28th Feb 2007 07:01
W.H. Ireland Group PLC28 February 2007 W.H. IRELAND GROUP plc ("W.H. Ireland" or "the Group") PRELIMINARY RESULTS FOR THE YEAR TO 30 NOVEMBER 2006 The principal activity of W.H. Ireland is the provision of stockbroking,corporate finance, investment management and financial services to both privateand institutional clients. It has a national network of offices includingManchester, London, Birmingham and Cardiff. Key Points * Pre-tax profit increased by 16% to a record £3.7m (2005: £3.2m) * Turnover up by 32% to £30.3m (2005: £23.0m) * Excluding acquisitions, operating profit up by 12% to £2.7m and turnover up by 29% to £29.6m * Equity shareholders funds increased by 13% to £14.9m (2005: £13.2m)relating to 92p per share (2005: 82p), and excluding intangibles an increase of 15% to £11.4m (2005: £9.9m) relating to 70p per share (2005: 62p) * Proposed final dividend of 3.0p per share giving a total of 4.4375p for the year (2005: 3.75p) an increase of 18% * Strong progress across three core business areas: - Corporate finance - turnover up 17% - IFA business - turnover up by 23% - Stockbroking - commission up by 42% * A consolidation of our presence in Australia by increasing our holding in WHI Australia Pty Limited by a further 8.94% to 59.94%. * Establishment of the Leeds office through the acquisition of TD Waterhouse's Institutional team based in Leeds, together with the addition of a retail stockbroking team and a Corporate finance team. Laurie Beevers, chief executive, commenting, said, " I am delighted to be able to report once again on record results. With thebenefit of our strong balance sheet, we are driving the business forward bothorganically and through strategic acquisitions. As we continue to invest indeveloping both our core stockbroking activities as well as our complementarycorporate finance and financial services businesses, I remain confident that ourstrategy will result in continued progress". Press enquiries: W.H. Ireland Group plcLaurie Beevers, chief executive Tel: 0161 832 6644 Mobile: 07903 164004David Youngman, managing director Tel: 0161 832 6644 Mobile: 07900 887142Richard Lee, director Tel: 0161 832 6644 Mobile: 07831 170298 Biddicks Tel: 020 7448 1000Zoe Biddick or Katie Tzouliadis Chairman's Statement Results and Dividend I am delighted to report increased turnover, profits, assets and funds undermanagement & advice for the fourth year in succession. Our pre-tax profit hasincreased by 16% to £3.7m, while turnover, which now includes a full year forour Australian subsidiary, has grown by over 32% to £30.3m. These results have been achieved in a period where stock market turnover hasfluctuated significantly and during which we have been investing significantlyin people and systems to facilitate the future growth objectives of the company. During the year we have completed the sale of the majority of our shares in theLondon Stock Exchange, which has contributed £1.1m out of the total profit fromsales of fixed asset investments of £1.3m compared with profits of £0.7m lastyear. We have also consolidated operating profits of £0.2m from associatedcompanies, principally from our holding in Ultimate Finance. We are proposing a final dividend of 3p making an increased dividend of 18% forthe year as a whole, comprising an interim of 1.4375p (2005: 1.25p) and a finalof 3p (2005: 2.5p). This dividend is covered 3.3 times. The final dividend willbe paid on 27 April 2007 to holders on the register on 9 March 2007. A scripalternative is available to shareholders who wish to take up that option. Trading Our accounts now include a significant contribution from our subsidiary inAustralia, WHI Australia, the holding company of DJ Carmichael, the Perth basedstockbroker, where we have increased our holding to 59.9%. We are delighted withits performance since we made our initial investment in June 2005. We would liketo congratulate everyone in Perth for their hard work and commitment. DJCarmichael now has representation in Melbourne, and it is our intention tosupport its continued expansion. WH Ireland Financial Services has continued to grow its business and headcountin Manchester and Cardiff and has contributed £1.9m (2005: £1.6m) to this year'sturnover, an excellent performance. We are continuing to look at potentialacquisitions for this subsidiary. Our Corporate Finance division has again performed strongly and has asignificant presence in the AIM market nationally and internationally. In theyear it undertook 17 IPOs, 14 secondary placings and acted in two advisorytransactions, raising in total in excess of £136m (2005: £82m). In addition toour Birmingham, London and Manchester offices we have recently opened in Leedsto further support this growth. On the stockbroking side we continue to recruit highly experienced personnel toour London office which is now developing well following the move to newpremises last year. Our acquisition of the institutional business of T.D.Waterhouse in Leeds early last year has seen the addition of new personnel andis locating to new offices in the centre of Leeds in Granary Wharf. It will bejoined there by our newly established Corporate Finance operation and ourprivate client stockbroking team. Group funds under management & advice now amount to £1.35bn, up from £1.17bnlast year. Investments We have in the past made reference to the fixed asset and equity investment thatwe have undertaken in order to both de-risk the business while at the same timebalancing the profit streams. Our Manchester property, which is in our books at £4.9m, is undergoing a majorrefurbishment. The ground floor, comprising three shop units, will be availablefor let, as will the first floor by the end of March. On completion of the workthe building will be revalued. The uplift in value is expected to show anincrease in excess of £1.0m over the refurbishment cost. Ultimate Finance, where we have a 23.17% holding, which is itself quoted on AIMcontinues to grow and we continue to be very pleased with its development. In 2005 we made an investment in Acceleris, a venture capital boutiquespecialising in mainly high tech start ups. This is developing well and we haveinvested a further £140k after the year end to maintain our equity position. Board During the year we have added two non executive directors to the main board.John Padovan is well known in the city having been managing director of threemerchant banks and a non-executive director of a number of listed companiesincluding Tesco and Whitbread. Roger Lane-Smith is a lawyer who until recently was Chairman and Senior Partnerof DLA Piper UK. He is Chairman of JJB Sports and a Director of a number ofother companies. The additional wise counsel and vast experience of these two senior figures isgenuinely appreciated. Outlook World equity markets remain in good form but volumes, particularly in the UKmarket from where we derive the majority of our income, are below last year'slevels. Our spread of activities and the commitment of a loyal, able and expanding staffshould ensure continued progress in the development of the Group. Sir David Trippier RD JP DL MSIChairman Year ended Year ended 30 November 30 November 2006 2005 Note £ £ Group turnoverContinuing operations 29,645,609 23,007,247Acquisitions 695,787 - ---------------------------------------------- 30,341,396 23,007,247 Administrative expenses (28,211,746) (20,562,231) ----------------------------------------------Group operating profitContinuing operations 2,733,316 2,445,016Acquisitions (603,666) - ---------------------------------------------- 2,129,650 2,445,016Share of operating profit 210,503 67,675before tax in associatesTotal operating profit: group 2,340,153 2,512,691and share of associates ---------------------------------------------- Profit on disposal of fixed 2 1,268,272 653,993asset investmentsIncome from fixed asset 3 31,775 47,109investments ---------------------------------------------- 3,640,200 3,213,793Other interest receivable and 516,461 494,059similar incomeAmounts written off (25,544) (34,224)investmentsInterest payable and similar (410,286) (473,579)charges ----------------------------------------------Profit on ordinary activities 3,720,831 3,200,049before taxationTax on profit on ordinary (1,228,034) (1,043,694)activities ----------------------------------------------Profit on ordinary activities 2,492,797 2,156,355after taxationMinority interests (120,620) (20,806) ----------------------------------------------Profit for the financial year 2,372,177 2,135,549 ============================================== Earnings per share(in accordance with FRS 14)Basic 5 14.71p 13.48pDiluted 5 13.30p 12.13p ============================================== All turnover and results in the current and previous year relate to continuingoperations. Year Year ended ended 30 30 November November 2006 2005 £ £Profit for the financial year 2,372,177 2,135,549Unrealised surplus on revaluation of fixed 548,886 1,083,223asset investmentsUnrealised gain on revaluation of properties - 76,805Taxation on current year's realised surplus on (625,535) (426,734)revaluation of fixed assetsCurrency translation differences (90,155) 23,724 ---------------------Total recognised gain for the year 2,205,373 2,892,567 ===================== Note of historical cost profits and lossesfor the period ended 30 November 2006 Restated Year Year ended ended 30 30 November November 2006 2005 £ £Reported profit on ordinary activities before 3,720,831 3,200,049taxRealisation of fixed asset investment 2,084,321 1,422,445revaluation gains ---------------------Historical cost profit on ordinary activities 5,805,152 4,622,494before taxation ---------------------Historical cost profit retained for the year 3,830,963 3,131,260after the provisions for taxation and minorityinterests. ===================== Restated Restated 2006 2006 2005 2005 Note £ £ £ £Fixed assetsIntangible assets 3,509,706 3,319,466Negative goodwill (33,063) -Tangible assets 6,105,899 5,685,833Investments- Fixed asset investments 6 4,767,838 6,181,536- Investment in 837,191 765,942associates ------------ ------------ 5,605,029 6,947,478 ------------------------------------------------- 15,187,571 15,952,777Current assetsDebtors 76,387,142 69,730,570Investments 11,268 14,702Cash at bank and in hand 14,819,199 7,362,131 ------------------------------------------------- 91,217,609 77,107,403Creditors: amounts 7 (85,337,320) (72,373,849)falling due withinone year -------------------------------------------------Net current assets 5,880,289 4,733,554 -------------------------------------------------Total assets less current 21,067,860 20,686,331liabilitiesCreditors: amounts 8 (5,194,992) (6,177,135)falling due after morethan one yearProvisions for (16,980) (115,608)liabilities and charges -------------------------------------------------Net assets 15,855,888 14,393,588 ------------------------------------------------- Capital and reservesCalled up share capital 812,017 800,820Share premium account 1,785,965 1,604,644Capital redemption 228,083 226,333reserveMerger reserve 490,511 490,511Other reserves 753,704 753,704Revaluation reserve 2,844,042 4,378,655Profit and loss account 8,038,173 4,931,680Treasury shares (86,561) - -------------------------------------------------Equity shareholders' 14,865,934 13,186,347fundsMinority Interests (all 989,954 1,207,241equity) -------------------------------------------------Total capital employed 15,855,888 14,393,588 ------------------------------------------------- Year ended Year ended 30 November 30 November 2006 2005 £ £Net cash inflow/(outflow) from operating 7,263,974 (3,465,512)activitiesReturns on investments and servicing of 261,868 169,915financeTaxation (857,762) (1,583,066)Capital expenditure and financial investment 2,762,903 1,977,037Acquisitions and disposals (616,836) 327,710Equity dividends paid (479,465) (691,679) ------------------------Cash inflow/(outflow) before financing 8,334,682 (3,265,595)Financing (870,031) (276,400) ------------------------Increase/(decrease) in cash in the year 7,464,651 (3,541,995) ------------------------ Restated Group Group 2006 2005 £ £Profit for the financial year before dividends 2,372,177 2,135,549Dividend - restatement adjustment (400,410) (550,312)Dividend - current year (233,084) (199,892) -----------------------Restated profit for the financial year 1,738,683 1,385,345Surplus on investment revaluation reserve 548,886 1,083,223Surplus on property revaluation reserve - 76,805Tax in respect of current year realised surplus on (625,535) (426,734)revaluationShares issued on payment of scrip dividends in the year 153,866 58,525Shares issued on acquisition of subsidiary undertaking - 321,091Shares issued on exercise of options 85,652 -Shares bought back for cancellation (45,250) -Treasury shares acquired (86,561) -Exchange rate adjustments (90,154) 23,724 ----------------------Increase in shareholders' funds during the year 1,679,587 2,521,979Opening equity shareholders' funds 13,186,347 10,664,368 ----------------------Closing equity shareholders' funds 14,865,934 13,186,347 ---------------------- 1. Accounting policies The following accounting policies have been applied consistently in dealing withitems that are considered material in relation to the Group's financialstatements. Basis of preparation The financial statements have been prepared in accordance with applicableaccounting standards subject to the true and fair view overrides detailed belowand under the historical cost accounting rules, except as modified by therevaluation of certain assets. During the year the group adopted FRS21 and FRS25 paragraphs 1 to 50. The figures for the year ended 30 November 2005 have been restated to complywith FRS21 and FRS25 paragraphs 1 to 50 as if these policies had been adoptedthroughout the year. Basis of accounting for the Carried Interest Scheme During the year the Group maintained a Carried Interest Bonus Scheme under whichbonuses 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. The relevant warrants and shares are includedwithin fixed asset investments and are revalued at the year end reporting dateand a bonus is provided on 50% of the expected profit should the warrants orshares be sold at that revalued amount, being the maximum amount of bonus thatmay be paid out. The amount of the bonus provision relating to warrants wherethe expiry date is less than one year is shown in creditors under one year, andthe balance is shown in creditors over one year. At the 30 November 2006 revaluation the relevant warrants had a revaluation lossof £193,047 and the shares a revaluation loss of £234,663 and accordingly£94,723 need to be written back on the warrant revaluation loss and £121,645 onthe revaluation losses on shares. Under the specific requirements of theCompanies Acts and relevant Financial Reporting Standards the full amount of therevaluation loss would be taken through the statement of total recognised gainsand losses to the revaluation reserve in the balance sheet whilst the credit forthe bonuses would be taken to the profit and loss account. The Directors do notconsider that adopting this accounting treatment truly matches the bonus creditagainst the relevant loss and thus does not show a true and fair view of thereasoning and substance behind the relevant accounting entries. In order to showa true and fair view of the Carried Interest Bonus Scheme the Directors havedeparted from the prescribed accounting treatment and have debited a sufficientamount of the loss to the profit and loss account to match the relevant bonuswrite back, as a debit within administrative expenses where the related bonus iscredited. The effect of this is to avoid an increase in profits of £216,368should the bonus alone be reported in the profit and loss account. During the current year certain warrants within the Carried Interest Scheme wereexercised and the shares acquired there from were sold resulting in a profitbeing credited to profit and loss of £306,309 and a bonus being charged of£165,154. Under the specific requirements of the Companies Acts and relevantFinancial Reporting Standards the profit on sale of the shares should bedisclosed below the operating profit line under the heading profit on disposalof fixed assets and the bonus should be included in staff costs above theoperating profit line. The Directors do not believe that this accountingtreatment properly reflects the matching of the bonus and the specific gain itis paid out from, nor with the presentation of equivalent revaluations withinoperating profit (see paragraph above). Accordingly the Directors have departedfrom these accounting requirements and have taken a sufficient amount of thegain as matches the bonus paid and have reported this above the operating profitline as a credit to administration expenses. This treatment has no effect on thereported profits before tax for the year, but it moves a realised gain of£165,154 from below to above the operating profit line. 2. Profit on disposal of investments Year Year ended ended 30 30 November November 2006 2005 £ £Gross Profit on disposal of fixed asset investments 1,443,950 817,466Loss on disposal of current asset investments (10,524) -Amount taken to administration expenses to offset (165,154) (163,473)against the bonus payment thereon (see note 1) ---------------------Net profit on disposal of fixed asset investments 1,268,272 653,993 --------------------- 3. Income from fixed asset investments Year ended Year ended 30 30 November November 2006 2005 £ £Quoted investments 31,775 31,839Unquoted investments - 15,270 ----------------------- 31,775 47,109 -----------------------4. Dividends Restated Year ended Year ended 30 30 November November 2006 2005 £ £Equity shares:Final dividend for the year ended 30 November 2005 400,410 235,848paid at 2.5p per share (2004: 1.50p)Special final dividend for year ended 30 November 2005 - 314,464(2004: 2.0p)Interim dividend for the year ended 30 November 2006 233,084 199,892paid at 1.4375p per share (2005: 1.25p) ---------------------- 633,494 750,204 ---------------------- 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 yearended 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. 5. Earnings per share Restated Year ended Year ended 30 30 November November 2006 2005 Profit for the year used for the basic calculation £2,372,177 £2,135,549 ----------------------Weighted average number of shares used in the basic 16,124,635 15,840,949calculationWeighted average number of options outstanding for the 1,715,122 1,764,713period ----------------------Weighted average number of shares used in the diluted 17,839,758 17,605,662calculations ---------------------- 6. Fixed asset investments Unquoted Quoted investments Warrants investments TotalGroup (excluding investments in £ £ £ £associates)Cost or valuationAt beginning of year 75,071 2,911,107 3,195,358 6,181,536Additions 275,000 - 477,656 752,656Revaluation adjustment - (193,047) 525,705 332,658Exchange rate adjustments - - (5,313) (5,313)Diminution in value - - (25,544) (25,544)Disposals - (704,687) (1,763,468) (2,468,155) ---------------------------------------------At end of year 350,071 2,013,373 2,404,394 4,767,838 --------------------------------------------- The historical cost value of the above quoted investments at the year end was£1,374,684 (2005: £748,140). The potential tax charge arising if the above quoted investments were sold attheir market value is £330,118 (2005: £714,735). In the consolidated financial statements, the interests in the associatedundertakings are accounted for using the equity method. In the Company financialstatements the interests in the associated undertakings are accounted for atmarket value where quoted and at the lower of cost or net realisable value whereunquoted. 7. Creditors: amounts falling due within one year Group Group 2006 2005 £ £Bank overdraft 46,199 -Bank loans 314,727 292,365Trade creditors 77,919,174 67,159,024UK corporation tax payable 1,827,763 839,136Taxation and social security 872,166 609,358Obligation under finance leases and hire purchase 3,887 6,982contractsDeferred purchase consideration - 461,560Other creditors 311,715 177,931Accruals and deferred income 4,041,689 2,827,493 ----------------------- 85,337,320 72,373,849 ----------------------- Accruals and deferred income includes £108,579 (Company: £nil) (2005: £nil(Company: £nil)) relating to bonuses provided under the carried interest scheme.Details of the accounting treatment thereof are given in note 1. 8. Creditors: amounts falling due after more than one year Group Group 2006 2005 £ £Bank loans 3,594,718 3,971,899Obligations under finance leases and hire purchase - 4,398contractsAccruals and deferred income 1,575,834 2,097,059Deferred rent creditor 24,440 103,779 ---------------------- 5,194,992 6,177,135 ---------------------- Accruals and deferred income includes £1,259,746 (Company: £215,192) (2005:£1,799,891 (Company: £336,836)) relating to bonuses provided under the carriedinterest scheme. Details of the accounting treatment thereof are given in note1. 9. 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 2006 will bedelivered to the Registrar of Companies following the Company's Annual GeneralMeeting. Accounts for the year ended 30 November 2005 have been filed with theRegistrar of Companies, and these accounts contain an unqualified, auditedreport and did not contain any statements under Section 237 (2) or (3) of theCompanies Act 1985. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
WHIreland