Final Results

W.H. Ireland Group PLC 21 February 2005 W.H. IRELAND GROUP plc ('W.H. Ireland' or 'the Group') PRELIMINARY RESULTS FOR THE YEAR TO 30 NOVEMBER 2004 The principal activity of W.H. Ireland is the provision of stockbroking, corporate finance, investment management and financial services to both private and institutional clients. It has a national network of offices including Manchester, London, Birmingham and Cardiff. Key Points * Turnover up by 82% to £16.9m (2003: £9.3m) * Pre-tax profit increased to a record £2.6m (2003: £0.2m) * Net assets increased by 40% to £10.1m (2003: £7.2m) * Strong asset base including shares in LSE, Euroclear and property. * Proposed final dividend of 1.50p per share, giving a total of 2.25p for the year (2003: 1.25p) * Special dividend of 2.00p per share - a distribution of the net proceeds of the LSE's special dividend. * Strong progress across our core business areas: - Investment management - funds under management up 39% to £291m - Corporate finance - record year with 25 AiM introductions (2003: 13) - IFA business - making excellent progress - Stockbroking commission up by 72.32% * Continued expansion of London office * Outlook remains encouraging Laurie Beevers, chief executive, commenting, said, 'We are continuing to grow the business and expand the quality, range and depth of the services we offer. This has the effect of broadening our revenue streams and establishing firm foundations from which to grow the business, both geographically and by business area.' Press enquiries: W.H. Ireland Group plc Tel: 020 7448 1000 (today) Laurie Beevers, chief executive Tel: 0161 832 6644 Mobile: 07903 164004 David Youngman, managing director Tel: 0161 832 6644 Mobile: 07900 887142 Richard Lee, director Tel: 0161 832 6644 Mobile: 07831 170298 Biddicks Tel: 020 7448 1000 Zoe Biddick or Katie Tzouliadis Chairman's Statement I am very pleased to report on a record year for the Company. Turnover increased by 82% to a record £16,889,225 whilst pre-tax profit was another record at £2,624,143. We have taken advantage of improved trading conditions to deliver a substantial and sustained recovery. All core areas of our business have made strong progress and we are well positioned to continue growing both organically and by selective acquisitions. In view of this progress, we are proposing to pay a final dividend of 1.5p per share, an increase of 0.75p. During the year, we received an exceptional dividend on our shareholding in the London Stock Exchange plc which has been credited to our profit and loss account, as opposed to any increase in the value of the holding itself which is credited to reserves. We have, therefore, decided to pay a special dividend to shareholders to distribute the net proceeds of this exceptional dividend and this will amount to 2.00p per share, making a total dividend for the year of 4.25p per share. The final and special dividends will be paid on 29 April 2005 to shareholders on the register as at 11 March 2005 and, again, a scrip dividend alternative will be available. Over the last three years we have significantly expanded our corporate finance activities building on an already established niche market position concentrating upon companies trading on AiM. Our drive for expansion has led to a significant increase in the number of clients advised on a retained basis, with some 49 corporate clients retained at the year end. According to AiM statistics recorded by the London Stock Exchange, we were the leading Nominated Adviser and Broker by number of new introductions in the first 9 months of 2004, a splendid achievement. During the year, we advised on 29 transactions, raising a total of £67 million. The team is now functioning as a truly national operation with offices in London, Manchester and Birmingham. Corporate fees accounted for 24% of our turnover during the year and, at the year end, the annual retainer base was over £780,000. We continue to offer our traditional style stockbroking services to private clients, providing both discretionary and advisory services. This business has grown substantially with very strong performances from our spread of offices. Client investment funds under discretionary or advisory management grew to £291 million as at 30 November 2004, compared with £209 million at the previous year end. In London, the team has performed particularly strongly and we are looking to acquire new premises to cater for continued expansion. Our Cardiff team has also developed very successfully during the year. In Birmingham, we were able to attract a team of 15 executives and their business performed in line with budget. Our IFA operations in Manchester and Cardiff have performed well and now employ a total of 13 people. Our objective is to expand this area of activity as and when we can recruit or purchase small teams of highly qualified advisers with profitable client bases. In addition to the increase in value of our shareholding in the London Stock Exchange, our other investments continue to show good progress, in particular our 22.5 per cent. stake in Ultimate Finance Group plc. Our head office building in Manchester is due for a refurbishment which will enable us to increase the rental value of the building. A number of tenants' leases come up for review or renewal in the next 18 months, and we are confident of being able to improve the value of the building which is in a prime location in the centre of Manchester. As anticipated in my statement in last year's report and accounts, Mohammed Marafie, a non-executive Director of the firm for seven years, retired from the board during the year. Since the year end his shareholding has been placed with a number of institutions whom we are pleased to welcome as new shareholders. I would like to extend my very genuine thanks to all our staff and colleagues who due to their hard work, loyalty, teamwork and expertise have all contributed to a very successful year for their and your Company. During the year, the market has regained its confidence and composure substantially and, with property values softening, the medium and long term advantage of equity investment is once more being recognised. The current year has started well. The benefits of our broadly based expansion in services and people are showing through with good levels of activity in all areas of the business. We look forward to the future with confidence. Sir David Trippier RD JP DL Chief Executive's Statement The firm has continued to grow, both organically and through the recruitment of specialist teams. This continued development, coupled with better trading conditions, has produced a record result for the year. Our turnover has grown from £9,260,811 to £16,889,225, and our pre-tax profit from £188,338 to £2,624,143. During the year we changed our accounting policy on the valuation of certain fixed asset investments in association with the adoption of the carried interest scheme which has resulted in a significant increase in the book value of these investments at the year end which, together with our record profits, has seen our net asset value rise to £10,114,056 from £7,254,322. This equates to 64.32p per share compared to 47.70p per share last year. Our discretionary and advisory funds under management have increased during the year from £209 million, at the last year end, to £291 million. All areas of the firm have contributed to this growth and I am pleased to be able to detail below the developments during the year. PRIVATE CLIENT STOCKBROKING Our businesses around the country have continued to grow. In particular, the London office has had an outstanding year. During the year we made the final payment on our acquisition of Stockholm Investments, the discretionary fund management business we bought in October 2001. We continue to act for a wide range of private clients and as a result of its strong performance, our London activities have outgrown our Cannon Street offices. Therefore, we are considering a move to larger offices in the City during the current year. In Birmingham, we have expanded considerably and now occupy two floors of our leased premises in the city centre. We are pleased to welcome formally the team of 15 brokers and support staff who joined us half way through the year. They have already proved a successful and profitable addition to the firm. In our Manchester head office, which also houses our administration function, further appointments have been made, in particular strengthening our back office and compliance capabilities to cater for our expansion. Meanwhile we are continually developing our IT facilities through the installation of the latest technology available in the market to ensure that our clients receive the highest quality of service. We have built a significant presence in Wales. Our two Cardiff based broking offices, one of which has re-located to the Cardiff Bay area, are both performing well. Combined with our four-strong office in Colwyn Bay, North Wales, we now have a total of 14 people in our stockbroking offices, making us one of the larger stockbrokers in the Principality. Our other regional offices continue to perform satisfactorily, although we have decided to close our small office in Tunbridge Wells. CORPORATE BROKING AND INSTITUTIONAL SALES Our Corporate Broking and Institutional Sales departments, located in Manchester and London, have had a successful year and have taken part in a number of primary and secondary placings. In our day to day activities, we also act for a number of institutional fund management groups and hedge funds. Through selective sector specialisation, we now have a particular expertise in mining and exploration, healthcare, and technology companies in the small and mid cap sectors. RESEARCH Our research capability has expanded during the year, both in numbers of personnel and scope of research. We do not set out to be a major research house, as the costs of doing so would be prohibitive for a broker of our size. Furthermore, there is a vast amount of research available from major research houses. However, we do aim to have the in house expertise necessary at a high level to support the other areas of the business, particularly corporate broking and corporate finance. As is required by the compliance rules, our researchers are structurally independent in their reporting and analysis. CORPORATE FINANCE Our Corporate Finance department has had another excellent year. Our decision to focus on AiM has been amply justified by our moving up from third to second position in the UK, measured by the number of AiM flotations for which we have acted as Nominated Adviser. I would like to congratulate our three teams in London, Manchester and Birmingham on their success in achieving such a memorable outcome for the year. We have a good pipeline of future deals in hand. FINANCIAL SERVICES WH Ireland Financial Services Ltd, our IFA arm, continued to perform well and expand with further appointments of advisers at Ingram Phillips in Cardiff and Manchester. In this subsidiary we remain focused on recruiting only high calibre advisers, capable of transacting substantial business but avoiding the pitfalls of acquiring high employee-low return business. INVESTMENTS AND PROPERTY We retain a substantial holding in the London Stock Exchange, which has increased in value significantly during the year and post the balance sheet date. We also have a holding in Euroclear which is shown in the accounts at a cost of £75,052 and we estimate that its current value is significantly higher. Our investment in Ultimate Finance, the asset finance business quoted on AiM, has shown solid improvement in its level of business and we are very happy with its progress. The team there are to be congratulated on their success in a competitive market place. Our head office in Manchester, whose freehold we own, is located in the prime central area of the city. We have applied for planning permission for alterations to the building which we believe will enable us to enhance its appearance and facilities, and so increase the rents payable significantly as rent reviews occur in the next two years. STAFF I would like to add my heartfelt thanks to those of the Chairman to all my colleagues who have played their part in achieving a successful outcome for the year. OUTLOOK We are continuing to grow the business and expand the quality, range and depth of the services we offer. This has the effect of broadening our revenue streams and establishing firm foundations from which to grow the business, both geographically and by business area. The new year has started well with a good pipeline of corporate activity and, subject to favourable market conditions, we expect a successful outcome for the year. We continue to examine further areas of growth whereby, organically or by acquisition, we can add value and build on the success achieved to date. Laurie Beevers Chief Executive W.H. Ireland Group plc Consolidated profit and loss account for the year ended 30 November 2004 Year ended Year ended 30 November 30 November 2004 2003 Note £ £ ------------------------------------------------------------------------------ Group turnover 16,889,225 9,260,811 Administrative expenses (14,951,179) (8,759,317) ------------------------------------------------------------------------------ Group operating profit 1,938,046 501,494 Share of operating profit/(loss) before tax in associates 2,919 (130,787) ------------------------------------------------------------------------------ 1,940,965 370,707 Profit on disposal of fixed asset investments 1 & 2 359,057 - Income from fixed asset investments (including exceptional item of £330,000) 3 368,704 - ------------------------------------------------------------------------------ 2,668,726 370,707 Other interest receivable and similar income 354,367 151,436 Amounts written off investments 6,730 (33,815) Interest payable and similar charges (405,680) (299,990) ------------------------------------------------------------------------------ Profit on ordinary activities before taxation 2,624,143 188,338 Tax on profit on ordinary activities (763,273) (131,895) ------------------------------------------------------------------------------ Profit on ordinary activities after taxation 1,860,870 56,443 Dividends on equity shares 4 (668,095) (192,829) ------------------------------------------------------------------------------ Retained profit/(loss) for the year for Group 1,192,775 (136,386) ------------------------------------------------------------------------------ Earnings per share (in accordance with FRS 14) Basic 5 11.88p 0.38p Diluted 5 11.18p 0.38p ------------------------------------------------------------------------------ Headline earnings per share (in accordance with guidelines issued by UK Society of Investment Professionals) Basic 5 10.72p 1.12p Diluted 5 10.09p 1.10p ------------------------------------------------------------------------------ All turnover and results in the current and previous year relate to continuing operations. W.H. Ireland Group plc Statement of total recognised gains and losses for the year ended 30 November 2004 Year ended Year ended 30 November 30 November 2004 2003 £ £ ------------------------------------------------------------------------------ Profit/(Loss) for the financial year 1,192,775 (136,386) Unrealised surplus on revaluation of fixed asset investments (Note 1) 1,722,124 459,686 Unrealised gain on revaluation of properties - 505,000 Taxation on realised surplus on revaluation of fixed assets - (90,873) Non trading increase in net assets of associate arising from external subscriptions 43,081 - ------------------------------------------------------------------------------ Total recognised gain for the year 2,957,980 737,427 ------------------------------------------------------------------------------ Note of historical cost profits and losses for the year ended 30 November 2004 Year ended Year ended 30 November 30 November 2004 2003 £ £ ------------------------------------------------------------------------------ Reported profit on ordinary activities before tax 2,624,143 188,338 Realisation of fixed asset investment revaluation gains 1,915 366,288 ------------------------------------------------------------------------------ Historical cost profit on ordinary activities before taxation 2,626,058 554,626 ------------------------------------------------------------------------------ Historical cost profit retained for the year after the provisions for taxation and dividends 1,194,690 139,029 ------------------------------------------------------------------------------ W.H. Ireland Group plc Consolidated Balance Sheet for the year ended 30 November 2004 2004 2004 2003 2003 Note £ £ £ £ ----------------------------------------------------------------------------------------- Fixed assets Intangible assets 3,052,104 3,229,325 Tangible assets 5,173,591 5,205,695 Investments 6 6,060,443 2,547,086 Investments in associates 484,512 268,879 ----------------------------------------------------------------------------------------- 14,770,650 11,250,985 Current assets Debtors 122,661,229 113,831,227 Investments 15,191 11,209 Cash at bank and in hand 10,883,582 5,083,127 ----------------------------------------------------------------------------------------- 133,560,002 118,925,563 Creditors: amounts falling due within one year 7 (131,789,786) (117,646,103) ----------------------------------------------------------------------------------------- Net current assets 1,770,216 1,279,460 ----------------------------------------------------------------------------------------- Total assets less current liabilities 16,540,866 12,530,445 Creditors: amounts falling due after more than one year 8 (6,162,692) (5,266,628) Provisions for liabilities and charges (264,118) (9,495) ----------------------------------------------------------------------------------------- Net assets 10,114,056 7,254,322 ----------------------------------------------------------------------------------------- Capital and reserves Called up share capital 786,161 765,187 Shares to be issued - 283,333 Share premium account 1,239,687 1,566,085 Capital redemption reserve 226,333 226,333 Merger reserve 490,511 - Revaluation reserve 4,641,072 2,920,863 Other reserves 753,704 753,704 Profit and loss account 1,976,588 738,817 ----------------------------------------------------------------------------------------- Equity shareholders' funds 10,114,056 7,254,322 ----------------------------------------------------------------------------------------- W.H. Ireland Group plc Consolidated cash flow statement for the year ended 30 November 2004 Year ended Year ended 30 November 30 November 2004 2003 £ £ ------------------------------------------------------------------------------ Net cash inflow from operating activities 5,995,730 2,568,333 Returns on investments and servicing of finance 370,222 (148,554) Taxation (116,161) 114,581 Capital expenditure and financial investment 426,385 294,989 Acquisitions and disposals (222,471) (515,128) Equity dividends paid (211,104) (78,666) ------------------------------------------------------------------------------ Cash inflow before financing 6,202,601 2,235,555 Financing (402,849) (157,442) ------------------------------------------------------------------------------ Increase in cash in the period 5,799,752 2,078,113 ------------------------------------------------------------------------------ W.H. Ireland Group plc Reconciliation of Movement in equity shareholders' funds for the year ended 30 November 2004 Group Group 2004 2003 £ £ ------------------------------------------------------------------------------ Profit for the financial year before dividends 1,860,870 56,443 Dividends (668,095) (192,829) ------------------------------------------------------------------------------ Profit/(Loss) for the financial year 1,192,775 (136,386) Surplus on investment revaluation reserve 1,722,124 459,686 Surplus on property revaluation reserve - 505,000 Tax in respect of realised surplus on revaluation - (90,873) Non trading increase in net assets of associates 43,081 - Shares issued in payment of scrip dividends in the year 24,244 70,376 Shares issued on acquisition of trades or businesses - 100,000 New shares issued 19,176 - Shares issued in payment of deferred consideration 141,667 141,667 Transfer from shares to be issued (141,667) (141,667) Payment in settlement of shares to be issued (141,666) - 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 ------------------------------------------------------------------------------ Increase in shareholders funds during the year 2,859,734 890,540 Opening equity shareholders' funds 7,254,322 6,363,782 ------------------------------------------------------------------------------ Closing equity shareholders' funds 10,114,056 7,254,322 ------------------------------------------------------------------------------ W.H. Ireland Group plc Notes to the preliminary statement for the year ended 30 November 2004 1. Accounting policies The following accounting policies have been applied consistently in dealing with items that are considered material in relation to the Group's financial statements. Basis of preparation The financial statements have been prepared in accordance with applicable accounting standards subject to the true and fair view overrides detailed below and under the historical cost accounting rules, except as modified by the revaluation of certain assets. The Group has adopted UITF38 regarding shares held in the Employee Benefit Trust although there is no impact on the financial statements as no shares were held in the Trust at the beginning and the end of the year. Basis of accounting for the carried interest scheme During the year the company adopted a carried interest bonus scheme under which bonuses may be payable to certain corporate finance personnel when certain warrants or shares acquired as part of a corporate finance transaction are ultimately sold at a profit. The relevant warrants and shares are included within fixed asset investments and are revalued at the year end reporting date and a bonus is provided on 50% of the expected profit should the warrants or shares be sold at that revalued amount, being the maximum amount of bonus that may be paid out. The amount of the bonus provision relating to warrants where the expiry date is less than one year are shown in creditors under one year, and the balance is shown in creditors over one year. At the 30 November 2004 the relevant warrants had a revaluation gain of £2,763,582 and the shares a revaluation gain of £803,441 and accordingly bonuses of £1,381,791 and £401,720 respectively would need to be provided on those gains. Under the specific requirements of the Companies Acts and relevant Financial Reporting Statements the full amount of the revaluation gain would be taken through the statement of total recognised gains and losses to the revaluation reserve in the balance sheet whilst the provision for the bonuses would be taken to the profit and loss account. The Directors do not consider that adopting this accounting treatment truly matches the bonus expense against the relevant gain and thus does not show a true and fair view of the reasoning and substance behind the relevant accounting entries. In order to show a true and fair view of the carried interest scheme the Directors have departed from the prescribed accounting treatment and have credited a sufficient amount of the gain to the profit and loss account to match the relevant bonus provision, as a credit within administrative expenses where the related bonus is charged. The effect of this is to avoid a reduction in profits of £1,744,041 should the bonus alone be reported in the profit and loss account. During the current year certain warrants within the carried interest scheme were exercised and the shares acquired therefrom were sold for a realised profit of £718,123 and a bonus of £359,066 was paid out from that profit. Under the specific requirements of the Companies Acts and relevant Financial Reporting Statements the profit on sale of the shares should be disclosed below the operating profit line under the heading profit on disposal of fixed assets and the bonus should be included in staff costs above the operating profit line. The Directors do not believe that this accounting treatment properly reflects the matching of the bonus and the specific gain it is paid out from, nor with the equivalent revaluations within operating profit (see above). Accordingly the Directors have departed from these accounting requirements and have taken a sufficient amount of the gain as matches the bonus paid and have reported this above the operating profit line as a credit to administration expenses. This treatment has no effect on the reported profits before tax for the year, but it moves a realised gain of £359,066 from below to above the operating profit line. 2. Profit on disposal of fixed asset investments Year ended Year ended 30 November 30 November 2004 2003 £ £ ------------------------------------------------------------------------------ Gross Profit on disposal of fixed asset investments 718,123 - Amount taken to administration expenses to offset against the bonus payment thereon, (see note 1) (359,066) - ------------------------------------------------------------------------------ Net profit on disposal of fixed asset investments 359,057 - ------------------------------------------------------------------------------ 3. Income from fixed asset investments Year ended Year ended 30 November 30 November 2004 2003 £ £ ------------------------------------------------------------------------------ Quoted investments 359,151 - Unquoted investments 9,553 - ------------------------------------------------------------------------------ 368,704 - ------------------------------------------------------------------------------ Income from quoted investments in 2004 includes an exceptional item of a special dividend of £330,000 received on our holding of shares in the London Stock Exchange. 4. Dividends and other appropriations Year ended Year ended 30 November 30 November 2004 2003 £ £ ------------------------------------------------------------------------------ Equity shares: Interim dividend paid at 0.75p per share (2003: 0.5p) 117,783 75,156 Final dividend proposed at 1.5p per share (2003: 0.75p) 235,848 117,673 Special final dividend proposed at 2.0p per share (2003:nil) 314,464 - ------------------------------------------------------------------------------ 668,095 192,829 ------------------------------------------------------------------------------ The final proposed dividend is provided on the number of shares currently in issue. 5. Earnings per share Year ended Year ended 30 November 30 November 2004 2003 £ £ ------------------------------------------------------------------------------ Profit for the year used for the basic calculation 1,860,870 56,443 Profit on sale of fixed asset investments (359,057) - Goodwill amortisation 177,221 108,730 ------------------------------------------------------------------------------ Profit for the year used in the 'headline earnings' calculation under the guidelines issued by the UK Society of Investment Professionals 1,679,034 165,173 ------------------------------------------------------------------------------ Weighted average number of shares used in the basic calculation 15,665,720 14,796,324 Weighted average number of options outstanding for the period 974,352 154,930 ------------------------------------------------------------------------------ Weighted average number of shares used in the diluted calculations 16,640,072 14,951,254 ------------------------------------------------------------------------------ The earnings per share calculated on a headline earnings basis has been calculated in addition to the earnings per share as required by FRS14 'Earnings per Share' and has been produced to give shareholders a cleaner understanding of the performance of the Group. 6. Fixed asset investments Unquoted Quoted investments Warrants investments Total Group (excluding investments £ £ £ £ in associates) ------------------------------------------------------------------------------ Cost or valuation At beginning of year 110,872 - 2,436,214 2,547,086 Additions 32 513,526 63,877 577,435 Reclassification of previously unquoted to quoted investments (25,085) - 25,085 - Revaluation adjustment - 2,763,582 702,583 3,466,165 Gain on fixed asset investments previously written down - - 132 132 Write back of prior year diminution in value - - 6,730 6,730 Disposals - (513,526) (23,579) (537,105) ------------------------------------------------------------------------------ At end of year 85,819 2,763,582 3,211,042 6,060,443 ------------------------------------------------------------------------------ This historical cost value of the above quoted investments at the year end was £287,743 (2003 : £158,740). If these shares were sold at their market value a potential tax charge of £874,190 (2003 : £660,336) would arise. 7. Creditors: amounts falling due within one year Group Group 2004 2003 £ £ ----------------------------------------------------------------------------- Bank overdraft 703 - Bank loans 280,935 277,258 Floating rate loan notes 2004/05 - 141,667 Trade creditors 127,198,502 115,340,604 UK corporation tax payable 910,576 292,782 Taxation and social security 461,954 156,848 Obligation under finance leases and hire purchase contracts 21,543 18,917 Deferred purchase consideration 161,560 493,667 Other creditors 340,028 202,338 Accruals and deferred income 1,863,673 604,349 Dividend proposed 550,312 117,673 ----------------------------------------------------------------------------- 131,789,786 117,646,103 ----------------------------------------------------------------------------- Accruals and deferred income includes £299,284 relating to bonuses provided under the carried interest bonus scheme. Details of the accounting treatment thereof is given in note 1. The floating rate loan notes 2004/05 were redeemed on 1 April 2004 8. Creditors: amounts falling due after more than one year Group Group 2004 2003 £ £ ------------------------------------------------------------------------------ Bank loans 4,238,794 4,519,315 Deferred purchase consideration 400,000 699,666 Obligations under finance leases and hire purchase contracts 10,772 16,912 Accruals and deferred income 1,483,927 - Deferred rent creditor 29,199 30,735 ------------------------------------------------------------------------------ 6,162,692 5,266,628 ------------------------------------------------------------------------------ Accruals and deferred income includes £1,483,927 relating to bonuses provided under the carried interest scheme. Details of the accounting treatment thereof is given in note 1. This information is provided by RNS The company news service from the London Stock Exchange

Companies

W H Ireland Group (WHI)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today