Final Results

W.H. Ireland Group PLC 15 March 2004 15th March 2004 W H IRELAND GROUP PLC PRELIMINARY RESULTS FOR THE YEAR TO 30 NOVEMBER 2003 W H Ireland Group provides private client and institutional stockbroking, independent financial services and corporate finance services. Based in Manchester, it has a network of offices in the UK, including London, Birmingham and Cardiff. KEY POINTS • Turnover increased by 43.8% to £9.26 million (2002: £6.44 million) • Operating profit of £0.50 million (2002: loss £1.06 million) • Pretax profit of £0.19 million (2002: loss £1.54 million) • Increased final dividend of 0.75 pence per share proposed (2002: 0.50 pence) making total dividend for year of 1.25 pence (2002: 1.0 pence) • Excellent year in Corporate Finance - third most active Nominated Adviser in 2003 with 10 flotations • Expertise in mining sector enhanced with increased research coverage • Successful expansion of our private client stockbroking operation • Current prospects very encouraging, with the improved business trend continuing through the first quarter of the current financial year Laurie Beevers, Chief Executive of W H Ireland, commented: 'I am pleased to report a significant turnaround in our performance for the year. Our improvement in sales was sustained throughout the year, with stockbroking income picking up significantly in the second half of the year. That growth in revenue is continuing and the business has traded above budget for the first quarter of the new financial year'. Press enquiries: W H Ireland Group plc Tel: 0161 832 6644 Laurie Beevers, Chief Executive David Youngman, Managing Director CHAIRMAN'S STATEMENT I am delighted to report a return to profitability in the year to 30 November 2003, with trading in the second half building strongly on the first half. Reflecting our confidence, we are proposing an increased final dividend of 0.75p, making a total dividend of 1.25p for the full year. When we joined the Alternative Investment Market of the London Stock Exchange plc ('AIM') in July 2000, we had a number of medium term strategic goals. These were to build up a significant corporate finance operation; to increase our corporate broking capability; to open more offices around the country; to strengthen our existing stockbroking offices; and, to substantially increase our funds under management. I am very pleased to report that, despite the last three years having encompassed one of the most extreme bear markets the stock market has experienced, we have achieved these goals and more. Last year we were one of the top three brokers nationally for the number of AIM flotations in which we acted as Nominated Adviser ('Nomad') - a remarkable achievement for a regionally based broker. We have built up our branch network, including the acquisition by mutual agreement of a competitor's branch in Cardiff, making us one of the largest brokers in the Principality. Our activities in Wales were further strengthened in November 2003, by the acquisition of a highly respected IFA business, Ingram Phillips. Our London office has also had an excellent year. In a difficult period for stockmarket investment, our funds under management have grown from £152 million at the beginning of this financial year to £209 million at the year end, an increase of 37%. We continue to pursue all our key objectives both by a combination of organic growth and acquisition. Mohammed Marafie, who has been a director for seven years has decided to retire from the Board. Mohammed has always been a fully committed and supportive member of the Board, particularly in its formative years prior to the IPO, and his direction and assistance in the listing process was enormously valuable. I would like to thank him for all his advice and support during that time. We enter a period of improving stockmarket and economic activity confident that we have used the last few years wisely to build up our expertise in a number of areas and lay the foundation for future growth. I would like to thank all our colleagues for their hard work and tenacity which is now bearing fruit in so many ways. The current year has started well and, subject to a continuation of market conditions, we look forward to a further year of growth and measured expansion. Sir David Trippier Chairman CHIEF EXECUTIVE'S REPORT I am pleased to report a significant turnaround in our performance for the year, with turnover increasing by 43.8% to £9.26 million (2002: £6.44 million) producing operating profits of £0.50 million, compared to a loss last year of £1.06 million. Our improvement in sales was sustained throughout the year, with stockbroking income picking up significantly in the second half of the year. That growth in revenue is continuing and the business has traded above budget for the first quarter of the new financial year. I am therefore very pleased that our policy of maintaining and indeed growing our revenue capability during the bear market has lead to us emerging with a significantly broader base from which to develop further. Private Client Stockbroking Historically, private client stockbroking has been the core of our business and we now trade from ten offices spread across the country. Our largest broking office is London which had a good year. A large part of the London office's business is now discretionary and advisory fund management. We have also expanded our institutional sales and dealing capability and now act for a number of hedge funds. During the year the team at Stockholm Investments, the advisory and discretionary portfolio management business we acquired in October 2001, achieved their initial earn-out target, and the first deferred consideration payment of £283,333 was made in December 2002, half in loan notes and half in shares. Subsequent to the year end the second earn-out target was reached and the second deferred consideration payment of £283,333 was made, split equally between cash and shares. In the Manchester office trading has also improved and we have continued to expand our funds under management. In August, we acquired the Cardiff office of one of our larger competitors and we now have one of the largest stockbroking operations in Wales, with offices in Cardiff and Colwyn Bay. I would like to welcome on board our new colleagues and I look forward to a long and successful relationship. Our other offices in Birmingham, East Lancashire, Preston, Lancaster, Malvern and Tunbridge Wells are now showing their worth, and together with Cardiff and Colwyn Bay, account for nearly 20% of our stockbroking income. Corporate Broking and Institutional Sales We have considerably expanded this area of our activities. While maintaining our traditional coverage of small to mid cap stocks, we have enhanced our coverage of mining stocks. This has been achieved by taking on a further three analysts, one in London specialising in mining and two in Manchester specialising in technology, supported by an additional corporate broker in London. Corporate Finance This has been a terrific year for our corporate finance department and we now have teams in London, Manchester and Birmingham transacting local, national and international business. Complementing our Nominated Adviser status we have been granted authority by the United Kingdom Listing Authority to act in all areas of corporate finance work for Fully Listed companies. As well as the successful flotation in the first half of the year of Highland Gold, the second largest company on AIM following its admission, we have acted as nominated adviser in nine other flotations. This made us the third most active Nomad on AIM in 2003. We also remain very active in secondary placings. Our reputation in this area continues to grow and our teams in London, Birmingham and Manchester are trading strongly. Financial Services At the beginning of the year we transferred our IFA business activities, which we regard as complementary to our stockbroking business, to W H Ireland (Financial Services) Limited. In November, we acquired the business of the Ingram Phillips Partnership, an IFA based in Cardiff, in a share and cash transaction. As well as strengthening our presence in South Wales, the acquisition will support our existing operation in Manchester. We look forward to working with Mary and Roy Phillips, the principals of the business. In the Manchester office we have added to our personnel and are pleased to welcome Nigel Liptrot and his team who specialise in advising high net worth clients. The current year has started well and we are looking to expand this company further and for it to make an increasing contribution to group profits. Group Developments We have established a new disaster recovery site at our Preston office, enabling us to duplicate our back office functions, currently operated out of Manchester, in the event of an accident or emergency. As we build up our expertise it is vital we retain the key personnel who contribute to the firm's development. In order to incentivise staff we have introduced a number of incentive schemes to help to match performance with reward. Our marketing activities have increased during the year as we attempt to bring greater recognition of the services we offer to a wider audience. Emphasis has principally been directed to Manchester but is now being broadened. We continue to explore ways of further strengthening our balance sheet; one such example being ownership of our head office building in the centre of Manchester. A recent revaluation, included in the asset figures in the accounts, indicates that its value has increased by over £500,000 since it was acquired in February 2002. Staff My report would not be complete without thanking all of my colleagues for the hard work they have put in during what has been, to say the least, an exciting twelve months. We look forward with a degree of confidence to building on this year's growth. W.Laurie Beevers Chief Executive Consolidated profit and loss account for the year ended 30 November 2003 Note Year ended Year ended 30 November 30 November 2003 2002 £ £ Group Turnover Existing operations 9,061,635 6,438,368 Acquisitions 199,176 - ------------ ------------ 9,260,811 6,438,368 Administrative expenses (8,759,317) (7,497,392) ------------ ------------ Group operating profit/ (loss) Existing operations 427,400 (1,059,024) Acquistions 74,094 - --------- ----------- 501,494 (1,059,024) Share of operating loss (130,787) (142,614) in associates Share of non trading decrease in net assets - (71,317) of associates ------------ ------------ 370,707 (1,272,955) Other interest receivable and similar 151,436 141,063 income Amounts written off (33,815) (153,539) Investments Interest payable and (299,990) (253,582) similar charges ------------ ------------ Profit/(loss) on ordinary activities 188,338 (1,539,013) before taxation Tax on profit/(loss) on 1 (131,895) (12,988) ordinary activities ------------ ------------ Profit/(loss) on ordinary activities 56,443 (1,552,001) after taxation Dividends on equity 2 (192,829) (145,830) shares ------------ ------------ Retained loss for the (136,386) (1,697,831) year for group ============ ============= Earnings per share (in accordance with FRS 14) Basic 3 0.38p (10.84) p Diluted 3 0.38p (10.84) p Headline earnings per share (in accordance with guidelines issued by UK Society of Investment Professionals) Basic 3 1.12p (10.12) p Diluted 3 1.10p (10.12) p Statement of total recognised gains and losses for the year ended 30 November 2003 Year ended Year ended 30 November 30 November 2003 2002 £ £ Profit/(loss) for the financial year before 56,443 (1,552,001) dividends Dividends (192,829) (145,830) ----------- ----------- Profit/(loss) for the financial year (136,386) (1,697,831) Unrealised surplus/(deficit) on revaluation of fixed asset investments 459,686 (261,877) Unrealised surplus on revaluation of properties 505,000 85,165 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 (90,873) - Non trading increase in net assets of associates - 15,844 ----------- ----------- Total recognised gain/(loss) for the year 737,427 (1,687,379) =========== =========== Note of historical cost profits and losses for the year ended 30 November 2003 Year ended Year ended 30 November 30 November 2003 2002 £ £ Reported profit/(loss) on ordinary activities before tax 188,338 (1,539,013) Realisation of fixed asset investment revaluation gains 366,288 377,950 ----------- ------------ Historical cost profit/(loss) on ordinary activities before taxation 554,626 (1,161,063) =========== ============ Historical cost profit/(loss) retained for the year after the provision for taxation and dividends 139,029 (1,148,561) =========== ============= Consolidated balance sheet at 30 November 2003 Note 2003 2003 2002 2002 £ £ £ £ Fixed assets Intangible assets 3,229,325 1,852,672 Tangible assets 5,205,695 4,962,955 Investments 4 2,547,086 2,453,729 Investments in associates and 268,879 401,528 joint ventures ------------ ----------- 11,250,985 9,670,884 Current assets Debtors 113,831,227 28,793,806 Investments 11,209 17,563 Cash at bank and 5,083,127 3,005,014 in hand ------------- ------------ 118,925,563 31,816,383 Creditors: amounts falling due within (117,646,103) (30,008,821) one year ------------- ------------ Net current assets 1,279,460 1,807,562 ------------ ------------ Total assets less 12,530,445 11,478,446 current liabilities Creditors: amounts falling due after (5,266,628) (5,114,664) more than one year Provision for (9,495) - liabilities and charges ------------ ------------ Net assets 7,254,322 6,363,782 ============ ============ Capital and reserves Called up share 765,187 945,578 capital Shares to be 283,333 425,000 issued Share premium 1,566,085 1,299,984 account Capital redemption 226,333 - reserve Revaluation 2,920,863 2,322,465 reserve Other reserves 753,704 544,634 Profit and loss 738,817 826,121 account ------------ ------------ Equity 7,254,322 6,363,782 shareholders' funds ============ ============ Consolidated cash flow statement for the year ended 30 November 2003 Year ended Year ended 30 November 30 November 2003 2002 £ £ Net cash inflow/(outflow) from operating activities 2,568,333 (1,885,264) Returns on investments and servicing of finance (148,554) (107,180) Taxation 114,581 (168,909) Capital expenditure and financial investment 294,989 (3,967,888) Acquisitions and disposals (515,128) (549,701) ------------ ----------- Cash inflow/(outflow) before management of liquid resources and financing 2,314,221 (6,678,942) Equity dividends paid (78,666) (215,773) Financing (157,442) 3,937,239 ------------ ----------- Increase/(decrease) in cash in the period 2,078,113 (2,957,476) ------------ ----------- Reconciliation of movements in equity shareholders' funds for the year ended 30 November 2003 Group Group 2003 2002 £ £ Profit/(loss) for the financial year before dividends 56,443 (1,552,001) Dividends (192,829) (145,830) ----------- ------------ Loss for the financial year (136,386) (1,697,831) Surplus/(deficit) on Investment revaluation reserve 459,686 (261,877) Surplus on Property revaluation reserve 505,000 85,165 Tax in respect of current year realised surplus on revaluation (90,873) - Tax refund in respect of previous year's realised surplus on revaluation reserve - 171,320 Non trading increase in net assets of associates - 15,844 Shares issued in payment of scrip dividends 70,376 - Shares issued on acquisition of business 100,000 - Shares issued in payment of deferred consideration 141,667 - Transfer from shares to be issued (141,667) - Redemption of deferred ordinary shares (226,333) - Transfer to Capital redemption reserve 226,333 - Transfer from profit and loss account (226,333) - Consolidation adjustment on redemption of deferred ordinary shares 209,070 - ---------- ------------ 890,540 (1,687,379) Opening equity shareholders' funds 6,363,782 8,051,161 ---------- ------------ Closing equity shareholders' funds 7,254,322 6,363,782 ========== ============ Notes 1. Taxation Year ended 30 Year ended 30 November November 2003 2002 £ £ Current tax on income for the period at 30% (2002: 30%) 200,778 (265,156) Offset against prior year realised gains on investments - 171,320 Offset against current year's realised gains on investments 1,330 106,824 Adjustment in respect of prior years (22,113) - ---------- ---------- Total current tax 179,995 12,988 Deferred tax - origination and reversal of (48,100) - timing differences ---------- ---------- Tax on profit / (loss) on 131,895 12,988 ordinary activities =========== ========== Corporation tax payable on realised investment gains at 30% 92,203 106,824 Losses utilised against this year's realised investment gains (1,330) (106,824) Losses utilised against previous year's realised investment gains - (171,320) ---------- ---------- Charged/(credited) to reserves 90,873 (171,320) =========== ========== Factors affecting current tax charge Year ended 30 Year ended 30 in the year November November 2003 2002 £ £ Profit/(loss) on ordinary activities before tax 188,338 (1,539,013) =========== ============ Tax on loss on ordinary 56,501 (461,703) activities at 30% Depreciation in excess of 40,949 31,085 capital allowances Expenses not deductible for 66,240 67,651 tax purposes Marginal relief - (508) Offset of losses in prior year (18,453) 171,320 Offset of losses in reserves 1,330 106,824 Other timing differences (431) 17,406 Effects of consolidation 55,972 80,913 Adjustments in respect of prior years (22,113) - ----------- ------------ Current tax charged in the year 179,995 12,988 =========== ============ As at 30 November 2003 there were unprovided deferred tax asset balances of £nil (2002: £18,286) in relation to accelerated capital allowances and £nil (2002: £34,355) in relation to other short term timing differences. 2. Dividends and other appropriations Year ended Year ended 30 November 30 November 2003 2002 £ £ Equity shares: Interim dividend paid at 0.50p per share 75,156 71,924 Final dividend proposed at 0.75p per share 117,673 73,906 --------- --------- 192,829 145,830 ========= ========= 3. Earnings per share Year ended Year ended 30 November 30 November 2003 2002 Profit/(loss) for the year used for the basic calculation 56,443 (1,552,001) Goodwill amortisation 108,730 102,942 ----------- ------------ Profit/(loss) for the year used in the 'headline earnings' calculation under the guidelines issued by the UK Society of Investment Professionals 165,173 (1,449,059) =========== =========== Weighted average number of shares used in the basic calculation 14,796,324 14,321,754 Weighted average number of options outstanding for the period 154,930 453,997 ----------- ----------- Weighted average number of shares used in the diluted calculations 14,951,254 14,775,751 =========== =========== 4. Fixed asset investments Investment in Unquoted Quoted Total own shares investments investments £ £ £ £ Group Cost or valuation At beginning of year 34,707 75,057 2,343,965 2,453,729 Additions 911 25,085 133,335 159,331 Reclassification of associate undertaking - 10,730 - 10,730 Revaluation adjustment - - 459,686 459,686 Gain on fixed asset investments previously written down - - 4,933 4,933 Diminution in investment value - - (33,815) (33,815) Disposals (35,618) - (471,890) (507,508) -------- --------- ----------- ---------- At end of - 110,872 2,436,214 2,547,086 year -------- --------- ----------- ---------- The potential tax charge arsing if the above quoted investments were sold at their market value is £660,336 (2002: £627,297) 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. Country of Principal Class and incorporation activity percentage of shares held Group Company Subsidiary undertakings W H Ireland England and Stockbroking Ordinary shares Ordinary shares Limited Wales 100% 100% W H I Leasing England and Leasing Ordinary shares Ordinary shares Limited Wales 100% 100% W H Ireland England and Financial Ordinary shares Ordinary shares (Financial Wales services 100% 100% Services) Limited Readycount England and Property Ordinary shares Ordinary shares Limited Wales 100% 100% Stockholm England and Investment Ordinary shares Ordinary shares Investments Wales consultancy 100% 100% Limited W H Ireland England and Dormant Ordinary shares Ordinary shares (Stockbrokers) Wales 100% 100% Limited W H Ireland England and Nominee Ordinary shares - Nominees Limited Wales 100% W H Ireland England and Trustee Ordinary shares - Trustees Limited Wales 100% Fitel Nominees England and Nominee Ordinary shares - Limited Wales 100% Associated undertakings - Ultimate Finance England and Debt Ordinary shares Ordinary shares Group PLC Wales Factoring 27.48% 27.48% Associated undertakings and joint ventures On 31 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 12 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 25 November 2002 by the issue of 105,042 shares to a fourth shareholder. On 30 May 2003 the holding was further diluted to below 20% when W H Ireland Group plc declined to participate in a rights issue which raised AUS$ 110,000. Accordingly the company is now included in fixed asset investments in these accounts. On 12 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 27.48% interest in the shares of that company which accordingly has been treated as an associate in these accounts. 5. 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 the Companies Act 1985. The Annual Report and Accounts for the year ended 30 November 2003 will be delivered to the Registrar of Companies following the company's Annual General Meeting. Accounts for the year ended 30 November 2002 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 The company news service from the London Stock Exchange

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