Preliminary Results

 

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)
Deferred taxation	–	–	60	–	–	–	60
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 –