Our Annual Report and Accounts March 2018
|View previous Interim and Annual Reports here|
This year's Annual Report covers the extended 16 month period that resulted from the decision to change our year end to the more conventional one of 31 March, from 30 November. I am pleased to report that considerable progress has been made to continue the transformation of WH Ireland over the period as a whole and that change has continued following the end of the period under review. However, as we identified in my second interim report in January (for the 12 months to 30 November), this has not been without its challenges, given market conditions and the scale of change that we have been implementing. This has resulted in losses being incurred for the year - but a much clearer path to profitability is now ahead of us in the new financial year and beyond.
Market activity was subdued in the extra four months from November 2017 to March 2018 impacting the Corporate and Institutional Broking (CIB) division; the Wealth Management (WM) division has benefited from higher market levels but it has borne higher costs than anticipated. These costs primarily relate to the outsourcing of our custody and operational functions and legacy issues which have taken longer to resolve than anticipated. This represents the final element of the investment in transformational change within the WM division and will result in a significant decline in these costs as of July this year.
I concentrated part of my last report to shareholders on the actions taken and implemented by the senior management team in order to help achieve the Board's aim of achieving consistent profitability across both divisions. These changes have included structural remuneration changes, continued focus upon fee income in the WM division, and in CIB a focus upon advising larger corporate clients, whilst maintaining our existing strong corporate client list. These efforts continue and while the competitive landscape does not get any easier, it is encouraging that both divisions have made significant progress during the past year and momentum has continued into the current year.
CHANGE IN LEADERSHIP
The Company announced earlier today that Richard Killingbeck, the Chief Executive Officer of the Group, is not seeking re-election as a Director of the Company at the forthcoming Annual General Meeting of the Company in order to pursue other opportunities. Accordingly, Richard will step down as CEO with effect from 31 July 2018, and will step down as a director at the Annual General Meeting on 27 September 2018. A further announcement will be made at that time. Richard joined the Company in September 2012 as Head of Private Wealth Management before being appointed Chief Executive in January 2013. The Board would like to express its thanks to Richard for his significant contribution to the Group over the past six years. During this time, he has overseen the key transformational changes that have positioned WH Ireland as a modern and more efficient organisation. We wish him well in the future.
The Board is delighted to announce that Phillip Wale has been appointed as Chief Executive Officer elect of the Company, with effect from 1 August 2018, with his appointment to Chief Executive Officer being subject to approval by the Financial Conduct Authority. Phillip brings considerable experience to the Board of WH Ireland having held a number of senior positions in similar financial services businesses which span both Wealth Management and Corporate and Institutional Broking and we believe that we can draw upon this experience to take the Group forward in the next stage of its development. This includes senior positions at Goldman Sachs in New York and London, and Chief Executive roles at Seymour Pierce and Panmure Gordon & Co.
This change in leadership comes at a time of transition for the Company, as it builds upon all the changes that have taken place in the last few years. Phillip is being tasked with delivering an accelerated path to growth and profitability, for the benefit of all of the Company's stakeholders.
In the new financial year that started on 1 April 2018, both divisions have witnessed better trading conditions and are beginning to see the benefits of all the changes that have been made to the business in the last few years. The CIB division has undertaken a number of transactions for corporate clients and we have begun to see the positive impact of the wider cost reduction and revenue enhancement programmes within the WM division. The latter will accelerate as the current year progresses and we expect to achieve at least £2 million of cost savings and revenue enhancements this year, with the full annual impact expected to crystallise in the financial year to March 2020.
Fee income (CIB retainers, WM management and advice fees) is now running at approximately £1.3 million a month, representing nearly 55% of our total monthly revenue. This is the highest ratio of fees to total revenue ever achieved by the business and is most encouraging for the progression of WH Ireland in the future.
I would like to thank all of those employees who have played a significant part in helping the Company evolve and who have worked extremely hard in bringing about change. In addition, I want to express my specific thanks to Richard Killingbeck for his commitment and dedication to the firm during his tenure as CEO; I have very much enjoyed working with Richard and wish him well in the future. Finally, I would like to welcome Phillip to the Company, and look forward to working with him over the coming months. As a result of all these efforts and changes, I believe that the Company has never been better positioned for the next stage in its exciting growth strategy.