turnover 21,543 15,906 30,342Administration expenses (19,662) (14,692) (28,249) ----------------------------------------Group operating profit 1,881 1,214 2,093Share of operating profit in associates 104 70 210 ----------------------------------------Total operating profit 1,985 1,284 2,303Realised profit on fixed asset investment sales 597 955 1,268Unrealised gain on assets at fair value through the profit and loss account 992 - -Income from fixed asset investments 17 17 32Amounts written off investments - - (26) ---------------------------------------- 3,591 2,256 3,577Other interest receivable and similar income 363 252 517Interest payable and similar charges (260) (175) (410) ----------------------------------------Profit on ordinary activities before taxation 3,694 2,333 3,684Tax on profit on ordinary activities (1,019) (825) (1,228) ----------------------------------------Profit on ordinary activities after taxation 2,675 1,508 2,456Minority interest (159) (93) (121)Profit for the financial period 2,516 1,415 2,335 ----------------------------------------Earnings per shareBasic 15.49p 8.82p 14.48pDiluted 14.17p 7.88p 13.09p ---------------------------------------- * See note 4 STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESfor the six months ended 31 May 2007 Unaudited Restated* Restated* 6 months Unaudited Audited ended 6 months 12 months 31 May ended ended 2007 31 May 30 November 2006 2006 £'000 £'000 £'000Profit for the period 2,516 1,415* 2,335**Unrealised (deficit) surplus on revaluation of fixed asset investments (29) 168 549Taxation on realised surplus on revaluation of fixed asset investments - (505) (626)Currency translation differences 79 (88) (90)Prior year adjustment (see note 4) (83)*** --------------------------------------Total gains and losses recognised since last annual report 2,483 990 2,168 -------------------------------------- * after having deducted £14,408 for the additional FRS 20 expense in the period** after having deducted £37,030 for the additional FRS 20 expense in the year*** the cumulative additional FRS 20 expense in respect of prior periods, net ofdeferred tax Note of Historical Cost Profits and Lossesfor the six months ended 31 May 2007 Unaudited Restated* Restated* 6 months Unaudited Audited ended 6 months 12 months 31 May ended ended 2007 31 May 30 November £'000 2006 2006 £'000 £'000 £'000Profit on ordinary activities before taxation 3,694 2,333 3,684Realisation of fixed asset investment revaluation gains - 1,808 2,084 -----------------------------------------Historical cost profit on ordinary activities before taxation 3,694 4,141 5,768 ----------------------------------------- Historical cost profit retained for the period after the provision for taxation and minority interests 2,516 2,718 3,793 ----------------------------------------- * See note 4 CONSOLIDATED BALANCE SHEETas at 31 May 2007 Unaudited Unaudited Audited 31 May 2007 31 May 2006 30 November 2006 £'000 £'000 £'000 £'000 £'000 £'000Fixed assetsIntangible assets 3,375 3,635 3,510Negative goodwill (154) - (33) ----------------------------------------------------------- 3,221 3,635 3,477Tangible assets 7,111 5,725 6,106Investments 8,309 4,403 4,768Investment in associates 987 765 837 ----------------------------------------------------------- 9,296 5,168 5,605 ----------------------------------------------------------- 19,628 14,528 15,188Current assetsDebtors 214,007 78,221 76,388Investments 332 20 11Cash at bank and in hand 15,451 11,938 14,819 ----------------------------------------------------------- 229,790 90,179 91,218 Creditors due within one year (223,289) (83,698) (85,338) -----------------------------------------------------------Net current assets 6,501 6,481 5,880 -----------------------------------------------------------Total assets less current liabilities 26,129 21,009 21,068Creditors due after one year (6,486) (5,729) (5,195)Provisions for liabilities (12) (92) (17) -----------------------------------------------------------Net assets 19,631 15,188 15,856 ----------------------------------------------------------- Capital and reservesCalled up share capital 824 811 812Share premium account 2,002 1,774 1,786Capital redemption reserve 228 226 228Merger reserve 491 491 491Property revaluation reserve 667 667 667Available for sale revaluation reserve 2,564 2,072 2,177Other reserves 754 754 754Retained profits 11,502 7,176 8,038Treasury shares (89) - (87) ----------------------------------------------------------Equity shareholders' funds 18,943 13,971 14,866Minority interest (all equity) 688 1,217 990 ----------------------------------------------------------Total capital employed 19,631 15,188 15,856 ----------------------------------------------------------Net assets (before minority interest) per ordinary share 114.95p 86.13p 91.54p ---------------------------------------------------------- CONSOLIDATED CASH FLOW STATEMENTfor the six months ended 31 May 2007 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 31 May 30 November 2007 2006 2006 £'000 £'000 £'000Net cash inflow from operating activities 3,985 3,219 7,264Returns on investments and servicing of 120 165 262financeTaxation (1,478) (281) (858)Capital proceeds and financial investment (1,366) 2,829 2,763Acquisitions and disposals (486) (440) (617)Equity dividends paid (488) (400) (479) ----------------------------------------Cash inflow before financing 287 5,092 8,335Financing 358 (471) (870) ----------------------------------------Increase in cash in the period 645 4,621 7,465 ---------------------------------------- Reconciliation of operating profit to operating cash flow Unaudited Restated* Restated* 6 months Unaudited Audited ended 6 months 12 months 31 May ended ended 2007 31 May 30 November 2006 2006 £'000 £'000 £'000Group operating profit 1,881 1,214 2,093Share-based payment charge (note 4) 23 14 37Less non cash transfer from revaluation reserve - (168) 217Less adjustment from profit on disposal of fixed asset investments - 37 (165)Depreciation 193 166 358Amortisation 103 121 202Profit on fixed assets (16) (13) (10)Increase in debtors (137,221) (8,892) (7,247)Increase in creditors 139,343 10,745 11,786Increase in current asset investments (321) (5) (7) ---------------------------------------- 3,985 3,219 7,264 ----------------------------------------* See note 4 Analysis of net debt At Cash flow Other non Exchange At the end beginning cash movements of the of the charges period period £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand 14,819 599 - 33 15,451Overdrafts (46) 46 - - - ---------------------------------------------------------- 14,773 645 - 33 15,451Debt due within one year (314) (135) (138) - (587)Debt due after one year (3,595) - 130 - (3,465)Finance leases (4) 3 - - (1) ---------------------------------------------------------- 10,860 513 (8) 33 11,398 ---------------------------------------------------------- NOTESfor the six months ended 31 May 2007 1. The interim report, which is the responsibility of the Directors and has notbeen audited, was approved by the Directors on 27 July 2007. 2. The figures for the six months ended 31 May 2007 have been prepared using thesame accounting policies as for the year ended 30 November 2006, except for theadoption of FRS 20 Share-based payment, FRS 23 The effects of changes in foreignexchange rates, the disclosure requirements of FRS 25 Financial instruments:disclosure and presentation and of FRS 26 Financial instruments: recognition andmeasurement. 3. These unaudited interim financial statements do not constitute statutoryaccounts. They have, however, been reviewed by the auditors whose report isincluded. The figures for the year ended 30 November 2006 have been extractedfrom the audited accounts for that year. The comparative figures for thefinancial year ended 30 November 2006 are not the Company's statutory accountsfor that year. Those accounts have been reported on by the Company's auditorsand delivered to the Registrar of Companies. The report of the auditors wasunqualified and did not contain a statement under section 237 (2) or (3)of the Companies Act 1985. 4. Implementation of New Accounting Standards. In the financial statements for the year ending 30 November 2007 the followingnew standards will adopted for the first time: • FRS 20 Share-based payment; • FRS 23 The effects of changes in foreign exchange rates; • the disclosure requirements of FRS 25 Financial instruments: disclosure and presentation; and • FRS 26 Financial instruments: recognition and measurement. FRS 20 'Share-based payment' - The Group recognises a charge to the profit andloss account for the fair value of outstanding share options in relation theGroup's Unapproved Executive Share Option Scheme granted to employees after 7November 2002. As all the group's share-based payments are equity settled acorresponding amount is credited to retained profits directly in equity. Following a restatement of the comparative figures to include amendmentsrequired to reflect the impact of FRS 20, the profits for the six month periodended 31 May 2006 have been reduced by a charge of £14,408 and the profits forthe year ended 30 November 2006 have been reduced by a charge of £37,030. Atotal of £82,573 is shown in the statement of total recognised gains and lossesbeing the total of the FRS 20 charge for the year ended 30 November 2006 of£37,030 and £45,543 as the total of the FRS 20 charge for previous periods. Asthe awards are all equity settled, a corresponding credit arises directly inequity and the restatement has no effect on retained profits. A charge of£23,065 has been made in this year's profit to reflect the charge for the sixmonth period ended 31 May 2007. FRS 23 'The effects of Changes in Foreign Exchange Rates' - The Group isrequired to adopt FRS 23 from the date it adopts FRS 26. No material impactarose on adoption, including on translation of the Group's Australiansubsidiary. The disclosure requirements of FRS 25 'Financial instruments: disclosure andpresentation' - The Group is required to adopt the disclosure requirements ofFRS 25 from the date it adopts FRS 26. Additional disclosures will need to beprovided in the financial statements for the year ended 30 November 2007 butotherwise there is no impact on adoption. FRS 26 'Financial instruments: recognition and measurement' - the group haselected to apply FRS 26 from 1 December 2006 and in accordance with the standardhas not restated comparative information. The group has elected to classify itsfinancial assets under the following headings: Quoted and unquoted equity shares - these have been classified as "Available forsale equity shares" and are measured at fair value at each reporting date withgains and losses on revaluation taken to revaluation reserve through thestatement of total recognised gains and losses, except for impairment losseswhich are recognised in the profit and loss account. When available for salefinancial assets are derecognised the cumulative gain or loss previouslyrecognised in the statement of total recognised gains and losses is recycled tothe profit and loss account. Options, warrants and equities which form part of the carried interest scheme -these are classified as "Financial assets at fair value through the profit andloss account" and are measured at fair value at each reporting date with allgains and losses credited or charged to the profit and loss account asappropriate, including those on re-measurement to fair value and onderecognition. Loans and receivables - The effective interest method is used in measuring loansand receivables. As a consequence of taking advantage of the transitional provision under FRS 26not to restate comparatives, the effect of the implementation of FRS 26 on theaccounts is as follows: • six month period ended 31 May 2006 - nil; and • year ended 30 November 2006 - nil; and • Six month period ended 31 May 2007 - opening reserves have been adjusted by a transfer of £1,333,278 from revaluation reserve to retained profits in relation to financial assets now at fair value through the profit and loss account but previously revalued through the statement of total recognised gains and losses with revaluation gains and losses recognised in the revaluation reserve. The revaluation reserve has been credited with £2,144,948 to reflect for the first time an increase the in value of assets available for sale to their fair value. The profit and loss account includes a gross gain of £1,896,623, which after transferring £905,201 to administration expenses to offset the relevant carried interest bonus thereon, amounts to a net gain of £991,420 for the increase in fair value in the period of financial assets at fair value through profit and loss. The revaluation reserve has been reduced by £29,371, relating to the decrease in fair value for the period of assets classified as available for sale. 5. Share premium and reserves Group Share Share Capital Merger Property Available Other Retained capital premium redemption reserve revaluation for sale reserve profits reserve reserve revaluation reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000At 30 November 2006 812 1,786 228 491 667 2,177 754 8,038 Restatement adjustment -FRS 26 relating toAssets at fairvalue throughthe profit andloss account - - - - - (1,333) - 1,333 Restatement adjustment -FRS 26 relating toavailable forsale equity shares - - - - - 2,145 - - ----------------------------------------------------------------------------------------At beginning of the period(restated) 812 1,786 228 491 667 2,989 754 9,371 Share option charge - - - - - - - 23 Payment ofdividend/scrip 6 142 - - - - - (488) Shares issued on exercise ofoptions 6 74 - - - - - - De-recognition on realistation - - - - - (393) - - Adjustment on investmentrevaluation - - - - - (29) - - Retained profit for theperiod - - - - - - - 2,516 Exchange rate variance - - - - - (3) - 80 ------------------------------------------------------------------------------------------At end of period 824 2,002 228 491 667 2,564 754 11,502 ------------------------------------------------------------------------------------------ 6. A final dividend for the year ended 30 November 2006 totaling £488,490 wassatisfied by the payment in cash of £340,271 paid on 27 April 2007. And on thesame day 122,386 new ordinary shares of 5p each were issued at 121.1p per sharein relation to the scrip dividend alternative. 7. The basic earnings per share for the period has been calculated by dividingthe profit for the financial period by the weighted average number of shares inissue during the period being 16,240,966 (six months ended 31 May 2006:16,050,641 and year ended 30 November 2006: 16,124,635). Diluted earnings pershare is the basic earnings per share adjusted for the effect of the conversioninto fully paid shares of the weighted average number of all share options andwarrants outstanding during the year. The additional weighted average number ofshares used for the diluted calculation is 1,509,712 (six months ended 31 May2006: 1,907,799, and year ended 30 November 2006: 1,715,123). 8. The tax charged to the profit and loss account of £900,961 represents a taxcharge of 27.07% (six months ended 31 May 2006: £825,232 and 35.15% and yearended 30 November 2006: £1,228,034 and 33.00%). In addition, there is a taxcharge transferred to reserves relating to tax payable on realised gainspreviously credited to the revaluation reserve of £117,900 (six months ended 31May 2006: £504,896 and year ended 30 November 2006: £625,535). 9. During the period the Group maintained a carried interest bonus scheme underwhich bonuses may be payable to certain corporate finance personnel when certainwarrants or shares acquired as part of a corporate finance transaction areultimately sold at a profit. Creditors due within one year includes £307,409 (six months ended 31 May 2006:£402,330 and year ended 30 November 2006: £108,579) relating to bonuses providedunder the carried interest scheme and creditors due after one year includes£1,896,306 (six months ended 31 May 2006: £1,239,223 and year ended 30 November2006: £1,259,746) relating to bonuses provided under the carried interestscheme. 10. During the period the Groups holding in WHI Australia Pty Ltd was increasedby a further 16.65% for a total consideration of £344,715, taking the Groupsholding to 76.63%. The acquisition gave rise to negative goodwill of £135,916. INDEPENDENT REVIEW REPORT BY KPMG AUDIT PLCIntroduction We have been instructed by the Company to review the financial information forthe six months ended 31 May 2007, which comprises: the consolidated profit andloss account; statement of total recognised gains and losses; note of historicalcost profits and losses; consolidated balance sheet; consolidated cash flowstatement; reconciliation of operating profit to operating cash flow; analysisof net debt and notes 1 to 10. We have read the other information contained inthe interim report and considered whether it contains any apparent misstatementsor material inconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of ourengagement. Our review has been undertaken so that we might state to the Companythose matters we are required to state to it in this report and for no otherpurpose. To the fullest extent permitted by company law we do not accept orassume responsibility to anyone other than the Company for our review work, forthis report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the Directors. The Directorsare responsible for preparing the interim report in accordance with the AIMrules which require that the interim report must be presented and prepared in aform consistent with that which will be adopted in the Company's annual accountshaving regard to the accounting standards applicable to such annual accounts. Review work performed We conducted our review having regard to guidance contained in Bulletin 1999/4:Review of interim financial information issued by the Auditing Practices Boardfor use in the UK. A review consists principally of making enquiries of Groupmanagement and applying analytical procedures to the financial information andunderlying financial data and, based thereon, assessing whether the accountingpolicies and presentation have been consistently applied unless otherwisedisclosed. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit performed in accordance with International Standards onAuditing (UK and Ireland) Auditing Standards and therefore provides a lowerlevel of assurance than an audit. Accordingly we do not express an audit opinionon the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 May 2007. KPMG Audit PlcChartered AccountantsLeeds27 July 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
WHIreland