News and Views

RNS Number : 9418A
W.H. Ireland Group PLC
27 March 2013
 



 


 27 March 2013

 

WH Ireland Group Plc

 

(“WH Ireland”, “the Group” or “the Company”)

 

Results for the year ended 30 November 2012

 

WH Ireland (AIM: WHI), an established financial services group operating in Private Wealth Management and Corporate Broking, today announces its results for the year ended 30 November 2012.

 

Operational summary

Further new client wins achieved in the Corporate Broking Division, and corporate client fundraisings increased to £116 million

In the Private Wealth Management Division, funds under management and administration rose by 27% to £1.7 billion

Acquisition of the client list from Pritchard Stockbrokers Limited in March 2012

Second Enterprise Investment Scheme fund launched following the success of the first fund

Since the period end, acquisition of the Seymour Pierce private client business in February 2013

 

Financial summary

Group turnover increased by 8.4% to £25.1m (2011: £23.1m)

Full year loss before tax £0.2m (2011: loss £1.4m)

Basic earnings per share of (0.89)p (2011: (8.0)p)

Year-end cash balances increased to £9.3m (2011: £7.4m)

Recurring revenue increased to approximately 27% of total Group revenue

The Board’s optimistic outlook is reflected in the dividend of 0.5 pence per share

 

Rupert Lowe, Chairman of WH Ireland, commented: “WH Ireland made strong progress across both the Corporate Broking and Private Wealth Management Divisions during the period under review.  The Board is pleased with the significant increase in the level of fundraisings for corporate clients, as well as the progress made towards achieving our goal of securing 100 quoted clients. 

 

“In Private Wealth Management we have achieved a combination of solid organic growth, as well as increasing our funds under management and administration through acquisitions.  The Board remains optimistic about the future prospects for WH Ireland, as reflected in the reinstated dividend, and we look forward to building on the sound foundations that have been laid during the period.” 

 

For further information:                                                                            

WH Ireland Group plc

+44 (0) 20 7220 1666

Richard Killingbeck, Chief Executive Officer

 

Rupert Lowe, Chairman

 


 

Panmure Gordon (UK) Limited

+44 (0) 20 7886 2500

Hugh Morgan / Callum Stewart (Corporate Finance)

 

Adam Pollock (Corporate Broking)

 


 

Abchurch Communications

 

Joanne Shears / Shabnam Bashir

+44 (0) 207 398 7707

shabnam.bashir@abchurch-group.com

 

 

Note:

 

In accordance with Rule 20 of the AIM Rules, WH Ireland Group plc confirms that the annual report and accounts for the year ended 30 November 2012, including notice of the Company’s annual general meeting to be held at 1030 on 22 May 2013, will today be posted to shareholders. The report will be available, in electronic form, for download on the Company’s website: www.wh-ireland.co.uk




Chairman’s statement

 

The Board is pleased to be able to report further progress to our shareholders, despite the ongoing backdrop of continuing economic uncertainty and unpredictable financial markets.  The Group has strengthened its cash reserves, turnover and client base and whilst the profitability has been marginally disappointing, the Board’s confidence in the progress we have made is underlined by returning to the dividend list with 0.5 pence per share final dividend.

 

The investment made into the Group’s Corporate Broking division during the year has resulted in the growth of our client numbers and, despite the economic conditions, the raising of £116 million for our corporate clients.  This has resulted in the Group achieving a top three position by number of AIM clients in the Adviser Rankings Guide.  We continue to build on this success, whilst always ensuring that the quality of service that we provide to our corporate clients remains of a high standard.

 

The banking market in the UK remains dysfunctional and the service that we provide to our corporate clients, particularly through equity fundraising, is essential if the investment required to secure macro-economic growth and recovery is to be achieved.  WH Ireland’s 2012/13 EIS fund has had a successful investment experience in its first year having achieved returns of approximately 20%, and we are currently seeking investment for a 2013/14 fund, for another round of investment into AIM quoted companies seeking funds to secure growth.

 

The Group’s Private Wealth Management network expanded during the year.  The acquisition of the client list from Pritchard Stockbrokers Limited (“Pritchard”) in the early part of 2012 was followed by a number of their brokers joining the Group to continue their working relationships with these clients.  The integration of this growth of brokers and offices, has been a key focus for the Group throughout the remainder of 2012.  Our teams of people, both those who have been here throughout and those that have joined as a result of this acquisition, have striven to provide the service needed to these clients throughout this process.  The Group has built on this acquisition and on our continued organic growth, and has, through it, focused on its core deliverables and its core locations.  This focus has positioned WH Ireland well to move forward and also to accommodate further growth opportunities.

 

As I wrote in my Chairman’s statement last year, many of our competitors have either been closed down or been forced to merge.  The Group has been able to capitalise on opportunities presented by others in the sector experiencing pressures of rising costs combined with falling.  One such opportunity since the financial year end has resulted in the acquisition of the Seymour Pierce retail client list and broking team, after its parent company went into administration.  These clients and brokers are in the process of being integrated into the WH Ireland culture and operations.

 

The new financial year has started well.  The Corporate Broking division has continued the momentum of new client wins and the Private Wealth Management division has seen improved markets and higher levels of client activity.    Richard Killingbeck, who has over 25 years’ investment management and private banking experience, joined us to improve the Private Wealth Management side of our business, where the Board sees great potential for developing both service levels and profitability, and was promoted to Chief Executive on 14 January 2013. 

 

WH Ireland is a small, well capitalised company with a focus on client service.  Following the acquisition of the Seymour Pierce private client business, the Group is in an enviable position of having nearly £2 billion of client funds under management and continues to approach our short term target of 100 retained quoted corporate clients.  Having laid sound foundations over the past few years, the Board is confident and optimistic about the Group’s future despite the uncertain market.

  

 

Rupert Lowe

Chairman

 

  




Chief Executive Officer’s Report

 

Following my appointment as Chief Executive Officer in January 2013, I set out below my review of the progress that the Group made during the year ended 30 November 2012, as well as the Board’s strategy for driving further growth in the years ahead.

 

The year under review saw revenue increase by 8.4% from £23.1m to £25.1m, whilst the loss before tax improved from £1.4m to £0.2m.  Another key indicator of the Group’s progress over the year has been the continued improvement in our balance sheet, with cash balances rising from £7.4m to £9.3m at year end, or 39.4p per share.  This figure, when added to unencumbered freehold property valued at £3.0m, or 12.7p a share, places the Group in an enviable position amongst its peers in regard to this key measure.

 

During the year the focus and rationalisation of the Group has continued with both of the trading divisions, Corporate Broking and Private Wealth Management, demonstrating strong progress and this is particularly pleasing when viewed against the wider economic and industry background.  The number of retained corporate clients has risen from 62 to 83 at year end.  Importantly corporate client fund raisings increased to £116m, albeit that the actual number of transactions fell, reflecting a significant increase in the size of individual fund raisings.

 

In the Private Wealth Management division our discretionary, advisory and execution-only assets continued to grow, partly reflecting the acquisition of the client list from Pritchard Stockbrokers in February 2012, as well as good underlying organic growth.  Total funds under management and administration rose by 27% during the year to £1.7 billion.  Significant regulatory changes in this area of the business, primarily the Retail Distribution Review which became effective from 31 December 2012, have increased the costs of doing business and the Board is pleased that the majority of our key client managers and advisers have met the new industry qualification standards.

 

During the year ahead a number of key themes will underlie the Board’s focus.  In the Corporate Broking division the significant investment in recruiting the team is now complete and we are focusing our efforts on building the retained client list and on leveraging from the wider distribution channels that we have now achieved.  In the Private Wealth Management division the focus is on building out our client asset base from our existing office locations and in ensuring that bespoke advice is at the core of our investment proposition.  We will continue to seek small acquisitions, whether they be corporate or private client teams, to join us.  In this vein, we announced the acquisition of the Seymour Pierce private client business in February 2013 which the Board believes will continue to grow both our client asset base and profitability.

 

A key financial metric that we pay particular close attention to is that of recurring revenue, both from retained corporate clients and fee paying private clients.  At year end recurring income represented approximately 27% of total Group revenue.  As a business we need to focus on increasing this level significantly, and this will be a key driver of management actions and focus in the years ahead.

 

Finally I would like to express my thanks to our employees for their dedication during the past year and to all of our clients, whether they be corporate or private, who have entrusted WH Ireland to manage or advise on their financial requirements.

 

Richard Killingbeck

Chief Executive Officer




Consolidated statement of comprehensive income

For the year ended 30 November 2012

 

 

 

Year ended

Year ended

 

 

30 November

30 November

 

 

2012

2011

 

Note

£’000

£’000

Revenue

 

25,079

23,142

Administrative expenses

 

(24,989)

(24,191)

Operating profit/(loss)

 

90

(1,049)

Other income

 

16

27

Investment gains


47

(13)

Fair value losses on investments


(287)

(141)

Finance income


13

63

Finance expense

 

(56)

(60)

Share of profit of associates

 

63

Loss on disposal of associates

 

(331)

 

 



Loss before tax

 

(177)

(1,441)

Tax expense

 

(33)

(246)

Loss for the year

 

(210)

(1,687)





Other comprehensive income:

 

 

 

Valuation gains on available for sale investments

 

182

Transferred to profit or loss on sale of investments

 

(1)

(30)

Tax relating to components of other

comprehensive income

 

6

(34)

Total other comprehensive income

 

5

118


 

 

 

Total comprehensive income

 

(205)

(1,569)

 

 



Loss for the year attributable to:

 



Owners of the parent

 

(210)

(1,687)

 

 

 

 

Total comprehensive income attributable to:

 

 

 

Owners of the parent

 

(205)

(1,569)

 

 



Earnings per share for profit to the ordinary

 



equity holders of the parent during the period

4



Basic

 

(0.89)p

(8.00)p

Diluted

 

(0.89)p

(8.00)p

 

 


 




Consolidated statement of financial position

As at 30 November 2012

 

 

 

Group

Company

 

 

As at

As at

As at

 

 

30 November

30 November

30 November

30 November

 

 

2012

2011

2012

2011

 

Note

£’000

£’000

£’000

£’000

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

 

Property, plant and equipment

5

5,412

4,957

Goodwill

6

542

683

Intangible assets

7

604

Subsidiaries

 

1,970

2,544

Associates

 

Investments

 

1,251

942

Loan receivable

 

782

782

Loan notes receivable

 

25

25

Deferred tax asset

 

625

689

71

53

 

 

8,434

7,296

2,823

3,404

Current assets

 

 

 

 

 

Trade and other receivables

 

34,266

26,656

4,984

5,243

Other investments

 

313

418

Corporation tax recoverable

 

33

Cash and cash equivalents

8

9,340

7,366

301

31

 

 

43,919

34,473

5,285

5,274

Total assets

 

52,353

41,769

8,108

8,678

LIABILITIES

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

 

(37,238)

(27,193)

(83)

(341)

Corporation tax payable

 

(30)

Finance Leases < 1 Year

 

(119)

Borrowings

 

(168)

(238)

(168)

(238)

Provisions

 

(299)

(65)

 

 

(37,854)

(27,496)

(251)

(579)

Non-current liabilities

 

 

 

 

 

Borrowings

 

(1,519)

(1,689)

(1,519)

(1,689)

Finance Leases >1 Year

 

(347)

Deferred tax liability

 

(320)

(421)

Accruals and deferred income

 

(41)

(144)

Provisions

 

(21)

(21)

 

 

(2,248)

(2,275)

(1,519)

(1,689)

Total liabilities

 

(40,102)

(29,771)

(1,770)

(2,268)

Total net assets

 

12,251

11,998

6,338

6,410

 

 

 

 

 

 

EQUITY

 

 

 

 

 

Share capital

 

1,184

1,171

1,184

1,171

Share premium

 

6,406

6,406

Available-for-sale reserve

 

170

165

Other reserves

 

982

1,472

229

719

Retained earnings

 

10,697

3,853

4,925

(1,599)

Treasury shares

 

(782)

(1,069)

(287)

Total equity

 

12,251

11,998

6,338

6,410

 

 

 

 

 

 

 




Condensed consolidated statement of cash flows

For the year ended 30 November 2012

 

 

 

 

Group

Company

 

 

Year ended

Year ended

Year ended

Year ended

 

 

30

November

30

November

30 November

30

November

 

 

2012

2011

2012

2011

 

 

£’000

£’000

£’000

£’000

Operating activities:

 

 

 

 

 

Loss for the year

 

(210)

(1,687)

(530)

(399)

Adjustments for:

 

 

 

 

 

Depreciation, amortisation and impairment

5,6 & 7

372

3,846

573

1

Finance income

 

(13)

(63)

(1)

Finance expense

 

56

60

53

Taxation

 

33

246

(18)

(39)

Share of profit of associates

 

(63)

Loss on disposal of associates

 

331

10

Changes in investments

 

130

664

Gain on sale of property, plant and equipment

 

3

Non-cash adjustment for share option charge

 

325

75

326

75

Decrease in trade and other receivables

 

(7,610)

10,547

259

(539)

Decrease in trade and other payables

 

9,940

(9,256)

(258)

(11)

(Increase)  in provisions

 

234

(83)

(Increase) in current asset investments

 

105

(418)

Net cash generated from / (used in)operations

 

3,362

4,202

352

(850)

Income taxes (paid) / received

 

(14)

Net cash in / (out) flows from operating activities

 

3,362

4,188

352

(850)

Investing activities:

 

 

 

 

 

Proceeds from sale of property, plant and equipment

 

Proceeds from sale of investments

 

664

1,273

816

Interest received

 

13

63

1

Interest Paid: Finance Leases

 

(18)

 

Disposal of associates

 

888

935

Acquisition of property, plant and equipment

5

(686)

(191)

Acquisition of investments

 

(1,103)

(1,243)

Acquisition of Intangibles

7

(604)

Redemption of loan notes

 

25

310

25

310

Net cash generated from investing activities

 

(1,709)

1,100

25

2,062

Financing activities:

 

 

 

 

 

Proceeds from issue of share capital

 

133

7

133

7

Proceeds from issue of share capital to EBT

 

782

Loan to EBT

 

(782)

Increase in borrowings

 

244

(308)

(240)

(308)

Interest paid

 

(56)

(60)

(53)

Net cash used in financing activities

 

321

(361)

(107)

(354)

Net increase in cash and cash equivalents

 

1,974

4,927

270

858

Cash and cash equivalents at beginning of year

 

7,366

2,439

31

(827)

Cash and cash equivalents at end of year

 

9,340

7,366

301

31

Clients’ settlement cash

 

4,189

3,683

Group cash

 

5,151

3,683

301

31

Cash and cash equivalents at end of year

8

9,340

7,366

301

31

 




Consolidated statement of changes in equity

For the year ended 30 November 2012

 

 

 

 

Available-

 

 

 

 

 

Share

Share

for-sale

Other

Retained

Treasury

Total

 

capital

premium

reserve

reserves

earnings

shares

equity

Group

£’000

£’000

£’000

£’000

£’000

£’000

£’000

Balance at 1 December 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

Gains arising on available-for-sale investments

(1)

(1)

Deferred taxation

6

Other comprehensive income

5

5

Loss after taxation

(210)

(210)

Total comprehensive income

(210)

(210)

Shares options exercised

13

120

133

Employee share option scheme

325

325

Share capital reduction

(6,526)

6,526

Reserve transfer

(490)

490

Treasury shares issued to employees

(287)

287

Balance at 30 November 2012

1,184

170

982

10,697

(782)

12,251

 

The total number of authorised ordinary shares is 34.5 million shares of 5p each (2011: 34.5 million shares of 5p each).  The total number of issued ordinary shares is 23.6 million shares of 5p each (2011: 23.4 million shares of 5p each).  264,785 shares were issued during the year (2011: 2,143,218), of which none (2011: 2,128,000) are held as Treasury (note 28).

 

 

 

Available-

 

 

 

 

 

Share

Share

for-sale

Other

Retained

Treasury

Total

 

capital

premium

reserve

reserves

earnings

shares

equity

Company

£’000

£’000

£’000

£’000

£’000

£’000

£’000

Balance at 1 December 2010

1,064

5,724

(155)

719

(1,275)

(287)

5,790

Loss arising on available-for-sale investments

155

155

Other comprehensive income

155

155

Loss after taxation

(399)

(399)

Total comprehensive income

155

(399)

(244)

Share options exercised

1

7

8

Shares issued to EBT

106

675

781

Employee share option scheme

75

75

Balance at 30 November 2011

1,171

6,406

719

(1,599)

(287)

6,410

Loss arising on available-for-sale investments

Other comprehensive income

Loss after taxation

(530)

(530)

Total comprehensive income

(530)

(530)

Shares options exercised

13

120

133

Employee share option scheme

325

325

Share capital reduction

(6,526)

6,526

Reserve transfer

(490)

490

Treasury shares issued to employees

(287)

287

Balance at 30 November 2012

1,184

229

4,925

6,338

 

The nature and purpose of each reserve, whether Consolidated or Company only, 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 £754k (2011: £1,244k) and a (consolidated) capital redemption reserve of £228k (2011: £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.  

On 28 November 2012 the Company was granted a Court Order approving a Capital Reduction, which became effective on 29 November 2012.  This reduction created distributable reserves by cancelling the amount standing to the credit of the Company’s share premium account.

Treasury shares

Purchases of the Company’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 2012

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 2012 or the year ended 30 November 2011 under the meaning of s434 Companies Act 2006, but is derived from the 2012 annual report and accounts.

The 2012 financial statements have been prepared on a basis consistent with the accounting policies set out in the 2011 financial statements.

Statutory accounts for the years ended 30 November 2011 and 30 November 2012 have been reported on by the Independent Auditors.

The Independent Auditors’ Report on the Annual Report and Financial Statements for years ended 30 November 2011 and 30 November 2012 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 2011 have been filed with the Registrar of Companies. The statutory accounts for the year ended 30 November 2012 will be delivered to the Registrar in due course.

2. Segment information

At the last year end, the Group had four main operating divisions; Private Clients, Wealth Management, Capital Markets and Secondary Trading.  In the period under review, these segments were revised by the chief operating decision maker (‘CODM’, defined as the Executive and Non-Executive Directors).  The Group now has only two operating segments.

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

All divisions are located in the UK.  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, with the information to 30 November 2011 being reanalysed to reflect the current segments.

£’000

£’000

£’000

£’000

14,395

7,031

3,653

25,079

3,109

1,246

(4,265)

90

47

 –

2,890

1,318

(4,385)

(177)


(33)

(33)

2,890

1,318

(4,418)

(210)

 

£’000

£’000

£’000

£’000

13,852

5,927

3,363

23,142

2,525

1,945

(5,519)

(1,049)

 –

2,525

1,831

(5,797)

(1,441)


(246)

(246)

2,525

1,831

(6,043)

(1,687)

 

Segment assets and segment liabilities are reviewed by the CODM in a consolidated statement of financial position.  Accordingly this information is replicated in the Group 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.

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.

 

3. Dividends

No interim dividends were paid or proposed in either year.  A final dividend of 0.5p per share is proposed for 2012 (2011: nil).  The dividend is to be paid to the shareholders on the register of members of the Company as at the close of business on 26 April 2013.

  

 

4. 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 7,164 (2011: 251,076) 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


2012

2011


000’s

000’s

Group



Weighted average number of shares in issue during the period

23,547

21,074

Effect of dilutive share options

1,651

2,346

 

25,198

23,420

 



 

£’000

£’000

Earnings attributable to ordinary shareholders

(210)

(1,687)


 

 

Basic EPS

 

 

Continuing operations

(0.89)p

(8.00)p




Diluted EPS

 

 

Continuing operations

(0.89)p

(8.00)p




 

 

5. Property plant and equipment



Computers,



Freehold

fixtures



Property

and fittings

Total

Group

£’000

£’000

£’000

Cost or valuation

 

 

 

At 1 December 2010

6,344

1,855

8,199

Additions

191

191

Disposals

(4)

(4)

At 30 November 2011

6,344

2,042

8,386

Additions

686

686

Disposals

At 30 November 2012

6,344

2,728

9,072

Depreciation

 

 

 

At 1 December 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

Disposals

Charge for the year

231

231

Impairments

At 30 November 2012

1,644

2,016

3,660

Net book values

 

 

 

At 30 November 2012

4,700

712

5,412

At 30 November 2011

4,700

257

4,957

At 30 November 2010

5,965

336

6,301

 



 

Bank borrowings are secured on freehold property for the value of £1,686,957 (2011: £1,927,028).

The freehold property at 11 St James’s Square, Manchester was valued by Lambert Smith Hampton as at 30 November 2011.  They reported that its Market Value, as defined in the Valuation Standards of the Royal Institute of Chartered Surveyors, was £4.7m.

6. Goodwill


Year ended

Year ended


30 November

30 November


2012

2011

Group

£’000

£’000

Beginning of year

683

2,835

Impairment

(141)

(2,152)

End of year

542

683

 

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

At 1 December 2010

946

898

242

178

253

117

201

2,835

Impairment

(263)

(898)

(242)

(178)

(253)

(117)

(201)

(2,152)

At 30 November 2011

683

683

Impairment

(141)

(141)

At 30 November 2012

542

542

 

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 3% for revenue (2011: 2%) and 0% for costs (2011:5%).  This is then adjusted for the anticipated wind-down in the client books acquired at 5% per annum.  This net cash flow is then discounted by an appropriate cost of capital of 10% (2011: 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.

 

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.

 

 

7. Intangible assets

 

Client

 

relationships

 

£’000

Cost

 

At 1 December 2010

641

At 30 November 2011

641

Additions

604

At 30 November 2012

1,245

Amortisation

 

At 1 December 2010

480

Charge for the year

161

At 30 November 2011

641

Charge for the year

At 30 November 2012

641

Net book values

 

At 30 November 2012

604

At 30 November 2011

At 30 November 2010

161

 

The above addition to intangible assets represents the value of the client bank acquired from Pritchard Stockbrokers.  Following the transfer, it has been determined that at the date of acquisition, the number of active clients amounted to approximately 4,600 with assets-under-management of approximately £225m.  The Board has assessed the carrying value of this intangible asset and confirms it remains appropriate.

 

8. Cash and cash equivalents



Group


Company



30 November

30 November


30 November

30 November



2012

2011


2012

2011



£’000

£’000


£’000

£’000

Cash and cash equivalents

 

9,340

7,366

 

301

31

 

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

 

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

 

Free money held on behalf of clients is not included in the balance sheet.  Free money at 30 November 2012 for the Group was £76,356k (2011: £80,758k).  There is no free money held in the Company (2011: £nil).

 

9. Events after the balance sheet date

The Company has been informed that a former employee, dismissed after 30 November 2012, has started legal proceedings for unfair dismissal, wrongful dismissal and breach of contract regarding a share agreement.  The Company vigorously denies that it was at fault and is intending to defend itself against any such action.  Legal advice received supports the directors’ belief that the claim is without merit.  It is anticipated the case will be concluded during 2013.

 

On 15 February 2013, through its wholly owned subsidiary, WH Ireland Limited, the Group acquired the private wealth management business and related assets from Tenebris Realisations Limited (in administration) and its administrators.  This included Tenebris’s private client list with assets under management valued at approximately £270 million.  The consideration of £25,000 was paid by WH Ireland Limited in cash on completion.

 

This transaction increases the Group’s total assets under management by approximately 15%.  Following completion the Group is in a position to undertake regulated activities for those of Tenebris’s clients that have transferred to its control.

 

Due to the proximity of the acquisition to the period end, the determination of fair value has not yet been completed.

– Ends –

This information is provided by RNS
The company news service from the London Stock Exchange
 

END

 
 

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