1st Aug 2006 07:01
W.H. Ireland Group PLC01 August 2006 WH Ireland Group plc Interim Results for the six months ended 31 May 2006 WH Ireland provides stockbroking, corporate finance, investment management andfinancial services to both private and institutional clients from its nationalnetwork of offices and from its Australian subsidiary, based in Perth. Key Points • Turnover up by 45% to £15.9 million (2005: £11.0 million) • Like for like turnover (excluding WHI Australia Pty and the acquisition of the Leeds operation of TD Waterhouse) up by 19% from £10.9m to £13.2m Pre-tax profit increased by 23% to £2.4 million (2005: £1.9 million) • Earnings per share 9% higher at 8.9p (2005: 8.2p) • Dividend increased by 15% to 1.4375p per share (2005: 1.25p) • Acquisition of the Leeds operations of T D Waterhouse in February 2006 • Expansion of the financial services business in both Cardiff and Manchester • Total funds under management have grown to £1.1 billion • Strong performance from the corporate finance division. W H Ireland Group plc David Youngman, Managing Director Mobile 07900 887142Richard Lee, Director 0161 832 6644 Biddicks Associates Zoe Biddick 020 7448 1000 Chairman's statement Results and Dividend Once again it is pleasing to be able to report good growth in both turnover andpre tax profit for the six months ended 31 May 2006. Turnover, in which we nowalso account for our Australian subsidiary, has increased by almost 45% to£15.9m whilst our pre-tax profit has increased by 23% to approximately £2.35m.Furthermore, these results were achieved during a period in which we have beeninvesting heavily in both our people and our infrastructure in order to achievefurther expansion of the business. The sale of fixed asset investments, particularly the sale of part of ourholding in London Stock Exchange plc, has resulted in a contribution to pre taxprofit of £955,000 as against a contribution from sales of fixed assetinvestments of £330,000 for the same period in 2005. Our share of profits fromassociated companies, principally our holding in Ultimate Finance Group plc,contributed £70,000 (2005: £5,000). We continue to enjoy a strong balance sheet and the Company's shares have anabove average dividend cover for the financial services sector. Accordingly, wehave increased the interim dividend by 15% to 1.4375p per share, to be paid on29 September 2006 to shareholders on the register on 11 August 2006. Once againa scrip alternative is being offered. Trading We have continued to invest for the future in order to build the business inline with our recently adopted internal three year business plan. In accordancewith the growth objective contained in the plan, we are investing heavily insystems and in recruiting experienced and skilled employees in a number ofareas. This expansion will take time to feed through fully to profits and weremain confident of the long term strategy. The figures for the half year include an important contribution to turnover andpre-tax profit from our Australian subsidiary, WHI Australia Pty Ltd ("WHIA"),the holding company of DJ Carmichael Pty Ltd ("DJC"), the Perth basedstockbroking and corporate finance boutique. Similarly, the results include therevenue and associated costs relating to the Leeds based institutional researchand sales business acquired from TD Waterhouse in February. We are particularly pleased with the continued strong performance of ourcorporate finance division where our three offices in London, Manchester andBirmingham now act for over 70 corporate clients and where our annual retainerincome alone now exceeds £1.3m. In the period under review, the division wasresponsible for 6 AIM flotations and 5 secondary fundraisings and two othertransactions, raising a total of £95.7m. The current levels of activity in thedivision are good and we continue to expect another strong performance from thisdivision in the second half. Expansion within our financial services businesses in both Cardiff andManchester continues apace, and, as with the other parts of our business, wehave acquired a number of highly professional individuals, taking the headcountin this division from 12 to 19. The business model of the division has also beenmodified to achieve higher levels of recurring income as opposed to upfrontfees. We are still looking for opportunities to expand this operation in acontrolled fashion. The move into our new London premises at 24 Martin Lane has proved to besuccessful and has aided further recruitment in that office. The additionalfloor space will facilitate the level of expansion which we are planning forthis key location. Our funds under management within the Group now total in excess of £570m. Afurther £540m is held by our nominee company, leading to total funds of over£1.1bn under Group control. Since the period end, we have increased our equity holding in WHIA by a further8% to 59%. We have also established a private client department within our Leedsoffice and a corporate finance operation will commence shortly. These activitieswill come together in new offices before the end of the calendar year, providinga complete service to clients based east of the Pennines. The next major investment program to be undertaken by the Group is thesubstantial upgrade and refurbishment of the Manchester head office, whereformal planning permission was received last year. This work is expected tocommence during the second half of the current year and, based on currentexpectations, will result, on completion, in a substantial uplift in the netvalue of the building. Board On 10 April 2006, we were delighted to welcome John Padovan as an independentnon-executive director. John is an experienced City figure, having been amanaging director of a number of merchant banks, following which he has been adirector of many listed and unlisted companies, including Tesco plc andWhitbread plc. Outlook Since the half year end, global stock markets have been impacted, not least ofall by geopolitical events in the Middle East and a consequent further rise inoil prices, which has led to a degree of volatility. However, the Group's spreadof businesses has been brought together to enable the Company to weather anystorms that may arise. The Group has a committed and experienced team and welldiversified income streams, which should ensure continued satisfactory progress. Sir David Trippier RD JP DL Chairman Consolidated Profit and Loss Accountfor the six months ended 31 May 2006 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 31 May 30 November 2006 2005 2005 £'000 £'000 £'000---------------------------------------------------------------------------------Group turnover 15,906 10,982 23,007Administration expenses (14,677) (9,446) (20,562)---------------------------------------------------------------------------------Group operating profit 1,229 1,536 2,445Share of operating profit in associates 70 5 68---------------------------------------------------------------------------------Total operating profit 1,299 1,541 2,513Profit on disposal of fixed asset 955 330 654investmentsIncome from fixed asset investments 17 11 47--------------------------------------------------------------------------------- 2,271 1,882 3,214Other interest receivable and similar income 252 274 494Amounts written off investments - - (34)Interest payable and similar charges (175) (248) (474)---------------------------------------------------------------------------------Profit on ordinary activities before taxation 2,348 1,908 3,200Tax on profit on ordinary activities (825) (619) (1,043)---------------------------------------------------------------------------------Profit on ordinary activities after 1,523 1,289 2,157taxationMinority interest (93) - (21)---------------------------------------------------------------------------------Profit for the financial period 1,430 1,289 2,136--------------------------------------------------------------------------------- Earnings per share (in accordance with FRS 14)Basic 8.91p 8.20p 13.48pDiluted 7.96p 7.37p 12.13p--------------------------------------------------------------------------------- Statement of Total Recognised Gains and Lossesfor the six months ended 31 May 2006 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 31 May 30 November 2006 2005 2005 £'000 £'000 £'000---------------------------------------------------------------------------------Profit for the period 1,430 1,289 2,136 Unrealised surplus on revaluation of fixed asset investments (note 4) 168 321 1,083Unrealised gain on revaluation of properties - - 77Taxation on realised surplus on revaluation of fixed asset investments (505) (244) (427)Currency translation differences (88) - 24---------------------------------------------------------------------------------Total recognised gain for the period 1,005 1,366 2,893--------------------------------------------------------------------------------- Note of Historical Cost Profits and Lossesfor the six months ended 31 May 2006 Restated Restated Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 31 May 30 November 2006 2005 2005 £'000 £'000 £'000---------------------------------------------------------------------------------Profit on ordinary activities before taxation 2,348 1,908 3,200Realisation of fixed asset investment revaluation gains 1,808 678 1,422---------------------------------------------------------------------------------Historical cost profit on ordinary activities before taxation 4,156 2,586 4,622---------------------------------------------------------------------------------Historical cost profit retained for the period after the provision for taxation and Minority Interests 2,733 1,723 3,131--------------------------------------------------------------------------------- Consolidated Balance Sheetas at 31 May 2006 Restated Restated Unaudited Unaudited Audited 31 May 2006 31 May 2005 30 November 2005 ---------------------------------------------------------- £'000 £'000 £'000 £'000 £'000 £'000----------------------------------------------------------------------------------Fixed assets Intangible assets 3,635 2,963 3,319Tangible assets 5,725 5,127 5,686Investments 4,403 5,869 6,182Investment in associates 765 443 766 ---------------------------------------------------------------------------------- 5,168 6,312 6,948---------------------------------------------------------------------------------- 14,528 14,402 15,953Current assets Debtors 78,221 89,702 69,731Investments 20 7 15Cash at bank and in hand 11,938 10,479 7,362 ---------------------------------------------------------------------------------- 90,179 100,188 77,108Creditors due within one year (83,698) (97,026) (72,374) ----------------------------------------------------------------------------------Net current assets 6,481 3,162 4,734----------------------------------------------------------------------------------Total assets less current liabilities 21,009 17,564 20,687 Creditors due after one year (5,729) (5,829) (6,177)Provisions for liabilities and charges (92) (228) (116)----------------------------------------------------------------------------------Net assets 15,188 11,507 14,394---------------------------------------------------------------------------------- Capital and reserves Called up share capital 811 787 801Share premium account 1,774 1,266 1,605Capital redemption reserve 226 226 226Merger reserve 491 491 491Revaluation reserve 2,739 4,284 4,379Other reserves 754 754 754Retained profits 7,176 3,699 4,931----------------------------------------------------------------------------------Equity shareholders' funds 13,971 11,507 13,187Minority Interest (all equity) 1,217 - 1,207----------------------------------------------------------------------------------Total capital employed 15,188 11,507 14,394----------------------------------------------------------------------------------Net assets (before minority interest) per ordinary share 86.13p 73.10p 82.33p---------------------------------------------------------------------------------- Consolidated Cash Flow Statementfor the six months ended 31 May 2006 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 2006 31 May 30 Nov 2005 2005 £'000 £'000 £'000-------------------------------------------------------------------------------Net cash inflow/(outflow) from operating activities 3,219 (927) (3,466)Returns on investments and servicing of finance 165 84 170Taxation (281) (71) (1,583)Capital proceeds and financial investment 2,829 1,135 1,977Acquisitions and disposals (440) - 328-------------------------------------------------------------------------------Cash inflow before management of liquid resources and financing 5,492 221 (2,574)Equity dividends paid (400) (523) (692)Financing (471) (110) (276)-------------------------------------------------------------------------------Increase/(decrease) in cash in the period 4,621 (412) (3,542)------------------------------------------------------------------------------- Reconciliation of operating profit to operating cash flow Unaudited Unaudited Audited 6 months 6 months 12 months Ended ended ended 31 May 2006 31 May 30 Nov 2005 2005 £'000 £'000 £'000------------------------------------------------------------------------------Operating profit 1,229 1,536 2,445Less non cash transfer from revaluation reserve (note 4) (168) (321) (506)Less adjustment from profit on disposal of fixed asset investments 37 (77) (163)Depreciation 165 151 323Amortisation 121 89 184Profit on sale of fixed assets (13) - (26)(Increase)/decrease in debtors (8,892) 32,965 56,011Increase/(decrease) in creditors 10,745 (35,278) (61,734)(Increase)/decrease in current asset investments (5) 8 ------------------------------------------------------------------------------- 3,219 (927) (3,466)------------------------------------------------------------------------------ Analysis of net debt Other non At cash At the beginning Cash changes Exchange end of of the flow Movements the period period £'000 £'000 £'000 £'000 £'000--------------------------------------------------------------------------------Cash at bank and in hand 7,362 4,621 - (45) 11,938Debt due within one year (292) 185 (185) - (292)Debt due after one year (3,972) - 185 - (3,787)Finance leases (11) 4 - - (7)-------------------------------------------------------------------------------- 3,087 4,810 - (45) 7,852-------------------------------------------------------------------------------- Notesfor the six months ended 31 May 2006 1. The interim report, which is the responsibility of the Directors and has not been audited, was approved by the Directors on 31 July 2006. 2. The figures for the six months ended 31 May 2006 have been prepared using thesame accounting policies as for the year ended 30 November 2005, except for theadoption of FRS21 and the presentation requirements of FRS25 as detailed in note 4. 3. These unaudited interim financial statements do not constitute statutoryaccounts. They have, however, been reviewed by the auditors whose report is included. The figures for the year ended 30 November 2005 have been extracted from the audited accounts for that year, and restated to comply with FRS21 and FRS25 as if these policies had been adopted throughout the year. The comparative figures for the financial year ended 30 November 2005 are not the Company's statutory accounts for that year. Those accounts have been reported on by the Company's auditors anddelivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. 4. Share premium and reserves Capital Share Share redemption Merger Revaluation Other Retained capital premium reserve reserve reserve reserve profits £'000 £'000 £'000 £'000 £'000 £'000 £'000-------------------------------------------------------------------------------------At beginning of period 801 1,605 226 491 4,379 754 4,531Restatement adjustment - - - - - - 400-------------------------------------------------------------------------------------At beginning of period (Restated) 801 1,605 226 491 4,379 754 4,931Payment of prior year dividend (400)Shares issued 10 169 - - - - -Adjustment on investment revaluation (see below) - - - - 168 - -Transfer of realised gain - - - - (1,808) - 1,808Tax on realised investment gain - - - - - - (505)Retained profit for the period - - - - - - 1,430Exchange rate movement - - - - - - (88)-------------------------------------------------------------------------------------At end of period 811 1,774 226 491 2,739 754 7,176------------------------------------------------------------------------------------- Following the adoption of FRS21, dividends payable are accounted for in theperiod in which the company is liable to pay them, rather than in the period inrespect of which they are declared. This has resulted in a reduction ofcreditors due within one year and increase in retained profits for the sixmonths ended 31 May 2005 of £199,892 and the year ended 30 November 2005 of£400,410. Following the adoption of the presentation requirements of FRS25, thesedividends are now treated as a charge on reserves and accounted for through thereconciliation of movements in shareholders funds rather than in the profit andloss account as previously. The adjustment on investment revaluation is after £167,751 has been crediteddirectly to the profit and loss account and offset against the applicable bonusprovision made under the carried interest scheme, as detailed in the 30 November2005 audited accounts. 5. A final dividend for the year ended 30 November 2005 of 2.5p per sharetotalling £400,410 was paid on 28 April 2006. On the same day 59,798 newordinary shares of 5p each were issued at 165.5p per share in satisfaction ofthe scrip dividend alternative for this dividend. 6. 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 16,050,641 (six months to 31 May 2005: 15,726,260and year ended 30 November 2005: 15,840,949). Diluted earnings per share is thebasic earnings per share adjusted for the effect of the conversion into fullypaid shares of the weighted average number of all share options and warrantsoutstanding during the year. The additional weighted average number of sharesused for the diluted calculation is 1,907,799 (six months to 31 May 2005:1,778,656, and year ended 30 November 2005: 1,764,713). 7. The tax charged to the profit and loss account of £825,232 represents a taxcharge of 35.15% (six months to 31 May 2005: £619,000 and 32.44% and year ended30 November 2005: £1,043,694 and 32.6%) in addition, there is a tax chargetransferred to reserves relating to tax payable on realised gains previouslycredited to the revaluation Reserve of £504,896 (six months ended 31 May 2005:£245,585 and year ended 30 November 2005: £426,734). 8. During the year 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 transactions areultimately sold at a profit. Creditors due within one year includes £402,330 (six months ended 31 May 2005:£303,334 and year ended 30 November 2005: nil) relating to bonuses provided under the carried interest scheme, and creditors due after one year includes £1,239,223 (six months ended 31 May 2005: £1,663,752 and year ended 30 November 2005: £1,799,891) relating to bonuses provided under the carried interest scheme. Independent Review Report by KPMG Audit Plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 31 May 2006, which comprises: the consolidated profit and loss account; statement of total recognised gains and losses; note of historical cost profits and losses; consolidated balance sheet; consolidated cash flow statement; reconciliation of operating profit to operating cash flow; analysis of net debt and notes 1 to 8. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or 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, for this report, or for 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 in accordance with guidance contained in Bulletin 1999/4: Review of interim financial information issued by the Auditing PracticesBoard. A review consists principally of making enquiries of Group management andapplying analytical procedures to the financial information and underlyingfinancial data and, based thereon, assessing whether the accounting policies andpresentation have been consistently applied unless otherwise disclosed. A reviewis substantially less in scope than an audit performed in accordance withAuditing Standards and therefore provides a lower level of assurance than anaudit. Accordingly we do not express an audit opinion on the financialinformation. 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 2006. KPMG Audit PlcChartered AccountantsLeeds31 July 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
WHIreland