Interim Results

W.H. Ireland Group PLC 19 July 2004 WH IRELAND GROUP PLC INTERIM RESULTS FOR THE 6 MONTH PERIOD TO 31ST MAY 2004 KEY POINTS • Turnover doubled for the period rising from £4 million to £8.1 million • Strong profit growth with £1.032 million profit before taxation for the period (2003: loss £160,000) • Earnings per share rising to 4.41p (2003: loss 1.09p) • Net assets of £8.3 million (equivalent to 53.12p per ordinary share) • Interim dividend raised to 0.75p (2003: 0.5p) with a scrip dividend alternative • The Corporate Finance Department has advised on 12 flotations in the period • Financial Services has made a substantial contribution to profit • Successful expansion in Cardiff and Birmingham • Strong growth in the London office Commenting, WH Ireland's Chairman Sir David Trippier, said: 'The second half will be influenced by the level of market activity. However, we anticipate a continued, controlled and balanced expansion of the group.' Press enquiries: W.H. Ireland Group plc 0161 832 6644 Laurie Beevers, Chief Executive CHAIRMAN'S STATEMENT I am very pleased to announce a continuation of the positive trends reported in the Annual Report & Accounts, reflecting our substantial progress and development during the period under review. Pre-tax profits of £1.032 million represent a significant improvement on the loss of £0.160 million for the same period of the previous year. Turnover for the period was almost double that of the comparable period. In recognition of this performance, the Board has decided to pay a dividend of 0.75p on 29 October 2004 to shareholders on the register at 10 September 2004. We will again be offering a scrip dividend alternative. Market conditions improved during the period under review and our increased client adviser base, which had been built up over the past two years, was able to capitalise upon them. In particular, our expansion in Cardiff, at both our stockbroking offices and our recently acquired IFA, Ingram Phillips, has borne fruit with a very good performance. Our London office has also shown very strong growth during the period, with an expansion of business on a number of fronts. Our corporate finance department has been extremely active advising on 12 AIM flotations during the period under review. We now act as Nominated Adviser or Broker for 39 corporate clients, 32 of which have been admitted to the Alternative Investment Market of the London Stock Exchange. The corporate finance teams in all three centres, London, Manchester and Birmingham, have contributed to this performance which has seen corporate fees up by nearly 50% over the corresponding period for last year. Our Birmingham office has been considerably expanded with the addition of 15 personnel from a local competitor and the benefits from the acquisition are already being seen. In addition to the acquisition of Ingram Phillips, our financial services business also benefited from additional personnel and made a substantial contribution to profits. The number of administration staff has increased during the period reversing recent trends, in order to maintain our high service levels and cope with the increased levels of business throughout the firm. We continue to upgrade and develop our computer systems throughout the Group. Following the announcement by the London Stock Exchange ('LSE'), we anticipate receiving a substantial special dividend on our holding of 600,000 ordinary shares in the LSE in the second half of the year. Market conditions since the half year end have been less buoyant in our core stockbroking division but we continue to make good progress on a number of fronts. A further 5 AIM admissions have been effected since 31 May and a further six are scheduled to complete soon. During the second half year we expect to see continued advances in corporate finance and financial services although the general level of market activity will, as always, influence trading in our stockbroking business. We continue to anticipate a controlled and balanced expansion of the Group. Sir David Trippier RD JP DL MSI Chairman Consolidated profit and loss account for the six months ended 31 May 2004 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 31 May 30 November 2004 2003 2003 £'000 £'000 £'000 ------------------------------ -------- -------- -------- Group turnover 8,117 4,096 9,261 Administration expenses (7,030) (4,114) (8,759) ------------------------------ -------- -------- -------- Group operating profit/(loss) 1,087 (18) 502 Share of operating loss in associates (36) (81) (131) Share of non trading decrease in net assets of associates - - - ------------------------------ -------- -------- -------- 1,051 (99) 371 Other interest receivable and similar income 139 81 151 Amounts written off investments - - (34) Interest payable and similar charges (158) (142) (300) ------------------------------ -------- -------- -------- Profit/(Loss) on ordinary activities before taxation 1,032 (160) 188 Tax on profit on ordinary activities (344) - (132) ------------------------------ -------- -------- -------- Profit/(Loss) on ordinary activities after taxation 688 (160) 56 Dividends on equity shares (118) (75) (192) ------------------------------ -------- -------- -------- Retained profit/(loss) for the period for the Group 570 (235) (136) ------------------------------ -------- -------- -------- Earnings per share (in accordance with FRS 14) Basic 4.41p (1.09p) 0.38p Diluted 4.17p (1.09p) 0.38p ------------------------------ -------- -------- -------- Earnings per share (in accordance with guidelines issued by UK Society of Investment Professionals) Basic 4.97p (0.74p) 1.12p Diluted 4.71p (0.74p) 1.10p ------------------------------ -------- -------- -------- Statement of total recognised gains and losses for the six months ended 31 May 2004 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 31 May 30 November 2004 2003 2003 £'000 £'000 £'000 ------------------------------ -------- -------- -------- Profit/(loss) for the period 570 (235) (136) Unrealised surplus on revaluation of fixed asset investments 443 175 460 Unrealised surplus on revaluation of properties - - 505 Taxation on realised surplus on revaluation of fixed asset investments - - (91) Non trading increase in net assets of associates 43 - - ------------------------------ -------- -------- -------- Total recognised gain/(loss) for the period 1,056 (60) 738 ------------------------------ -------- -------- -------- Note of historical cost profits and losses for the six months ended 31 May 2004 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 31 May 30 November 2004 2003 2003 £'000 £'000 £'000 ------------------------------ -------- -------- -------- Reported profit/(loss) on ordinary activities before taxation 1,032 (160) 188 Realisation of fixed asset investment revaluation gains 2 - 366 ------------------------------ -------- -------- -------- Historical cost profit/(loss) on ordinary activities before taxation 1,034 (160) 554 ------------------------------ -------- -------- -------- Historical cost profit/(loss) retained for the period after the provision for taxation and dividends 572 (235) 139 ------------------------------ -------- -------- -------- Consolidated balance sheet as at 31 May 2004 Unaudited Unaudited Audited 31 May 2004 31 May 2003 30 November 2003 --------- --------- ------------ £'000 £'000 £'000 £'000 £'000 £'000 ------------------ ------- ------ ------ ------ -------- -------- Fixed assets Intangible assets 3,141 1,801 3,229 Tangible assets 5,237 4,835 5,206 Investments 3,014 2,642 2,547 Investment in associates 415 329 269 ------------------ ------- ------ ------ ------ -------- -------- 11,807 9,607 11,251 Current assets Debtors 177,862 35,817 113,831 Investments 22 7 11 Cash at bank and in hand 6,931 3,079 5,083 ------------------ ------- ------ ------ ------ -------- -------- 184,815 38,903 118,925 Creditors due within one year (182,904) (37,215) (117,646) ------------------ ------- ------ ------ ------ -------- -------- Net current assets 1,911 1,688 1,279 ------------------ ------- ------ ------ ------ -------- -------- Total assets less current liabilities 13,718 11,295 12,530 Creditors due after one year (4,996) (4,961) (5,267) Provisions for liabilities and charges (381) - (9) ------------------ ------- ------ ------ ------ -------- -------- Net assets 8,341 6,334 7,254 ------------------ ------- ------ ------ ------ -------- -------- Capital and reserves Called up share capital 785 752 765 Shares to be issued 142 283 283 Share premium account 1,718 1,457 1,566 Capital redemption reserve 226 226 226 Investment revaluation reserve 3,362 2,497 2,921 Other reserves 754 754 754 Retained profits 1,354 365 739 ------------------ ------- ------ ------ ------ -------- -------- Equity shareholders funds 8,341 6,334 7,254 ------------------ ------- ------ ------ ------ -------- -------- Net assets per ordinary share 53.12p 42.14p 47.40p ------------------ ------- ------ ------ ------ -------- -------- Consolidated cash flow statement for the six months ended 31 May 2004 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 31 May 30 November 2004 2003 2003 £'000 £'000 £'000 ------------------------------ -------- -------- -------- Net cash inflow from operating activities 2,660 172 2,568 Returns on investments and servicing of finance (18) (61) (149) Taxation 42 115 115 Capital expenditure and financial investment (199) (80) 295 Acquisitions and disposals (139) - (515) ------------------------------ -------- -------- -------- Cash inflow before management of liquid resources and financing 2,346 146 2,314 Equity dividends paid (106) (26) (79) Financing (392) (46) (157) ------------------------------ -------- -------- -------- Increase in cash in the period 1,848 74 2,078 ------------------------------ -------- -------- -------- Reconciliation of operating profit to operating cash flow Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 31 May 30 November 2004 2003 2003 £'000 £'000 £'000 ------------------------------ -------- -------- -------- Operating profit/(loss) 1,087 (18) 502 Depreciation 162 172 334 Amortisation 89 51 109 Profit on sale of fixed assets (19) (1) (26) (Increase)/decrease in debtors (64,073) (7,138) (85,067) Increase/(decrease) in creditors 65,425 7,096 86,710 Decrease in current asset investments (11) 10 6 ------------------------------ -------- -------- -------- 2,660 172 2,568 ------------------------------ -------- -------- -------- Analysis of net debt At beginning Cash Other non At the end of the period flow cash changes of the period £'000 £'000 £'000 £'000 ---------------------- ---------- -------- -------- -------- Cash at bank and in hand 5,083 1,848 - 6,931 Debt due within one year (277) 118 (126) (285) Debt due after one year (4,519) - 126 (4,393) Loan Notes 2004/05 (142) 142 - - Finance leases (36) 10 - (26) ---------------------- ---------- -------- -------- -------- 109 2,118 - 2,227 ---------------------- ---------- -------- -------- -------- Notes 1. The interim report, which is the responsibility of the Directors and has not been audited, was approved by the Directors on 16 July 2004. 2. The figures for the six months ended 31 May 2004 have been prepared using the same accounting policies as for the year ended 30 November 2003. 3. These unaudited interim financial statements do not constitute statutory accounts. They have, however, been reviewed by the auditors whose report is included. The figures for the year ended 30 November 2003 have been extracted from the audited accounts for that year. The comparative figures for the financial year ended 30 November 2003 are not the Company's statutory accounts for that year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. 4. Share premium and reserves Shares Capital Share to be Share redemption Revaluation Other Retained capital issued premium reserve reserve reserve profits £'000 £'000 £'000 £'000 £'000 £'000 £'000 ------------ ------ ------ ------- -------- -------- ------ ------ At beginning of period 765 283 1,566 226 2,921 754 739 Shares issued 20 (141) 152 - - - - Investment revaluations - - - - 443 - - Transfer of realised gain - - - - (2) - 2 Non trading increase in net assets of associate - - - - - - 43 Retained profit for the period - - - - - - 570 ------------ ------ ------ ------- -------- -------- ------ ------ At end of period 785 142 1,718 226 3,362 754 1,354 ------------ ------ ------ ------- -------- -------- ------ ------ 5. On 31 December 2003 347,650 new ordinary shares of 5p each were issued at a price of 40.75p per share in part consideration of the second tranche of the deferred consideration due on the acquisition of Stockholm Investments Limited. On 6 January 2004 38,350 new ordinary shares of 5p each were issued for cash at a price of 50p per share. On 28 May 2004 14,675 new ordinary shares of 5p each were issued at 76.6p per share in satisfaction of the scrip dividend alternative for the final dividend for the year ended 30 November 2003. 6. A final dividend for the year ended 30 November 2003 of 0.75p per share costing £117,673 was paid on 28 May 2004. It is proposed that an interim dividend for the six months ending 31 May 2004 of 0.75p per share costing £117,783 be paid on 29 October 2004 to shareholders on the register on 10 September 2004. 7. The basic earnings per share for the period has been calculated by dividing the profit on ordinary activities after taxation by the weighted average number of shares in issue during the period being 15,623,268 (six months to 31 May 2003: 14,625,082 and year ended 30 November 2003: 14,796,324). Diluted earnings per share is the basic earnings per share adjusted for the effect of the conversion into fully paid shares of the weighted average number of all share options and warrants outstanding during the year. The additional weighted average number of shares used for the diluted calculation is 887,484 (six months to 31 May 2003: nil, and year ended 30 November 2003: 154,930). The calculation done in accordance with the guidelines issued by the UK Society of Investment Professionals uses the profit on ordinary activities after tax with goodwill amortisation added back. 8. In a number of instances Split Capital Investment Trusts ('Splits') have either failed or performed poorly in the past two years. The UK's financial regulator, The Financial Services Authority, is currently undertaking a review of the Splits sector. There has also been speculation that legal action may be brought against a range of parties involved in the sector. No legal action has been served against any company in the Group and in the event that the Group were to be included in any such proceedings this would be robustly defended. However a limited number of cases have been referred to the Financial Ombudsman and the directors believe it is prudent to provide in full for such cases. Accordingly a gross provision of £367,700 has been made under the heading of Provision for Liabilities and Charges. Independent review report by KPMG Audit Plc Introduction We have been instructed by the Company to review the financial information for the six months ended 31 May 2004, which comprises: the consolidated profit and loss account; statement of total recognised gains and losses; note of historical cost profits and losses; consolidated balance sheet; consolidated cash flow statement; reconciliation of operating profit to operating cash flow; analysis of net debt and notes 1 to 8. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by company law we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the Directors. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/ 4: Review of interim financial information issued by the Auditing Practices Board. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 May 2004. KPMG Audit plc Chartered Accountants Leeds 16 July 2004 This information is provided by RNS The company news service from the London Stock Exchange

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