Final Results
W.H. Ireland Group PLC
7 March 2003
7 March 2003
W. H. IRELAND GROUP PLC
PRELIMINARY RESULTS
FOR THE YEAR TO 30 NOVEMBER 2002
KEY POINTS
• Turnover of £6.44 million (2001: £6.97 million)
• Operating loss of £1.06 million (2001: loss of £0.69 million)
• Loss before tax of £1.54 million (2001: loss of £0.50 million)
• Final dividend of 0.5p per share proposed (2001: 1p per share)
• Scrip dividend scheme proposed, subject to shareholder approval
• New offices opened in Birmingham, Lancaster and Preston
• An active year for Corporate Finance with good level of retained income
established
• The Board remains encouraged about the Group's prospects over the medium term
but in the shorter term, the Group's performance is geared to a wider recovery
in the financial markets.
Press enquiries:
W.H. Ireland Group plc Tel: 0161 832 6644
Laurie Beevers, Chief Executive
David Youngman, Managing Director
W. H. IRELAND - PRELIMINARY RESULTS 2/12
Chairman's Statement
Results
In common with many businesses in the stockbroking profession, the Group has
experienced a difficult past two years. During the previous year ended 30
November 2001, we saw a substantial reduction in trading levels, and a number of
factors, including financial scandals, problems in the pensions and life
assurance sectors, and the possible war in Iraq, combined to reduce trading
levels further during the year under review.
Against this difficult background, we are pleased to report that the Group's
turnover for the year held up well at £6.44m compared to £6.97m for the same
period last year. However, continued investment in the expansion of our national
network of branches in major cities has kept overheads at similar levels to the
previous year. This resulted in an operating loss of £1.06m for the year against
a loss of £0.69m for the previous year. After charging £213,931 for our share of
the operating losses in the two associates, W.H.I. Securities Pty Limited
('WHIS') and our start-up investment, Ultimate Finance Group plc ('Ultimate'),
and writing off £153,539 from the value of our fixed asset investments, the loss
before tax increased to £1.54m compared to the loss of £0.5m last year. WHIS
traded profitably in the second half although it still made a loss for the
financial year as a whole whilst the operating loss of Ultimate was wholly in
line with our expectations for the first five months' of trading.
Reflecting our strong balance sheet and in acknowledgement of the loyalty of our
shareholders, the Board is proposing a final dividend of 0.5p per share. This
will be payable on 30 May 2003 to all shareholders on the register as at 11
April 2003. This year, subject to shareholders' approval, we intend to introduce
a scrip dividend scheme. This will enable shareholders to elect to receive the
dividend by way of ordinary shares in the company. A letter outlining details of
the scheme is being sent to shareholders with the Report and Accounts and a
resolution seeking its approval at the AGM is set out in the notice of the
meeting. The Board members themselves hold approximately 58.49% of the ordinary
issued share capital of the company as at the date of this report, and intend to
take up the scrip alternative in the event of the scheme being approved.
Branch network
We have made good progress in our ambition to build our presence across major
cities in the UK. During the year we added branches in Birmingham, Lancaster and
Preston. The office in Lancaster commenced trading in February, the Preston
office was opened in September and our Birmingham presence was established in
October. In the current environment, the progress of our branches has been
slower than anticipated, necessitating some consolidation and reorganisation,
but we continue to look forward to their long-term future growth. The total
number of our UK branches now stands at eleven.
Corporate Finance
Our corporate finance department has taken full advantage of being granted
Nominated Adviser ('Nomad') status by the London Stock Exchange in August 2001
and during the year acted as Nomad on two admissions to AIM. In addition, we
acted as Broker in two admissions and were involved in fourteen fundraisings. We
are currently Broker or Nomad to a total of twenty two companies on either AIM
or the Official List and we are adviser to a further five companies whose shares
are traded on OFEX.
W. H. IRELAND - PRELIMINARY RESULTS 3/12
Towards the end of the financial year, we took the opportunity to employ a small
team from a corporate finance boutique in Birmingham and established a corporate
finance office in that city. The team is widely known in the Birmingham area and
has already attracted clients to the Group.
Progress
In the first quarter of the current financial year, substantial fee income has
been generated by our corporate finance department which has acted in two
admissions to AIM. In particular, the flotation of Highland Gold Mining Limited,
which operates substantial gold mining interests in Russia, was the largest
mining company to be admitted to AIM and has the second largest market
capitalisation of all companies whose shares are traded on that market. The
increase in the workload of this department supports our decision to expand our
resource in this area and alongside the investment we have made in Birmingham,
we have strengthened our London office team. The corporate finance department
has had a very satisfactory start to the year and now generates substantial
annual retained income for its advisory services.
The current volume of equity bargains transacted on the London Stock Exchange is
severely depressed for a number of reasons which have been well documented. At
present, the most significant is the uncertainty of the situation in the Gulf
although general concerns about the global economic outlook continue. As a
result, investor confidence in equity markets is lower than at any time since
the 1973/4 bear market. If the situation in the Gulf is resolved satisfactorily
and quickly, some degree of investor confidence could return to the market.
As a result of difficult trading conditions, the Board continues to restructure
the Group's staffing requirement in an effort to bring the cost base to a level
that is appropriate to those revenues that the Board believes are consistently
achievable in the medium term. Further consolidation is taking place within the
profession and we continue to explore every opportunity to improve our market
position and shareholder value.
I would like, once again, to thank all the members of the firm for their support
and fortitude in the past year. We look forward to the future knowing that
whatever market conditions may transpire, we continue to work hard in building
the business with the aim of generating profitable growth.
Sir David Trippier RD JP DL MSI
Chairman
W. H. IRELAND - PRELIMINARY RESULTS 4/12
Consolidated profit and loss account
for the year ended 30 November 2002
Note Year ended Year ended
30 November 30 November
2002 2001
£ £
Group Turnover 6,438,368 6,968,771
Administrative expenses (7,497,392) (7,655,891)
Group operating loss (1,059,024) (687,120)
Share of operating loss in associates (142,614) (4,685)
Share of non trading decrease in net assets of associates (71,317) -
(1,272,955) (691,805)
Other interest receivable and similar income 141,063 285,343
Amounts written off Investments (153,539) -
Interest payable and similar charges (253,582) (94,839)
Loss on ordinary activities before taxation (1,539,013) (501,301)
Tax on loss on ordinary activities 1 (12,988) 21,892
Loss on ordinary activities after taxation (1,552,001) (479,409)
Dividends on equity shares 2 (145,830) (283,448)
Retained loss for the year for group (1,697,831) (762,857)
Earnings per share (in accordance with FRS 14)
Basic 3 (10.84) p (3.45) p
Diluted 3 (10.50) p (3.29) p
Headline earnings per share (in accordance with guidelines issued by UK
Society of Investment Professionals)
Basic 3 (10.12) p (3.21) p
Diluted 3 (9.81) p (3.07) p
All turnover relates to continuing operations.
W. H. IRELAND - PRELIMINARY RESULTS 5/12
Statement of total recognised gains and losses
for the year ended 30 November 2002
Year ended Year ended
30 November 30 November
2002 2001
£ £
Loss for the financial year before dividends (1,552,001) (479,409)
Dividends (145,830) (283,448)
Loss for the financial year (1,679,831) (762,857)
Unrealised (deficit) / surplus on revaluation of fixed asset investments (176,712) 473,186
Realised surplus on revaluation of fixed asset investments - 690,739
Taxation refund on previous year's realised surplus on revaluation of fixed asset
investments 171,320 -
Taxation on current years realised surplus on revaluation of fixed asset investments - (207,221)
Foreign exchange difference on the carrying value of the Joint Venture - (2,866)
Non trading increase in net assets of associates 15,844 -
Total recognised (loss) / gain for the year (1,687,379) 190,981
Prior period adjustment 2,403,941
Total gains and losses recognised since last annual report 2,594,922
Note of historical cost profits and losses
for the year ended 30 November 2002
Year ended Year ended
30 November 30 November
2002 2001
£ £
Reported loss on ordinary activities before tax (1,539,013) (501,301)
Realisation of fixed asset investment revaluation gains 377,950 690,739
Historical cost profit on ordinary activities before taxation (1,161,063) 189,438
Historical cost loss retained for the year after the provision for taxation
and dividends (1,148,561) (279,339)
W. H. IRELAND - PRELIMINARY RESULTS 6/12
Consolidated balance sheet
at 30 November 2002
Note 2002 2002 2001 2001
£ £ £ £
Fixed assets
Intangible assets 1,852,672 1,955,614
Tangible assets 4 4,962,955 925,669
Investments 5 2,453,729 3,189,874
Investments in associates and joint ventures 5 401,528 49,914
9,670,884 6,121,071
Current assets
Debtors 28,793,806 45,327,003
Investments 17,563 21,567
Cash at bank and in hand 3,005,014 5,962,490
31,816,383 51,311,060
Creditors: amounts falling due within one year (30,008,821) (48,512,562)
Net current assets 1,807,562 2,798,498
Total assets less current liabilities 11,478,446 8,919,569
Creditors: amounts falling due after more than one
year (5,114,664) (868,408)
Net assets 6,363,782 8,051,161
Capital and reserves
Called up share capital 945,578 945,578
Shares to be issued 425,000 425,000
Share premium account 1,299,984 1,299,984
Investment revaluation reserve 2,322,465 2,877,127
Other reserves 544,634 544,634
Profit and loss account 826,121 1,958,838
Equity shareholders' funds 6,363,782 8,051,161
W. H. IRELAND - PRELIMINARY RESULTS 7/12
Consolidated cash flow statement
for the year ended 30 November 2002
Year ended Year ended
30 November 30 November
2002 2001
£ £
Net cash (outflow)/ inflow from operating activities (1,885,264) 570,542
Returns on investments and servicing of finance (107,180) 200,513
Taxation (168,909) (701,175)
Capital expenditure and financial investment (3,967,888) 30,747
Acquisitions and disposals (549,701) (425,000)
Cash inflow before management of liquid resources and financing (6,678,942) (324,373)
Equity dividends paid (215,773) (265,061)
Financing 3,937,239 (5,394)
Decrease in cash in the period (2,957,476) (594,828)
Reconciliation of movements in equity shareholders' funds
for the year ended 30 November 2002
Group Group Company Company
2002 2001 2002 2001
£ £ £ £
Loss for the financial year before dividends (1,552,001) (479,409) (149,057) 291,472
Dividends (145,830) (283,448) (145,830) (283,448)
Loss for the financial year (1,697,831) (762,857) (294,887) 8,024
New share capital subscribed (net of issue costs) - 265,624 - 491,957
Shares to be issued - 425,000 - 425,000
(Deficit) / surplus on Investment revaluation reserve (261,877) 1,163,925 (88,986) -
Surplus on Property revaluation reserve 85,165 - - -
Tax in respect of current year realised surplus on revaluation - (207,221) - -
Tax refund in respect of previous year's realised surplus on - -
revaluation reserve 171,320 -
Foreign exchange difference on carrying value of the joint
venture - (2,866) - -
Non trading increase in net assets of associates 15,844 - - -
(1,687,379) 881,605 (383,873) 924,981
Opening equity shareholders' funds 8,051,161 7,169,556 3,280,881 2,355,900
Closing equity shareholders' funds 6,363,782 8,051,161 2,897,008 3,280,881
W. H. IRELAND - PRELIMINARY RESULTS 8/12
Notes to the preliminary statement
1. Taxation
Year ended 30 November Year ended 30 November
2002 2001
£ £
UK corporation tax at 30% (2001: 30%)
Current tax on income for the period (265,156) 14,570
Offset against prior year realised gains on investments 171,320 -
Offset against current year's realised gains on investments 106,824 -
Group relief surrendered and paid for - (36,462)
Charged/(credited) to profit and loss account 12,988 (21,892)
Corporation tax payable on realised investment gains at 30% 106,824 170,759
Losses utilised against this year's realised investment gains (106,824) -
Losses utilised against previous year's realised investment gains (171,320) -
Group relief received and paid for - 36,462
(Credited)/charged to reserves (171,320) 207,221
Year ended 30 November Year ended 30 November
Factors affecting current tax charge in the year 2002 2001
£ £
Loss on ordinary activities before tax (1,539,013) (501,301)
Tax on loss on ordinary activities at 30% (461,703) (150,390)
Depreciation in excess of capital allowances 31,085 28,815
Expenses not deductible for tax purposes 67,651 (63,702)
Marginal relief (508) -
Offset of losses in prior year 171,320 -
Increase in losses carried forward - 4,282
Offset of losses in reserves 106,824 -
Other timing differences 17,406 1,959
Effects of consolidation 80,913 157,144
Current tax charged/(credited) to profit and loss account 12,988 (21,892)
As at 30th November 2002 there were unprovided deferred tax asset balances of
£18,286 (2001: asset of £8,945 and liability of £5,264) in relation to
accelerated capital allowances and £34,355 (2001: £7,431) in relation to other
short term timing differences. The deferred tax assets have not been recognised
as they are not expected to crystallise in the foreseeable future and the 2001
liability has not been considered material enough to require recognition.
W. H. IRELAND - PRELIMINARY RESULTS 9/12
Notes to the preliminary statement (continued)
2. Dividends and other appropriations
Year ended Year ended
30 November 30 November
2002 2001
£ £
Equity shares:
Interim dividend paid 71,924 139,599
Final dividend proposed 73,906 143,849
145,830 283,448
3. Earnings per share
Year ended 30 November 2002 Year ended 30 November 2001
Loss for the year used for the basic calculation (1,552,001) (479,409)
Goodwill amortisation 102,942 33,006
Loss for the year used in the 'headline earnings'
calculation under the guidelines issued by the UK
Society of Investment Professionals (1,449,059) (446,403)
Weighted average number of shares used in the basic
calculation 14,321,754 13,897,535
Weighted average number of options outstanding for the
period 453,997 661,732
Weighted average number of shares used in the diluted
calculations 14,775,751 14,559,267
4. Tangible fixed assets
Computers,
Freehold Motor fixtures and
Property vehicles fittings Total
Group £ £ £ £
Cost
At beginning of year - 320,868 1,250,444 1,571,312
Additions 4,079,835 131,669 126,813 4,338,317
Adjustment on revaluation 85,165 - - 85,165
Disposals - (95,637) (85,581) (181,218)
At end of year 4,165,000 356,900 1,291,676 5,813,576
Depreciation
At beginning of year - 102,528 543,115 645,643
Charge for year - 81,080 262,266 343,346
On disposals - (52,786) (85,582) (138,368)
At end of year - 130,822 719,799 850,621
W. H. IRELAND - PRELIMINARY RESULTS 10/12
Notes to the preliminary statement (continued)
Net book value
At 30 November 2002 4,165,000 226,078 571,877 4,962,955
At 30 November 2001 Nil 218,340 707,329 925,669
Assets purchased under finance leases and hire purchase contracts included
in the above:-
Computers,
Freehold Motor fixtures and
Property vehicles fittings Total
Net book value
At 30 November 2002 Nil 51,423 Nil 51,423
At 30 November 2001 Nil 53,275 Nil 53,275
5. Fixed asset investments
Investment in own shares Unquoted investments Quoted investments
Total
£ £ £ £
Group
Cost or valuation
At beginning of year 31,130 75,057 3,083,687 3,189,874
Additions 8,203 - 138,078 146,281
Revaluation adjustment - - (261,877) (261,877)
Diminution in investment value - - (153,539) (153,539)
Disposals (4,626) - (462,384) (467,010)
At end of year 34,707 75,057 2,343,965 2,453,729
In the consolidated financial statements, the interests in the associated
undertakings are accounted for using the equity method. In the company financial
statements the interests in the associated undertakings are accounted for at
cost.
Interest in Interest in
Associated Associated
Subsidiary undertakings undertakings Quoted
undertakings (Quoted) (Unquoted) Investments Total
£ £ £ £ £
Company
Cost or valuation
At beginning of year 1,994,041 - 57,465 - 2,051,506
Additions 9,999 549,701 - 77,000 636,700
Revaluation
Adjustment - (97,024) - 8,039 (88,985)
Disposals - - - (62,538) (62,538)
At end of year 2,004,040 452,677 57,465 22,501 2,536,683
W. H. IRELAND - PRELIMINARY RESULTS 11/12
Notes to the preliminary statement (continued)
Certain quoted investments in the company's balance sheet are currently valued
below cost. This is considered to be temporary reduction and not a permanent
diminution in value and thus the relevant amount has been debited to the
investment revaluation reserve, thus creating a debit balance on that reserve.
The undertakings in which the group's and company's interest at the year end is
more than 20% are as follows
Country of Principal Class and percentage
incorporation activity of shares held
Group Company
Subsidiary undertakings
W H Ireland Limited England and Stockbroking Ordinary shares Ordinary shares
Wales 100% 100%
W H I Leasing Limited England and Leasing Ordinary shares Ordinary shares
Wales 100% 100%
W H Ireland (Financial England and Dormant Ordinary shares Ordinary shares
Services) Limited Wales 100% 100%
Readycount Limited England and Property Ordinary shares Ordinary shares
Wales 100% 100%
Stockholm Investments England and Investment Ordinary shares Ordinary shares
Limited Wales consultancy 100% 100%
W H Ireland (Stockbrokers) England and Dormant Ordinary shares Ordinary shares
Limited Wales 100% 100%
W H Ireland Nominees England and Nominee Ordinary shares
Limited Wales 100% -
W H Ireland Trustees England and Trustee Ordinary shares
Limited Wales 100% -
Fitel Nominees Limited England and Nominee Ordinary shares
Wales 100% -
Associated undertakings -
W H I Securities Pty Limited Australia Stockbroking Ordinary shares Ordinary shares
34.22% 34.22%
Ultimate Finance Group UK Debt Factoring Ordinary shares Ordinary shares
PLC 26.88% 26.88%
Employee benefit trust
2002 2001
£ £
Cost
At beginning of period 31,130 40,286
Additions 8,203 27,324
Transfers to participants (4,626) (36,480)
At end of period 34,707 31,130
Amounts written off
Beginning and end of period - -
Net book value as at 30 November 34,707 31,130
W. H. IRELAND - PRELIMINARY RESULTS 12/12
Notes to the preliminary statement (continued)
The W. H. Ireland Employee Benefit Trust was established in October 1998 for the
purpose of holding and distributing shares in the company for the benefit of the
employees. All costs of the Trust are borne by W. H. Ireland Limited. At 30
November 2002, the trust held 89,963 shares in the company (2001: 67,315),
representing 0.62% of the called up share capital (2001: 0.47%). The maximum
number held at any time during the year was 89,963. The nominal value of shares
purchased in the year was £1,875 and the aggregate consideration paid by the
company was £37,500.
Associated undertakings and joint ventures
On 31st October 2000 a joint venture was set up in Australia by the
incorporation of a company called W.H.I. Securities Pty Limited. W.H. Ireland
Group plc originally owned a 50% interest in this company which was accounted
for as a joint venture. On 12th December 2001 this stake was diluted to 45% by
the issue of 33,333 new shares to a third shareholder, and the stake was further
diluted to 34.22% on 25th November 2002 by the issue of 105,042 shares to a
fourth shareholder. Accordingly this company is now treated as an associate in
these accounts. On 12th June 2002 Ultimate Finance Group plc was admitted to AIM
and started trading as a cash flow finance group from that date. W. H. Ireland
Group plc has a 26.88% interest in the shares of that company which accordingly
has been treated as an associate in these accounts.
The following figures are taken from the audited accounts of W.H.I. Securities
Pty Limited for the year ended 30th November 2002 and from the un-audited
management accounts of Ultimate Finance Group plc for the five months trading
period ended 30th November 2002. Ultimate Finance Group plc has a year end of
30th June.
Total Joint Venture Associates
£ £ £
Cost or share of net assets at beginning of period 49,914 49,914 -
Additions 549,701 - 549,701
Reclassification - (49,914) 49,914
Share of net losses (142,614) - (142,614)
Non trading decrease in net assets written off to profit and loss
account (71,317) - (71,317)
Non trading increase in net assets taken to reserves 15,844 - 15,844
At end of period 401,528 - 401,528
6. Financial Information
The financial information is this press release, which has not been audited,
does not constitute Statutory Accounts within the meaning of Section 240 of the
Companies Act 1985.
The Annual Report and Accounts for the year ended 30 November 2002 will be
delivered to the Registrar of Companies following the company's Annual General
Meeting. Accounts for the year ended 30 November 2001 have been filed with the
Registrar of Companies, and these accounts contained an unqualified audit report
and did not contain any statements under Section 237 (2) or (3) of the Companies
Act 1985.
This information is provided by RNS
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