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W.H. Ireland Group (WHI)

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Friday 23 March, 2012

W.H. Ireland Group

Preliminary Results

RNS Number : 9182Z
W.H. Ireland Group PLC
23 March 2012
 



 

Press Release

 23 March 2012

 

WH Ireland Group Plc

 

("WH Ireland", "the Group" or "the Company")

 

Preliminary Results for the year ended 30 November 2011

 

WH Ireland (AIM: WHI), an established financial services group operating in Private Wealth Management and Corporate Broking, today announces its Preliminary Results for the year ended 30 November 2011.

 

Operational summary

Significant new client wins during the period, with an increase of over 500% in funds raised for corporate clients

New fund launched to benefit from the Enterprise Investment Scheme legislation

Number of significant new hires made to strengthen the team across Private Wealth Management and Corporate Broking divisions

 

Financial summary

Group turnover increased by 25.9% to £23.1m (2010: £18.4m)

Full year adjusted* profit before tax £2.2m (2010: loss £0.3m)

Full year statutory loss before tax £1.4m (2010: £0.7m)

Adjusted* earnings per share of 9.33p (2010: 0.08p)

Basic loss per share of 8.00p (2010: 1.75p)

Year-end cash balances increased to £7.4m (2010: £2.4m)

* Adjusted profit / (loss) before tax is stated after adding back impairments to property and goodwill and loss on disposal of associates (see note 3).

 

Rupert Lowe, Chairman of WH Ireland, commented: "2011 was a period of strong progress for WH Ireland, as we made a number of significant hires, won 14 new corporate clients, and raised considerably more funds for our corporate clients than in the previous year.  The Group's focus on growing companies positions us well for the EIS legislation changes, and the adjusted* profit before tax of £2.2 million demonstrates the considerable progress that has been made during the period." 

 

 

For further information:                                                                            

WH Ireland Group plc

+44 (0) 20 7220 1666

Paul Compton, Chief Executive

 

Rupert Lowe, Non-Executive Chairman

 


 

Panmure Gordon (UK) Limited

+44 (0) 20 7459 3600

Hugh Morgan / Callum Stewart (Corporate Finance)

 

Adam Pollock (Corporate Broking)

 


 

Abchurch Communications

 

Joanne Shears / Oliver Hibberd

+44 (0) 207 398 7714

oliver.hibberd@abchurch-group.com

 

 

 

Chairman's statement

 

It is pleasing to be able to report to our shareholders that the Group has delivered a successful outcome for the year ended 30 November 2011.  In the financial period we have improved our cash reserves, our adjusted profitability and our turnover. 

 

During the course of the year under review we have considerably strengthened our client base, in the process raising £100 million to help some exciting small companies to finance their business against the backdrop of a severely dysfunctional banking market.  We have improved our position relative to many of our competitors, attracted many new and able members of staff to join our existing team and, at the same time, overhauled and simplified the incentive structure for existing staff resulting in a more transparent and fairer reward for those who produce our revenues.  The process of improving the service provision whilst reducing costs continues and includes investment in a new and more comprehensive IT platform.  Credit for the progress we have made should be given to all our staff, as it is their energy and drive that propels our progress.

 

The new Enterprise Investment Scheme (EIS) legislation introduced in the 2011 budget by George Osborne plays to the strengths of a broker such as WH Ireland with both private and corporate clients.  With this in mind, we have set up a fund to allow our private clients to benefit from the tax breaks available when we invest their money in fast growing and exciting AIM listed companies.  We are very enthusiastic about this area of our business and would encourage any shareholders who are interested to view our website (www.wh-ireland.co.uk) and contact us for further details or a presentation.

 

It is now clear that many of our competitors allowed their fixed cost base to become excessive.  The recent prolonged downturn has exposed this weakness and, as a result, many broking companies have either been closed down or forced to merge.  These pressures have been exacerbated by an increasingly expensive regulatory environment and have resulted in many very talented people losing their jobs.  The result is that we are now able to recruit such people on sensible and fair incentive packages with the recent stability of WH Ireland making us an attractive place to work.  The old adage that "wealth is created in booms but dynasties are made in depressions" may be overstating the case but I believe success is based on positive momentum and on that basis we have the conditions to continue our progress.

 

The new financial year has started well in terms of revenue, new clients and also new members of staff.  The Sovereign debt situation in Europe continues to be a concern to the fragile economic recovery. The resolution of this malaise will not be straightforward, as the current situation in Greece exemplifies.  However, with Bond yields at historically very low levels, quantitative easing and an equity market which offers some attractive yields in the current low interest rate environment, there are grounds for some optimism.  

 

There are some exciting small companies who need investment in order to grow and WH Ireland is very well placed to help them, together with our private clients and wealth management clients.  As a part of our ongoing development, I am pleased that we have been successful in our recent acquisition from Pritchard Stockbrokers Limited of 8,000 active private clients with £400m of non cash assets under management.  This will result in some hard work to integrate this business, but will serve to continue the growth of our regionally based private client business, thereby balancing the growth of WH Ireland.

 

Rupert Lowe

Non-Executive Chairman

 

 

Chief Executive's Report

 

 In a year which the Chief Executive of one of our main competitors described as being, "Maybe the worst operating climate for almost a century", I am pleased to say that WH Ireland has performed well.

 

Revenues increased by 26% from £18.4m to £23.1m, and the adjusted profit before tax increased from £(0.3)m to £2.2m.  The statutory loss before tax, which includes the write downs of goodwill and property and the loss on disposal of associates, increased from £0.7m to £1.4m. 

 

Perhaps more importantly this improvement was reflected in cash balances rising by over 200% from £2.4m to £7.4m; funds raised for corporate clients rising by over 500% from £16m to £97m and 14 new brokerships being won.  Since the year end, new quoted client wins and new fundraisings have continued.

 

The Group's focus was improved during the year with the sale of the remaining 37% of WHI Australia Pty Limited, the holding company of DJ Carmichael Pty Limited.  Whilst the Australian stockbroking market offers many opportunities, the Board did not feel it was appropriate for a relatively small group such as ours to continue with such a broad spread of interests.  The mainstream fund management business was also closed to continue to focus these efforts and overall 34 people left the Group in the year, with termination costs being incurred against administration expenses.

 

The dislocation that has and is occurring in the small company broking sector has created a fertile environment for client wins, but also has freed up high quality staff.  Without incurring any headhunter fees we have made ten significant hires from Altium, Religaire, Collins-Stewart, Investec and Westhouse in recent months.  Our Corporate Broking team is now scaled to handle over 100 clients, a level at which we would have achieved critical mass.

 

Our Private Clients division continued to provide solid earnings, with funds under nominee control of £1.4bn.  The recent acquisition of the client list from Pritchard Stockbrokers Limited should increase this figure by 25% and we are also expanding our regional office team as a result.  Progress was made in the Wealth Management division and your Board remains confident in the validity of building up this activity alongside the well established Private Client stock broking offering, particularly with the likely impact of the Retail Distribution Review (RDR) on small independents.

 

During the course of the year the Government focused on the EIS as a means of stimulating the small company sector.  Incentives were improved and the size of company to which they applied was increased with effect from April 2012 onwards.  WH Ireland is at the forefront of developments in this field, which it sees as being beneficial to all divisions of the Group.

 

Despite the uncertainties in the markets, your Board is confident of progress in the year ahead.  As such we will seek shareholder approval for an ongoing share buy back programme.  The achievements of the past year could not have been made without the efforts of our staff.  Their confidence in the firm's future was shown by a 56% take up in our new Save as You Earn scheme and numerous employee purchases.  Focused on small company Corporate Broking and on Private Wealth Management, well financed and growing both organically and through acquisition, WH Ireland has a strong future.

 

Paul Compton

Chief Executive



Consolidated statement of comprehensive income

For the year ended 30 November 2011

 



Year ended

Year ended



30 November

30 November



2011

2010


Note

£'000

£'000


 


(as restated, note 9)

Revenue

 

23,142

18,379

Administrative expenses

 

(24,191)

(19,210)

Operating loss

 

(1,049)

(831)

Other income

 

27

45

Investment (losses) / gains


(13)

259

Fair value losses on investments


(141)

(72)

Finance income


63

54

Finance expense

 

(60)

(90)

Share of profit of associates

6

63

226

Loss on disposal of associates

 

(331)

(311)

 

 


 

Loss before tax

 

(1,441)

(720)

Tax (expense) / credit

 

(246)

351

Loss for the year

 

(1,687)

(369)





Other comprehensive income:

 

 

 

Valuation gains / (losses) on available for sale investments

 

182

(192)

Transferred to profit or loss on sale of investments

 

(30)

(31)

Tax relating to components of other comprehensive income

 

(34)

60

Total other comprehensive income

 

118

(163)


 

 

 

Total comprehensive income

 

(1,569)

(532)

 

 



Loss for the year attributable to:

 


 

Owners of the parent

 

(1,687)

(369)

 

 

 

 

Total comprehensive income attributable to:

 

 

 

Owners of the parent

 

(1,569)

(532)

 

 


 

Earnings per share for profit to the ordinary

 


 

equity holders of the parent during the

 


 

period

3


 

Basic

 

(8.00)p

(1.75)p

Diluted

 

(8.00)p

(1.75)p







Consolidated statement of financial position

As at 30 November 2011

 

 


Group



As at

As at



30 November

30 November



2011

2010


Note

£'000

£'000




(As restated, note 9)

ASSETS

 

 

 

Non-current assets

 

 

 

Property, plant and equipment

4

4,957

6,301

Goodwill

5

683

2,835

Intangible assets

 

-

161

Associates

6

-

1,156

Investments

 

942

1,483

Loan notes receivable

 

25

335

Deferred tax asset

 

689

930

 

 

7,296

13,201

Current assets

 

 

 

Trade and other receivables

 

26,656

37,205

Other investments

 

418

-

Corporation tax recoverable

 

33

21

Cash and cash equivalents

7

7,366

2,439

 

 

34,473

39,665

Total assets

 

41,769

52,866

LIABILITIES

 

 

 

Current liabilities

 

 

 

Trade and other payables

 

(27,193)

(36,495)

Borrowings

 

(238)

(305)

Provisions

 

(65)

(149)

 

 

(27,496)

(36,949)

Non-current liabilities

 

 

 

Borrowings

 

(1,689)

(1,930)

Deferred tax liability

 

(421)

(384)

Accruals and deferred income

 

(144)

(98)

Provisions

 

(21)

(20)

 

 

(2,275)

(2,432)

Total liabilities

 

(29,771)

(39,381)

Total net assets

 

11,998

13,485

 

 

 

 

EQUITY

 

 

 

Share capital

 

1,171

1,064

Share premium

 

6,406

5,724

Available-for-sale reserve

 

165

47

Other reserves

 

1,472

1,472

Retained earnings

 

3,853

5,465

Treasury shares

 

(1,069)

(287)

Total equity

 

11,998

13,485

 

 

 

 

 



Condensed consolidated statement of cash flows

For the year ended 30 November 2011

 

 

 


Group



Year ended

Year ended



30 November

30 November



2011

2010



£'000

£'000


Note


(As restated, note 9)

Operating activities:

 

 

 

Loss for the year

 

(1,687)

(369)

Adjustments for:

 

 

 

Depreciation, amortisation and impairment

4 & 5

3,846

562

Finance income

 

(63)

(54)

Finance expense

 

60

90

Taxation

 

246

(351)

Share of profit of associates

6

(63)

(226)

Loss on disposal of associates

 

331

311

Changes in investments

 

664

272

Gain on sale of property, plant and equipment

 

3

(26)

Non-cash adjustment for share option charge

 

75

(94)

Decrease in trade and other receivables

 

10,547

5,468

Decrease in trade and other payables

 

(9,256)

(8,332)

(Increase) / decrease in provisions

 

(83)

22

(Increase) / decrease in current asset investments

 

(418)

855

Net cash generated from / (used in)operations

 

4,202

(1,872)

Income taxes (paid) / received

 

(14)

256

Net cash in / (out) flows from operating activities

 

4,188

(1,616)

Investing activities:

 

 

 

Proceeds from sale of property, plant and equipment

 

-

291

Proceeds from sale of investments

 

1,273

823

Interest received

 

63

54

Disposal of associates

 

888

75

Acquisition of property, plant and equipment

4

(191)

(81)

Acquisition of investments

 

(1,243)

(665)

Redemption of loan notes

 

310

-

Net cash generated from investing activities

 

1,100

497

Financing activities:

 

 

 

Proceeds from issue of share capital

 

7

-

Decrease in borrowings

 

(308)

(610)

Interest paid

 

(60)

(90)

Net cash used in financing activities

 

(361)

(700)

Net increase / (decrease) in cash and cash equivalents

 

4,927

(1,819)

Cash and cash equivalents at beginning of year

 

2,439

4,258

Cash and cash equivalents at end of year

 

7,366

2,439

Clients' settlement cash

 

3,683

1,573

Group cash

 

3,683

866

Cash and cash equivalents at end of year

7

7,366

2,439

 



Consolidated statement of changes in equity

For the year ended 30 November 2011

 




Available-






Share

Share

for-sale

Other

Retained

Treasury

Total


capital

premium

reserve

reserves

earnings

shares

equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 December 2009 (as restated, note 9)

1,064

5,724

210

1,472

5,928

(287)

14,111

Gains arising on available-for-sale investments

-

-

(223)

-

-

-

(223)

Other comprehensive income (as restated, note 9)

-

-

(163)

-

-

-

(163)

Loss after taxation (as restated, note 9)

-

-

-

-

(369)

-

(369)

Total comprehensive income (as restated, note 9)

-

-

(163)

-

(369)

-

(532)

Employee share option scheme

-

-

-

-

(94)

-

(94)

Balance at 30 November 2010

1,064

5,724

47

1,472

5,465

(287)

13,485

Gains arising on available-for-sale investments

-

-

152

-

-

-

152

Deferred taxation

-

-

(34)

-

-

-

(34)

Other comprehensive income

-

-

118

-

-

-

118

Loss after taxation

-

-

-

-

(1,687)

-

(1,687)

Total comprehensive income

-

-

118

-

(1,687)

-

(1,569)

Shares options exercised

1

6

-

-

-

-

7

Shares issued to ESOT

106

676

-

-

-

(782)

-

Employee share option scheme

-

-

-

-

75

-

75

Balance at 30 November 2011

1,171

6,406

165

1,472

3,853

(1,069)

11,998

 

The total number of authorised ordinary shares is 34.5 million shares of 5p each (2010: 34.5 million shares of 5p each).  The total number of issued ordinary shares is 23.4 million shares of 5p each (2010: 21.3 million shares of 5p each).  2,143,218 shares were issued during the year (2010: nil), of which 2,128,000 (2010: nil) are held as Treasury.

The nature and purpose of each reserve is summarised below:

Share premium

The share premium is the amount raised on the issue of shares that is in excess of the nominal value of those shares and is recorded less any direct costs of issue.

Available-for-sale reserve

The available-for-sale reserve reflects gains or losses arising from the change in fair value of available-for-sale financial assets except for impairment losses which are recognised in the income statement.  When an available-for-sale asset is impaired or derecognised, the cumulative gain or loss previously recognised in the available-for-sale reserve is transferred to the income statement.

Other reserves

Other reserves comprise a (consolidated) merger reserve of £1,244k (2010: £1,244k) and a (consolidated) capital redemption reserve of £228k (2010: £228k).

Retained earnings

Retained earnings reflect; accumulated income, expenses, gains and losses, recognised in the income statement and the statement of recognised income and expense and is net of dividends paid to shareholders.  The cumulative effect of changes in accounting policy is also reflected as an adjustment in retained earnings.

Treasury shares

Purchases of the Group's own shares in the market are presented as a deduction from equity, at the amount paid, including transaction costs.  That is, treasury shares are shown as a separate class of shareholders' equity with a debit balance.

Notes to the financial statements

For the year ended 30 November 2011

1.  Principal accounting policies

The financial information set out in this announcement has been prepared in accordance with the recognition and measurement principles of IFRS as endorsed for use in the European Union.

 

The financial information set out in this announcement does not constitute the group's statutory accounts for the year ended 30 November 2011 or the year ended 30 November 2010 under the meaning of s434 Companies Act 2006, but is derived from the 2011 annual report and accounts.

 

The 2011 financial statements have been prepared on a basis consistent with the accounting policies set out in the 2010 financial statements.

 

Statutory accounts for the years ended 30 November 2010 and 30 November 2011 have been reported on by the Independent Auditors.

 

The Independent Auditors' Report on the Annual Report and Financial Statements for years ended 30 November 2010 and 30 November 2011 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under s498(2) or s498(3) of the Companies Act 2006.

 

Statutory accounts for the year ended 30 November 2010 have been filed with the Registrar of Companies. The statutory accounts for the year ended 30 November 2011 will be delivered to the Registrar in due course.

 

2. Segment information

IFRS 8 requires indication of operating segments on the basis of internal reports that are regularly reviewed by the entity's chief operating decision maker ('CODM') in order to allocate resources to the segment and assess its performance.  The CODM has been determined to be the Executive and Non-Executive Directors, as they are principally responsible for evaluating operating segment performance and deciding how to allocate resources to operating segments.

 

In the year under review, the Group had four main operating divisions; Private Clients, Wealth Management, Capital Markets and Secondary Trading, all located in the UK.

 

The Private Clients division offers investment management and stockbroking advice and services to individuals.  Wealth Management contains our Independent Financial Advisory ("IFA") business, giving advice on and acting as intermediary for a range of financial products.  The Capital Markets division provides corporate finance and corporate broking advice and services to companies and acts as Nominated Advisor to clients listed on the Alternative Investment Market ("AIM").

 

Secondary Trading contains our Institutional Sales and Research business, which carries out stockbroking activities on behalf of companies as well as conducting research into markets of interest to its clients.  Each reportable segment has a segment manager who is directly accountable to and maintains regular contact with the CODM.  The Head Office segment comprises centrally incurred costs and revenues.

 

No customer represents more than ten percent of the Group's revenue.



The following tables represent revenue and profit information for the Group's business segments.

 

Year ended 30 November 2011

Private

Wealth

Capital

Secondary

Head



Clients

Management

Markets

Trading

Office

Group


£'000

£'000

£'000

£'000

£'000

£'000

Revenue

8,960

1,134

5,106

4,578

3,364

23,142

Segment result before impairments

1,750

(642)

2,059

378

(1,271)

2,274

Impairment of goodwill

(759)

(1,140)

-

(253)

-

(2,152)

Impairment of property

-

-

-

-

(1,171)

(1,171)

Segment result

991

(1,782)

2,059

125

(2,442)

(1,049)

Other Income

-

-

-

-

27

27

Investment Income

-

-

132

(246)

(40)

(154)

Finance income

-

-

-

-

63

63

Finance expense

-

-

-

-

(60)

(60)

Share of profit of associates

-

-

-

-

63

63

Loss on disposal of associate

-

-

-

-

(331)

(331)

Profit/(loss) before taxation

991

(1,782)

2,191

(121)

(2,720)

(1,441)

Taxation

-

-

-

-

(246)

(246)

Profit/(loss) on continuing operations after taxation

991

(1,782)

2,191

(121)

(2,966)

(1,687)

 

Year ended 30 November 2010

Private

Wealth

Capital

Secondary

Head


(as restated, note 9)

Clients

Management

Markets

Trading

Office

Group


£'000

£'000

£'000

£'000

£'000

£'000

Revenue

8,783

1,667

2,801

2,395

2,733

18,379

Segment result before impairments

2,337

(257)

367

461

(3,665)

(757)

Impairment of goodwill

(74)

-

-

-

-

(74)

Segment result

2,263

(257)

367

461

(3,665)

(831)

Other Income

-

-

-

-

45

45

Investment Income

-

-

135

-

52

187

Finance income

-

-

-

-

54

54

Finance expense

-

-

-

-

(90)

(90)

Share of profit of associates

-

-

-

-

226

226

Loss on disposal of associate

-

-

-

-

(311)

(311)

Profit/(loss) before taxation

2,263

(257)

502

461

(3,689)

(720)

Taxation

-

-

-

-

351

351

Profit/(loss) on continuing operations after taxation

2,263

(257)

502

461

(3,338)

(369)

 

Segment assets and segment liabilities are reviewed by the CODM in a consolidated statement of financial position.  As no measure of assets or liabilities for individual segments is reviewed regularly by the CODM, no disclosure of total assets or liabilities has been made.

 

3. Earnings per share (EPS)

Basic EPS is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares.

Diluted EPS is the basic EPS, adjusted for the effect of the conversion into fully paid shares of the weighted average number of all employee share options outstanding during the year.  Options over 251,076 (2010: 527,855) shares are excluded from the EPS calculation as they are antidilutive.  Antidilutive options represent options issued where the exercise price is greater than the average market price for the period.

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below:


Year ended

Year ended


30 November

30 November


2011

2010


000's

000's

Group


(as restated,
note  9)

Weighted average number of shares in issue during the period

21,074

21,070

Effect of dilutive share options

2,346

75

 

23,420

21,145

 



 

£'000

£'000

Earnings attributable to ordinary shareholders

(1,687)

(369)

Add back goodwill impairment

2,152

74

Add back property impairment

1,171

-

Add back loss on disposal of associate

331

311

Adjusted earnings attributable to ordinary shareholders

1,967

16

Add back tax

246

(351)

Adjusted profit / (loss) before tax

2,213

(335)


 


Basic EPS

 


Continuing operations

(8.00)p

(1.75)p




Diluted EPS

 


Continuing operations

(8.00)p

(1.75)p




Adjusted EPS from continuing operations

 


Basic

9.33p

0.08p

Diluted

8.40p

0.07p

 



4. Property plant and equipment



Computers,



Freehold

fixtures



property

and fittings

Total

Group

£'000

£'000

£'000

Cost or valuation

 

 

 

At 1 December 2009

6,592

1,826

8,418

Additions

2

79

81

Disposals

(250)

(50)

(300)

At 30 November 2010

6,344

1,855

8,199

Additions

-

191

191

Disposals

-

(4)

(4)

At 30 November 2011

6,344

2,042

8,386

Depreciation

 

 

 

At 1 December 2009

292

1,313

1,605

Disposals

(11)

(24)

(35)

Charge for the year

98

230

328

At 30 November 2010

379

1,519

1,898

Disposals

-

(1)

(1)

Charge for the year

98

263

361

Impairments

1,167

4

1,171

At 30 November 2011

1,644

1,785

3,429

Net book values

 

 

 

At 30 November 2011

4,700

257

4,957

At 30 November 2010

5,965

336

6,301

At 30 November 2009

6,300

513

6,813

 



 

 

Bank borrowings are secured on freehold property for the value of £1,927,028 (2010: £2,235,034).

 

The freehold property at 11 St James's Square, Manchester was valued by Lambert Smith Hampton on 30 November 2011.  They have reported that its Market Value, as defined in the Valuation Standards of the Royal Institute of Chartered Surveyors, is £4.7m.  The Group therefore has recognised the above impairment to the carrying value.

 

5. Goodwill


Year ended

Year ended


30 November

30 November


2011

2010

Group

£'000

£'000

Beginning of year

2,835

2,909

Impairment

(2,152)

(74)

End of year

683

2,835

 

Impairment tests for goodwill

Goodwill of the Group is allocated to the following CGUs:













ARE








WH Ireland

Business







Stockholm

(Financial

and







Investments

Services)

Professional

WH Ireland Limited



Limited

Limited

Limited

London

Leeds

Manchester

Cardiff

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Beginning of year

946

898

242

178

253

117

201

2,835

Impairment

(263)

(898)

(242)

(178)

(253)

(117)

(201)

(2,152)

End of year

683

-

-

-

-

-

-

683

 

The Group tests at least annually for goodwill impairment.  The recoverable amount of a CGU is determined based on value-in-use calculations.  These calculations use pre-tax cash flows based on financial budgets prepared by management covering a three year period and then extrapolated for the remaining useful economic life based on relevant estimated growth rates of 2% for revenue and 5% for costs.  This cash flow is then discounted by an appropriate cost of capital (currently 10%) in order to estimate their present value.

 

The key assumptions for the value-in-use calculations are those regarding the discount rate, growth rates and expected changes to revenues and costs in the period.  Management has made these assumptions based on past experience and future expectations in the light of anticipated market conditions, combined with the actions taken during this and last year to streamline the Group's operations whilst maximising revenue potential.

 

During the year a number of key staff responsible for the acquired cash generating units left the Group.  Also Management noted that there was significant reduction in the originally acquired client base.  Accordingly the Directors have undertaken a full review of the impairment during the year, which is based on the reduced revenues and contribution of the CGUs attributable to the above factors.  Year-on-year originally acquired client base reductions of 5% to 13% was estimated, which is incorporated within the cash flow forecasts. The impairments have been allocated to business segments as disclosed in note 2.

 

Where the value-in-use exceeds the carrying value of the goodwill asset, it has been concluded that no impairment is necessary.  However, where this is not the case, goodwill is written down to the net present value of cash flows at the balance sheet date.

 

Sensitivity analysis shows that the client wind-down variable is now the key component of the outcome of the recoverable amount of Stockholm Investments Limited, the remaining CGU.  This has been set at 5% per annum based on the historic movement in the client bank.  However, if this were to grow to a wind-down of 18% per annum, the recoverable amount after five years would be £nil.

 

6. Associates

On 25 February 2011 WH Ireland Group plc disposed of its Holding in JBCM Holdings Limited for £150,000.

On 20 May 2011 WH Ireland Group plc disposed of its Holding in the share capital of its associate WHI Australia Pty Limited, the holding company of the Perth based stockbroking company, DJ Carmichael Pty Limited. The consideration received totaled £960,099.


Year ended

Year ended


30 November

30 November


2011

2010

Group

£'000

£'000

Beginning of year

1,156

1,963

Disposals

(1,219)

(1,033)

Share of profit

63

226

End of year

-

1,156

 

Summarised financial information in respect of the Group's associates is set out below:

 

Year ended

Year ended

 

30 November

30 November

 

2011

2010

 

£'000

£'000

Total assets

-

7,236

Total liabilities

-

(3,235)

Total net assets

-

4,001

Group's share of total net assets

-

1,320

 



 

 

Year ended

Year ended

 

30 November

30 November

 

2011

2010

For the period to disposal:

£'000

£'000

Revenues

3,759

11,073

(Losses) / profits

(169)

424

 

7. Cash and cash equivalents



Group



30 November

30 November



2011

2010



£'000

£'000

Cash and cash equivalents

 

7,366

2,439

 

 

7,366

2,439

 

For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand, deposits with banks and financial institutions with a maturity of up to three months and bank overdrafts repayable on demand.

 

Cash and cash equivalents represent the Group's money and money held for settlement of outstanding transactions.

 

Free money held in trust on behalf of clients is not included in the balance sheet.  Free money at 30 November 2011 for the Group was £80,758k (2010: £85,429k). 

 

8. Events after the balance sheet date

 

On 29 February 2012, the Company announced that its wholly owned subsidiary, WH Ireland Limited, had acquired certain assets from Pritchard Stockbrokers Limited and its wholly owned subsidiary, Prism Nominees Limited, for a cash consideration of up to £500,000 plus VAT.  The assets include a substantial part of Pritchard Stockbrokers Limited's client list consisting of approximately 8,000 active private clients and, as part of the transaction, the non-cash assets under management relating to those clients, valued at approximately £400 million, will transfer to the control of WH Ireland Limited.  In the financial year ended 30 June 2011, the assets generated a loss of approximately £6,000 for Pritchard Stockbrokers Limited.

 

The total consideration payable to Pritchard Stockbrokers Limited is structured as follows:

 

·      £250,000 was paid in cash on completion of the transaction; and

·      up to a further £250,000 in cash will be paid subject to the assets being successfully transferred to WH Ireland Limited within an agreed timeframe and subject to adjustments relating to costs incurred by WH Ireland Limited, on behalf of Pritchard Stockbrokers Limited, in relation to effecting the transfer of the assets.

 

The Directors' best estimates of the costs directly attributable to the acquisition were £15,500.

 

The transaction will increase WH Ireland Limited's number of private-client stockbroking clients by approximately 50% and total assets under management by approximately 25%.

 

On the assumption that the assets are successfully transferred to WH Ireland Limited, the acquisition will give rise to a separately identifiable intangible asset of £500,000 plus VAT.

 



9. Restatement of prior periods

 

The comparatives have been restated in these financial statements to reflect the following adjustments:

 

·      On transition to IFRS on 1 December 2007, the Group elected to measure certain fixed assets at their fair value and use that fair value as their deemed cost at that date.  Accordingly, the revaluation surplus at that time should have been reflected within retained earnings rather than a revaluation reserve.  An adjustment has been made to the opening reserves to reflect this, increasing the retained earnings by £667,000 and decreasing the revaluation reserve by £667,000.  The adjustment has neither an effect on the total comprehensive income nor the total net assets at either the current or previous reporting dates; therefore the opening balance sheet at 30 November 2009 is not presented as a result of this restatement.

 

·      In the six month period ended 31 May 2010 and the year to 30 November 2010, the Group incorrectly reported a transfer to profit or loss on sale of property, plant and equipment of £102,000 within both other comprehensive income and profit for the year.  IAS 16 requires that the gain on the disposal of property, plant and equipment is the difference between the net disposal proceeds and the carrying amount of the asset.  Accordingly, the comparative information has been restated to reflect this change.  This has resulted in the loss for the six month period to 31 May 2010 and for the year ended 30 November 2010 increasing by £102,000 with a corresponding reduction to the loss from other comprehensive income.  The adjustment had neither an effect on the total comprehensive income nor the total net assets at either the current or previous reporting dates.

 

- Ends -


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