TIDMWHI
RNS Number : 2864H
W.H. Ireland Group PLC
31 July 2019
31 July 2019
WH Ireland Group Plc
("WH Ireland" or the "Company")
Final Results for the twelve months ended 31 March 2019
Notice of AGM
WH Ireland today announces its final results for the twelve
months ended 31 March 2019:
Highlights
-- New management team in place
-- Board of Directors refresh in process (and largely complete)
-- Cash at year end of GBP7.7m (2018: GBP7.3m) and no debt; with
robust capital position following equity raise
-- Corporate and Institutional broking remains profitable -
GBP0.5m (2018: GBP3.6m) with resilient performance in public and
private funding
-- Wealth Management loss of GBP1.5m (2018: profit of GBP4.2m) but stable AUM of GBP2.5bn
-- 63% of shares held by three large and supportive shareholders
-- Overall Group loss GBP11.3m (2018: GBP3.0m) due to reduced
revenues, one off costs and increased exceptional items
-- Exceptional items, including an impairment charges of
GBP2.6m, increased to GBP4.1m (2018: GBP2.5m)
-- Focus in the first quarter of new financial year has been on
cost reduction, improved efficiencies and strengthening regulatory
systems across the Group
-- Headcount reducing; with salaried staff at year-end 178
(2018: 192), further reduced to 159 at 30 June 2019
Phillip Wale, Chief Executive Officer of WH Ireland Group plc
said:
"I am excited about the future of WH Ireland. We have
exceptional people, a cleansed, debt free balance sheet and the
support of our shareholders and a refreshed Board. Our plan, a
simple one, is to build the business by reducing its unnecessarily
high costs, retire legacy systems and improve the quality of our
earnings across both divisions.
"I am looking forward to the year ahead with cautious optimism
and am keen to engage with all our stakeholders again at the
interim report to provide updated information on progress
made."
To view a short video of the results please follow this link:
http://bit.ly/WHIfy19
Notice of AGM
The Company also confirms today that it has posted to
shareholders its annual report and accounts for the period ended 31
March 2019, and a notice convening the annual general meeting of
the Company, to be held at 2.00 p.m. on 12 September 2019 at the
offices of WH Ireland, 24 Martin Lane, London, EC4R 0DR. A copy is
also available from the Company's website :
www.whirelandplc.com.
For further information please contact:
WH Ireland Group plc www.whirelandplc.com
Phillip Wale, Chief Executive Officer +44(0) 207 220 1666
SPARK Advisory Partners Limited
Andrew Emmott/Miriam Greenwood +44(0) 203 368 3551
MHP Communications +44 (0) 203 128 8100
Reg Hoare whireland@mhpc.com
Chairman's statement
For the year ended 31 March 2019
This year's Annual Report returns to the traditional 12 month
period to 31 March 2019, following last year's 16 month extended
period.
Review and outlook
The past trading period has been extremely challenging and
accordingly, the Board has implemented a significant change of
senior executive management, with the appointments of a new Chief
Executive Officer, new Finance Director, new Head of Private Wealth
Management and new Head of Compliance and Risk. The total loss for
the period is GBP7.2m before non-cash impairments and one-off
charges of GBP4.1m. These one off costs reflect the actions which
we have taken to address an excessively high head count, since
addressed in the new year, and the cost of replacing senior
executives with the newly recruited personnel identified above to
drive change. In addition, the migration of private clients to the
new SEI platform has experienced many teething problems which have
led to duplicated costs as the project has been integrated. The
carrying value of intangible assets created by the acquisitions in
earlier years of two teams of investment managers has also been
written down, creating a non-cash loss. Finally, the uncertain
economic and political climate in the UK as a result of Brexit has
led to a reduction of new equity issues in the London stockmarket,
which has affected our profitable corporate broking business.
Following a difficult period, I am pleased to report that a
number of initiatives taken by the new senior management have led
to a sharp reduction in operating losses in the first quarter of
the current year end to March 2020, and we look forward to further
improvements in operating performance as the year progresses.
New leadership
The Board is delighted with the progress that Phillip Wale has
achieved since his appointment as CEO in late 2018: he has moved
quickly to reinvigorate the business by building a new executive
team with extensive sector experience and a strong track record in
change management. In addition, he has secured the support of our
strong shareholder base and raised GBP4.95m of additional equity
capital, and introduced a clear focus on cost control. As a result,
these initiatives have improved morale across all departments of
the firm.
I am grateful for the support of our existing and new
shareholders, which I believe has placed the Group in a far
stronger capital position than before, which should help the CEO
and his management team to achieve the Board's aim to restore the
Group to profitability.
Board
I am delighted to welcome to the Board of Directors Philip
Tansey as our new CFO, as well as Simon Lough and Philip Shelley,
whom are appointed as Non-Executive Directors, subject to FCA
approval.
Simon Lough was Chief Executive of the Heartwood Wealth
Management business from 2008 to 2014, having previously headed
both the client and investment teams, and was responsible for
building up its London office.
Philip Shelley was previously Vice Chairman at Barclays
Investment Bank. Before Barclays Phil ran Broking and ECM in the UK
for Goldman Sachs and was Head of Corporate Broking at UBS. During
his career of 24 years, Philip advised and raised equity for a wide
of range of UK public and private companies.
I offer thanks to Jonathan Carey for his tenure as Non-Executive
Director for three years and we wish him well for the future.
Finally, I would like to acknowledge on behalf of the Board the
continued hard work of all our employees during what has been a
challenging year but one that has, I believe, laid the foundations
for a recovery in operating performance.
Tim Steel
July 2019
Chief Executive statement
For the year ended 31 March 2019
Overview
This is my first annual report as Chief Executive Officer and
with the benefit of 8 months from joining to the year ended of 31
March 2019 I have had time to conduct a full review of the
business.
Financially, the performance of WH Ireland has been challenging
with a significant loss for the year ended 31 March 2019 of
GBP11.3m (2018: GBP2.9m), after exceptional costs, including one
off costs of GBP1.5m and impairment charges of GBP2.6m that do not
impact cash or regulatory capital. This loss comes despite a
profitable Corporate and Institutional Broking performance.
Furthermore, the control environment across the Group required
remedial action, under the direction of our new Head of Compliance
and Risk, Yen Chang, and that has generated further cost
implications, which are discussed below.
The year 2018/2019
Comparatives with the extended prior reporting period of 16
months to 31 March 2018 are difficult. However, discretionary
managed assets continue to increase as a proportion of the total
funds under management (2019: 47%, 2018: 42.1%). But at the same
time there has been a marked decline in the commission paying
elements of the wealth management business in line with the wider
experience of the market, struggling as it is with low volumes and
worries concerning EU withdrawal. This, combined with a decline in
new issuance activity for the CIB division, has driven revenue down
by more than explained simply by a shorter accounting period alone.
Exceptional items of GBP4.1m (2018: GBP2.5m) incurred by the Group
have increased significantly, details of which are set out in the
Chairman's Statement. Overall, whilst the Corporate and
Institutional business remains profitable, the Wealth Management
division has been loss-making.
Leadership
I have made key appointments:
-- Philip Tansey joined late in the year as CFO/COO and comes
with thirty years' experience in financial services across a number
of regulatory authorities. He has particular experience in clean-up
and turnaround challenges;
-- Stephen Ford is our new Head of Wealth Management with thirty
years' experience of managing and growing wealth management
businesses;
-- Yen Chang, our new Head of Compliance and Risk. She brings
the correct balance of experience and dedication to maintain a
serious control framework and build excellent relationships with
our regulators and other authorities.
Adam Pollock remains Head of our Corporate and Institutional
Broking business, and intends to build on the success of the last
year by continuing to grow our client base and completing both
private and public market transactions.
Board
I believe it is critical for the success of WH Ireland to have a
Board that comprises people with appropriate skills and experience
across a number of relevant business and control areas, and which
provides effective challenge and support in equal measure. I echo
my Chairman's sentiments in thanking Jonathan Carey and look
forward to welcoming both Simon Lough and Philip Shelley to the
board as Non-Executive Directors (both appointments are still
subject to FCA approval).
CLIENTS
Our clients are at the heart of everything that we do, and
providing excellent service to our corporate, institutional and
private clients remains our priority.
Staff
There are excellent people within the Group; I have made changes
to the head count to reflect the new, simplified business model and
believe that we are now at a good size for growth. I thank all the
members of staff for their commitment and hard work in the past and
for the years ahead.
Shareholders
I am delighted with the support, both in terms of capital
investment and guidance, received from our major shareholders and
thank the new investors who joined in our most recent placing in
March 2019 for their backing.
Capital
The raising of GBP4.95m in March 2019 has replenished regulatory
and working capital. Cash at the year-end date of 31 March 2019 was
GBP7.7m (2018: GBP7.3m). The group has no debt. Against the
forecasts set out and agreed with the business and approved by the
Board, the Directors believe that these levels are sufficient to
take WH Ireland to the next phase of success.
Business reviews
Wealth Management (WM)
We are progressing with a number of significant changes to the
WM division. The first stage of change to WM, under Stephen Ford's
direction, has three key strands. First, to reduce the cost base
which we believe has historically been too high. Second, to
energise the project of retiring our legacy platform systems and
custodians. Finally, to simplify and enforce our standard charging
structure in order to improve the quality of earnings. All these
initiatives are in progress and further updates will be provided in
due course.
Corporate and Institutional Broking (CIB)
CIB continues to enjoy a low fixed cost model with a solid
recurring-revenue client base. We continue to build our reputation
for raising growth capital for public and private companies.
Against a highly uncertain market backdrop, the division is well
positioned to take full advantage of the structural changes being
experienced, including its approach post MiFID II. We are actively
looking to recruit further high quality people into the division in
order to build CIB over the coming years.
LOOKING FORWARD
I believe that we have made significant changes and the focus
for the new management team is to build what we believe is a good
business with good clients and revenue streams; to manage our costs
effectively; enhance the revenue generated by the existing
business; evidence the effectiveness of our control framework
across everything we do; and engage proactively with all
stakeholders.
The first quarter of our new financial year has started well on
all fronts. Our costs are down as is our total Group headcount (at
June 2019: 159, down from 178 at 31 March 2019 and 192 at 31 March
2018) and revenue initiatives are well advanced, as are the now
re-energised projects to eliminate inherited legacy systems,
processes and associated costs.
I look forward with cautious optimism to the coming year.
P Wale
July 2019
Strategic report
For the year ended 31 March 2019
Overview
The WH Ireland Group has two principal operating subsidiaries,
WH Ireland Limited and WH Ireland (IOM) Limited. WH Ireland Limited
consists of two business divisions: Wealth Management, which
provides bespoke wealth management solutions and independent
financial advisory services to retail clients; and Corporate and
Institutional Broking which provides corporate finance, advisory
and broking services to small and mid-cap corporate clients, and
stockbroking and research services to its institutional client
base. WH Ireland (IOM) Limited provides wealth management
services.
The Group's income is predominantly derived from activities
conducted in the UK and the Isle of Man with a number of retail,
institutional and corporate clients, which are situated
worldwide.
At the year end, the Group had 171 staff (2018: 184) in the UK
and 7 (2018: 8) in the Isle of Man.
Strategy SUMMARY
The Group's strategic focus remains on becoming the corporate
broker of choice in the small and mid-cap company segment and a
leading advice-driven wealth management service provider to retail
clients.
The strategy is focused on strengthening our corporate client
list and increasing the discretionary assets under management in
order to maximise the Group's recurring revenue through the
generation of corporate retainer income and wealth management
fees.
FINANCIAL OVERVIEW
A summary of the statement of comprehensive income for the
financial YEAR is set out below:
Year to 16 months to
31 March 2019 31 March 2018
GBP'000 GBP'000
------------------------------------ ---------------- ----------------
Revenue 23,680 36,416
Administrative expenses (33,419) (40,389)
Expected credit loss (641) (128)
------------------------------------- ---------------- ----------------
Operating loss (10,380) (4,101)
Operating loss before exceptional
items (6,267) (1,595)
Exceptional items (4,113) (2,506)
------------------------------------- ---------------- ----------------
Operating loss after exceptional
items (10,380) (4,101)
Other income and charges 230 387
------------------------------------- ---------------- ----------------
Loss before tax (10,150) (3,714)
Tax (1,176) 769
Loss after tax (11,326) (2,945)
------------------------------------- ---------------- ----------------
A reconciliation of the adjusted operating loss is set out
below:
Year to 16 months to
31 March 2019 31 March 2018
GBP'000 GBP'000
-------------------------------------- ---------------- ----------------
Operating loss (10,380) (4,101)
Add back of one off charges:
Project Discovery * 442 1,527
Restructuring ** 835 718
Compliance & regulatory projects*** 230 -
MiFID II**** - 261
Goodwill and intangible assets***** 2,606 -
-------------------------------------- ---------------- ----------------
Adjusted operating loss (6,267) (1,595)
-------------------------------------- ---------------- ----------------
Notes:
**As announced on 2 June 2016, the Group entered into a seven
year agreement with SEI Investments (Europe) Ltd, to outsource its
Private Wealth Management back office operations and move to a
"Model B" arrangement. On account of a number of unforeseen
obstacles, significant cost has been incurred in both internal and
external resources dedicated to this project ("Project Discovery")
as the project moves to conclude the transfer of clients and assets
from the prior legacy platforms over to SEI.
**During the period ended 31 March 2018 and 2019 there were a
number of changes within the senior management team and several
external hires were made. The costs of these changes, in respect of
both short term consultancy costs and fixed employment related
costs, are considered by the Board to be non-trading and
exceptional in nature.
*** During the year ending 31 March 2019, the Group incurred
various costs in relation to one off regulatory reports.
****During the period to 31 March 2018 the Group incurred
various costs in preparation for compliance with MiFID II.
*****See notes 13 &14
Financial analysis
The total operating loss, after exceptional items, has increased
in the year-ended 31 March 2019 by GBP6.3m to GBP10.4m. (2018:
GBP4.1m).
Identification and analysis of the component parts of that
increase of GBP6.3m is difficult due to the differing lengths of
accounting period. Annualising the results of the prior-period
ended 31 March 2018 (i.e. by applying a factor of 12/16th), whilst
not theoretically perfect on account of, amongst other factors,
seasonality, does however assist in that analysis.
An annualised restatement would result thus:
Actual year Theoretically annualised Differences
Line Item ended 31 March 'year' ended 31
2019 March 2018 GBP'000
GBP'000 GBP'000
Revenue 23,680 27,312 (3,632)
Administration
expenses (before
Exceptional items) 29,947 28,508 (1,439)
Revised annualised
Operating loss
before exceptional
items (6,267) (1,196) (5,071)
Exceptional items (4,113) (2,506) (1,607)
Total Operating
loss
after Exceptional
items (10,380) (3,702) (6,678)
The changes in the year to 31 March 2019 compared to the
'annualised' results of 2018 were as follows:
Revenue: The CIB division, despite remaining profitable and
improving retainer fee revenue in the year, suffered lower
transactional success fees of approximately GBP1.0m. Commissions
generated by the WM division were lower by GBP2.6m. Both resulted
directly from the impact of increasingly poor market conditions as
witnessed by the declines in volume traded across the London stock
exchanges in both trading and in corporate transactions.
Expenses: Additional operational costs were incurred as the
Group struggled with an excessive cost-base worsened by the
additional on-going costs of addressing legacy systems with
contract staff and other related expenses.
Exceptional Items: The costs associated with the retirement of
legacy systems and the MiFID II project declined but there were
increases in costs that were neither affected cash nor regulatory
capital; these costs included the determination that the carrying
value of goodwill and intangible assets should be reduced by
GBP2.6m.
Balance Sheet: Operational losses incurred in the year of
GBP6.0m, Exceptional items, including the decision to impair the
carrying value of goodwill and intangible assets, of a total of
GBP4.0m and, the elimination of deferred tax credits recognised in
prior periods of GBP1.1m totalled GBP11.1m. This was offset by the
proceeds of raising fresh equity of GBP7.0m resulting in the net
decline of GBP4.1m in Total Equity at 31 March 2019 to GBP8.8m
(2018: GBP12.9m).
Wealth Management
The Wealth Management division incorporates both investment
management services and advice on Wealth Planning. These services
are offered from offices across the UK including London,
Manchester, Cardiff, Poole and Milton Keynes. International clients
are serviced from the Isle of Man office.
As the complexity of financial markets and advice increases, we
are able to offer specific Wealth Planning expertise in areas such
as pensions and inheritance planning. We also work closely with
third party advisors in helping our mutual clients achieve their
financial goals.
The strategy for the ongoing growth in this division is to focus
our efforts on discretionary portfolios. This will be achieved by
continued personal referrals, selective recruitment of individuals
and teams with existing client relationships and, in time,
corporate acquisitions of Wealth Management businesses.
Corporate & INSTITUTIONAL Broking
WH Ireland specialises in providing corporate finance and
broking services to smaller companies across a wide range of
industry sectors and geographies. It is the fourth largest
Nominated Adviser (NOMAD) for AIM quoted companies and currently
represents 77 corporate companies. It has a highly experienced team
drawn from a range of professional backgrounds and that provides
strategic, technical and regulatory advice. Areas of specialism for
this division include pre-IPO fundraising, IPOs and secondary
issues, mergers and acquisitions, disposals, restructuring and
tender offers. It has also established a track record for raising
capital for private companies.
As an integrated Institutional Stock Broker, WH Ireland also
provides award winning research, Institutional Sales and Investor
Relations and market making.
The division's focus remains upon providing market leading
advice to all of our corporate and institutional clients and
enhancing our retained client list.
In response to the inevitable regulatory change, the Corporate
and Institutional Broking division has received many plaudits from
our clients for their clear and concise interpretation of the
research distribution rules under MiFID II. We have been alert to
the opportunities that have presented themselves as a result of
this change and this has led to an encouraging number of corporate
client enquiries to understand how the division can benefit their
reach in the market.
KEY PERFORMANCE INDICATORS (KPI's)
1. Ratio of adjusted operating loss before tax to total revenue
31 March 2019 31 March 2018
% %
----------------------------------- --------------- ---------------
Ratio of adjusted operating loss
before tax to revenue (26.47) (3.30)
------------------------------------ --------------- ---------------
2. Funds under management and advice
31 March 2019 31 March 2018
GBPm GBPm
------------------------ --------------- ---------------
Discretionary assets 1,175 1,081
Advisory assets 556 639
Execution only assets 777 844
------------------------- --------------- ---------------
Total 2,508 2,564
------------------------- --------------- ---------------
3. Recurring income streams
12 months to 31 16 months to
March 31 March 2018
2019
GBPm GBPm
---------------------------- ----------------- ----------------
Value of recurring income 14.0 18.0
----------------------------- ----------------- ----------------
4. Corporate Broking performance
12 months to 31 16 months to
March 31 March 2018
2019
----------------------------- ----------------- ----------------
Number of transactions 37 37
Money raised GBP51m GBP61m
Retained corporate clients 77 84
------------------------------ ----------------- ----------------
Dividend
The Board does not propose to pay a dividend in respect of the
financial year (2018: GBPnil).
Statement of Financial Position and Capital Structure
Maintaining a strong and liquid statement of financial position
remains a key objective for the Board, alongside its regulatory
capital requirements. Total net assets were GBP8.8m (2018:
GBP12.9m) and net current assets GBP6.9m (2018: GBP8.1m). Cash
balances at year-end were GBP7.7m (2018: GBP7.3m).
Risks and Uncertainties
Risk appetite is established, reviewed and monitored by the
Board. The Group, through the operation of its Committee structure,
considers all relevant risks and advises the Board as necessary.
The Group maintains a comprehensive risk register as part of its
risk management framework encouraging a risk-based approach to the
internal controls and management of the Group. The Group operates
an Internal Audit coordinated by the Finance department. Internal
Audit reports directly to the Audit Committee.
Liquidity and capital risk
As noted in the Chief Executive's Report, the Group's focus is
on stabilising the business, managing its costs and returning it to
profitability whilst increasing the proportion of recurring revenue
including the building of its discretionary fee paying client base
to better fit the regulatory environment in which it operates.
The Group has a predominantly fixed cost base which in recent
years has been allowed to increase leading to the recorded losses.
Action has been taken to achieve operational efficiencies and to
aid the return to profitability.
To mitigate risk, the Board continues to focus on ensuring that
the financial position remains robust and suitably liquid with
sufficient regulatory capital being maintained over the minimum
common equity tier 1 capital requirements. Regulatory capital and
liquid assets are monitored on a daily basis.
Operational risk
Operational risk is the risk of loss to the Group resulting from
inadequate or failed internal processes, people and systems, or
from external events.
Business continuity risk is the risk that serious damage or
disruption may be caused as a result of a breakdown or
interruption, from either internal or external sources, of the
business of the Group. This risk is mitigated in part by the number
of branches across the UK and the Group having business continuity
and disaster recovery arrangements including business interruption
insurance.
The Group seeks to ensure that its risk management framework and
control environment is continuously evolving which Compliance and
Risk monitor on an ongoing basis.
Credit risk
The Board takes active steps to minimise credit losses including
formal new business approval, and the close supervision of credit
limits and exposures and the proactive management of any overdue
accounts. Additionally, risk assessments are performed on an
ongoing basis on all deposit taking banks and custodians and our
outsourced relationships.
Regulatory risk
The Company operates in a highly regulated environment both in
the UK and in the Isle of Man. The Group has Internal Audit and
Compliance and Risk functions resourced with appropriately
qualified and experienced individuals. The Directors monitor
changes and developments in the regulatory environment and ensure
that sufficient resources are made available for the Group to
implement any required changes. The impact of the regulatory
environment on the Group's management of its capital is discussed
in note 25 of the financial statements.
By Order of the Board
P Tansey
Finance Director
31 July 2019
Consolidated statement of comprehensive income
For the year ended 31 March 2019
16 months
Year ended ended
31 March 2019 31 March 2018
Note GBP'000 GBP'000
-------------------------------------- ------ --------------- ---------------
Revenue 3&5 23,680 36,416
Administrative expenses 6 (33,419) (40,389)
Expected credit loss 6 (641) (128)
-------------------------------------- ------ --------------- ---------------
Operating loss (10,380) (4,101)
Operating loss before exceptional
item (6,267) (1,595)
Exceptional items 6 (4,113) (2,506)
-------------------------------------- ------ --------------- ---------------
Operating loss after exceptional
items (10,380) (4,101)
Gain on sale of property, plant
and equipment - 343
Realised gains 234 47
Finance income 8 13 21
Finance expense 8 (17) (24)
-------------------------------------- ------ --------------- ---------------
Loss before tax (10,150) (3,714)
Tax 9 (1,176) 769
-------------------------------------- ------ --------------- ---------------
Loss and total comprehensive income
for the year (11,326) (2,945)
-------------------------------------- ------ --------------- ---------------
Earnings per share 11
Basic (35.44)p (10.57)p
Diluted (35.44)p (10.57)p
-------------------------------------- ------ --------------- ---------------
The notes are an integral part of these financial
statements.
There were no items of other comprehensive income for the
current year or prior period.
Consolidated and Company statement of financial position
For the year ended 31 March 2019
Group Company
Restated
---------------------- --- ----------------------
31 March 31 March 31 March 31 March
2019 2018 2019 2018
Note GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ------- ---------- ---------- --- ---------- ----------
ASSETS
Non-current assets
Goodwill 13 - 258 - -
Intangible assets 14 880 3,425 - -
Investment in subsidiaries 15 - - 16,501 9,550
Property, plant and
equipment 12 1,162 1,274 - 2
Investments 16 229 245 - -
Loan receivable 27 - - 644 746
Subordinated loan 17 - - 985 985
Deferred tax asset 18 - 1,197 - 81
------------------------------ ------- ---------- ---------- --- ---------- ----------
2,271 6,399 18,130 11,364
------------------------------ ------- ---------- ---------- --- ---------- ----------
Current assets
Trade and other receivables 19&33 5,698 7,198 2,461 2,358
Other investments 20 1,168 692 - -
Cash and cash equivalents 21 7,702 7,277 3 -
------------------------------ ------- ---------- ---------- --- ---------- ----------
14,568 15,167 2,464 2,358
------------------------------ ------- ---------- ---------- --- ---------- ----------
Total assets 16,839 21,566 20,594 13,722
------------------------------ ------- ---------- ---------- --- ---------- ----------
LIABILITIES
Current liabilities
Trade and other payables 22&33 (6,468) (5,603) (95) (194)
Borrowings - - - (5)
Finance leases 30 - (282) - -
Deferred consideration 24 (1,194) (1,179) - -
Provisions 23 - (33) - -
------------------------------ ------- ---------- ---------- --- ---------- ----------
(7,662) (7,097) (95) (199)
------------------------------ ------- ---------- ---------- --- ---------- ----------
Non-current liabilities
Accruals and deferred
income (412) (439) - -
Deferred consideration 24 - (1,123) - -
Provisions 23 - (35) - -
------------------------------ ------- ---------- ---------- --- ---------- ----------
(412) (1,597) - -
------------------------------ ------- ---------- ---------- --- ---------- ----------
Total liabilities (8,074) (8,694) (95) (199)
------------------------------ ------- ---------- ---------- --- ---------- ----------
Total net assets 8,765 12,872 20,499 13,523
------------------------------ ------- ---------- ---------- --- ---------- ----------
EQUITY
Share capital 2,044 1,493 2,044 1,493
Share premium 11,908 5,503 11,908 5,503
Other reserves 981 982 228 229
Retained earnings (5,524) 5,640 6,319 6,298
Treasury shares (644) (746) - -
------------------------------ ------- ---------- ---------- --- ---------- ----------
Total equity 8,765 12,872 20,499 13,523
------------------------------ ------- ---------- ---------- --- ---------- ----------
The notes are an integral part of these financial
statements.
The Company has elected to take the exemption under Section 408
of the Companies Act 2006 not to present the Company statement of
comprehensive income. The loss after tax of the Company for the
year was GBP113k (2018: profit GBP735k).
These financial statements were approved by the Board of
Directors on 30 July 2019 and were signed on its behalf by:
P Tansey
Director
Consolidated and Company statement of cash flows
For the year ended 31 March 2019
Group Company
Restated
12 months 16 months 12 months 16 months
to to to to
31 March 31 March 31 March 31 March
2019 2018 2019 2018
Notes GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ------- ----------- ----------- ----------- -----------
Operating activities:
(Loss) / profit for the
year (11,326) (2,945) (113) 735
Adjustments for:
12,
Depreciation, amortisation 13,
and impairment 14 3,295 785 2 8
Finance income 8 (13) (21) - -
Finance expense 8 17 24 - -
Tax 9 1,176 (766) 60 -
Gain on sale of property - (343) - -
Losses / (gains) in investments (234) (47) - -
Non-cash adjustment for
share option charge 7 153 55 153 55
Decrease / (increase) in
trade and other receivables 19 1,253 11,397 (103) 2,422
Decrease/(increase) in
loan receivables - - 102 (15)
(Decrease) / increase in
trade and other payables 22 852 (13,996) (98) (1,742)
(Decrease) / increase in
provisions 23 (68) 19 - -
(Decrease) / increase in
deferred consideration 24 108 - - -
Decrease / (increase) in
current asset investments 20 (476) (162) - -
------------------------------------- ------- ----------- ----------- ----------- -----------
Net cash (used in) / generated
from operations (5,263) (6,000) 3 1,463
Taxes received / (paid) 247 (52) - -
------------------------------------- ------- ----------- ----------- ----------- -----------
Net cash (outflows) / inflows
from operation activities (5,016) (6,052) 3 1,463
------------------------------------- ------- ----------- ----------- ----------- -----------
Investing activities:
Proceeds from sale of property - 5,093 - -
Proceeds from sale of investments 642 596 - -
Interest received 8 13 21 - -
Investment in subsidiary 15 - - (6,951) (4,515)
Payment of deferred consideration 24 (1,216) (1,216) - -
Increase in intangible
fixed asset 14 - (106) - -
Acquisition of property,
plant and equipment 12 (380) (589) - -
Acquisition of investments 16 (275) (752) - -
------------------------------------- ------- ----------- ----------- ----------- -----------
Net cash (used in) / generated
from investing activities (1,216) 3,047 (6,951) (4,515)
------------------------------------- ------- ----------- ----------- ----------- -----------
Financing activities
Proceeds from issue of
share capital 6,956 4,066 6,956 4,066
Repayment of borrowings - (994) - (994)
Increase in deferred consideration 24 - 929 - -
Capital element of finance
leases repaid 30 (282) (352) - -
Issue of subordinated loan - - - (25)
Interest paid 8 (17) (24) - -
Dividends paid - - -
------------------------------------- ------- ----------- ----------- ----------- -----------
Net cash generated from
financing activities 6,657 3,625 6,956 3,047
------------------------------------- ------- ----------- ----------- ----------- -----------
Net (decrease) / increase
in cash and cash equivalents 425 620 8 (5)
Cash and cash equivalents
at beginning of year 7,277 6,657 (5) -
------------------------------------- ------- ----------- ----------- ----------- -----------
Cash and cash equivalents
at end of year 7,702 7,277 3 (5)
------------------------------------- ------- ----------- ----------- ----------- -----------
The notes are an integral part of these financial
statements.
Notes to the Statement of Cash Flows (Direct Method and Indirect
Method)
Reconciliation of Group and Company liabilities arising from
financing activities
As at Cash flows Non-cash As at
1 April 31 March
2018 changes 2019
Group GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- ------------ ---------- ----------
Long-term borrowings - - - -
Deferred consideration 2,302 (1,216) 108 1,194
Lease liabilities 282 (282) - -
------------------------- ---------
2,584 (1,498) 108 1,194
------------------------- --------- ------------ ---------- ----------
There are no Company liabilities arising from financing
activities.
The notes on pages 38 to 76 are an integral part of these
financial statements.
Consolidated and Company changes in equity
For the year ended 31 March 2019
Available
Share Share for-sale Other Retained Treasury Total
capital premium reserve Reserves earnings Shares equity
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- --------- --------- ----------- ---------- ------------ ------------ ----------
Balance at 1 December
2016 1,309 1,621 7 982 8,524 (731) 11,712
Loss and total comprehensive
income for the period - - - - (2,945) - (2,945)
------------------------------- --------- --------- ----------- ---------- ------------ ------------ ----------
Employee share option - - - - - - -
scheme
Deferred tax on
employee share options - - - - (36) - (36)
New share capital
issued 184 3,882 - - - (15) 4,051
Other movements - - - - 90 - 90
Share options exercised - - - - - - -
Dividends - - - - - - -
------------------------------- --------- --------- ----------- ---------- ------------ ------------ ----------
Balance at 31 March
2018 1,493 5,503 7 982 5,633 (746) 12,872
Profit and total
comprehensive income
for the year - - - (11,326) - (11,326)
------------------------------- --------- --------- ----------- ---------- ------------ ------------ ----------
Employee share option
scheme - - - - 153 - 153
Deferred tax on
employee share options - - - - (21) - (21)
New share capital
issued 551 6,405 - - - - 6,956
Transfer of
available-for-sale
reserves transferred
to retained earnings - - (7) - 7 - -
Other movements - - - (1) 30 102 131
Share options exercised - - - - - - -
Dividends - - - - - - -
Balance at 31 March
2019 2,044 11,908 - 981 (5,524) (644) 8,765
------------------------------- --------- --------- ----------- ---------- ------------ ------------ ----------
The notes are an integral part of these financial
statements.
Retained earnings include GBP10k ESOT reserve.
At 31 March 2019 the total number of issued ordinary shares is
42,871,276 million shares of 5p each (2018: 29.9 million shares of
5p each). 13,000,000 shares were issued during the period (2018:
3,684,943).
Share Share Other Retained Treasury Total
capital premium Reserves earnings Shares equity
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- --------- ---------- ---------- ---------- ---------
Balance at 1 December 2016 1,309 1,621 229 5,508 - 8,667
Profit and total comprehensive
income for the period - - - 735 - 735
--------------------------------- --------- --------- ---------- ---------- ---------- ---------
Employee share option scheme - - - - - -
Deferred tax on employee share
options - - - (36) - (36)
New share capital issued 184 3,882 - - - 4,066
Other movements - - - 91 - 91
Share options exercised - - - - - -
Dividends - - - - - -
--------------------------------- --------- --------- ---------- ---------- ---------- ---------
Balance at 31 March 2018 1,493 5,503 229 6,298 - 13,523
Profit and total comprehensive
income for the year - - (113) - (113)
--------------------------------- --------- --------- ---------- ---------- ---------- ---------
Employee share option scheme - - - 153 - 153
Deferred tax on employee share
options - - - (21) - (21)
New share capital issued 551 6,405 - - - 6,956
Other movements - - (1) 2 - 1
Share options exercised - - - - - -
Dividends - - - - - -
Balance at 31 March 2019 2,044 11,908 228 6,319 - 20,499
--------------------------------- --------- --------- ---------- ---------- ---------- ---------
The notes are an integral part of these financial
statements.
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.
Other reserves
Other reserves comprise a (consolidated) merger reserve of
GBP753k (2018: GBP753k) and a (consolidated) capital redemption
reserve of GBP228k (2018: GBP229k).
Retained earnings
Retained earnings reflect accumulated income, expenses, gains
and losses, recognised in the statement of comprehensive income and
the statement of recognised income and expense and is net of
dividends paid to shareholders. It includes GBP10k of ESOT
reserve.
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, shares are shown as a separate class of
shareholders' equity with a debit balance.
Notes to the financial statements
For the year ended 31 March 2019
1. GENERAL INFORMATION
WH Ireland Group plc is a public company incorporated in the
United Kingdom. The shares of the Company are traded on the
Alternative Investment Market (AIM), a market operated by the
London Stock Exchange Group plc. The address of its registered
office is 24 Martin Lane, London, EC4R 0DR.
BASIS OF PREPARATION
The principal accounting policies adopted in the preparation of
the consolidated financial statements are set out in note 3. The
policies have been consistently applied to all the years presented,
unless otherwise stated. The group has identified that the adoption
of IFRS 9 & 15 has not materially impacted these consolidated
financial statements.
The consolidated financial statements are presented in GBP,
which is also the Group's functional currency. Amounts are rounded
to the nearest thousand, unless otherwise stated. These financial
statements have been prepared in accordance with International
Financial Reporting Standards, International Accounting Standards
and Interpretations (collectively IFRSs).
2. ADOPTION OF NEW AND REVISED STANDARDS
New standards, amendments and interpretations adopted
There are a number of standards and interpretations which have
been issued by the International Accounting Standards Board that
are effective in future accounting periods that the Group has
decided not to adopt early. The most significant of these are:
This is the first set of the Group's annual financial statements
in which IFRS 9 Financial Instruments and IFRS 15 Revenue from
Contracts with Customers have been applied, the impact of which is
described below.
IFRS 9 Financial Instruments
The Group has identified that the adoption of IFRS 9, which
replaces IAS 39 Financial Instruments: Recognition and Measurement
from 1 April 2018, has not materially impacted its consolidated
financial statements.
Transitions
The standard has been adopted from 1 April 2018 and applied
retrospectively by adjusting where necessary, the statement of
financial position at the date of initial application, with no
requirement to restate comparative periods.
Classification and measurement of financial assets
The Group's financial assets consist of trading assets from its
Corporate and Institutional Broking division are currently measured
at fair value through profit and loss either held for trading or
designated at fair value. This treatment will therefore not change
under IFRS 9. However, at year end the Group held GBP1,168k in
current asset investments and GBP229k of investments as
available-for-sale and other investments, which will be classified
as being at fair value through profit or loss under IFRS 9. This
will mean that all changes in the fair value up to the point of
disposal will be recorded in the consolidated statement of
comprehensive income.
IFRS 9 Financial Instruments
As at 1 April 2018 Old classification New classification Old carrying New carrying
under IAS39 under IFRS 9 amount under amount under
IAS 39 IFRS 9
Financial assets GBP'000 GBP'000
------------------------------ --------------------- ---------------------- --------------- ------------------
Amortised
Cash and cash equivalents cost Amortised cost 7,277 7,277
Trading assets - listed Held for Fair value through
holdings trading profit or loss 692 692
Amortised
Trade receivables cost Amortised cost 2,850 2,850
Designated Fair value through
Financial investments at fair value profit or loss 197 197
Fair value through
Financial investments Available-for-sale profit or loss 48 48
Amortised
Other assets cost Amortised cost 3,077 3,077
------------------------------ --------------------- ---------------------- --------------- ------------------
Total financial assets 14,141 14,141
----------------------------------------------------------------------------- --------------- ------------------
Financial liabilities
------------------------------ --------------------- ---------------------- --------------- ------------------
Amortised
Trade payables cost Amortised cost 1,474 1,474
Amortised
Other liabilities cost Amortised cost 4,129 4,129
------------------------------ --------------------- ---------------------- --------------- ------------------
Total financial liabilities 5,603 5,603
----------------------------------------------------------------------------- --------------- ------------------
Impairment
The Group applies an expected credit loss model when calculating
impairment losses on its trade and other receivables (both current
and non-current). In applying IFRS 9 the Group must consider the
probability of a default occurring over the contractual life of its
trade receivables and contract asset balances on initial
recognition of those assets. The Group does not consider that this
will result in a material increase in impairment provisions.
IFRS 15 Revenue from Contracts with Customers
This standard has been adopted on its mandatorily effective date
of 1 April 2018 and applied on a retrospective basis. There was no
impact of applying the standard on this basis and therefore no
cumulative effect to adjust in the opening balance of retained
earnings. The Group will continue to assess individual customer
contracts for separate performance obligations to allocate the
correct transaction price as they occur. The impact of the new
revenue standard has not had a significant effect on the
consolidated results.
For additional information on the Group's accounting policies
relating to revenue recognition see further down in note 3.
IFRS 16 Leases
Adoption of IFRS 16 will result in the group recognising right
of use assets and lease liabilities for all contracts that are, or
contain, a lease. For leases currently classified as operating
leases, under current accounting requirements the Group does not
recognise related assets or liabilities, and instead spreads the
lease payments on a straight-line basis over the lease term,
disclosing in its annual financial statements the total
commitment.
At 31 March 2019 operating lease commitments amounted to GBP4.2
million (2018: GBP3.9 million) [see note 30].
Transition:
The standard will be adopted from 1 April 2019 using the
modified retrospective approach. This recognises the cumulative
effect of initially applying the standard as an adjustment to
equity at the date of the initial application.
The Group anticipates recording a right of use asset of GBP3.5m
and corresponding lease liability of approximately GBP3.5m, with
the right of use asset to be depreciated over the life of the lease
and the lease liability subsequently measured at amortised cost
using the effective interest rate per IFRS 9.
The actual impacts of adopting the standard on 1 April 2019 may
change because the new accounting policies are subject to change
until the Group presents its next interim financial statements that
include the date of initial application.
Disclosure Initiative: Amendments to IAS 7: Statement of Cash
Flows: The amendments to IAS 7 are intended to improve information
provided to users of financial statement about changes in
liabilities arising from an entity's financing activities. These
amendment have not yet been endorsed.
Classification and Measurement of Share-based Payment
Transactions (Amendments to IFRS 2): The amendments, provide
clarification on the accounting for:
-- The effects of vesting and non-vesting conditions on the
measurement of cash-settled share-based payments;
-- Share-based payment transactions with a net settlement
feature for withholding tax obligations;
-- A modification to the terms and conditions of a share-based
payment that changes the classification of the transaction from
cash-settled to equity-settled.
These amendments have not yet been endorsed.
The Group did not apply early adoption to any of these changes
and, due to the number of unknowns because of the length of time
before potential compulsory adoption, has not yet ascertained their
impact.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation
Where the company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the
company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between group
companies are therefore eliminated in full. The consolidated
financial statements incorporate the results of business
combinations using the acquisition method. In the statement of
financial position, the acquiree's identifiable assets, liabilities
and contingent liabilities are initially recognised at their fair
values at the acquisition date. The results of acquired operations
are included in the consolidated statement of comprehensive income
from the date on which control is obtained until the date on which
control ceased.
In the Company's accounts, investments in subsidiary
undertakings and associates are stated at cost less any provision
for impairment.
Business combinations
All business combinations are accounted for by applying the
purchase method. The purchase method involves recognition, at fair
value, of all identifiable assets and liabilities, including
contingent liabilities, of the subsidiary at the acquisition date,
regardless of whether or not they were recorded in the financial
statements of the subsidiary prior to acquisition. The cost of
business combinations is measured based on the fair value of the
equity or debt instruments issued and cash or other consideration
paid, plus any directly attributable costs. Any directly
attributable costs relating to business combinations after this
date are charged to the statement of comprehensive income in the
period in which they are incurred.
Goodwill arising on a business combination represents the excess
of cost over the fair value of the Group's share of the
identifiable net assets acquired and is stated at cost less any
accumulated impairment losses. Goodwill is tested annually for
impairment. Any impairment is recognised immediately in the
statement of comprehensive income and is not subsequently reversed.
On disposal of a subsidiary the attributable amount of goodwill
that has not been subject to impairment is included in the
determination of the profit or loss on disposal.
Revenue
Revenue is recognised to the extent that it is probable that the
economic benefits associated with the transaction will flow into
the Group. It is measured based on the consideration specified in a
contract with a customer. The application of IFRS 15 Revenue from
contracts with customers has not resulted in any significant
changes to the way the following revenue streams have been
recognised.
Revenue comprises: brokerage commission, investment management
fees, corporate finance fees, commission and fees earned from the
provision of independent financial advice, interest receivable in
the course of ordinary investment management business and rental
income and is stated net of VAT and foreign sales tax.
-- Brokerage commission is recognised when receivable in
accordance with the date of the underlying transaction. It is
variable fee based on a percentage of the transaction and therefore
performance obligation is satisfied at the date of the underlying
transaction to which the brokerage relates.
-- Investment management fees are recognised in the period in
which the related service is provided. It is a variable fee based
on the average daily market value of assets under management and is
invoiced on a calendar quarter basis in arrears. The performance
obligation is satisfied over time as the contractual obligations
are on ongoing throughout the period under contract. The revenue
accrued but not yet invoiced is recognised as a contract asset.
-- Corporate finance advisory fees are fixed fees agreed on a
deal by deal basis and might include non-cash consideration
received in the form of shares, loan notes, warrants or other
financial instruments recognised at the fair value on the date of
receipt and therefore the performance obligation is satisfied at a
point in time when the Group has fully completed the performance
obligations per the contract.
-- Retainer fees are recognised over the length of time of the
agreement. Fees are fixed and invoiced quarterly in advance based
on the agreed engagement letter. The performance obligation is
satisfied over time as the contractual obligations are on ongoing
throughout the period under contract. The deferred revenue is
recognised as a contract liability.
-- Corporate placing commissions are variable fees agreed on a
deal by deal basis based on a percentage of the funds raised as
part of a transaction. This includes non-cash consideration
received in the form of shares, loan notes, warrants or other
financial instruments recognised at the fair value on the date of
receipt. Given that fees related to this work are success based,
there is a significant risk of reversal of the variable revenue and
therefore the performance obligation is satisfied at a point in
time when the transaction is completed.
Employee benefits
The Group contributes to employees' individual money purchase
personal pension schemes. The assets of the schemes are held
separately from those of the Group in independently administered
funds. The amount charged to the statement of comprehensive income
represents the contributions payable to the schemes in respect of
the period to which they relate.
Short term employee benefits are those that fall due for payment
within twelve months of the end of the period in which employees
render the related service. The cost of short term benefits is not
discounted and is recognised in the period in which the related
service is rendered. Short term employee benefits include
cash-based incentive schemes and annual bonuses.
Share-based payments
The share option programmes allows Group employees to receive
remuneration in the form of equity-settled share-based payments
granted by the Company.
The cost of equity-settled transactions with employees is
measured by reference to the fair value at the date at which they
are granted. The fair value of the options granted is measured
using an option valuation model. The cost of equity-settled
transactions is recognised, together with a corresponding increase
in equity, over the period in which the performance or service
conditions are fulfilled (the vesting period), ending on the date
on which the relevant employees become fully entitled to the award
(the vesting date). The cumulative expense recognised for equity
settled transactions, at each reporting date until the vesting
date, reflects the extent to which the vesting period has expired
and the Group's best estimate of the number of equity instruments
that will ultimately vest. The statement of comprehensive income
charge or credit for a period represents the movement in cumulative
expense recognised at the beginning and end of that period.
Where the terms of an equity-settled award are modified, an
incremental value is calculated as the difference between the fair
value of the repriced option and the fair value of the original
option at the date of re-pricing. This incremental value is then
recognised as an expense over the remaining vesting period in
addition to the amount recognised in respect of the original option
grant.
Where an equity-settled award is cancelled or settled (that is,
cancelled with some form of compensation) it is treated as if it
had vested on the date of cancellation and any expense not yet
recognised for the award is recognised immediately. However, if a
new award is substituted for the cancelled award and is designated
as a replacement award on the date that it is granted, the
cancelled and new awards are treated as if they were a modification
of the original award, as described in the previous paragraph. Any
compensation paid up to the fair value of the award is accounted
for as a deduction from equity. Where an award is cancelled by
forfeiture, when the vesting conditions are not satisfied, any
costs already recognised are reversed (subject to exceptions for
market conditions).
In all instances, the charge/credit is taken to the statement of
comprehensive income of the Group or Company by which the
individual concerned is employed.
Employee Benefit Trust (EBT)
The cost of purchasing own shares held by the EBT are shown as a
deduction against equity. The proceeds from the sale of own shares
held increase equity. Neither the purchase nor sale of own shares
leads to a gain or loss being recognised in the consolidated
statement of comprehensive income.
Employee Share Ownership Trust (ESOT)
The Company has established an ESOT. The assets and liabilities
of this trust comprise shares in the Company and loan balances due
to the Company. The Group includes the ESOT within these
consolidated Financial Statements and therefore recognises a
Treasury shares reserve in respect of the amounts loaned to the
ESOT and used to purchase shares in the Company. Any cash received
by the ESOT on disposal of the shares it holds, will be used to
repay the loan to the Company.
Treasury shares
The costs of purchasing Treasury shares are shown as a deduction
against equity. The proceeds from the sale of own shares held
increase equity. Neither the purchase nor sale of own shares leads
to a gain or loss being recognised in the consolidated statement of
comprehensive income.
Income taxes
Income tax on the profit or loss for the periods presented,
comprising current tax and deferred tax, is recognised in the
statement of comprehensive income except to the extent that it
relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income
for the year, using rates enacted or substantively enacted at the
reporting period end date and any adjustment to tax payable in
respect of previous years.
-- Deferred tax is provided for temporary differences, at the
reporting period end date, between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes. The following temporary differences are not provided
for;
-- goodwill which is not deductible for tax purposes;
-- the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit; and
-- temporary differences relating to investments in subsidiaries
to the extent that they will probably not reverse in the
foreseeable future.
The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively
enacted at the reporting period end date (note 18).
A deferred tax asset is recognised for all deductible temporary
differences and unused tax losses only to the extent that it is
probable that future taxable profits will be available against
which the assets can be utilised. Deferred tax assets are reduced
to the extent that it is no longer probable that the related tax
benefit will be realised.
Prior period adjustments
Where material errors in the financial statements are detected
resulting adjustments are made and explanations provided in
relevant disclosure notes. If such errors are in a prior period and
it is determined that they are material then adjustments are made
and restatements made to the prior years within the current
financial report in accordance with International Accounting
Standard IAS8 'Accounting Policies, Changes in Accounting Estimates
and Errors'. See note 33.
Leases
Where assets are financed by leasing agreements that give rights
approximating to ownership (finance leases), the assets are treated
as if they had been purchased outright. The amount capitalised is
the present value of the minimum lease payments payable over the
term of the lease. The corresponding leasing commitments are shown
as amounts payable to the lessor. Depreciation on the relevant
assets is charged to the statement of comprehensive income over the
shorter of estimated useful economic life and the period of the
lease.
Lease payments are analysed between principal and interest
components so that the interest element of the payment is charged
to the statement of comprehensive income over the period of the
lease and is calculated so that it represents a constant proportion
of the balance of the principal payments outstanding. The principal
part reduces the amounts payable to the lessor. Rentals paid under
leases which do not result in the transfer to the Company of
substantially all the risks and rewards of ownership (operating
leases) are charged against income on a straight line basis over
the lease term.
Freehold land and buildings
Freehold land and buildings are carried at the lower of cost or
periodic valuation by a professionally qualified surveyor. Freehold
land is not depreciated.
Plant and equipment
Plant and equipment is stated at cost less accumulated
depreciation and impairment. Depreciation is calculated, using the
straight line method, to write down the cost or revalued amount of
plant and equipment over the assets' expected useful lives, to
their residual values, as follows:
Computers, fixtures and fittings - 4 to 7 years
Intangible assets
Measurement
Intangible assets with finite useful lives that are acquired
separately are measured, on initial recognition at cost. Following
initial recognition, they are carried at cost less accumulated
amortisation and any accumulated impairment. The cost of intangible
assets acquired in a business combination is their fair value at
the date of acquisition.
Intangible assets other than goodwill are amortised over the
expected pattern of their consumption of future economic benefits,
to write down the cost of the intangible assets to their residual
values as follows:
Client relationships - 10 years
The amortisation period and method for an intangible asset are
reviewed at least at each financial year end. Changes in the
expected useful life or the expected pattern of consumption of
future economic benefits embodied in the asset or its residual
value are accounted for by changing the amortisation period or
method and treated as changes in accounting. It was determined
following the annual review that an appropriate period to amortise
was 10 years (previously 20). See note 13.
Impairment
The carrying amounts of the Group's intangible assets are
reviewed when there is an indicator of impairment and the asset's
recoverable amount is estimated.
The recoverable amount is the higher of the asset's fair value
less costs to sell (or net selling price) and its value-in-use.
Value-in- use is the discounted present value of estimated future
cash inflows expected to arise from the continuing use of the asset
and from its disposal at the end of its useful life. Where the
recoverable amount of an individual asset cannot be identified, it
is calculated for the smallest cash-generating unit (CGU) to which
the asset belongs. A CGU is the smallest identifiable group of
assets that generates cash inflows independently.
Intangible assets
When the carrying amount of an asset (or CGU) exceeds its
recoverable amount, the asset (or CGU) is considered to be impaired
and is written down to its recoverable amount. An impairment loss
is immediately recognised as an expense. Any subsequent reversal of
impairment credited to the statement of comprehensive income shall
not cause the carrying amount of the intangible asset to exceed the
carrying amount that would have been determined had no impairment
been recognised.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets and liabilities
Investments are recognised and derecognised on the trade date
where the purchase or sale of an investment is under a contract
whose terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at
fair value, plus transaction costs, except for those financial
assets classified as at fair value through profit or loss, which
are initially measured at fair value.
Assets and liabilities are presented net where there is a legal
right to off-set and an intention to settle in that way.
Policy applicable from 1 April 2018 under IFRS 9:
The three principal classification categories for financial
assets are: measured at amortised cost, fair value through other
comprehensive income (FVOCI) and fair value through profit or loss
(FVTPL). The classification of financial assets under IFRS 9 is
generally based on the business model in which a financial asset is
managed and its contractual cash flow characteristics.
Financial assets are not reclassified subsequent to their
initial recognition unless the Group changes its business model for
managing financial assets, in which case all affected financial
assets are reclassified on the first day of the first reporting
period following the change in the business model.
A financial asset is measured at amortised cost if it meets both
of the following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held
for trading, the Group may irrevocably elect to present subsequent
changes in the investment's fair value in OCI. This election is
made on an investment-by-investment basis.
All financial assets not classified as measured at amortised
cost or FVOCI as described above are measured at FVTPL. This
includes all derivative financial assets. On initial recognition,
the Group may irrevocably designate a financial asset that
otherwise meets the requirements to be measured at amortised cost
or at FVOCI as at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would otherwise arise.
Assets held at FVTPL are subsequently measured at fair value.
Net gains and losses, including any interest or dividend income,
are recognised in profit or loss.
Financial assets at amortised cost are subsequently measured at
amortised cost using the effective interest method. The amortised
cost is reduced by impairment losses. Interest income, foreign
exchange gains and losses and impairment are recognised in profit
or loss. Any gain or loss on derecognition is recognised in profit
or loss.
Financial instruments
Debt investments at FVOCI are subsequently measured at fair
value. Interest income calculated using the effective interest
method, foreign exchange gains and losses and impairment are
recognised in profit or loss. Other net gains and losses are
recognised in OCI. On derecognition, gains and losses accumulated
in OCI are reclassified to profit or loss.
Equity investments at OCI are subsequently measured at fair
value. Dividends are recognised as income in profit or loss unless
the dividend clearly represents a recovery of part of the cost of
the investment. Other net gains and losses are recognised in OCI
and are never reclassified to profit or loss.
Policy applicable before 1 April 2018 under IAS 39:
Financial assets
Initial recognition
The classification of financial assets at initial recognition
depends upon the purpose for which they are acquired and their
characteristics. Financial assets are measured initially at their
fair value. Financial assets not at fair value through profit or
loss include any directly attributable incremental costs of
acquisition or issue.
Financial assets classified as available-for-sale
Available-for-sale financial assets are financial assets
designated as such on initial recognition or those that do not
qualify to be classified in another category. They include equity
investments, other than those in subsidiary undertakings and may be
in quoted or unquoted entities.
After initial measurement, available-for-sale financial assets
are subsequently measured at fair value. In the case of listed
investments, the fair value represents the quoted bid price of the
investment at the reporting period end date. The fair value of
unlisted investments is estimated by reference to similar recent
arm's length transactions.
Unrealised gains and losses are recognised directly in equity in
the available-for-sale reserve. When an available-for-sale
financial asset is disposed of, the cumulative gain or loss
previously recognised in equity is recognised in the statement of
comprehensive income in profit on disposal of available-for-sale
investments. Losses arising from impairment are recognised in the
statement of comprehensive income. Any profit or loss on sale is
credited or charged to the statement of comprehensive income.
Other investments
Other investments comprise financial assets designated as fair
value through profit or loss and include warrants and quoted
investments obtained as a result of a corporate finance
transaction. Warrants are valued by taking the mean of the results
from three different methods; Black Scholes with short-term
volatility, Black Scholes with longer-term volatility and an
Empirical model.
Short-term principal positions taken on behalf of clients, are
recognised and derecognised on trade date. Other investments are
measured at fair value which is determined directly by reference to
published prices in an active market where available. Gains or
losses arising from changes in fair value or disposal of other
investments are recognised through the statement of comprehensive
income.
Quoted investments are valued at the quoted bid price at the
reporting period end date. Changes in the value of these other
investments are recognised directly in the statement of
comprehensive income.
Impairment of financial assets
The Group assesses, at each reporting period end date, whether
there is objective evidence that a financial asset or a group of
financial assets is impaired. In the case of financial assets
classified as available-for-sale, a significant or prolonged
decline in the fair value of the asset is considered in determining
whether the assets are impaired. If any such evidence exists for
available-for-sale financial assets, the cumulative loss, less any
impairment loss previously recognised is removed from equity and
recognised in the statement of comprehensive income.
Financial instruments
If, in a subsequent period, the fair value of an asset
classified as available-for-sale increases, the loss may not be
reversed through the statement of comprehensive income. Any
increase after an impairment loss has been recognised is treated as
a revaluation and is recognised directly in equity.
Loan receivables
Loan receivables are initially recognised at fair value.
Subsequent to initial recognition, loan notes are measured at
amortised cost using the effective interest rate method.
Trade receivables
Trade receivables are measured on initial recognition at fair
value. Appropriate allowances for estimated irrecoverable amounts
are recognised in the statement of comprehensive income when there
is objective evidence that the asset is impaired.
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash
equivalents comprise cash and bank balances and short-term highly
liquid investments with an original maturity of three months or
less.
Financial liabilities
Bank loans and loan notes are initially recognised as financial
liabilities at the fair value of the consideration received.
Subsequent to initial recognition, bank loans and loan notes are
measured at amortised cost using the effective interest rate
method.
Trade payables
Trade payables principally comprise amounts outstanding for
trade purchases and ongoing costs. The Directors consider that the
carrying amount of trade payables approximates to their fair
value.
Provisions
A provision is recognised when a present legal or constructive
obligation has arisen as a result of a past event and it is
probable that an outflow of economic benefits will be required to
settle the obligation and a reliable estimate can be made of the
amount of the obligation.
Deferred consideration
Deferred consideration is recognised at the discounted present
value of amounts payable. Subsequent to initial recognition, it is
rebased over the period in which the consideration is payable, with
the unwinding of the discount being taken to the statement of
comprehensive income.
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY
The preparation of financial statements in accordance with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
There are no significant accounting judgements relevant to the
application of these policies.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including reasonable
expectations of future events. The estimates and judgements that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are discussed below:
Amortisation and impairment of non-financial assets
As noted above, the Group estimates the useful economic lives of
intangible assets, in order to calculate the appropriate
amortisation charge. This is done by the Directors using their
knowledge of the markets and business conditions that generated the
asset, together with their judgement of how these will change in
the foreseeable future.
Where an indicator of impairment exists, value in use
calculations are performed to determine the appropriate carrying
value of the asset. The value in use calculation requires the
Directors to estimate the future cash flows expected to arise for
the CGU and a suitable discount rate in order to calculate present
value. Where the actual future cash flows are less than expected, a
material impairment loss may arise (see note 13 and 14).
Investments in subsidiaries
Where an indicator of impairment exists, management assess the
carrying value of the asset by determining the fair value by
independent assessment of the carrying value of the business units
and by comparative analysis against other similar businesses in the
peer group.
5. SEGMENT INFORMATION
The Group has two principal operating segments, Wealth
Management (WM) and CIB and a number of minor operating segments
that have been aggregated into one operating segment.
The Wealth Management division offers investment management
advice and services to individuals and contains our Wealth Planning
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 (Nomad) 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 or the Isle of Man. Each
reportable segment has a segment manager who is directly
accountable to, and maintains regular contact with, the Chief
Executive Officer.
No customer represents more than ten percent of the Group's
revenue.
The majority of the Group's revenue originates within the UK
with a non-material element originating overseas in the Isle of Man
which has been included in "Other Group companies".
The following tables represent revenue and cost information for
the Group's business segments:
WM CIB Head office Other Group Group
companies*
Year to 31 March GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2019
------------------- ---------- --------- ------------- ------------- ----------
Revenue 14,988 7,639 - 1,052 23,679
Direct costs (16,594) (7,457) (146) (1,459) (25,656)
------------------- ---------- --------- ------------- ------------- ----------
Contribution (1,606) 182 (146) (407) (1,977)
Indirect costs - - (7,200) (258) (7,458)
------------------- ---------- --------- ------------- ------------- ----------
Segment result (1,606) 182 (7,346) (665) (9,435)
Executive board
costs 71 71 (1,087) - (945)
Investment gains - 234 - - 234
Finance income - - 12 1 13
Finance expense - - (17) - (17)
------------------- ---------- --------- ------------- ------------- ----------
(Loss)/ profit
before tax (1,535) 487 (8,438) (664) (10,150)
Tax - - (1,176) - (1,176)
------------------- ---------- --------- ------------- ------------- ----------
(Loss)/ profit
for the year (1,535) 487 (9,614) (664) (11,326)
------------------- ---------- --------- ------------- ------------- ----------
* Other Group companies include WH Ireland (IOM) Limited, WH
Ireland Plc and Stockholm Investments Ltd.
WM CIB Head office Other Group Group
companies*
16 months to 31 March GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2018
------------------------ ---------- --------- ------------- ------------- ----------
Revenue 23,529 11,779 - 1,108 36,416
Direct costs (19,650) (8,554) (370) (675) (29,249)
------------------------ ---------- --------- ------------- ------------- ----------
Contribution 3,879 3,225 (370) 433 7,167
Indirect costs - - (11,268) - (11,268)
------------------------ ---------- --------- ------------- ------------- ----------
Segment result 3,879 3,225 (11,638) 433 (4,101)
Executive board costs 328 328 (656) - -
Investment gains - 47 - 343 390
Finance income - - 2 19 21
Finance expense - - (23) (1) (24)
------------------------ ---------- --------- ------------- ------------- ----------
(Loss)/ profit before
tax 4,207 3,600 (12,315) 794 (3,714)
Tax - - 939 (170) 769
------------------------ ---------- --------- ------------- ------------- ----------
(Loss)/ profit for
the period 4,207 3,600 (11,376) 624 (2,945)
------------------------ ---------- --------- ------------- ------------- ----------
*Other Group companies include WH Ireland (IOM) Limited, WH
Ireland Plc and Stockholm Investments Ltd.
Segment assets and segment liabilities are reviewed by the Chief
Executive Officer in a consolidated statement of financial
position. Accordingly this information is replicated in the Group
Consolidated statement of financial position on page 32. As no
measure of assets or liabilities for individual segments is
reviewed regularly by the Chief Executive Officer, 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.
The impact of applying IFRS 15 on the Group's revenue from
contracts with customers is described is note 3.
Revenue disaggregated by division and timing of recognition
below:
Year ended 31 March Other Group
2019 WM CIB Head Office Companies Group
------------------------ -------- -------- ------------- ------------- --------
Point in time 5,675 4,340 - 131 10,146
Over time 9,313 3,299 - 921 13,533
------------------------ -------- -------- ------------- ------------- --------
Total 14,988 7,639 - 1,052 23,679
------------------------ -------- -------- ------------- ------------- --------
16 months to 31 March Other Group
2018 WM CIB Head Office Companies Group
------------------------ -------- -------- ------------- ------------- --------
Point in time 10,916 7,904 - 110 18,930
Over time 12,613 3,875 - 998 17,486
------------------------ -------- -------- ------------- ------------- --------
Total 23,529 11,779 - 1,108 36,416
------------------------ -------- -------- ------------- ------------- --------
6. OPERATING (LOSS)/PROFIT
Year ended 16 months
ended
31 Mar 2019 31 Mar 2018
Group GBP'000 GBP'000
-------------------------------------------------- ------------- -----------------------
Operating (loss)/profit is stated after
charging/(crediting):
Depreciation of property, plant and equipment 492 218
Amortisation of intangibles 197 263
Operating lease rentals - property (note
11) 543 851
Impairment of intangibles and goodwill (note 2,606 -
12 & 13)*
Employee benefit expense (note 7) 18,022 23,741
Restructuring and one-off legal and regulatory
costs* 1,507 2,506
Other administrative expenses 9,941 12,670
Auditors' remuneration:
Audit of these financial statements 25 25
Amounts payable to the principal auditors
and their associates in respect of:
- audit of financial statements of subsidiaries
pursuant to legislation 54 70
- audit related assurance services 32 45
-------------------------------------------------- ------------- -----------------------
33,419 40,389
Expected credit loss 641 128
-------------------------------------------------- ------------- -----------------------
Total 34,060 40,517
-------------------------------------------------- ------------- -----------------------
Other administrative expenses are incurred in the ordinary
course of the business and do not include any non-recurring
items.
* Exceptional items totalling GBP4,113,000 (2018: 2,506,000) is
shown below:
Year to 16 months to
31 March 2019 31 March 2018
GBP'000 GBP'000
---------------------------------------- ---------------- ----------------
Project Discovery * 442 1,527
Restructuring ** 835 718
Compliance & regulatory projects*** 230 -
MiFID II**** - 261
Goodwill and intangible assets***** 2,606 -
---------------------------------------- ---------------- ----------------
Total 4,113 2,506
---------------------------------------- ---------------- ----------------
Notes:
*As announced on 2 June 2016, the Group entered into a seven
year agreement with SEI Investments (Europe) Ltd, to outsource its
Private Wealth Management back office operations and move to a
"Model B" arrangement. On account of a number of unforeseen
obstacles, significant cost has been incurred in both internal and
external resources dedicated to this project ("Project Discovery")
as the project moves to conclude the transfer of clients and assets
from the prior legacy platforms over to SEI.
**During the period ended 31 March 2018 and 2019 there were a
number of changes within the senior management team and several
external hires were made. The costs of these changes, in respect of
both short term consultancy costs and fixed employment related
costs, are considered by the Board to be non-trading and
exceptional in nature.
*** During the year ending 31 March 2019, the Group incurred
various costs in relation to one off regulatory reports.
****During the period to 31 March 2018 the Group incurred
various costs in preparation for compliance with MiFID II.
*****See notes 13 &14
7. EMPLOYEE BENEFIT EXPENSE
Year ended 16 months
ended
31 Mar 2019 31 Mar 2018
Group GBP'000 GBP'000
------------------------------------------------ ------------- -----------------------
Wages and salaries 11,938 13,961
Bonuses 2,663 4,161
Social security costs 1,908 2,520
Other pension costs 506 552
------------------------------------------------ ------------- -----------------------
17,015 21,194
Non-salaried staff 1,728 2,492
------------------------------------------------ ------------- -----------------------
18,743 23,686
Charge for share options granted to employees
(note 29)* 214 55
Less amounts included within Restructuring (835) -
and non-recurring costs
------------------------------------------------ ------------- -----------------------
18,122 23,741
------------------------------------------------ ------------- -----------------------
*Approximately GBP60k of charges in the current year relate to
the prior period.
Non-salaried staff are commission-only brokers and therefore do
not receive a salary.
Year ended 16 months
ended
31 Mar 2019 31 Mar 2018
Company GBP'000 GBP'000
------------------------ ------------- -------------
Wages and salaries 138 195
Social security costs 15 21
------------------------ ------------- -------------
153 216
------------------------ ------------- -------------
The average number of persons (including Directors) employed
during the year was:
Year ended 16 months
ended
Group 31 Mar 2019 31 Mar 2018
Executive and senior management 7 12
Corporate Broking 33 28
Wealth Management 72 76
Support staff 62 74
---------------------------------- ------------- -------------
Salaried staff 174 190
Non-salaried staff 10 11
---------------------------------- ------------- -------------
184 201
---------------------------------- ------------- -------------
Year ended 16 months
ended
Company 31 Mar 2019 31 Mar 2018
Executive and senior management 4 5
4 5
---------------------------------- ------------- -------------
The total amount paid to Directors in the period, including
social security costs was GBP1.2m (2018: GBP1.0m). Full details of
Directors' remuneration, including that of the highest paid
Director, are disclosed in the Remuneration Report on pages 22-24
of these financial statements.
8. FINANCE INCOME AND EXPENSE
Year ended 16 months
ended
31 Mar 2019 31 Mar 2018
Group GBP'000 GBP'000
------------------------------------- ------------- -------------
Bank interest receivable 13 21
Finance income 13 21
------------------------------------- ------------- -------------
Interest payable on finance leases 17 22
Other interest - 2
------------------------------------- ------------- -------------
Finance expense 17 24
------------------------------------- ------------- -------------
9. TAX EXPENSE
Year ended 16 months
ended
31 Mar 2019 31 Mar 2018
Group GBP'000 GBP'000
---------------------------------------------- ------------- --------------
Current tax expense:
United Kingdom corporation tax at 19.00% - -
(2018: 19.25%)
Adjustment in respect of prior years - -
---------------------------------------------- ------------- --------------
Total current tax - -
---------------------------------------------- ------------- --------------
Deferred tax expense (note 18):
Current year 1,304 (27)
Effect of change in tax rate (137) 3
Adjustments in respect of prior years 9 -
---------------------------------------------- ------------- --------------
Total deferred tax 1,176 (24)
---------------------------------------------- ------------- --------------
Total tax in the statement of comprehensive
income 1,176 (24)
---------------------------------------------- ------------- --------------
Equity items:
Deferred tax current year charge/ (credit) 21 36
---------------------------------------------- ------------- --------------
Total tax in the statement of equity 21 36
---------------------------------------------- ------------- --------------
The tax expense for the year and the amount calculated by
applying the standard United Kingdom corporation tax rate of 19.00%
(2018: 19.25%) to profit before tax can be reconciled as
follows:
Year ended 16 months
ended
31 Mar 2019 31 Mar 2018
Group GBP'000 GBP'000
--------------------------------------------- ------------- ------------------
Loss before tax (10,150) (2,946)
--------------------------------------------- ------------- ------------------
Tax expense: United Kingdom corporation
tax rate of 19.00% (2018: 19.25%) (1,929) (567)
Other expenses not tax deductible 105 97
Income not chargeable to tax (45) (324)
Impact of share options 67 26
Movement in unrecognised deferred tax 3,130 -
Adjustments in respect of prior years 9 (73)
Difference in overseas tax rates (24) (20)
Effect of other tax rates/credits (137) 92
--------------------------------------------- ------------- ------------------
Total tax charge/(credit) in the statement
of comprehensive income 1,176 (769)
--------------------------------------------- ------------- ------------------
10. DIVID
No dividend is proposed in respect of 2019 (2018: none).
11. EARNINGS PER SHARE (EPS)
Basic EPS is calculated by dividing the profit or loss
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 (note 27).
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. In a year
when the Company presents positive earnings attributable to
ordinary shareholders, anti-dilutive 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 16 months
ended
31 Mar 2019 31 Mar 2018
Weighted average number of shares in issue
during the period (thousands) 31,955 27,874
31,955 27,874
--------------------------------------------- ------------- -------------------
Loss for the year attributable to ordinary
shareholders (GBP'000) (11,326) (2,945)
--------------------------------------------- ------------- -------------------
Basic EPS (35.44)p (10.57)p
--------------------------------------------- ------------- -------------------
Diluted EPS (35.44)p (10.57)p
--------------------------------------------- ------------- -------------------
Share options are anti-dilutive as they reduce the stated loss
per share.
12. PROPERTY, PLANT AND EQUIPMENT
Company Group
---------------------------
Computers, Freehold Computers, Total
fixtures property fixtures
and fittings and fittings
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ -------------- ----------- -------------- ---------
Cost
At 30 November 2016 33 6,394 4,341 10,735
Additions - - 589 589
Disposals - (6,394) - (6,394)
------------------------------ -------------- ----------- -------------- ---------
At 31 March 2018 33 - 4,930 4,930
Additions - - 380 380
Disposals - - - -
------------------------------ -------------- ----------- -------------- ---------
At 31 March 2019 33 - 5,310 5,310
------------------------------ -------------- ----------- -------------- ---------
Depreciation and impairment
At 30 November 2016 23 1,644 3,134 4,778
Charge for the year 8 - 522 522
Adjustment on disposal - (1,644) - (1,644)
------------------------------ -------------- ----------- -------------- ---------
At 31 March 2018 31 - 3,656 3,656
Charge for the year 2 - 492 492
Adjustment on disposal - - - -
------------------------------ -------------- ----------- -------------- ---------
At 31 March 2019 33 - 4,148 4,148
------------------------------ -------------- ----------- -------------- ---------
Net book values
At 31 March 2019 - - 1,162 1,162
------------------------------ -------------- ----------- -------------- ---------
At 31 March 2018 2 - 1,274 1,274
------------------------------ -------------- ----------- -------------- ---------
At 30 November 2016 10 4,750 1,207 5,957
------------------------------ -------------- ----------- -------------- ---------
The freehold property was sold on 23 January 2017 for GBP5.27m.
Accordingly, at 30 November 2016, it had been reclassified to
current assets, as held for sale.
13. GOODWILL
Year ended 16 months ended
31 Mar 2019 31 Mar 2018
Group GBP'000 GBP'000
-------------------- ------------- -----------------
Beginning of year 258 258
Impairment (258) -
-------------------- ------------- -----------------
End of year - 258
-------------------- ------------- -----------------
The value of goodwill related wholly to Stockholm Investments
Ltd, a subsidiary set up in 2001 to house the clients and wealth
management business of a then, newly acquired team. That team left
the business in 2017 and the group was unable to retain the
business formerly undertaken by them. As a result, the goodwill
associated with these cash generating units has been fully
impaired.
14. INTANGIBLE ASSETS
Client relationships
Group GBP'000
---------------------- ----------------------------------
Cost
At 30 November 2016 4,475
Additions 106
---------------------- ----------------------------------
At 31 March 2018 4,581
Additions -
---------------------- ----------------------------------
At 31 March 2019 4,581
---------------------- ----------------------------------
Amortisation
At 30 November 2016 893
Charge for the year 263
---------------------- ----------------------------------
At 31 March 2018 1,156
Charge for the year 197
Impairment losses 2,348
---------------------- ----------------------------------
At 31 March 2019 3,701
---------------------- ----------------------------------
Net book values
At 31 March 2019 880
---------------------- ----------------------------------
At 31 March 2018 3,425
---------------------- ----------------------------------
At 30 November 2016 3,582
---------------------- ----------------------------------
Client relationships arise when the group acquires a broker
business with an existing client base. These individual broker
businesses each represent a cash generating unit. During the year,
a number of brokers left the business and the group was unable to
retain the business formerly undertaken by them. As a result, the
client relationships associated with these cash generating units
has been fully impaired.
Furthermore, the group has reassessed the amortisation rate that
applies to continuing client relationships. Taking into account the
attrition rate of the acquired customers, it has been determined
that the remaining useful economic life of the one remaining
acquired client relationship should be shortened from a remaining
useful life of 7 years (2018: 17 years). This revised useful
economic life has been applied prospectively from 1 April 2018.
15. SUBSIDIARIES
Year ended 16 months ended
31 Mar 2019 31 Mar 2018
Company GBP'000 GBP'000
---------------------------- ------------- ------------------
Beginning of year/ period 9,550 5,035
Additions 6,951 4,515
End of year/ period 16,501 9,550
---------------------------- ------------- ------------------
Investments in subsidiaries are stated at cost less
impairment.
The Group raised GBP4.95m on 5 March 2019 and GBP2.00m on 20
September 2018, a total of GBP6.95m by way of placings to existing
and new shareholders, for general corporate purposes. The additions
in the year relate to additional subscriptions for shares in WH
Ireland Limited, a wholly owned subsidiary, in September 2018 and
March 2019.
The Company's subsidiaries, all of which are included in the
consolidated financial statements, are presented below:
Proportion
Country of Principal Class held by Proportion
Subsidiary incorporation activity of shares Group held by Company
England &
WH Ireland Limited Wales WM and CIB Ordinary 100% 100%
WH Ireland (IOM)
Limited Isle of Man WM Ordinary 100% 100%
WH Ireland (Financial England &
Services) Limited Wales Dormant Ordinary 100% -
England &
Readycount Limited Wales Dormant Ordinary 100% 100%
Stockholm Investments England &
Limited Wales Dormant Ordinary 100% 100%
ARE Business
and Professional England &
Limited Wales Dormant Ordinary 100% -
SRS Business
and Professional England &
Limited Wales Dormant Ordinary 100% -
WH Ireland Nominees England &
Limited Wales Nominee Ordinary 100% -
WH Ireland Trustee England &
Limited Wales Trustee Ordinary 100% -
Fitel Nominees England &
Limited Wales Nominee Ordinary 100% -
------------------------ ----------------- ------------- ------------- ------------ ------------------
The registered office of WH Ireland (IOM) Limited is St George's
Tower, Hope Street, Douglas, Isle of Man, IM1 1HR.
The registered office of all other companies listed above is 24
Martin Lane, London, EC4R 0DR.
16. INVESTMENTS
Group
----------------------------------------- --------- ---------- ---------------
Quoted Unquoted Total
Financial assets at fair value through GBP'000 GBP'000 GBP'000
profit or loss
----------------------------------------- --------- ---------- ---------------
At 30 November 2016 - 40 40
Fair value gain - 8 8
----------------------------------------- --------- ---------- ---------------
At 31 March 2018 - 48 48
----------------------------------------- --------- ---------- ---------------
At 31 March 2019 - 48 48
----------------------------------------- --------- ---------- ---------------
Quoted Warrants Total
Other financial assets at fair value GBP'000 GBP'000 GBP'000
through profit or loss
----------------------------------------- --------- ---------- ---------------
At 30 November 2016 4 74 78
Additions - 171 171
Fair value loss (2) (14) (16)
Disposals (1) (35) (36)
----------------------------------------- --------- ---------- ---------------
At 31 March 2018 1 196 197
Additions - - -
Fair value gain - 289 289
Disposals - (305) (305)
----------------------------------------- --------- ---------- ---------------
At 31 March 2019 1 180 181
----------------------------------------- --------- ---------- ---------------
Total investments at 31 March 2019 1 228 229
----------------------------------------- --------- ---------- ---------------
Total investments at 31 March 2018 1 244 245
----------------------------------------- --------- ---------- ---------------
Financial assets at fair value through profit or loss include
equity investments other than those in subsidiary undertakings.
These are measured at fair value with fair value gains and losses
recognised through profit and loss.
Other investments, in the main, comprise financial assets
designated as fair value through profit or loss and include
warrants and equity investments. Financial assets designated as
'fair value through profit or loss' are measured at fair value with
fair value gains and losses recognised directly in the statement of
comprehensive income.
Warrants may be received during the ordinary course of business
and are designated as fair value through profit or loss. There is
no cash consideration associated with the acquisition.
Fair value, in the case of quoted investments, represents the
bid price at the reporting period end date. In the case of unquoted
investments, the fair value is estimated by reference to recent
arm's length transactions. The fair value of warrants is estimated
using established valuation models.
17. SUBORDINATED LOAN
Year ended 16 months
ended
31 Mar 2019 31 Mar 2018
Company GBP'000 GBP'000
-------------------- ------------- ----------------
Beginning of year 985 960
Additions - 25
-------------------- ------------- ----------------
End of year 985 985
-------------------- ------------- ----------------
This interest-free, subordinated loan was originally issued to
WH Ireland (IOM) Limited on 31 March 2014 and has been increased in
line with the needs of the subsidiary. Whilst payment can be
requested giving six months' notice, there is no intention to do
this within the next twelve months; accordingly the loan has been
classified as non-current. The impact of applying IFRS 9 has been
considered and probability of default was assessed and
consequently, it was determined that the expected credit loss is
not material.
18. DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax is provided for temporary differences, at the
reporting period end date, between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes using a tax rate of 19.00% (2018: 19.25%). A deferred tax
asset is recognised for all deductible temporary differences and
unutilised tax losses only to the extent that it is probable that
future taxable profits will be available against which the assets
can be utilised. Deferred tax assets are reduced to the extent that
it is no longer probable that the related tax benefit will be
realised.
Deferred tax assets and liabilities are attributable to the
following:
Deferred tax assets Deferred tax liabilities
----------------------- ----------------------------
2019 2018 2019 2018
Group GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ----------- ---------- ------------- -------------
Property, plant and -
equipment 110 - -
Intangible assets - 147 - -
Share Options - 81 - -
Losses - 824 - -
Provisions - 35 - -
End of year - 1,197 - -
--------------------- ----------- ---------- ------------- -------------
Deferred tax assets Deferred tax liabilities
----------------------- ----------------------------
2019 2018 2019 2018
Company GBP'000 GBP'000 GBP'000 GBP'000
--------------- ----------- ---------- ------------- -------------
Share Options - 81 - -
- 81 - -
--------------- ----------- ---------- ------------- -------------
The unrecognised tax losses amount to GBP16.5m (2018:
GBP6.2m)
Movement in deferred tax is shown below:
At 30 Recognised Recognised At 31 Recognised Recognised At 31
Nov 2016 income in equity Mar 2018 income in equity Mar 2019
statement statement
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ----------- ------------ ------------ ----------- ------------ ------------ -----------
Property,
plant and
equipment (17) 127 - 110 (110) - -
Intangible
assets 165 (18) - 147 (147) - -
Share options 141 (24) (36) 81 (60) (21) -
Provisions 16 19 - 35 (35) - -
Tax losses 411 413 - 824 (824) - -
---------------- ----------- ------------ ------------ ----------- ------------ ------------ -----------
716 517 (36) 1,197 (1,176) (21) -
---------------- ----------- ------------ ------------ ----------- ------------ ------------ -----------
At 30 Recognised Recognised At 31 Recognised Recognised At 31
Nov 2016 income in equity Mar 2018 income in equity Mar 2019
statement statement
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ----------- ------------ ------------ ----------- ------------ ------------ -----------
Share options 141 (24) (36) 81 (60) (21) -
141 (24) (36) 81 (60) (21) -
---------------- ----------- ------------ ------------ ----------- ------------ ------------ -----------
19. TRADE AND OTHER RECEIVABLES
Group Company
------------------------- --------------------------
Restated
31 March 31 March 31 March 31 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ------------ ----------- ------------ ------------
Trade receivables 2,082 2,850 - -
Amounts due from Group
companies - - 2,383 2,298
Other receivables 637 3,077 75 53
Accrued income 2,547 857 (1) -
Prepayments 432 414 4 7
------------------------- ------------ ----------- ------------ ------------
5,698 7,198 2,461 2,358
------------------------- ------------ ----------- ------------ ------------
The carrying value of trade and other receivable balances are
denominated fully in British pounds (2018: 100%).
In preparing these financial statements errors of an offsetting
nature in trade receivables and trade payables were detected in the
prior period of a material nature. Whilst there was no impact on
the income statement for the period the errors were sufficiently
material to warrant correcting adjustments to be made to the prior
period statements. A full explanation is set out in note 33.
Accrued income relates to management fee accrual. Management
fees are accrued on a monthly basis and reconciled to fees
collected quarterly. Consideration to IFRS 9 has been made and it
has been determined that there is a low probability of default and
therefore the expected credit loss is not material.
The impact of applying IFRS 9 to intercompany balances for the
Company has been considered and probability of default was assessed
and consequently, it was determined that the expected credit loss
is not material.
Fees and charges owed by clients are generally considered to be
past due where they remain unpaid five working days after the
relevant billing date. At 31 March 2019, trade receivables (net of
provisions for impairment and doubtful debts) comprised the
following:
Group Company
------------------------- --------------------------
Restated
31 March 31 March 31 March 31 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------ ----------- ------------ ------------
Not past due 471 1,531 - -
Up to 5 days past due 241 - - -
From 6 to 15 days past 27 - - -
due
From 16 to 30 days past
due 196 259 - -
From 31 to 45 days past
due 190 53 - -
More than 45 days past
due 957 1,007 - -
2,082 2,850 - -
-------------------------- ------------ ----------- ------------ ------------
Trade receivables are largely amounts due from retainer clients,
who are invoiced on a quarterly basis in advance. The Group's
policy is to allow 30 days for payment. Consequently, these
receivables have no significant financing component and the Group
have applied the simplified approach in line with IFRS 9.
Calculation of loss allowances are measured at an amount equal to
lifetime expected credit losses (ECLs). The approach taken by the
Group in arriving at the expected credit loss is as follows:
Step 1: The Group have determined the appropriate brackets by
grouping each trade receivables based on the ageing structure.
Step 2: Having determined the appropriate groupings, a
historical loss rate was calculated for each age bracket by
reviewing the pattern of payment of trade receivables over the past
12 months.
Step 3: This historical loss rate has been applied to each
ageing bracket of trade receivables as at the balance sheet date to
arrive at an expected credit loss for each grouping. All trade
receivables over 365 days have a 100% historical loss rate loss
applied to them.
Based on the above, the group recognised an expected credit loss
of GBP641k (2018: GBP128k).
The maximum exposure to credit risk, before any collateral held
as security, is the carrying value of each class of receivable set
out above.
The Directors consider that the carrying amounts of trade and
other receivables approximate their fair value.
Movements in impairment provisions were as follows:
Group Company
---------------------- ----------------------
31 March 31 March 31 March 31 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---------- ---------- ---------- ----------
Opening balance 436 309 - -
Amounts released from
provision due to recovery (51) (72) - -
Amounts written off, (474) - - -
previously fully provided
Amounts charged to the
statement of comprehensive
income 692 199 - -
Closing balance 603 436 - -
------------------------------ ---------- ---------- ---------- ----------
20. OTHER INVESTMENTS
Group Company
---------------------- ----------------------
31 March 31 March 31 March 31 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- ---------- ---------- ----------
Current asset investment 1,168 692 - -
These represent short-term principal positions in the form of
listed investments which are held at market value. No tax was
payable at that value.
21. CASH AND CASH EQUIVALENTS
Group Company
---------------------- ----------------------
31 March 31 March 31 March 31 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ---------- ---------- ---------- ----------
Cash and cash equivalents 7,702 7,277 3 -
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.
Money held on behalf of clients is not included in cash and cash
equivalents on the statement of financial position. Client money at
31 March 2019 for the Group was GBP469k (2018: GBP1,505k). There is
no client money held in the Company (2018: GBPnil).
22. TRADE AND OTHER PAYABLES
Group Company
---------------------- ----------------------
Restated
31 March 31 March 31 March 31 March
2019 2018 2019 2018
Company GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---------- ---------- ---------- ----------
Trade payables 1,553 1,474 41 155
Amounts due to Group - - - -
companies
Other payables 1,149 339 (12) -
Tax and social security 373 771 (1) -
Deferred income 311 346 - -
Accruals 3,082 2,673 67 39
-------------------------- ---------- ---------- ---------- ----------
6,468 5,603 95 194
-------------------------- ---------- ---------- ---------- ----------
The Directors consider that the carrying amounts of trade and
other payables approximate their fair value.
During the process of preparing these financial statements
errors were detected in the prior period of a material nature.
Whilst there was no impact on the income statement for the period
the errors were sufficiently material to warrant correcting
adjustments to be made to the prior period statements. A full
explanation and the resulting changes made is set out in note
33.
Deferred income relates to retainer fees invoiced in advance and
spread over the length of the period, typically quarterly. There
was no impact of applying IFRS 15 to this revenue stream.
23. PROVISIONS
IFA clawback Complaints Total
provision provision
Group GBP'000 GBP'000 GBP'000
------------------------------------- -------------- ------------ -----------------
At 1 April 2018 35 33 68
Provided during the year (35) (10) (45)
Utilised during the year - (23) (23)
Total investments at 31 March - - -
2019
31 March 31 March
2019 2018
GBP'000 GBP'000
Provisions included in current
liabilities - 33
Provisions included in non-current
liabilities - 35
- 68
The IFA clawback provision relates to any policy cancellations
and the resultant potential repayment of past independent financial
advisory commission earned, relating mainly to products such as
pensions and insurance.
The complaints provision relates to any complaints which may
result in cash outflows falling below the relevant insurance
excess.
The expected period of settlement of the outstanding complaints
provision is six months from the year end.
24. DEFERRED CONSIDERATION
Deferred consideration represents the amounts payable over a
three year period from September 2016 to October 2019, for certain
client relationships (note 14).
Client relationships
Group GBP'000
At 31 March 2018 2,302
Additions during the year:
Charged to Statement of Comprehensive income 108
Paid during the year (1,216)
At 31 March 2019 1,194
31 March 2019 31 March 2018
GBP'000 GBP'000
Included in current liabilities 1,194 1,179
Included in non-current liabilities - 1,123
1,194 2,302
25. FINANCIAL RISK MANAGEMENT
The fair value of all of the Group's and the Company's financial
assets and liabilities approximated its carrying value at the
reporting period end date. The carrying amount of non-current
financial instruments, including floating interest rate borrowing,
is not significantly different from the fair value of these
instruments based on discounted cash flows. The significant methods
and assumptions used in estimating fair values of financial
instruments are summarised below:
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include
equity investments, other than those in subsidiary undertakings. In
the case of listed investments, the fair value represents the
quoted bid price at the reporting period end date. The fair value
of unlisted investments is estimated by reference to recent arm's
length transactions.
Other investments
Other investments include warrants and equity investments,
categorised as fair value through profit or loss. In the case of
listed investments, the fair value represents the quoted bid price
at the reporting period end date. The fair value of unlisted
investments is estimated by reference to recent arm's length
transactions. In the case of warrants, the fair value is estimated
using established valuation models.
Trade receivables and payables
The carrying value less impairment provision of trade
receivables and payables is assumed to approximate their fair
values due to their short-term nature.
Borrowings
Borrowings are measured at amortised cost using the effective
interest rate method. The tables below summarise the Group's main
financial instruments by financial asset type:
31 March 2019
Amortised cost Fair value through Total
profit or loss
Group GBP'000 GBP'000 GBP'000
Financial assets
Investments - 48 48
Other investments - 1,349 1,349
Trade and other receivables 5,698 - 5,698
Cash and cash equivalents 7,702 - 7,702
Financial liabilities
Trade and other payables 6,468 - 6,468
Deferred consideration 1,194 - 1,194
31 March 2018
Loans Amortised Held at fair Fair value Total
and other cost value as available through
receivables for sale assets profit or
loss
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Investments - - 48 - 48
Other investments - - 692 198 890
Trade and other receivables 7,198 - - - 7,198
Cash and cash equivalents 7,277 - - 7,277
Financial liabilities
Trade and other payables - 5,603 - - 5,603
Finance leases - 282 - - 282
Deferred consideration - 2,302 - - 2,302
The tables below summarise the Company's main financial
instruments by financial asset type:
31 March 2019
Amortised Fair value Total
cost through profit
or loss
Company GBP'000 GBP'000 GBP'000
Financial assets
Subordinated loan (note 17) 985 - 985
Group balances 2,383 - 2,383
Financial liabilities
Trade and other payables 41 - 41
31 March 2018
Amortised Fair value Total
cost through profit
or loss
Company GBP'000 GBP'000 GBP'000
Financial assets
Subordinated loan (note 17) 985 - 985
Group balances 2,298 - 2,2983
Financial liabilities
Trade and other payables 155 - 155
Risks
The main risks arising from the Group's financial instruments
are credit risk, liquidity risk and market risk. Market risk
comprises, interest rate risk and other price risk. The Directors
review and agree policies for managing each of these risks which
are summarised below:
Credit risk
Credit risk is the risk that clients or other counterparties to
a financial instrument will cause a financial loss by failing to
meet their obligations. Credit risk relates, in the main, to the
Group's trading and investment activities and is the risk that
third parties fail to pay amounts as they fall due. Formal credit
procedures include approval of client limits, approval of material
trades, collateral in place for trading clients and chasing of
overdue accounts. Additionally, risk assessments are performed on
banks and custodians.
The maximum exposure to credit risk at the end of the reporting
period is equal to the statement of financial position figure.
Impairment policy and information on collateral held against trade
receivables can be found in note 19. There were no other past due,
impaired or unsecured debtors.
Financial assets that are neither past due nor impaired in
respect of trade receivables relate mainly to bonds, equity and
gilt trades quoted on a recognised exchange, are matched in the
market, and are either traded on a cash against documents basis or
against a client's portfolio.
The credit risk on liquid funds, cash and cash equivalents is
limited due to deposits being held at the Group's main bank with a
credit rating of "A", assigned by Standard and Poor's.
There has been no change to the Group's exposure to credit risk
or the manner in which it manages and measures the risk during the
period.
Liquidity risk
Liquidity risk is the risk that obligations associated with
financial liabilities will not be met. The Group monitors its risk
to a shortage of funds by considering the maturity of both its
financial investments and financial assets (for example, trade
receivables) and projected cash flows from operations.
The Group's objective is to maintain the continuity of funding
through the use of bank facilities where necessary, which are
reviewed annually with the Group's Banker, the Bank of Scotland.
Items considered are limits in place with counterparties which the
bank are required to guarantee, payment facility limits, as well as
the need for any additional borrowings.
The Directors most recently renewed the Group's main banking
facilities in February 2015. As an evergreen facility there is no
requirement to update the agreement annually, although a formal
review of facilities is undertaken at least annually.
The table below summarises the maturity profile of the Group's
financial liabilities based on contractual undiscounted
payments:
31 March 2019
Payable Payable in Payables after Total contractual
within 1 2 to 5 years more than payments
year 5 years
Group GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables 3,661 - - 3,661
Accruals 2,807 412 - 3,219
Deferred consideration 1,194 - - 1,194
Other financial liabilities - - - -
7,662 412 - 8,074
31 March 2018
Payable Payable in Payables after Total contractual
within 1 2 to 5 years more than payments
year 5 years
Group GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables
(restated) 2,584 - - 2,584
Finance leases 282 - - 282
Accruals 3,019 439 - 3,458
Deferred consideration 1,179 1,123 - 2,302
Other financial liabilities 33 35 - 68
7,097 1,597 - 8,694
The table below summarises the maturity profile of the Company's
financial liabilities based on contractual undiscounted
payments:
31 March 2019
Payable Payable in Payables after Total contractual
within 1 2 to 5 years more than 5 payments
year years
Company GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables 41 - - 41
Accruals 67 - - 67
108 - - 108
31 March 2018
Payable Payable in Payables after Total contractual
within 1 2 to 5 years more than 5 payments
year years
Company GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables 155 - - 155
Accruals 39 - - 39
194 - - 194
Market Risk
Interest rate risk
The Group's exposure to the risk of changes in market interest
rates relates to the Group's amount of interest receivable on cash
deposits. The maximum exposure for interest is not significant.
Other price risk
Other price risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in market prices (other than those arising from interest rate risk)
whether those changes are caused by factors specific to the
individual financial instrument or its issuer or factors affecting
all similar financial instruments traded in the market. Other
investments are recognised at fair value and subject to changes in
market prices.
The Group manages other price risk by monitoring the value of
its financial instruments on a monthly basis and reporting these to
the Directors and Senior Management. The Group has disposed of a
number of its investments during the course of the year, which has
helped mitigate risk. However, the risk of deterioration in prices
remains high whilst the market continues to be volatile.
The risk of future losses is limited to the fair value of
investments as at the year-end of GBP229k (2018: GBP245k). See note
16.
Fair value measurement recognised in the statement of financial
position
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 to 3 based on the degree to which
the fair value is observable:
-- Level 1 at fair value measurements are those derived from
quoted prices (unadjusted) in active markets for identical assets
and liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than the quoted price included within Level 1 that are
observable for the asset or a liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from formal
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
31 March 2019
Level Level 2 Level 3 Total
1
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair value
through profit or loss
Unquoted equities - - 48 48
Financial instruments designated
at fair value through profit
or loss
Quoted equities - - - -
Other investments - - 181 181
Total - - 229 229
31 March 2018
Level Level 2 Level 3 Total
1
GBP'000 GBP'000 GBP'000 GBP'000
Financial assets at fair value
through profit or loss
Unquoted equities - - 48 48
Financial instruments designated
at fair value through profit
or loss
Quoted equities 1 - - 1
Other investments - - 196 196
Total 1 - 244 245
There were no transfers between levels in either financial
year.
Unquoted equities Other investments
GBP'000 GBP'000
Balance at 30 November 2016 40 74
Total gains or losses in statement of
comprehensive income 8 (14)
Purchases - 172
Transfer out - (34)
Balance at 31 March 2018 48 198
Total gains or losses in statement of
comprehensive income - (17)
Balance at 31 March 2019 48 181
26. CAPITAL MANAGEMENT
The capital of the Group comprises share capital, share premium,
retained earnings and other reserves. The total capital at 31 March
2019 amounted to GBP10.0m for the Group (2018: GBP12.9m) and
GBP20.6m for the Company (2018: GBP13.5m). The primary objective of
the Group's capital management is to ensure that it maintains a
strong capital structure in order to support the development of its
business, to maximise shareholder value and to provide benefits for
its other stakeholders.
These objectives are met by managing the level of debt and
setting dividends paid to shareholders at a level appropriate to
the performance of the business.
Certain activities of the Group are regulated by the FCA which
is the statutory regulator for financial services business and has
responsibility for policy, monitoring and discipline for the
financial services industry. The FCA requires the Group's resources
to be adequate, that is, sufficient in terms of quantity, quality
and availability, in relation to its regulated activities.
The Group monitors capital on a daily basis by measuring
movements in the Group regulatory capital requirement and through
its Internal Capital Adequacy Assessment Process (ICAAP).
Compliance with FCA minimum common equity tier 1 regulatory capital
requirements was maintained during the year and the Group is
satisfied that there is and will be, sufficient capital to meet
these regulatory requirements for the foreseeable future.
27. TREASURY SHARES
Year ended Period ended
31 March 2019 31 March 2018
Group GBP'000 GBP'000
At 31 March 746 731
Additions - 15
Disposals (102) -
At 31 March 644 746
At 31 March 2019 no shares in the Company were held in Treasury
(2018: nil shares). At 31 March 2019 no shares in the Company were
held in the EBT (2018: nil shares) and the ESOT held 2,139,500
shares (2018: 2,289,500), at a nominal value of 5p per share. This
represents 4.64% of the called up share capital (2018: 6.66%).
28. EMPLOYEE BENEFIT TRUSTS (EBT)
The WH Ireland EBT was established in October 1998 and the WH
Ireland Group plc Employee Share Ownership Trust (ESOT) was
established in October 2011, both for the purpose of holding and
distributing shares in the Company for the benefit of the
employees. All costs of the EBT and ESOT are borne by the Company
or its subsidiary WH Ireland Limited.
Joint Ownership Arrangements (the 'JOE Agreements') are in place
in relation to 2,139,500 shares between the trustees of the ESOT
and a number of employees (the 'Employees'). Under the JOE
Agreements, the option for the Employees to acquire the interest
that the trustees of the ESOT has in the jointly owned shares,
lapses when an employee is deemed to be a Bad Leaver. If an
Employee ceases to be an employee of the Group, other than in the
event of critical illness or death, the Employee is deemed to be a
Bad Leaver.
The shares carry dividend and voting rights, although these have
been waived by all parties to the JOE Agreements. Due to the
consolidation of the ESOT into the Group accounts, these shares are
shown in Treasury (note 27). Due to the nature of these
arrangements, the options contained in the JOE Agreements are
accounted for as share based payments (note 29).
29. SHARE-BASED PAYMENTS
The Group had two schemes for the granting of non-transferable
options to employees during the reporting period; the approved
Company Share Ownership Plan (CSOP) and a Save as You Earn Schemes
(SAYE 3). In addition, options are held in the ESOT (note 29).
Details of these schemes can be found in the Remuneration Report on
pages 22 to 24. SAYE 3 matured following the end of the period in
May 2019.
Movements in the number of share options outstanding that were
issued post 7 November 2002 and their related weighted average
exercise prices (WAEP) are as follows:
31 March 2019
CSOP ESOT SAYE 3 ESOT
Options WAEP Options WAEP Options WAEP Options WAEP
Outstanding at beginning
of year 163,589 66.23p 1,650,000 78.14p 794,564 82.00p 629,500 92.50p
Granted 5,000 66.23p - - - - - -
Expired/ forfeited (40,000) 66.23p - - - - (179,500) 92.50p
Exercised - - - - - - - -
Outstanding at end
of year 128,589 66.23p 1,650,000 78.14p 794,564 82.00p 450,000 92.50p
Exercisable at end
of year 128,589 66.23p 1,500,000 78.14p - - - -
31 March 2018
CSOP ESOT SAYE 3 ESOT
Options WAEP Options WAEP Options WAEP Options WAEP
Outstanding at
beginning of year 235,522 66.23p 1,650,000 78.14p 827,490 82.00p 329,500 92.50p
Granted - - - - - - 300,000 92.50p
Expired/ forfeited - - - - (32,926) 82.00p - -
Exercised (71,933) 105.00p - - - - - -
Outstanding at end
of year 163,589 66.23p 1,650,000 78.14p 794,564 82.00p 629,500 92.50p
Exercisable at
end of year 163,589 66.23p 1,500,000 78.14p - - - -
The pricing models used to value these options and their inputs
are as follows:
Pricing Models
CSOP ESOT SAYE 3 ESOT
Pricing model Black Scholes Monte Carlo Black Scholes N/A
Date of grant 02/11/11-24/05/12 28/10/13-13/04/16 18/05/16 30/05/17
Share price at grant(p) 56.5-83.0 74.5-114.5 92.0 125.0
Exercise price (p) 57.0-84.5 0.0-114.5 82.00 0.00
Expected volatility 32.6332-33.2130 43.0000-37.0000 28.0000 N/A
(%)
Expected life (years
) 5 5 3 3
Risk-free rate (%) 1.2993-0.7999 0.8000-1.9300 0.5400 N/A
Expected dividend
yield (%) 0.00 0.67-2.19 2.00 N/A
The volatility of the Company's share price was estimated as the
standard deviations of daily historical continuously compounded
returns over a period commensurate with the expected life of the
option, back from the date of grant and annualised by the factor of
the square root of 252, assuming 252 trading days per year (2018:
252 trading days). For options granted in 2004, volatilities were
calculated back to the date of the Group's flotation in July
2000.
Awards granted on 30 May 2017 are economically equivalent to
shares with dividend rights. Therefore the fair value has been
taken as the closing share price on the date of grant of
GBP1.25.
The risk-free rate is the yield to maturity on the date of grant
of a UK Gilt Strip, with term to maturity equal to the life of the
option.
The Group recognised a total net debit of GBP214k during the
year (2018: GBP55k), relating to share-based payment
transactions.
30. LEASING COMMITMENTS
Finance leases
The net carrying value of these assets at 31 March 2019 was
GBPnil (2018: GBP563,040).
Group Minimum Lease
payments
Capital Interest 2019 2018
The present value of future lease GBP'000 GBP'000 GBP'000 GBP'000
payments are analysed as:
Within one year - - - 299
Greater than one year but less - - - -
than five
Total minimum lease payments - - - 299
Less finance charge - - - (17)
Present value of minimum lease
payment - - - 282
31 March 31 March
2019 2018
Group GBP'000 GBP'000
Disclosed as:
Current finance lease payable - 282
Non-current finance lease payable - -
Total finance lease payable - 282
Operating lease commitments
The future aggregate minimum lease payments under
non-cancellable operating leases are as follows:
Group Company
31 March 31 March 31 March 31 March
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
No later than one year 770 611 - -
Later than one year and
not later than five years 2,686 2,253 - -
After five years 736 993 - -
4,192 3,857 - -
Operating lease payments represent rentals payable for office
premises and equipment. Leases are negotiated for an average of six
years. The leases do not contain provisions for contingent rental
payments, purchase options or escalation charges and do not impose
restrictions beyond the property or equipment to which they
relate.
31. CAPITAL COMMITMENTS
There were no capital commitments for the Group or the Company
as at 31 March 2019 (2018: GBPnil).
32. RELATED PARTY TRANSACTIONS
Group
Services rendered to related parties were on the Group's normal
trading terms in an arms' length transaction. Amounts outstanding
are unsecured and will be settled in accordance with normal credit
terms. No guarantees have been given or received. No provision
(2018: GBPnil) has been made for impaired receivables in respect of
the amounts owed by related parties.
Key management personnel include Executive and Non-Executive
Directors of WH Ireland Group plc and all its subsidiaries. They
are able to undertake transactions in stocks and shares in the
ordinary course of the Group's business, for their own account and
are charged for this service, as with any other client. The
transactions are not material to the Group in the context of its
operations, but may result in cash balances on the Directors'
client accounts owing to or from the Group at any one point in
time. The charges made to these individuals and the cash balances
owing from/due to them are disclosed in the table below. There are
no other material contracts between the Group and the
Directors.
The following table sets out the transactions which have been
entered into during the year together with any amounts
outstanding:
Services rendered Purchases/ Amounts owed
to related services from to related
parties related parties parties
GBP'000 GBP'000 GBP'000
Key management personnel 2019 - - -
2018 7 - -
Other related parties 2019 - - -
2018 - 27 5
The total compensation of key management personnel is shown
below:
Year ended 16 months ended
31 March 2019 31 March 2018
GBP'000 GBP'000
Short term employment
benefits 1,564 1,946
Post-employment benefits 170 82
Termination benefits 322 41
Share-based payment - 19
2,056 2,088
The highest paid Director for 2019 and 2018 was RW Killingbeck
receiving emoluments of GBP376,883 and GBP398,304,
respectively.
Company
The Parent Company receives interest from subsidiaries in the
normal course of business. Total interest received during the year
was GBPnil (2018: GBP2k). In addition, the Parent Company received
a management charge of GBP481k (2018: GBP575k) from its subsidiary
WH Ireland Limited. WH Ireland Limited also charged the Parent
Company GBP25k (2018: GBP25k) for broker services.
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation. The
captions in the primary statements of the Parent Company include
amounts attributable to subsidiaries. These amounts have been
disclosed in aggregate in the notes 19 and 22 and in detail in the
following table:
Amounts owed by related Amounts owed to related
parties parties
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Readycount Limited 4,157 4,157 - -
WH Ireland (IOM) Limited 108 106 - -
Stockholm Investments
Limited 410 410 - -
WH Ireland Limited - - 2,275 2,473
WH Ireland Trustees
Limited - - 17 17
4,675 4,673 2,292 2,490
The net amount owed by related parties is GBP2,383k
(2018:GBP3,183k) (see note 19).
33. PRIOR PERIOD ADJUSTMENT
The Group migrated to a new operating system over 2 years ago
and with the old platform system in the process of being retired,
the validation of the financial records was initiated by
management. It was established that Trade Receivables (see note 19)
and Trade Payables (see note 22) each included an erroneous entry
amounting to GBP10.1m. Whilst the elimination of these erroneous
entries has no effect on the income statement for the periods under
consideration, the materiality of the correction and guidance
provided by International Accounting Standard IAS 8 'Accounting
Policies, Changes in Accounting Estimates and Errors' necessitates
the restatement of the prior period balances of the following
sections within these financial statements:
Balance as Restated prior
stated in the Adjustment period balance
Relevant section of these prior period's within these
financial statements financial statements financial statements
GBP'000
GBP'000 GBP'000
Consolidated statement of financial
position
Current assets
Trade and other receivable 17,339 (10,141) 7,198
Total current assets 25,308 (10,141) 15,167
Total assets 31,707 (10,141) 21,566
Current liabilities
Trade and other payables (15,744) 10,141 (5,603)
Total current liabilities (17,238) 10,141 (7,096)
Total liabilities (18,835) 10,141 (8,694)
Consolidated statement of
cash flow
Decrease / (increase) in trade
and other receivables 1,256 10,141 11,397
(Decrease) / increase in trade
and other payables (3,855) (10,141) (13,996)
Notes to the financial statements
Note 19 trade and other receivables
Trade receivables 12,991 (10,141) 2,850
Total trade and other receivables 17,339 (10,141) 7,198
Note 22 trade and other payables
Trade payables 11,615 (10,141) 1,474
Total trade and other payables 15,744 (10,141) 5,603
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FMGFNMMRGLZG
(END) Dow Jones Newswires
July 31, 2019 02:02 ET (06:02 GMT)
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