TIDMWHI
RNS Number : 4669S
W.H. Ireland Group PLC
09 July 2020
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
W.H. Ireland Group Plc
("WH Ireland" or the "Company")
(and with its subsidiaries the "Group")
Final Results for the Twelve Months Ended 31 March 2020
"2019/2020 results in line, profitable in Q1 2020/2021"
Financial Highlights
-- Revenue declined 3% to GBP22.9m (2019 FY: GBP23.7m)*
-- 23% reduction in administrative expenses to GBP25.8m (2019 FY: GBP33.4m)*
-- 68% reduction in operating loss (pre-exceptional items) to GBP2.0m (2019 FY: GBP6.3m)*
-- 69% reduction in loss before tax for the period of GBP3.2m (2019 FY: GBP10.2m)*
-- Group regulatory capital ratio at 10.3%
Divisional Highlights
Significant cost reductions and positive momentum in both
divisions have positioned the group for sustainable profitability
and growth:
-- Wealth Management:
o Decommissioning of legacy Wealth Management platforms and
associated costs now complete
o 33% reduction in direct cost base to GBP11.1m (2019:
GBP16.6m)
o Adverse market conditions caused a reduction in AUM to
GBP1.8bn at the period end
o Discretionary managed assets as a proportion of the total AUM
stable at 48% (2019 FY: 47%)
-- Corporate & Institutional Broking:
o Maintained position as top three NOMAD and top five corporate
broker on AIM
o Won 12 new corporate clients in the year
o 31% increase in funds raised to GBP67m (2019 FY: GBP51m)
despite challenging markets
o Investor Forum makes continued progress with transaction and
member numbers
Current Trading and Outlook **
-- Profitable in both divisions in Q1 2020, the first profitable quarter for a number of years
-- Group profit for Q1 expected to be GBP200k
-- Further cost actions expected to reduce administrative expenses
-- CIB has already completed 10 transactions and won a further 8 corporate clients in Q1
-- As at 30 June 2020 estimated AUM stood at GBP2.1bn, net cash
at GBP4.3m and group regulatory capital solvency ratio at 10.5%
-- Non-core Isle of Man subsidiary conditionally divested for
total cash consideration of up to GBP0.7m, with an agreement with
Ravenscroft Holdings Limited to continue to offer wealth management
solutions to clients in international jurisdictions
Commenting, Phillip Wale, Chief Executive Officer said:
"Despite challenging market conditions, we have seen a
significant improvement in operational performance which has led to
the first quarterly profit for the Group in the new financial year.
Our continued strong focus on cost management has led to a further
reduction in the run rate of administration expenses to a level
where we can deliver profitability consistently.
"We also now have a platform that is better able to provide the
quality of service that will differentiate us in the future and
which has shown it is sufficiently robust to successfully navigate
challenges as significant as Covid-19. The turnaround plan for WH
Ireland is on track and I look forward with cautious optimism to
executing the next stages of that plan in the coming year."
Annual General Meeting
The Company confirms that it will today post to shareholders the
annual report and accounts for the period ended 31 March 2020, and
a notice convening the annual general meeting of the Company. A
copy of the annual report and accounts along with the notice of AGM
is available on the Company's website. The Annual General Meeting
of the Company will be held at the Company's offices at 24 Martin
Lane, London EC4R 0DR on Tuesday, 4 August 2020 at 11.00 a.m .
As a result of the ongoing COVID-19 pandemic and the measures
that the UK Government has put in place restricting public
gatherings and non-essential travel and for the health and safety
of our shareholders, employees, advisers and the general public,
the Annual General Meeting this year will be a closed meeting and
shareholders will not be able to attend in person. The Company will
continue to monitor the restrictions in place in response to
COVID-19 and, if circumstances change, it will consider if it is
appropriate to open the Annual General Meeting for attendance by
shareholders in person. If this is the case, an update will be
given on the Company's website and an announcement will be made via
a Regulatory Information Service. Given these restrictions in place
all shareholders are strongly encouraged to vote by proxy.
For further information please contact:
WH Ireland Group plc www.whirelandplc.com
Phillip Wale, Chief Executive Officer +44(0) 20 7220 1666
SPARK Advisory Partners Limited (Nominated
Adviser)
Andrew Emmott +44(0) 20 3368 3555
MHP Communications +44(0)20 3128 8793
Reg Hoare / James Bavister whireland@mhpc.com
*includes discontinued operations.
** all numbers included in this section are unaudited.
Chair's statement
For the year ended 31 March 2020
I am pleased to be presenting my first report as Chair of
WHIreland Group plc for the financial year to 31 March 2020.
Review and outlook
This financial year was an important one for WHIreland, with
significant change required to return the business to sustainable
profitability and provide a platform for a successful future. The
changes needed included significant cost reductions, the
decommissioning of duplicate wealth management platforms and
corporate broking trading systems, as well as the closure of
non-performing offices.
Of particular importance has been the introduction of a robust
control framework fit for the future with strong governance to
support it. The Board is very clear that this is an essential part
of doing business in Wealth Management and Corporate Broking, and
so will remain focused on this as a key priority.
Alongside the rigorous focus on profitability, both our
businesses have started to see good momentum. In our Wealth
management business customers have remained loyal, and despite the
significant asset volatility this business has performed well. In
our Corporate and Institutional Business we have seen continued
client gains as well as increasing activity levels as we strengthen
our top three slot amongst AIM NOMADs.
Much of this change has been achieved ahead of plan and in the
face of challenging markets. The reduction in costs alongside
improved efficiency has been impressive, and was required in a year
when revenue came under pressure from a number of external factors.
It has left the Group in a strong position. Sustainable
profitability is now possible and we have a robust platform from
which to grow and develop the business. The outlook is exciting
with a streamlined cost base and a better-focused business model
that has its key people incentivised in a way that is aligned with
its owners.
There have clearly already been challenges to work through this
year so I am pleased to see the Group expect to generate a profit
for the first quarter ending June 2020. This is the first for a
number of years, and is clear evidence of the progress made by the
team and our employees more broadly, and bodes well for the future.
There is still much to do, and we must remain absolutely focused on
providing the very best service to our customers and clients - but
we now have the opportunity to grow our business and to start to
reward our shareholders.
Our largely new Board and management team are now fully embedded
after a busy year, and I would like to thank them all for the huge
progress we have been able to make in such a short time and in such
a hostile environment
I would like to thank Tim Steel who joined the Board in 2014. He
took on the Chair in 2016, and steered the Group through some
extremely difficult times. I would also like to thank Richard Lee,
who has been with the Group first as an employee and then as a
Director for a total of more than 18 years. I wish both Tim and
Richard well for the future.
Finally, I want to thank and congratulate Phillip Wale, his
Management team and all our employees for working so hard through
what has been a very challenging year. The progress we have made
and the strong results so far this year would not have been
possible without the dedication and professionalism of our team,
alongside the loyalty and support of our customers and our owners.
We very much look forward to building on this strong start during
the rest of the year.
Philip Shelley
Chair
July 2020
Chief executive statement
For the year ended 31 March 2020
Overview
I most recently spoke to shareholders and the market with the
interim results in November 2019 when I reported the significant
progress made in the half-year to September 2019 and the clear
sight of the route to profitability from the start of the new
financial year. That profitability arrived earlier than expected
following the post-UK General election led upturn but, the last two
months of the financial year were badly impacted by the Covid-19
market turbulence and we updated the market accordingly in April
2020. The results presented here are in line with that April
update. The more meaningful outturn however, following further
robust action on costs is that WHIreland is expected to deliver a
profit for its first quarter. It is some time since the business
has delivered a quarterly profit and it is testament to the
dedication, professionalism and tenacity of our staff that we have
been able to make this progress at a time of significant market
disruption.
WH Ireland has been challenged over the year, first by the
pre-election Brexit market malaise and then more recently by the
Covid-19 impacted market turbulence. However, the results are
generally in line with our expectations for what we expected to be
the critical 'turn-around' year, with a reduced loss for the year
ended 31 March 2020 of GBP3.2m (2019: GBP11.3m), after exceptional
costs of GBP1.0m and the continued investment in strengthening the
control environment across the Group.
The year 2019/2020
The reduced market activity in the first nine months of the
financial year before the UK general election in December, impacted
commission revenue and activity levels across both the Wealth
Management and the Corporate Broking businesses, leading to an
overall decline in revenue for the Group of 4% to GBP21.6m (2019:
GBP22.4m). However, this reduction was more than matched by the 23%
decline in administrative expenses to GBP24.7m (2019: GBP32.1m).
Exceptional items of GBP1.0m (2019: GBP4.1m) incurred by the Group
have decreased significantly as the decommissioning of legacy
platforms, a scourge for the business that I set out with my new
management team to tackle this year, has been successfully
completed. This, together with robust action in response to the
impact of Covid-19, has reduced our run rate administrative costs
still further to a level where we can deliver profitability
consistently.
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 Chair's sentiments in thanking Tim Steel and Richard Lee.
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. I would like to take the
opportunity to thank all our clients for their loyalty and patience
as we have worked through the inevitable disruption from the scale
and pace of change we have instigated this year. We now have a
platform that is better able to provide the quality of service that
will differentiate us in the future and which has shown it is
sufficiently robust to successfully navigate challenges as
significant as Covid-19.
Staff
There are excellent people within the Group; I have continued
from last year in making changes to the head count to reflect the
new, simplified business model and will keep the level under close
control. I thank all the members of staff for their commitment and
hard work in the past and particularly over the recent challenging
few months since the onset of the Covid-19 pandemic. Group
headcount at June 2020 is 148, which has reduced from 159 at June
2019.
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
November 2019 for their backing.
Capital
The raising of GBP2.8m in November 2019, which following on from
the GBP5m raised in March 2019 brings in the approximately GBP8m
that had been identified as required to replenish regulatory and
working capital. Cash at the year-end date of 31 March 2020 was
GBP3.7m (GBP2.6m in cash and cash equivalents and GBP1.1m in assets
held for sale) (2019: GBP7.7m). 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.
Wealth Management (WM)
Total assets under management declined to GBP1.8Bn (2019:
GBP2.5Bn) through a combination of some fund outflows in the first
half and through a reduction in market valuations in the last 2
months of the financial year. However, it was pleasing to see
stable fund flows in the final quarter as the business bedded in
the significant changes made earlier in the year.
Discretionary managed assets saw a slight increase as a
proportion of the total funds under management (2020: 48%, 2019:
46%).
We have progressed the changes identified this time last year to
the WM division under Stephen Ford's direction. Firstly, to reduce
the cost base which has declined significantly over the year from
GBP16.6m to GBP11.1m (33% decline). Secondly, to energise the
project of retiring our legacy platform systems which was completed
in March 2020. And finally, to simplify and enforce our standard
charging structure to improve the quality of earnings which was
implemented over the October - December 2019 period resulting in an
impressive improvement in the quality of revenue. The benefit of
all of these initiatives are working through the current financial
year with focus now switching to growing assets.
Corporate and Institutional Broking (CIB)
CIB continues to enjoy a solid recurring-revenue client base as
it strengthens its position as a top five broker and top three
Nomad by client numbers operating on the AIM market. The year saw
good momentum in client wins and our share of market activity with
a number of new hires adding to the platform's capability. CIB
ended the year with a significantly rebalanced cost structure with
a lower fixed base. The benefit of this is flowing through into the
current financial year and positions the business for profitability
at current activity levels. The business has continued to build its
reputation for raising growth capital for public and private
companies with growing momentum in client wins and share of market
activity.
LOOKING FORWARD
This has been a uniquely challenging year. However, the
significant changes that I flagged this time last year as key
targets for the management team have now mainly been achieved and
are leading to the building of a good business with good clients
and revenue streams within a robust control framework that is now
generating profits on a monthly basis. Despite the desperately
difficult environment we find ourselves in my aim is to do
everything possible to continue this excellent start to the current
financial year across everything we do.
The turnaround plan for WHIreland is on track with much of the
challenging but necessary cost reduction achieved though there is
more to do and I look forward with cautious optimism to executing
the next stages of that plan including building a robust platform
for growth in the coming year.
P Wale
July 2020
Strategic report
For the year ended 31 March 2020
Overview
The WH Ireland Group has one principal operating subsidiary, WH
Ireland Limited which 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 (CIB) 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. At the year-end date the other
subsidiary of WH Ireland Group, WH Ireland (IOM) Limited which
provides wealth management services, was in the process of being
sold.
The Group's income is predominantly derived from activities
conducted in the UK with a number of retail, institutional and
corporate clients, which are situated worldwide.
At the year-end, the Group had 154 staff (2019: 180) in the
UK.
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 improving the quality and value of 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 GROUP'S PERFORMANCE FOR the financial YEAR is
set out below :
Year to Year to
31 Mar 2020 31 Mar 2019
GBP'000 GBP'000
------------------------------------------ ------------- -------------
Revenue 22,863 23,680
Administrative expenses (25,819) (33,419)
Expected credit loss (44) (641)
Operating loss (3,000) (10,380)
Operating loss before exceptional items (2,030) (6,267)
Exceptional items (970) (4,113)
Operating loss after exceptional items (3,000) (10,380)
Other income and charges (199) 230
Loss before tax (3,199) (10,150)
Tax - (1,176)
------------------------------------------ ------------- -------------
Loss after tax (3,199) (11,326)
------------------------------------------ ------------- -------------
A reconciliation of the adjusted operating loss is set out
below:
Year to Year to
31 Mar 2020 31 Mar 2019
GBP'000 GBP'000
----------------------------------------------- ------------- -------------
Operating loss (3,000) (10,380)
Add back one off charges:
Project Discovery* 268 442
Restructuring** 506 835
Compliance & regulatory projects*** 196 230
Impairment of goodwill and intangible assets - 2,606
Adjusted operating loss (2,030) (6,267)
----------------------------------------------- ------------- -------------
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 2020, there were some further
personnel restructures and a one off project on cost reduction was
undertaken. During the year ending 31 March 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 2020 and 31 March 2019, the
Group incurred various costs in relation to one off regulatory
projects.
Financial analysis
The total operating loss, after exceptional items, has decreased
in the year-ended 31 March 2020 by GBP7.4m to GBP3.0m (2019:
GBP10.4m).
The changes in the year to 31 March 2020 compared to the results
of 2019 were as follows:
Revenue: The CIB division saw an improving retainer fee base in
the year coupled with levels of transactional success fees that
were similar to the prior year but commissions were lower by
approximately GBP0.9m. Similarly, commissions generated by the WM
division were lower by GBP0.6m. 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 particularly in the
pre-general election period.
Expenses: Operational costs have been aggressively addressed by
the new management team in an effort to rid the Group of its
historical excessive cost-base which had been worsened by the
additional on-going costs of the multi-year historic inability to
address legacy systems.
Exceptional Items: The costs associated with the retirement of
legacy systems declined to the point in March 2020 when the prime
legacy platform in Wealth Management was finally retired. There
were a number of other restructuring costs incurred in reducing
headcount and filling the remaining necessary open slots in the
management team.
Balance Sheet: Operational losses incurred in the year of
GBP2.2m and Exceptional items, of GBP1.0m totalled GBP3.2m. This
was offset by the proceeds of raising fresh equity of GBP2.8m
resulting in the net decline of GBP0.3m in Total Equity at 31 March
2020 to GBP8.5m (2019: GBP8.8m). Whilst the total Equity and Net
Assets of GBP8.5m (2019: GBP8.8m) have not altered materially, some
components contributing to this total have. The application for the
first time of IFRS16 - accounting for leases, has introduced two
new lines; a Right of Use asset representing the future benefit
accruing to the Group from its property lease contracts within
non-current assets, GBP2.5m and a Lease Liability representing the
future contractual commitment in regard to leasehold property
contracts within the non-current liabilities: value of GBP2.3m.
Cash Flows: Cash and cash equivalents have declined by GBP4.0m
to GBP3.7m (GBP2.6m in cash and cash equivalents and GBP1.1m in
assets held for sale) (2019: GBP7.7m) on account of the losses
incurred and the reduction in creditors and payables within the
year including particularly deferred consideration payments
satisfied in the year.
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 and Poole.
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 third largest Nominated
Adviser (NOMAD) for AIM quoted companies and currently represents
75 corporate companies. It has a highly experienced team drawn from
a range of professional backgrounds 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.
KEY PERFORMANCE INDICATORS
The key targets of the directors over the financial year has
been to reduce costs and enhance the quality of earnings despite
the very challenging market environment costs have as a percentage
of revenue fallen significantly with further advances put in place
for the coming financial year and headcount has reduced by 12% and
again, is continuing to fall in the new year. Discretionary funds
under management as a proportion of total funds under management
and advice has continued to move forward.
1. RATIO OF ADJUSTED OPERATING LOSS BEFORE TAX TO TOTAL
REVENUE
31 Mar
2020 31 Mar 2019
% %
Ratio of adjusted operating loss before tax
to revenue (9) (26)
---------------------------------------------------- ------------ -------------
2. RATIO OF ADMINISTRATIVE EXPENSES TO TOTAL
REVENUE
31 Mar
2020 31 Mar 2019
% %
Ratio of administrative expenses to total revenue 113 141
---------------------------------------------------- ------------ -------------
3. AVERAGE STAFF NUMBERS
31 Mar
2020 31 Mar 2019
159 184
---------------------------------------------------- ------------ -------------
4. FUNDS UNDER MANAGEMENT AND ADVICE
31 Mar
2020 31 Mar 2019
GBPm GBPm
Discretionary assets 878 1,175
Advisory assets 338 556
Execution only assets 625 777
Total 1,841 2,508
---------------------------------------------------- ------------ -------------
5. RATIO OF DISCRETIONARY TO TOTAL FUNDS
31 Mar
2020 31 Mar 2019
% %
Ratio of discretionary to total funds 48 46
---------------------------------------------------- ------------ -------------
6. RECURRING INCOME STREAMS
Year ended Year ended
31 Mar
2020 31 Mar 2019
GBPm GBPm
Value of recurring income 13 14
---------------------------------------------------- ------------ -------------
7. CORPORATE BROKING
Year ended Year ended
31 Mar
2020 31 Mar 2019
Number of transactions 34 37
Money raised GBP67m GBP51m
Retained corporate clients 74 77
---------------------------------------------------- ------------ -------------
DIVIDS
The Board does not propose to pay a dividend in respect of the
financial year (2019: 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 GBP8.5m (2019: GBP8.8m)
and net current assets GBP6.4m (2019: GBP6.9m). Cash balances at
year-end were GBP3.7m (2019: GBP7.7m).
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 managing the costs of its business 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 historically had a predominantly fixed cost base
which in recent years has been allowed to increase leading to the
recorded losses but decisive action has been taken in reducing
costs 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 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.
SECTION 172 STATEMENT
Broader Stakeholder Interests
Directors of the Group must consider Section 172 of the
Companies Act 2006 which requires them to act in the way that would
most likely promote the success of the Group for the benefit of all
its stakeholders. The Board and its committees consider who its key
stakeholders are, the potential impact of decisions made on them
taking into account a wider range of factors, including the impact
on the Company's operations and the likely consequences of
decisions made in the long term. The Group's key stakeholders,
material issues and how the Board and the Group have engaged with
them during the year is set out below.
Employees
The CEO and his management team on behalf of the Board engage
with employees through a variety of methods including periodic
sometimes weekly all staff notifications of updates, information
and points of interest, staff forums, group meetings and Town Hall
meetings. The majority of reductions in headcount over the year has
been achieved by natural means such as leavers not being replaced
as we became more efficient and in general this reduction has not
impacted morale.
Shareholders
Our shareholders have been pivotal in supporting the Group and
its new management team and Board in their plan to turnaround the
Group and return it to a far healthier state. The Board recognise
and frequently discuss the importance of good, open and
constructive relationships with both new potential as well as
existing shareholders and is committed to this communication. The
way in which this has been achieved during the year has been by our
Chief Executive Officer, supported by the management team,
maintaining regular contact and meetings with individual and
institutional shareholders, both existing and potential new ones,
and communicating and discussing shareholders' views with the
Board. The support from existing shareholders and the investment
made in the Company by new shareholders is indicative of their
support of the overall plan and its progress over the year. Further
actions such as the disposal of the Isle of Man subsidiary have
been welcomed as further signs of simplifying the offering and
focusing on that plan. A number of Board members and employees also
hold the Group's shares and regular communications are provided.
The Group's strategy and results are presented to shareholders
through meetings following announcements of the final and interim
results. Shareholders are also requested to meet the Board and
management team, all of whom attend, the Annual General Meeting.
For this year, on account of the current pandemic challenges,
shareholders are however requested not to attend. The annual report
and accounts for the year ended 31 March 2020 along with all past
accounts, regulatory communications and other material is set out
on the Group's website at
https://www.whirelandplc.com/investor-relations .
Regulators
The Board recognises the past history of the Group in this
regard and is absolute in its insistence on continuous and open
communication with our regulators at the Financial Conduct
Authority ("FCA") as well as with the London Stock Exchange AIM
Regulation team. Regular ongoing dialogue has continued through the
CEO and CFO with the FCA who received regular Management
information. The FCA have met and approved the appointments of each
member of the new Management team and the Board members.
Clients
Our clients' are utterly fundamental to the business of the
Group and the Board recognise that their interests are of paramount
importance. On both the PWM as well as the CIB side of the business
management closely engage with clients to understand their
objectives so that the service provided by the business is the most
appropriate. In PWM the clients profile and the suitability of the
investment strategy provided is frequently challenged by the
professional investment managers and this is supplemented by a
second line of review from management and our compliance team. It
is recognised that the status of our clients can and does change in
line with the environment and this has been particularly
challenging this year with the pandemic and its influence on the
investment markets. Vulnerable clients in particular are identified
and discussed at length at Board and at Committee level to ensure
that they are provided with the best possible advice.
On the CIB side of the business the Group's objective is also to
achieve the best outcome and this applies equally to Institutional
clients as well as corporate ones. Regular contact is maintained
with them across all departments including corporate broking,
corporate finance, trading and research. Our investor relations
team arrange meetings with investors, undertake site visits and
organise events for a wide range of the clients' teams such as
their own Board directors.
Community and Suppliers
The Board through its executive directors is keenly focused on
its key supplier relationships especially those of an outsourced
variety and constantly challenges and reviews its arrangements. The
Group openly encourages its branches and employees to engage in
local charitable, community groups and other causes.
Each of the Board members consider that they have acted
together, in good faith in a way most likely to promote the success
of the Group for the benefit of its broader range of stakeholders
as a whole taking into account section 172 (1) (a-f) of the
Companies Act 2006.
By Order of the Board
P Tansey
Finance Director
9 July 2020
Directors' report
For the year ended 31 March 2020
The Directors present their annual report on the affairs of the
Group, together with the financial statements and Independent
Auditors' Report, for the year ended 31 March 2020.
Going concern
The financial statements of the Group have been prepared on a
going concern basis. In making this assessment, the Directors have
prepared detailed financial forecasts for the period to September
2021 which considers the funding and capital position of the Group.
Those forecasts make assumptions in respect of future trading
conditions, notably the economic environment and its impact on the
Group's revenues and costs. In addition to this, the nature of the
Group's business is such that there can be considerable variation
in the timing of cash inflows. The forecasts take into account
foreseeable downside risks, based on the information that is
available to the Directors at the time of the approval of these
financial statements.
The Directors have conducted full and thorough assessments of
the Group's business and the past financial year has provided a
thorough test of those assessments and the resilience of the
business. The first half of the financial year in the run-up to the
December 2019 UK election was negatively impacted by the continuing
uncertainty over the Brexit process resulting in low levels of
market activity. Action was taken in regard to cost reductions and
the raising of further capital in November 2019 to ensure that the
plan to turnaround the business was not deflected and to provide
robust levels of capital. Market conditions improved following the
election leading to a significant upturn for the Group's business
only to be struck by the market turbulence resulting from the
Covid-19 crisis which negatively impacted the last two months of
the financial year.
Covid-19, recognised as a pandemic by the World Health
Organization (WHO) in March 2020, led to world-wide actions being
taken that have severely reduced economic activity and impacted the
health of the financial markets. The Directors responded to
Covid-19 promptly by implementing a thorough remote working
capability that has and continues to work well ensuring the
wellbeing of our staff whilst continuing to service our clients and
other key stakeholders including our shareholders and our
regulators.
There remains uncertainty over what the future impact on the
economy, the Group and its business will be. However, since the
pandemic was declared, our CIB business has been appointed by
several new clients and completed a number of transactions. The
resulting performance in the first period of the new financial year
has been significantly above our stressed-scenario planning which
informed the going concern basis of accounting decision noted. What
the future plans of our corporate clients are, and what the future
levels of stock market indices will be that determine the level of
assets managed and the resulting PWM fees, is not possible to
quantify with total certainty. If the future impact of Covid-19
were to lead to a period of market inactivity this could result in
a reduction in CIB fees and a decline in the values of securities
that could impact both the CIB and the PWM businesses. The impact
of the Covid-19 pandemic on the financial markets and the Group is
continuously monitored.
Decisive and radical actions were taken on costs including the
replacement of a significant section of people related fixed costs
with a profit-linked variable basis of compensation. Although
material uncertainty remains, particularly around the effect that
the lifting of Covid-19 restrictions will have on the economy, we
have seen a significant performance upturn in the first 3 months of
the new financial year that is significantly above our own stressed
forecasts which informed the aforementioned cost decisions taken
earlier. We are currently working on several transactions for our
clients in CIB which together with a lower cost base across both
CIB and PWM places the business in a much better position to meet
the challenges ahead over the coming financial year.
Certain activities of the Group are regulated by the Financial
Conduct Authority which is the statutory regulator for financial
services business in the UK and has responsibility for policy,
monitoring and discipline for the financial services industry. The
FCA requires the Group's capital resources to be adequate; that is
sufficient in terms of quantity, quality and availability, in
relation to its regulated activities. The Directors monitor the
Group's regulatory capital resources on a daily basis and they have
developed appropriate scenario tests and corrective management
plans which they are prepared to implement to address any potential
deficit as required. Further actions open to the Directors include
incremental cost reductions, regulatory capital optimisation
programmes or further capital raising.
An analysis of the potential downside impacts was conducted as
part of the going concern assessment to assess the potential impact
on revenue, asset values with a particular focus on the more
variable component parts of our overall revenue, corporate finance
fees and commission. Furthermore, reverse stress tests were
modelled to assess what level the Group's business would need to be
driven down to before resulting in a liquidity crisis or a breach
of regulatory capital.
Whilst the Directors consider it unlikely, particularly given
the profitable performance of the Group since the period end, the
long term impact of Covid-19 on the economy and in turn the Group's
variable transactional based revenue is unknown. In the event that
these revenues are 30% below forecast a material uncertainty exists
which may cast significant doubt on the Group's ability to continue
as a going concern without taking remedial action that could
include cost reduction programmes, assets sales and the raising of
further capital in order to ensure that regulatory capital
requirements are maintained. The financial statements do not
include the adjustments that would result if the company was unable
to continue as a going concern.
Based on all the aforementioned, the Directors believe that
regulatory capital requirements will continue to be met and that
the Group has sufficient liquidity to meet its liabilities for the
next twelve months and that the preparation of the financial
statements on a going concern basis remains appropriate.
Likely future developments
The initial stages of turning around the Group focussed on the
reduction of costs to not only a lower absolute level but further,
to reduce the proportion of total costs represented by fixed costs
burdening the business. Whilst the cost reduction over the year is
significant, further reductions have been identified. Management
are resolute in their commitment to act on these further
reductions. The elimination of legacy systems in both divisions has
resulted in simpler and less risky business that is now well
positioned to support a growing business, as stated in the chief
executive's statement, the next stages include building a robust
platform and growing the business in the coming year.
Financial instruments and risk management
Details of risks and risk management arising from the Group's
financial instruments are set out in note 25 of the financial
statements.
Dividends
The Directors do not propose to pay a dividend for 2020 (2019:
GBPnil) (note 11).
Directors
The Directors who held office during the year and their interest
in the shares of the Company were as follows:
Year ended Year ended
31 Mar 2020 31 Mar 2019
Number of shares Number of
shares
P A Wale 75,000 32,500
P Tansey (appointed 21 June 2019) 18,000 -
V G Raffé 33,333 -
S N Lough (appointed 19 August 2019) 319,167 30,267
P J Shelley (appointed 26 September 2019) 760,411 -
A G Buchanan (appointed 18 December 2019) 208,333 -
T M Steel (resigned 19 May 2020) 25,000 25,000
R E M Lee (resigned 31 December 2019 ) 30,267 30,267
J H D Carey (resigned 13 May 2019) - -
Further details of Directors' service contracts, remuneration,
share interests and interests in options over the Company's shares
can be found in the Remuneration Report.
No Directors holding office at the end of the financial year had
any disclosable interest in the shares of other Group
companies.
MAJOR SHAREHOLDINGS
At the date of publication of this report, the Company had been
notified of the following shareholdings (other than those of the
Directors) of 3% or more of the share capital:
Ordinary shares %
Polygon Global Partners LLP* 14,543,522 29.86
Oceanwood Capital Management LLP 7,699,094 15.80
M & G Investments Limited 7,301,333 14.99
M Lawson 1,500,000 3.08
------------------------------------------------ ------------------ -------
*including 1,210,278 held by way of Contracts
for Difference
In addition, the Company's Employee Share Ownership Trust, which
is operated by Sanne Trust Company Limited, holds 720,000 shares as
trustees. All rights to receive dividends in respect of these
shares have been waived. Further details are in notes 28 and 29 of
the Financial Statements.
POLITICAL CONTRIBUTIONS
The Group and Company did not make any political donations or
incur any political expenditure during the year (2019: nil).
QUALIFYING THIRD PARTY INDEMNITY PROVISIONS
The Company has arranged qualifying third party indemnity for
all of its directors.
EMPLOYEES
Our employees are vital to the success of the Group. The Group
and its employees are committed to delivering a quality service
which meets our own expectations, those of the FCA and those of our
clients wherever possible.
Employees are kept informed of, and consulted regularly on, key
issues affecting them and the Group by the intranet and through
regular communication between management and staff.
The Company policy is to give full and fair consideration to all
disabled people who apply for employment, seeks to develop the
skills and potential of disabled people, affords them access to
training and promotion opportunities and makes every effort to
retain in suitable employment those staff who have the misfortune
of becoming disabled whilst in the employment of the Group.
EVENTS AFTER THE REPORTING PERIOD
On 29 June 2020 the Group announced its intention to sell its
subsidiary WH Ireland (IOM) Limited. Therefore, in the Financial
Statements the assets and liabilities of WH Ireland (IOM) Limited
are presented as single lines in assets and liabilities held for
sale, respectively and the results for the year are presented as
discontinued operations with comparatives restated.
ANNUAL GENERAL MEETING (AGM)
The resolutions being proposed at the AGM include usual
resolutions dealing with the ordinary business of the AGM together
with certain additional special business. A description of all the
resolutions is set out at the end of the Notice of AGM.
AUDITORS
The Directors who held office at the date of approval of this
Directors' Report confirm that, so far as they are each aware,
there is no relevant audit information of which the Company's
auditors are unaware; and each Director has taken all the steps
that they ought to have taken as a Director to make themselves
aware of any relevant audit information and to establish that the
Company's auditors are aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of Section 418 of the Companies Act
2006.
In accordance with the Companies Act 2006, a resolution for the
re-appointment of BDO LLP as auditors of the Company is to be
proposed at the forthcoming AGM.
DIRECTORS' BIOGRAPHIES
Phillip Wale, Chief Executive Officer
Phillip began his career in UK Gilt Edged & convertible
bonds, spending ten years at Goldman Sachs in New York and then
London, as co-head of pan-European equities. He managed the equity
businesses at Commerzbank and then at Knight Securities, where he
was appointed European CEO. In 2004 he moved into fund management
as CIO of a multi-strategy hedge fund, returning to the sell-side
in 2007 with Collins Stewart working closely with the expansion of
the wealth management product. Phillip joined Seymour Pierce, the
corporate & institutional broker and wealth manager, in 2010
and was appointed its Chief Executive Officer in 2011. Between 2012
and 2016 he was Chief Executive Officer of Panmure Gordon & Co.
Prior to joining WHIreland in August 2018, Phillip was Head of
Fixed Income (Europe) at Cantor Fitzgerald Europe.
Philip Tansey, Chief Finance Officer
Between 2011 and 2017, Philip, a Chartered Accountant, was Chief
Financial Officer of Panmure Gordon and before that, from 2008, was
Managing Director of the NASDAQ quoted US inter-dealer Broker, BGC
Partners Inc. During his career he has also worked at Deutsche
Bank, CSFB, CIBC Wood Gundy, Salomon Brothers and BDO Stoy
Hayward.
Victoria Raffé, Non-Executive Director
Victoria Raffé has had an extensive City career, latterly as a
Regulator with positions as Director of the Authorisations Division
and Executive Committee member at the Financial Conduct Authority
("FCA"). Previously she held various senior level roles with the
Financial Services Authority ("FSA") and before that had roles at
KPMG, Prudential and Fidelity. She currently holds non-executive
directorships with Starling Bank, Growth Street and Inbotiqa, and
sits on the Public Interest Body of PwC. Victoria was appointed to
the Board of WHIreland in January 2017.
Simon Lough, Non-Executive Director
After graduating from Oxford University, Simon joined Kleinwort
Benson in 1984, moving to work in their Tokyo office in 1986. In
1991, he joined Banca della Svizzera Italiana, working in Tokyo and
then their London office. In 1996, Simon left investment banking,
joining, and co-investing, in the forerunner of the Heartwood
wealth management business. His managerial role initially entailed
establishing a London office for the growing business. He
subsequently headed both the client and investment teams, before
becoming Chief Executive in November 2008. In May 2013, Heartwood
became a wholly owned subsidiary of Handelsbanken and Simon
continued as Chief Executive until July 2014 and subsequently left
on the third anniversary of its acquisition.
From 2013-16, he was also a member of the Financial Conduct
Authority's Smaller Business Practitioner Panel, nominated by the
Wealth Management Association (now called PIMFA - Personal
Investment Management & Financial Advice Association) to
represent the wealth management sector.
Phillip Shelley, Non-Executive Director, Chair
After graduation from Edinburgh University, where he read Civil
Engineering, Phil served in the Armed Forces as an Officer in the
Royal Green Jackets. He joined UBS in 1995 where he worked in
Corporate Broking and Equity Capital markets for 15 years,
culminating as Head of Corporate Broking. He joined Goldman Sachs
in 2010 where he ran the Corporate Broking and Equity Capital
Markets team before joining Barclays as Vice Chairman of the
Investment Bank. In September last year he set up Arlington Capital
Markets Ltd. The firm advises both listed FTSE companies, private
companies preparing for listing or sale and companies planning to
IPO.
During his career of nearly 25 years Phil has advised many UK
and European companies on equity, debt and mergers and
acquisitions.
Alistair Buchanan, Non-Executive Director
Alistair was formerly CEO of Ofgem, the UK's gas and electricity
markets' regulator, for ten years and a partner at KPMG, where he
was also UK Chairman of Power & Utilities. He trained as a
Chartered Accountant at KPMG before becoming an award-winning
energy sector analyst and head of research for banks in London and
New York.
Alistair is currently a NED at Thames Water (where he Chairs the
Strategy Committee and is a member of audit committee), and a NED
at Electricity North West Limited (where he sits on the Valuation
committee). In the past he has served on the Boards of Durham
University and Scottish Water, and also currently serves on the
board of Atlas Holdings Corp. He was awarded the CBE in 2008.
The Directors' report is approved by the Board on 9 July 2020
and signed on its behalf by:
P Tansey
Director
Corporate governance
For the year ended 31 March 2020
The Directors of the Company have always endeavoured to apply
the highest level of Corporate Governance, and has done so by
seeking to comply with the QCA Corporate Governance Code for
Smaller Companies. On 8 March 2018, the London Stock Exchange
issued revised rules for AIM-quoted companies, within which there
is a requirement for AIM quoted companies to apply a recognised
corporate governance code from September 2018 and incorporate
details of how it complies with that Code in both its Annual Report
and on its website.
The Company has chosen to apply the QCA Corporate Governance
Code published in April 2018 (the "QCA Code") and this Corporate
Governance report is based upon the QCA Code.
The principal means of communicating the Company's application
of the QCA Code are the Company's Annual Report for the year ended
30 March 2019 ("Annual Report") and the Corporate Governance
section on the Company's website (www.whirelandplc.com).
This statement has been collectively prepared by the Board of
Directors of the Company (the "Board"). The Board refers to the QCA
Corporate Governance Code as a useful guide to assist in
articulating how the Company approaches and applies good corporate
governance.
This report sets out the Company's application of the Code, by
the Board, and where appropriate, cross references other sections
of the Annual Report. Where the Company's practices depart from the
expectations of the Code, the Board has given an explanation as to
why.
The QCA Code is constructed around ten broad principles and a
set of disclosures which notes appropriate arrangements for growing
companies and requires companies who have adopted the QCA Code to
provide an explanation about how they are meeting those principles
through the prescribed disclosures. In the table below, the Board
explains how it has applied them.
QCA Code Principle: How it should be How the Company applies
applied: it:
1 Establish a The board must be Company's Annual Report for
strategy and able the period ended 31 March
business model to express a shared 2020 sets out its principal
which promote view strategy, which is to focus
long-term value of the company's on continuing to grow the
for shareholders purpose, business across the two business
business model and divisions of Wealth Management
strategy. and Corporate and Institutional
It should go beyond Broking, with the ultimate
the objective of becoming the
simple description of corporate broker of choice
products in the small and mid-cap company
and corporate segment and a leading advice-driven
structures wealth management service
and set out how the provider to retail clients.
company
intends to deliver The risks that attach to this
shareholder strategy and how such risks
value in the medium are mitigated are set out
to in WHI's annual report for
long-term. It should the period ended 31 March
demonstrate 2020.
that the delivery of
long-term
growth is underpinned
by
a clear set of values
aimed
at protecting the
company
from unnecessary risk
and
securing its
long-term
future.
------------------------ ----------------------- ------------------------------------------------------------
2 Seek to understand Directors must The Board is committed to
and meet shareholder develop regular shareholder dialogue
needs and expectations a good understanding with both its institutional
of and retail shareholders.
the needs and The principal opportunity
expectations for the Board to meet shareholders
of all elements of is at the Company's AGM, to
the which shareholders are encouraged
company's shareholder to attend.
base. The Company also has a dedicated
The board must manage email address which investors
shareholders' can use to contact the Company.
expectations and The CEO is responsible for
should reviewing all communications
seek to understand received from shareholders
the and determining the most appropriate
motivations behind response.
shareholder To date, all responses from
voting decisions shareholders as to the procedures
in place for dialogue have
been positive.
------------------------ ----------------------- ------------------------------------------------------------
3. Take into account Long-term success The Company's assessment of
wider stakeholder relies its key resources and relationships
and social upon good relations is set out in WHI's annual
responsibilities with report for the period ended
and their implications a range of different 31 March 2020.
for long-term stakeholder The Directors believe that,
success groups both internal in addition to its shareholders,
(workforce) the main stakeholders of the
and external Company are its clients, its
(suppliers, employees, the communities
customers, regulators in which it operates and its
and three regulatory bodies (the
others). The board London Stock Exchange, the
needs FCA and the Isle of Man's
to identify the FSA).
company's The Company dedicates significant
stakeholders and time to understanding and
understand acting on the needs and requirements
their needs, of each of these Groups by
interests way of meetings dedicated
and expectations. to obtained feedback. The
Company is also a member of
Where matters that certain organisations, such
relate as the Quoted Companies Alliance,
to the company's which encourages and facilitates
impact active dialogue with some
on society, the of the Company's key stakeholders.
communities Linked to this, the Company
within which it endeavours to build relationships
operates with those local communities
or the environment in which it operates and some
have of those initiatives it has
the potential to invested in, in recent years,
affect are set out in the Company's
the company's ability CSR section of its website.
to
deliver shareholder
value
over the medium to
long-term,
then those matters
must
be integrated into
the
company's strategy
and
business model.
Feedback is an
essential
part of all control
mechanisms.
Systems need to be in
place
to solicit, consider
and
act on feedback from
all
stakeholder groups
------------------------ ----------------------- ------------------------------------------------------------
4. Embed effective The board needs to The Company's Annual Report
risk management, ensure for the period ended 31 March
considering that the company's 2020 sets out the risks to
both opportunities risk the Company's business and
and threats, management framework outlook, and how such risks
throughout identifies are minimised.
the organisation and addresses all Given the areas in which the
relevant Company operates, risk is
risks in order to a particular focus.
execute The Company employs a Head
and deliver strategy; of Compliance and Risk, which
companies is a full time position within
need to consider the Company and who is tasked
their with risk identification,
extended business, assessment, management and
including the measurement of risk and
the company's supply threats to, the business.
chain, These risks are recorded within
from key suppliers to the Company's risk register
end-customer. and cover all categories including
Setting strategy human capital risk, regulatory
includes risk, conduct (client) risk,
determining the competition, financial risk,
extent IT and operational resilience
of exposure to the risk and legal risk. Each
identified risk is ranked on impact and
risks that the likelihood and mitigating
company strategies are identified.
is able to bear and In addition, the Executive
willing Committee which is formed
to take (risk of the Executive Directors,
tolerance the Heads of the business
and risk appetite). divisions, a representative
from HR and the Head of Compliance
and Risk meet to assess and
monitor these risks; and discuss
any new emerging risks arising
in the day to day business.
The risk register and minutes
from the Executive Committee
are reviewed in Board meetings.
The Directors receive progress
reports from the Head of Compliance
and Risk directly, to enable
them to assess the effectiveness
of the systems in place. These
risks and systems are also
tested by the Company's external
auditors on an annual basis.
------------------------ ----------------------- ------------------------------------------------------------
5. Maintain the The board members All strategic decisions are
board as a have decided by the Board acting
well-functioning, a collective collectively.
balanced team responsibility The Board consists of four
led by the and legal obligation Non-Executive Directors and
chair to two Executive Directors (with
promote the interests a third Executive Director,
of Stephen Ford, appointed subject
the company, and are to FCA approval). It is considered
collectively that Victoria Raff é,
responsible for Philip Shelley, Simon Lough
defining and Alistair Buchanan are
corporate governance independent Non-Executive
arrangements. Directors.
Ultimate All Executive Directors are
responsibility full time Directors of the
for the quality of, Company and the Non-Executive
and Directors are expected to
approach to, commit at least one day a
corporate month to the Company in addition
governance lies with to their attendance at board
the meetings.
chair of the board. The Board meets at least 12
times a year. The attendance
The board (and any record of each director is
committees) set out on the Company's website.
should be provided Board minutes and related
with papers are circulated to Directors
high quality in good time ahead of the
information relevant Board meeting(s).
in a timely manner to The Board has established
facilitate audit, remuneration, risk,
proper assessment of nomination and executive committees
the which meet regularly in accordance
matters requiring a with their terms of reference.
decision The details of these committees,
or insight. including their terms of reference
and composition, are set out
The board should have below, in this Corporate Governance
an Report.
appropriate balance
between
executive and
non-executive
directors and should
have
at least two
independent
non- executive
directors.
Independence is a
board
judgement.
The board should be
supported
by committees (e.g.
audit,
remuneration,
nomination)
that have the
necessary
skills and knowledge
to
discharge their
duties
and responsibilities
effectively.
Directors must commit
the
time necessary to
fulfil
their roles.
------------------------ ----------------------- ------------------------------------------------------------
6 Ensure that The board must have The Company has six directors
between them an being Phillip Wale, Philip
the directors appropriate balance Tansey, Victoria Raff é
have the necessary of , Philip Shelley, Simon Lough
up-to-date sector, financial and and Alistair Buchanan. Details
experience, public of these Directors and their
skills and markets skills and relevant experience, skills
capabilities experience, and personal qualities are
as well as an set in the Company's Annual
appropriate Report for the period ended
balance of personal 31 March 2020.
qualities The Company periodically holds
and capabilities. The briefings for the Directors
board covering regulations that
should understand and are relevant to their role
challenge as Directors of an AIM-quoted
its own diversity, company.
including The Company also has a dedicated
gender balance, as Human Resources and Compliance
part departments and also uses
of its composition. the services of a number of
external training providers.
The board should not The Directors therefore have
be access to certain in-house
dominated by one seminars and external training
person courses to assist the Directors
or a group of people. in keeping their skills are
Strong kept up to date.
personal bonds can be The Board is supported by
important Katy Mitchell as Company Secretary
but can also divide a and Head of Legal. Katy is
board. a qualified corporate lawyer,
a member of ICSA and a senior
As companies evolve, Qualified Executive within
the the Corporate Broking department
mix of skills and of the Group. The Board also
experience engages external legal advisers
required on the board to advise them, where appropriate
will and necessary on the legal
change, and board aspects of any ongoing regulatory
composition queries.
will need to evolve
to
reflect this change
------------------------ ----------------------- ------------------------------------------------------------
7. Evaluate board The board should Evaluation of the performance
performance regularly of the Company's Board has
based on clear review the historically been implemented
and relevant effectiveness in an informal manner, with
objectives, of its performance as the exception of the Executive
seeking continuous a Directors who are assessed
improvement unit, as well as that annually on performance by
of the Chair.
its committees and At this stage a formalised
the process has not been adopted.
individual directors. It is intended that the process
will be formalised in due
The board performance course, and details of the
review process and its results and
may be carried out recommendations will be published
internally at a future date.
or, ideally, The Nomination Committee is
externally required to give recommendations
facilitated from time to the Directors where there
to are vacancies or where it
time. is felt that additional directors
should be appointed. For new
The review should appointments the search for
identify candidates is conducted, and
development or appointments are made, on
mentoring merit, against objective criteria
needs of individual and with due regard for the
directors benefits of diversity on the
or the wider senior Board.
management
team.
It is healthy for
membership
of the board to be
periodically
refreshed. Succession
planning
is a vital task for
boards.
No member of the
board
should become
indispensable
------------------------ ----------------------- ------------------------------------------------------------
8. Promote a corporate The board should The Company's website sets
culture that embody out the Company's approach
is based on and promote a to corporate responsibility
ethical values corporate and the Company's values relating
and behaviours culture that is based to corporate culture. The
on Company's CSR section of the
sound ethical values website sets out the Company's
and approach to corporate responsibility,
behaviours and use it the Group's people, its social
as impact and the impact upon
an asset and a source the environment in which it
of operates.
competitive
advantage. The Board seeks to ensure
that all of its employees
The policy set by the are aware of the Company's
board ethical values which embodies
should be visible in seven core values. These are
the covered in the mandatory induction
actions and decisions process for new employees
of and each employee is also
the chief executive assessed on their adherence
and to these values in their annual
the rest of the appraisal which influences
management promotion and reward.
team. Corporate
values
should guide the
objectives
and strategy of the
company.
The culture should be
visible
in every aspect of
the
business, including
recruitment,
nominations, training
and
engagement. The
performance
and reward system
should
endorse the desired
ethical
behaviours across all
levels
of the company.
The corporate culture
should
be recognisable
throughout
the disclosures in
the
annual report,
website
and any other
statements
issued by the company
------------------------ ----------------------- ------------------------------------------------------------
9. Maintain governance The company should The Board has an established
structures maintain Audit, Remuneration, Risk,
and processes governance structures Nomination and Executive Committees
that are fit and which meet regularly in accordance
for purpose processes in line with their terms of reference.
and support with The details of these committees,
good decision-making its corporate culture including their terms of reference
by the board and and composition, are set out
appropriate to its: in this Corporate Governance
-- size and section. This detail also
complexity; includes the roles and responsibilities
and of each of the Directors,
-- capacity, appetite with all of the Non-Executive
and Directors sitting on each
tolerance for risk. of the sub-committees of the
The governance Board.
structures The matters reserved for the
should evolve over Board, are set out in the
time Board Terms of Reference,
in parallel with its and can be summarised as follows:
objectives, * Reviewing, approving and guiding corporate strategy,
strategy and business major plans of action, risk appetite and policies,
model annual budgets and business plans; setting
to reflect the performance objectives; monitoring, implementation
development and corporate performance; and overseeing major
of the company. capital expenditures, acquisitions and disposals;
* Monitoring the effectiveness of the Company's
governance arrangements and practices, making change
s
as needed to ensure the alignment of the Company's
governance framework with current best practices;
* Ensuring that appointments to the Board or its
Committees are effected in accordance with the
appropriate governance process;
* Monitoring and managing potential conflicts of
interest of management, Board members, shareholders,
external advisors and other service providers,
including related party transactions; and overseeing
the process of disclosure and communications.
* The Board is also responsible for all other matters
of such importance as to be of significance to the
Group as a whole because of their strategic,
financial or reputational implications or
consequences.
At this stage the Board believes
that the governance framework
is appropriate for a Company
of its size but it continues
to keep this under review.
------------------------ ----------------------- ------------------------------------------------------------
10. Communicate A healthy dialogue The Company is committed to
how the company should open dialogue with all its
is governed exist between the stakeholders. The CEO liaises
and is performing board with the Company's principal
by maintaining and all of its shareholders, regulators and,
a dialogue stakeholders, where appropriate, clients
with shareholders including and relays their views to
and other relevant shareholders, the wider Board.
stakeholders to enable all On the Company's website shareholders
interested can find all historical regulatory
parties to come to announcements, Interim Reports
informed and Annual Reports. Annual
decisions about the Reports and Annual General
company. Meeting Circulars are posted
directly to all registered
In particular, shareholders or nominees and
appropriate results of Annual General
communication and Meeting votes are also published
reporting on the Company's website.
structures should As described earlier, the
exist Company also maintains email
between the board and and phone contacts which shareholders
all can use to make enquiries
constituent parts of or requests.
its At the stage the Board does
shareholder base. not publish an Audit Committee
This Report, but following the
will assist: appointment of new Chair of
-- the communication the Audit Committee it will
of look to adopt such a report
shareholders' views in the coming year.
to
the board; and Following the Company's AGM
-- the shareholders' the results of all votes will
understanding be made available on the website.
of the unique
circumstances
and constraints faced
by
the company.
It should be clear
where
these communication
practices
are described (annual
report
or website).
------------------------ ----------------------- ------------------------------------------------------------
THE BOARD AND ITS COMMITTEES
At the date of this report the Group Board consists of two
Executive and four Non-Executive Directors (with a third Executive
Director appointed subject to FCA approval). The Board is
responsible for the overall direction and strategy of the Group and
meets regularly throughout the year. Under the Company's Articles
of Association at every AGM, any Directors:
-- who have been appointed by the Directors since the last AGM; or
-- who were not appointed or reappointed at one of the preceding two AGMs,
must retire from office and may offer themselves for
reappointment by the members.
The Board has formally established a number of committees and
agreed their terms of reference, as follows:
Remuneration Committee
The principal function is to determine the policy on Executive
appointments and remuneration. The committee consists of the four
Non-Executive Directors with Simon Lough as Chair. It is the aim of
the committee to attract, retain and motivate high calibre
individuals with a competitive remuneration package.
Remuneration for Executives normally comprises basic salary,
bonus, benefits in kind and options. Details of the current
Directors' remuneration are given in the Remuneration Report.
Other Executive Directors and Risk Committee members may be
invited to attend the meetings.
Audit Committee
The committee is made up of the four Non-Executive Directors
with Alistair Buchanan as Chair. It is responsible for reviewing
the Company's arrangements with its external and internal auditors,
including the cost effectiveness of the audit and the independence
and objectivity of the auditors. It also reviews the application
and appropriateness of the Company's accounting policies, including
any changes to financial reporting requirements brought about by
both external and internal requirements and it gives consideration
to all major financial announcements made by the Company including
its interim and preliminary announcements and annual report and
accounts.
The external auditors, internal auditors and other Executive
Directors may be invited to attend the meetings.
Risk Committee
The committee is made up of the four Non-Executive Directors
with Victoria Raffé as Chair. It is responsible for advising the
Board on risk appetite, tolerance and strategy, taking into account
the current and prospective regulatory and market environment.
The Committee maintains a constant review of both the Group's
overall risk assessment processes and the effectiveness of the
Group's internal controls and risk management systems. It advises
the Board on proposed strategic transactions that may impact the
risk profile of the Group.
The Head of Compliance and Risk and the Executive Directors may
be invited to attend the meetings.
Nomination Committee
The committee consists of the four Non-Executive Directors with
Simon Lough as chair. It is the aim of the committee to identify
and nominate potential candidates to fill Board vacancies; to
consider succession planning and to consider appropriate training
for the Board.
Executive Committee
The committee is made up of the senior management of the Group
and is chaired by the CEO. The committee is responsible for
oversight of all delegated functions by the Board and the
day-to-day operational business. In addition, it is responsible for
ensuring the strategy of the Board is implemented and any issues
that need to be communicated to the Board are recorded as such. The
committee is also responsible for ensuring timely identification
and resolution of regulatory and compliance issues, ensuring senior
management are aware of significant regulatory matters and to act
as a forum to update the Head of Compliance and Risk about
organisational change and new business. The Corporate and
Institutional Broking Executive Committee and the Wealth Management
Executive Committee escalates issues and actions to the committee
as appropriate.
Internal control
The Board has overall responsibility for the framework of
internal control established by the Group and places critical
importance on maintaining a strong control environment. This
framework of internal control is designed to manage rather than
eliminate the risk of failure to achieve business objectives and
can only provide reasonable and not absolute assurance against
material misstatement or loss.
Detailed internal control procedures exist throughout the
Group's operations and compliance is monitored by management and
through the Group's Compliance Department, Internal Audit and the
Executive Committees of both business divisions.
By order of the Board.
Katy Mitchell
Company Secretary
9 July 2020
Remuneration report
For the year ended 31 March 2020
The Directors present the Directors' Remuneration Report (the
"Remuneration Report") for the financial year ended 31 March
2020.
COMPOSITION AND ROLE OF THE REMUNERATION COMMITTEE
As detailed within the Corporate Governance report, the Board
has established a Remuneration Committee which currently consists
of the four Non-Executive Directors, chaired by Simon Lough.
The committee determines and agrees with the Board the framework
and policy of Executive remuneration and the associated costs to
the Group and is responsible for the implementation of that policy.
The committee determines the specific remuneration packages for
each of the Executive Directors and no Director or Senior Executive
is involved in any decisions as to their own remuneration. The
committee has access to information and advice provided by the CEO
and the CFO and has access to independent advice where it considers
it appropriate.
This report explains how the Group has applied its policy on
remuneration paid to Executive Directors.
FRAMEWORK AND POLICY ON EXECUTIVE DIRECTORS' REMUNERATION
The Group's remuneration policy is designed to provide
competitive rewards for its Executive Directors and other Senior
Executives, taking into account the performance of the Group and
the individual Executives, together with comparisons to pay
conditions throughout the markets in which the Group operates. It
is the aim of the committee to attract, retain and motivate high
calibre individuals with a competitive remuneration package. It is
common practice in the industry for total remuneration to be
significantly influenced by bonuses.
The remuneration packages are constructed to provide a balance
between fixed and variable rewards. Therefore remuneration packages
for Executive Directors and Senior Executives normally include
basic salary, bonuses, benefits in kind and options. In agreeing
the level of basic salaries and annual bonuses the committee takes
into consideration the total remuneration that Executives could
receive.
BASIC SALARY
Basic salaries are reviewed on an annual basis or following a
significant change in responsibilities. The committee seeks to
establish a basic salary for each Executive determined by
individual responsibilities and performance, taking into account
comparable salaries for similar positions in companies of a similar
size in the same market.
INCENTIVE ARRANGEMENTS
Bonuses
These are designed to reflect the Group's performance, taking
into account the performance of its peers, the market in which the
Group operates and the Executive's contribution to that
performance.
Performance related contractual incentive scheme
These are designed to reward performance by employees across the
Group.
Share options
As referred to in the Directors' Report, the Group has four
different share ownership plans for employees; the ESOT, CSOP, SAYE
and LTIP scheme.
ESOT
The WH Ireland Group plc Employee Share Ownership Trust (ESOT)
was established on 19 October 2011, for the purpose of holding and
distributing shares in the Company for the benefit of employees.
All costs of the ESOT are borne by Group Companies. 720,000 shares
are held by the ESOT. Joint ownership arrangements have been put in
place in relation to certain of these shares between the trustees
of the ESOT and a number of employees, including some Directors.
The shares carry dividend and voting rights, although these are
normally waived by all parties to such arrangements. The joint
ownership arrangements create options for the employees to acquire
the interest that the trustees of the ESOT has in the jointly owned
shares, which lapses when an employee is deemed to be a bad
leaver.
CSOP
Under the terms of the Company Share Option plan, options over
the Company's shares may be granted on a discretionary basis to
employees of the Group (including Directors) at a price which is
not less than the market value of the shares at the date of grant.
Performance conditions may be imposed at the discretion of the
Board.
In the event of an option holder ceasing to be an employee of
the Group, options granted under the CSOP shall lapse (a) on the
first anniversary of an option holder's death, (b) on the expiry of
6 months from the date on which an option holder ceases to be an
employee of the Group due to injury, disability, retirement or
redundancy or (c) immediately on an option holder ceasing to be an
employee of the Group for any reason other than those referred to
in (a) and (b), unless, and to the extent, the Board exercises its
discretion to allow the options to be exercised for a period after
the option holder ceases to be an employee of the Group.
SAYE
Under the terms of the Save As You Earn scheme, employees of the
Group (including Directors) may be invited to apply for an option
to be granted to them at a price which is not less than 80% of the
market value of the shares at the date of grant. Employees enter
into a savings contract under which they agree to save a certain
amount of salary each month for a specified period, typically 3
years, with a view to using those savings to buy shares under the
terms of the option.
In the event of an employee leaving before the end of the 3
years contract because of redundancy, injury, disability or
retirement, the employee will be able to continue saving privately
and buy a reduced number of shares (in line with the amount saved)
within 6 months of leaving using the savings accrued. If the
employee leaves before the end of the 3 years due to resignation,
dismissal on grounds of misconduct or not returning after maternity
leave, they would not be able to buy any shares and would have
their funds returned to them. In the event of death prior to the
scheme maturing, the deceased's personal representative(s) would be
able to buy a reduced number of shares within 12 months of the
death. As at the date of this report there were no SAYE schemes
open.
LTIP
Under the terms of the LTIP, options over the Company's shares
may be granted on a discretionary basis to employees and
consultants of the Group (including Directors) at a price to be
agreed between the Company and the relevant option holder. Under
the terms of the options granted under the current LTIP, such
options vest on the third anniversary of the award dates; are
exercisable at the market price at the time the option was issued
and are exercisable for ten years after the vesting date.
OTHER EMPLOYEE BENEFITS
Depending on the terms of their contract certain Executive
Directors and Senior Executives are entitled to a range of
benefits, including contributions to individual personal pension
plans, private medical insurance and life assurance.
SERVICE CONTRACTS AND NOTICE PERIODS
The Executive Directors are employed on rolling contracts
subject to six months' notice from either the Executive or the
Group, given at any time. The service contracts of the current
Executive Directors are available for inspection by any person from
the Human Resources department at the Group's administrative office
during normal office hours on any day except weekends and bank
holidays and at the AGM from 9am on the day of the Meeting until
the conclusion of the Meeting.
Contracts of employment for Senior Executives are all on a
rolling basis subject to notice periods ranging from three to
twelve months.
Service contracts do not provide explicitly for termination
payments or damages but the Group may make payments in lieu of
notice. For this purpose pay in lieu of notice would consist of
basic salary and other relevant emoluments for the relevant notice
period excluding any bonus.
EXTERNAL APPOINTMENTS UNDERTAKEN BY EXECUTIVE DIRECTORS
In the committee's opinion, experience of other companies'
practices and challenges is valuable for the personal development
of the Group's Executive Directors and for the Company. It is
therefore the Group's policy to allow Executive Directors to accept
Non-Executive Directorships at other companies, provided the time
commitment does not interfere with the Executive Directors'
responsibilities within the Group. Fees are retained by the
individual Executive Director.
NON-EXECUTIVE DIRECTORS
All Non-Executive Directors have a remuneration agreement for an
initial period of twelve months and thereafter on a rolling basis
subject to three months' notice by either the Non-Executive
Director or the Group, given at any time.
In the event of termination of their appointment they are not
entitled to any compensation. The terms and conditions of
appointment of Non-Executive Directors are available for inspection
by any person from the Human Resources department at the Group's
administrative office during normal working hours on any day except
weekends or bank holidays and at the AGM from 9am on the day of the
Meeting until the conclusion of the Meeting.
Non-Executive Directors' fees are determined by the Executive
Directors having regard to the need to attract high calibre
individuals with the right experience, the time and
responsibilities entailed and comparative fees paid in the market
in which the Group operates. They are not eligible for
pensions.
DIRECTORS' EMOLUMENTS (AUDITED)
The remuneration of each Director, excluding share options and
awards, during the year ended 31 March 2020 is detailed in the
table below:
Total Total Pension Pension
year year contribution contribution
ended ended year ended year ended
31-Mar 31-Mar 31-Mar 31-Mar
Salary Benefits Bonus 2020 2019 2020 2019
GBP GBP GBP GBP GBP GBP GBP
---------------- --------- ---------- ---------- --------- --------- -------------- --------------
Executive
P Wale 250,000 390 120,755* 371,145 216,086 25,000 16,667
P Tansey
(1) 200,000 3,389 47,170* 250,559 67,359 10,000 2,000
-
Non-Executive
VG Raffé 40,000 - - 40,000 30,000 - -
SN Lough
(2) 40,000 - - 40,000 - - -
PJ Shelley
(3) 27,744 - - 27,744 - - -
AG Buchanan
(4) 24,718 - - 24,718 - - -
TM Steel
(5) 60,000 - - 60,000 60,000 - -
REM Lee
(6) 30,000 - - 30,000 30,000 - -
JHD Carey
(7) 3,538 - - 3,538 30,000 - -
676,000 3,779 167,925 847,704 433,445 35,000 18,667
---------------- --------- ---------- ---------- --------- --------- -------------- --------------
*payments made in April 2019 in lieu of foregone rewards and
subject to claw-back provisions.
Notes:
(1) Appointed 21 June
2019
(2) Appointed 19 August
2019
(3) Appointed 26 September
2019
(4) Appointed 18 December
2019
(5) Resigned 19 May
2020
(6) Resigned 31 December
2019
(7) Resigned 13 May
2019
The highest paid Director for 2020 was P Wale receiving
emoluments of GBP371,145 (2019: RW Killingbeck receiving emoluments
of GBP376,883)
DIRECTORS' INTERESTS IN SHARE OPTIONS (AUDITED)
There were no unexercised options over ordinary shares in the
Company held by Executive and Non-Executive Directors at 31 March
2020.
At 31 March 2020 the market price of the Company's shares was
41.0p.
The highest daily closing price during the year was 57.0p and
the lowest daily closing price was 38.5p.
Statement of Directors' responsibilities
For the year ended 31 March 2020
IN RESPECT OF THE DIRECTORS' REPORT AND THE FINANCIAL
STATEMENTS
The Directors are responsible for preparing the annual report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the Group and Company financial statements
in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union. Under company law the
Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Group and Company and of the profit or loss of the
Group for that period. The Directors are also required to prepare
financial statements in accordance with the rules of the London
Stock Exchange for companies trading securities on the Alternative
Investment Market.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with
IFRSs as adopted by the European Union, subject to any material
departures disclosed and explained in the financial statements;
and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the requirements of the
Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
WEBSITE PUBLICATION
The Directors are responsible for ensuring the annual report and
the financial statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Independent Auditors' report to the members of WH Ireland Group
PLC
For the year ended 31 March 2020
OPINION
We have audited the financial statements of WH Ireland Group Plc
(the 'Parent Company') and its subsidiaries (the 'Group') for the
year ended 31 March 2020 which comprise Consolidated statement of
comprehensive income, Consolidated and Company statement of
financial position, Consolidated and Company statement of cash ows,
Consolidated and Company statement of changes in equity and the
notes to the nancial statements, including a summary of signi cant
accounting policies.
The financial reporting framework that has been applied in the
preparation of the Group financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union and, as regards the Parent Company financial
statements, as applied in accordance with the provisions of the
Companies Act 2006.
In our opinion:
-- the financial statements give a true and fair view of the
state of the Group's and of the Parent Company's affairs as at 31
March 2020 and of the Group's loss for the year then ended;
-- the Group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
-- the Parent Company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European Union;
and
-- the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the company
in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the
FRC's Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
MATERIAL UNCERTAINTY RELATED TO GOING CONCERN
We draw attention to note 1 to the financial statements, which
indicates the directors' considerations over going concern
including the potential impacts of COVID-19 and that the Group
would be required to take remedial action ranging from cost
reductions to raising additional capital in the event that revenues
fall 30% from forecast scenarios. As stated in
note 1, these conditions, indicate that a material uncertainty
exists that may cast significant doubt on the company's ability to
continue as a going concern. Our opinion is not modified in respect
of this matter.
Given the conditions and uncertainties noted above, we
considered going concern to be a key audit matter. We performed the
following work as part of our audit:
-- Obtained management's assessment of the going concern
assumption applied in the financial statements. Assessed this in
light of our understanding of the group's long-term strategy,
forecasts, regulatory capital requirements, and current assessment
of the impact of Covid-19.
-- We have assessed the forecast, through to September 2021,
used to support the Going Concern assessment for arithmetical
accuracy, challenged managements estimates applied within the
forecasts, and assessed the consistency of the forecasts with our
understanding of the business.
-- We assessed the forecast in terms of post year-end
performance, as well as historical performance.
-- We requested that management perform further sensitivity and
breakeven analysis of the forecasts, where they considered reverse
stress testing, downturn and stress in the revenues, and the
related impacts on regulatory capital requirements. We then
analysed and challenged thorough discussions with management and
the Audit committee. We also assessed management's sensitivities
and stress applied within the forecast and independently stressed
the forecasts to note the impact on regulatory capital based on the
stress applied.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Besides going concern, as noted above, there were no other
matters that were considered key audit matters.
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. For planning, we consider materiality to be the
magnitude by which misstatements, including omissions, could in
uence the economic decisions of reasonable users that are taken on
the basis of the nancial statements. Importantly, misstatements
below this level will not necessarily be evaluated as immaterial as
we also take account of the nature of identi ed misstatements, and
the particular circumstances of their occurrence, when evaluating
their effect on the nancial statements.
Based on our professional judgement, we determined materiality
for the Group financial statements as a whole to be GBP343k (2019:
GBP360k), which represents 1.6% (2019: 1.5%) of the Group revenue
for the year. We used revenue as the most important benchmark as
the Group is loss-making and given the importance of revenue as a
measure for shareholders in assessing the performance of the Group.
The Parent Company's materiality was determined at GBP325k (2019:
GBP324k) which represents 1.75% (2019: 2%) of total assets as it is
a holding company focused on managing its investments.
Our audit work on each component of the Group was executed at
levels of materiality applicable to the individual entity, all of
which were lower than Group materiality, ranging from GBP325k to
GBP18k for the two signi cant components.
Performance materiality is the application of materiality at the
individual account or balance level set at an amount to reduce to
an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality. On
the basis of our risk assessment together with our assessment of
the Group's overall control environment, our judgment was that
overall performance materiality for the Group should be 75% (2019:
75%) of
materiality, namely GBP257k (2019: GBP270k). The parent
company's performance materiality was set at 75% (2019: 75%) which
totalled GBP244k (2019: GBP243k).
We agreed with the Audit Committee that we would report to them
all audit differences in excess of GBP17k (2019: GBP18k) and GBP17k
(2019: GBP16k) for the Parent Company, as well as differences below
that threshold that, in our view, warranted reporting on
qualitative grounds.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
We tailored our audit to ensure we have performed sufficient
work to be able to give an onion on the financial statements as a
whole taking into account the structure of the Group and its
accounting processes and controls.
The Group manages its operations through subsidiaries of the
Parent Company, the main trading entity, WH Ireland Limited, as
well as other components. The Group audit engagement team carried
out full scope audits for the Parent Company and the other signi
cant components. Non-significant components represent dormant
entities, with the only material balances in these companies being
inter-company balances. These were substantively audited by the
Group audit engagement team.
OTHER INFORMATION
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT
2006
In our opinion, based on the work undertaken in the course of
the audit:
-- the information given in the strategic report and the
directors' report for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
-- the strategic report and the directors' report have been
prepared in accordance with applicable legal requirements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the Group and
the Parent Company and its environment obtained in the course of
the audit, we have not identified material misstatements in the
strategic report or the directors' report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
-- adequate accounting records have not been kept by the Parent
Company, or returns adequate for our audit have not been received
from branches not visited by us; or
-- the Parent Company financial statements are not in agreement
with the accounting records and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Statement of Directors'
Responsibilities, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give
a true and fair view, and for such internal control as the
directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the Group's and the Parent Company's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL
STATEMENTS
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities .
This description forms part of our auditor's report.
USE OF OUR REPORT
This report is made solely to the company's members, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Daniel Taylor (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
Date : 9 July 2020
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Consolidated statement of comprehensive income
For the year ended 31 March 2020
Year ended Year ended
31 March 31 March 2019
2020
Note GBP'000 GBP'000
Continuing operations
Revenue 3&5 21,608 22,434
Administrative expenses 6 (24,697) (32,135)
Expected credit loss 6 (44) (641)
--------------------------------------------- ------ ---------------
Operating loss (3,133) (10,342)
Operating loss before exceptional items: (2,163) (6,229)
Exceptional items 6 (970) (4,113)
--------------------------------------------- ------ ------------ ---------------
Operating (loss)/profit after exceptional
items (3,133) (10,342)
Realised gains/ (losses) (43) 234
Finance income 8 11 12
Finance expense 8 (151) (17)
--------------------------------------------- ------ ---------------
Loss before tax (3,316) (10,113)
Tax income/(charge) 9 - (1,176)
--------------------------------------------- ------ ---------------
Loss from continuing operations (3,316) (11,289)
Profit/(loss) from discontinued operations 10 117 (37)
Loss and total comprehensive income
for the year (3,199) (11,326)
--------------------------------------------- ------ ------------ ---------------
Earnings per share 12
------------------------------- ---- --------- ----------
From continuing operations
Basic (7.38p) (35.33p)
Diluted (7.38p) (35.33p)
------------------------------- ---- --------- ----------
From discontinued operations
Basic 0.26p (0.12p)
Diluted 0.26p (0.12p)
------------------------------- ---- --------- ----------
Total
Basic (7.11p) (35.44p)
Diluted (7.11p) (35.44p)
------------------------------- ---- --------- ----------
The notes below 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 2020
Group Company
31 March 31 March 31 March 31 March
2020 2019 2020 2019
Note GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ------ ---------- ---------- ---------- ----------
ASSETS
Non-current assets
Intangible assets 14 758 880 - -
Investment in subsidiaries 15 - - 19,298 16,501
Property, plant and
equipment 13 831 1,162 - -
Investments 16 278 229 - -
Right of use asset 17 2,474 - -
Subordinated Loan 18 - - - 985
Loan receivable 27 - - 644 644
4,341 2,271 19,942 18,130
------------------------------ ------ ---------- ---------- ---------- ----------
Current assets
Trade and other receivables 20 5,944 5,698 2,589 2,461
Other investments 21 1,223 1,168 - -
Subordinated Loan 18 - - 985 -
Cash and cash equivalents 22 2,580 7,702 - 3
Assets held for sale 10 2,128 - - -
11,875 14,568 3,574 2,464
------------------------------ ------ ---------- ---------- ---------- ----------
Total assets 16,216 16,839 23,516 20,594
------------------------------ ------ ---------- ---------- ---------- ----------
LIABILITIES
Current liabilities
Trade and other payables 23 (4,103) (6,468) (156) (95)
Lease liability 17 (629) - - -
Deferred consideration 24 - (1,194) - -
Liabilities classified
as held for sale 10 (704) - - -
(5,436) (7,662) (156) (95)
------------------------------ ------ ---------- ---------- ---------- ----------
Non-current liabilities
Lease liability 17 (2,274) - - -
Accruals and deferred - (412) - -
income
(2,274) (412) - -
------------------------------ ------ ---------- ---------- ---------- ----------
Total liabilities (7,710) (8,074) (156) (95)
------------------------------ ------ ---------- ---------- ---------- ----------
Total net assets 8,506 8,765 23,360 20,499
------------------------------ ------ ---------- ---------- ---------- ----------
Capital and reserves
Share capital 2,335 2,044 2,335 2,044
Share premium 14,414 11,908 14,414 11,908
Other reserves 981 981 228 228
Retained earnings (8,580) (5,524) 6,383 6,319
Treasury shares 27 (644) (644) - -
------------------------------ ------ ---------- ---------- ---------- ----------
Shareholders' funds 8,506 8,765 23,360 20,499
------------------------------ ------ ---------- ---------- ---------- ----------
The notes below 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 GBP45k (2019: GBP113k).
These financial statements were approved by the Board of
Directors on 9 July 2020 and were signed on its behalf by:
P Tansey
Director
Consolidated and Company statement of cash flows
For the year ended 31 March 2020
Group Company
-------------------------- --------------------------
Year ended Year ended Year ended Year ended
31 Mar 31 Mar 31 Mar 31 Mar
2020 2019 2020 2019
Notes GBP'000 GBP'000 GBP'000 GBP'000
Operating activities:
(Loss)/profit for the year:
Continuing operations (3,316) (11,289) (45) (113)
Discontinuing operations 117 (37) - -
(3,199) (11,326) (45) (113)
Adjustments for:
13,
Depreciation, amortisation 14,
and impairment 17 1,225 3,295 - 2
8,
Finance income 10 (12) (13) - -
8,
Finance expense 10 166 17 - -
Tax 9 - 1,176 - 60
Losses/(gains) in investments 43 (234) - -
Non-cash adjustment for share
option charge 7 109 153 109 153
Decrease/(increase) in trade
and other receivables (1,586) 1,253 (128) (103)
(Decrease)/increase in trade
and other payables (1,304) 852 61 (98)
Decrease/(increase) in loan
receivable - - - 102
(Decrease)/increase in provisions - (68) - -
(Decrease)/increase in deferred
consideration - 108 - -
Decrease/(increase) in current
asset investments 21 (55) (476) - -
Net cash (used in)/generated
from operations (4,613) (5,263) (3) 3
Income taxes received/(paid) 9 - 247 -
Net cash inflows from operating
activities (4,613) (5,016) (3) 3
-------------------------------------- ------- ------------ ------------ ------------ ------------
Investing activities:
Proceeds from sale of investments 1 - 642 - -
8,
Interest received 10 12 13 - -
Investment in subsidiary 15 - - (2,797) (6,951)
Repayment of deferred consideration 24 (1,194) (1,216) - -
Acquisition of property, plant
and equipment 13 (214) (380) - -
Acquisition of investments - (275) - -
Net cash (used in)/generated
from investing activities (1,396) (1,216) (2,797) (6,951)
-------------------------------------- ------- ------------ ------------ ------------ ------------
Finance activities:
Proceeds from issue of share
capital 2,797 6,956 2,797 6,956
Lease liability payments (754) (282) - -
Interest paid 8 (2) (17) - -
Net cash (used in)/generated
from financing activities 2,041 6,657 2,797 6,956
-------------------------------------- ------- ------------ ------------ ------------ ------------
Net (decrease)/increase in
cash and cash equivalents (3,968) 425 (3) 8
Cash and cash equivalents
at beginning of year 7,702 7,277 3 (5)
Cash and cash equivalents
at end of year 3,734 7,702 - 3
-------------------------------------- ------- ------------ ------------ ------------ ------------
Notes to the Statement of Cash Flows (Direct Method and Indirect
Method)
Reconciliation of Group cash and cash equivalents at the end of
the year:
Year ended
31 Mar 2020
Group GBP'000
Cash and cash equivalents from continuing operations 2,580
Cash and cash equivalents from discontinuing operations 1,154
Cash and cash equivalents at end of
year 3,734
----------------------------------------------------------- -------------
Reconciliation of Group and Company liabilities arising from
financing activities in the year:
As at Transition Cash flows Non-cash As at
1 April to IFRS 31 March
2019 16 changes 2020
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ---------- ------------ ------------ ---------- ----------
Lease liability - 3,811 (754) 166 3,223
- 3,811 (754) 166 3,223
----------------------------- ------------ ------------ ---------- ----------
Reconciliation of Group and Company liabilities arising from
financing activities in the prior year:
As at Cash flows Non-cash As at
1 April 2018 changes 31 March 2019
Group GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------------- ------------ ---------- ---------------
Lease liability 282 (282) - -
282 (282) - -
------------------ -------------- ------------ ---------- ---------------
There are no Company liabilities arising from financing
activities.
The notes below are an integral part of these financial
statements.
Consolidated and Company changes in equity
For the year ended 31 March 2020
Available
Share Share for-sale Other Retained Treasury Total
capital premium reserves reserves earnings shares equity
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- --------- ----------- ---------- ---------- ---------- ----------
Balance at 1 April 2018 1,493 5,503 7 982 5,633 (746) 12,872
Loss 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 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
Loss and total comprehensive
income for the year - - - (3,199) - (3,199)
--------------------------------- --------- --------- ----------- ---------- ---------- ---------- ----------
Employee share option
scheme - - - - 109 - 109
Deferred tax on employee - - - - - - -
share options
New share capital issued 291 2,506 - - - - 2,797
Other movements - - - - 34 - 34
Share options exercised - - - - - - -
Dividends - - - - - - -
--------------------------------- --------- --------- ----------- ---------- ---------- ---------- ----------
Balance at 31 March 2020 2,335 14,414 - 981 (8,580) (644) 8,506
--------------------------------- --------- --------- ----------- ---------- ---------- ---------- ----------
The notes below are an integral part of these financial
statements.
Retained earnings include GBP10k ESOT reserve.
At 31 March 2020 the total number of issued ordinary shares is
48.70 million shares of 5p each (2019: 42.87 million shares of 5p
each). 5.80 million shares were issued during the period (2019:
13.00 million).
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 April 2018 1,493 5,503 229 6,298 - 13,523
Loss 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
Profit/(loss) after tax - - - (45) - (45)
------------------------------- --------- --------- ---------- ---------- ---------- ---------
Employee share option
scheme - - - 109 - 109
Deferred tax on employee - - - - - -
share options
New share capital issued 291 2,506 - - - 2,797
Other movements - - - - - -
Share options exercised - - - - - -
Dividends - - - - - -
------------------------------- --------- --------- ---------- ---------- ---------- ---------
Balance at 31 March 2020 2,335 14,414 228 6,383 - 23,360
------------------------------- --------- --------- ---------- ---------- ---------- ---------
The notes below 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 (2019: GBP753k) and a (consolidated) capital redemption
reserve of GBP228k (2019: GBP228k).
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. This includes shares in
the company held by the EBT or ESOT, both of which are consolidated
within the consolidated figures.
Notes to the financial statements
For the year ended 31 March 2020
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 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) as adopted by the EU.
Despite the uncertainty around Brexit and Covid-19, the
performance in the first period of the new financial year has been
significantly above our stressed scenario analysis. Decisive
actions around cost reductions have already taken place and this
has ensured that the Group is able to meet its regulatory capital
requirement. An analysis of potential negative scenarios were
conducted as part of the going concern review to assess the
potential impact on revenue, asset values with a particular focus
on the more variable component parts of our overall revenue,
corporate finance fees and commission. Furthermore, reverse stress
tests were modelled to determine when a liquidity crisis or a
breach of regulatory capital in the Group would occur.
Whilst the Directors consider it unlikely, particularly given
the profitable performance of the Group since the period end, the
long term impact of Covid-19 on the economy and in turn the Group's
variable transactional based revenue is unknown. In the event that
these revenues are 30% below forecast a material uncertainty exists
which may cast significant doubt on the Group's ability to continue
as a going concern without taking remedial action that could
include cost reduction programmes, assets sales and the raising of
further capital in order to ensure that regulatory capital
requirements are maintained. The financial statements do not
include the adjustments that would result if the company was unable
to continue as a going concern
Based on the above, the Group continues to adopt the going
concern basis in preparing the financial statements. This is
discussed in more detail in the Directors' Report.
2. ADOPTION OF NEW AND REVISED STANDARDS
New standards, amendments and interpretations adopted
This is the first set of the Group's annual financial statements
in which IFRS 16 Leases has been applied, the impact of which is
described below.
IFRS 16 Leases
The standard has been adopted from 1 April 2019 using the
modified retrospective approach. Adoption of IFRS 16 has resulted
in the group recognising right of use assets and lease liabilities
for all contracts that are, or contain, a lease. On transition, the
Group has recognised a right of use asset of GBP3.4m and lease
liabilities of GBP3.8m. The Right of use asset was measured at an
amount equal to the lease liability adjusted for deferred rent
balance at 31 March 2019 of GBP0.4m
Lease liabilities are measured at the present value of the
remaining lease payments discounted using an incremental borrowing
rate as at 1 April 2019. The weighted average incremental borrowing
rate applied was 5%.
Right of use assets are initially measured at the amount of the
lease liabilities and adjusted by the amount of any prepaid or
accrued lease payments as at 31 March 2019.
As permitted under IFRS 16, all leases are accounted for by
recognising a right of use asset and a lease liability except
for:
- Leases with a term of 12 months or less remaining at 1 April
2019
- Leases of low value assets
Lease liabilities are subsequently increased by the interest
charge using the incremental borrowing rate and reduced by the
contractual payments. Right of use assets are amortised on a
straight line basis over the remaining term of the lease.
The reconciliation between the operating lease commitment as at
31 March 2019 and the lease liability as at 1 April 2019 is as
follows:
GBP'000
------------------------------------------------------- ---------
Operating lease commitment at 31 March 2019 4,192
Effect of applying the Group's incremental borrowing
rate (583)
Effect of extending lease term 202
Lease liability recognised as at 1 April 2019 3,811
------------------------------------------------------- ---------
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 before or
after the acquisition 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.
Discontinued operations
The Group present its results from its discontinued operations
separately from its continuing operations. In line with IFRS 5, an
operation is classed as discontinued if it has been or in the
process of being disposed, represents either a separate major line
of business or a geographical area of operations or is part of a
single co-ordinated plan to dispose of a separate major line of
business or geographical area of operation
Assets and liabilities held for sale
An asset or liability is classified as held for sale if it's
carrying value is intended to be recovered through its sale rather
than its continuing use, management is committed to a plan to sell,
the asset is available for immediate sale, an active programme to
locate a buyer has been initiated, the sale is highly probable
within 12 months of classification as held for sale and the actions
required to complete the transaction indicate it is unlikely it
will be significantly changed or withdrawn. Assets held for sale
are measured at the lower of their carrying amount and fair value
less costs to sell. Any impairment losses is recognised through the
consolidated comprehensive income.
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.
Revenue comprises: brokerage commission, investment management
fees, corporate finance fees, commission and fees earned from the
provision of independent financial advice.
-- Brokerage commission is recognised when receivable in
accordance with the date of the underlying transaction. It is a
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 19).
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. No deferred tax assets have been
recognised.
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 .
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.
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.
Leased assets
Measurement and recognition of leases as a lessee
For any new lease contracts entered into on or after 1 April
2019, as permitted under IFRS 16, the Group recognises a right of
use asset and a lease liability except for:
- Leases with a term of 12 months or less from the lease
commencement date
- Leases of low value assets
Lease liabilities are measured at the present value of the
unpaid lease payments discounted using an incremental borrowing
rate.
Right of use assets are initially measured at the amount of the
lease liabilities plus initial direct costs, costs associated with
removal and restoration and payments previously made. Right of use
assets are amortised on a straight line basis over the term of the
lease.
Lease liabilities are subsequently increased by the interest
charge using the incremental borrowing rate and reduced by the
contractual payments.
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 offset and an intention to settle in that way.
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.
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.
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 14).
Investments in subsidiaries
Where an indicator of impairment exists, management uses its
judgement to 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. The carrying value of
investments in subsidiaries at 31 March 2020 was GBP19.3m (see note
15).
Going Concern
Management has used its judgement and knowledge of the business
in preparing detailed financial forecasts for the period to
September 2021 which consider the funding and capital position of
the Group. The forecasts take into account foreseeable downside
risks, based on the information that is available to the Directors
at the time of the approval of these financial statements (see note
1).
There remains uncertainty over what the future impact on the
economy, the Group and its business will be as a result of Brexit
and Covid-19. However, this is being continuously monitored by the
Group and the stressed forecast prepared to September 2021 is being
reviewed on a regular basis. This is to ensure that if there is any
risk to liquidity and capital position, decisive actions could be
taken immediately.
5. SEGMENT INFORMATION
The Group has two principal operating segments, Wealth
Management (WM) and Corporate & Investment Broking (CIB) and a
number of minor operating segments that have been aggregated into
one operating segment.
The WM 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 CIB 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:
Other
Head Group Less Discontinued Continuing
WM CIB Office Companies Group Operations Operations
Year to 31 March GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2020
---------------------- ---------- --------- --------- ------------ ---------- ------------------- -------------
Revenue 13,790 7,860 - 1,213 22,863 (1,255) 21,608
Direct costs (11,085) (7,674) - (1,070) (19,829) 1,105 (18,724)
Contribution 2,705 186 - 143 3,034 (150) 2,884
Indirect costs (4,501) - (4,501) - (4,501)
Segment result 2,705 186 (4,501) 143 (1,467) (150) (1,617)
Executive board
cost 125 125 (1,162) - (912) - (912)
Investment
gains/(losses) - (43) - - (43) - (43)
Depreciation - - (482) (17) (499) 17 (482)
Amortisation - - (122) - (122) - (122)
Finance income - - 11 1 12 (1) 11
Finance expense (65) (28) (58) (17) (168) 17 (151)
(Loss)/profit
before tax 2,765 240 (6,314) 110 (3,199) (117) (3,316)
Tax - - - - - - -
(Loss)/profit
for the year 2,765 240 (6,314) 110 (3,199) (117) (3,316)
---------------------- ---------- --------- --------- ------------ ---------- ------------------- -------------
* Other Group companies include WH Ireland (IOM) Limited, WH
Ireland Plc.. Discontinued operations are included in other Group
companies.
Other
Head Group Less Discontinued Continuing
WM CIB Office Companies Group Operations Operations
Year to 31 March GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2019
---------------------- ---------- --------- --------- ------------ ---------- ------------------- -------------
Revenue 14,988 7,639 - 1,052 23,679 (1,245) 22,434
Direct costs (16,594) (7,457) (146) (1,185) (25,382) 1,269 (24,113)
Contribution (1,606) 182 (146) (133) (1,703) 24 (1,679)
Indirect costs - - (4,179) (258) (4,437) - (4,437)
Segment result (1,606) 182 (4,325) (391) (6,140) 24 (6,116)
Executive board
cost 71 71 (1,087) - (945) - (945)
Investment
gains/(losses) - 234 - - 234 - 234
Depreciation - - (476) (16) (492) 14 (478)
Amortisation and
impairment - - (2,545) (258) (2,803) (2,803)
Finance income - - 12 1 13 (1) 12
Finance expense - - (17) - (17) - (17)
(Loss)/profit
before tax (1,535) 487 (8,438) (664) (10,150) 37 (10,113)
Tax - - (1,176) - (1,176) - (1,176)
(Loss)/profit
for the year (1,535) 487 (9,614) (664) (11,326) 37 (11,289)
---------------------- ---------- --------- --------- ------------ ---------- ------------------- -------------
*Other Group companies include WH Ireland (IOM) Limited, WH
Ireland Plc and Stockholm Investments Ltd. Discontinued operations
are included in other Group companies.
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. 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.
Revenue disaggregated by division and timing of recognition
below:
Other
Year to 31 March Head Group Less Discontinued Continuing
2020 WM CIB Office Companies Group Operations Operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- ------------ --------- ------------------- -------------
Point in time 4,034 4,571 - 77 8,682 (119) 8,563
Over time 9,756 3,289 - 1,136 14,181 (1,136) 13,045
--------- --------- --------- ------------ --------- ------------------- -------------
Total 13,790 7,860 - 1,213 22,863 (1,255) 21,608
------------------- --------- --------- --------- ------------ --------- ------------------- -------------
Other
Year to 31 March Head Group Less Discontinued Continuing
2019 WM CIB Office Companies Group Operations Operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- ------------ --------- ------------------- -------------
Point in time 5,675 4,340 - 131 10,146 (323) 9,823
Over time 9,313 3,299 - 921 13,533 (922) 12,611
--------- --------- --------- ------------ --------- ------------------- -------------
Total 14,988 7,639 - 1,052 23,679 (1,245) 22,434
------------------- --------- --------- --------- ------------ --------- ------------------- -------------
6. OPERATING (LOSS)/PROFIT
Year ended Year ended
31 Mar 2020 31 Mar 2019
Group GBP'000 GBP'000
------------- -------------
Operating (loss)/profit is stated after charging/(crediting):
Depreciation of property, plant and equipment 482 478
Amortisation of intangibles 122 197
Operating lease rentals - property - 516
IFRS 16 depreciation (note 17) 562 -
Impairment of intangibles - 2,606
Employee benefit expense (note 7) 14,365 18,022
Restructuring and non-recurring legal and
regulatory costs 970 1,507
Other administrative expenses 8,071 8,698
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 78 54
- audit related assurance services 22 32
24,697 32,135
Expected credit loss (note 20) 44 641
Total 24,741 32,776
---------------------------------------------------------------- ------------- -------------
Other administrative expenses are incurred in the ordinary
course of the business and do not include any non-recurring
items.
Exceptional items totalling GBP970,000 (2019: GBP4,113,000) is
shown below:
Year to Year to
31 Mar 2020 31 Mar 2019
GBP'000 GBP'000
----------------------------------------------- ------------- -------------
Project Discovery* 268 442
Restructuring** 506 835
Compliance & regulatory projects*** 196 230
Impairment of goodwill and intangible assets - 2,606
Total 970 4,113
----------------------------------------------- ------------- -------------
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 2020, there were some further
personnel restructures and a one off project on cost reduction was
undertaken. During the year ending 31 March 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 2020 and 31 March 2019, the
Group incurred various costs in relation to one off regulatory
projects.
7. EMPLOYEE BENEFIT EXPENSE
Year ended Year ended
31 Mar 2020 31 Mar 2019
Group GBP'000 GBP'000
------------- -------------
Wages and salaries 10,690 11,938
Bonuses 432 2,663
Social security costs 1,583 1,908
Other pension costs 442 506
13,147 17,015
Non salaried staff 1,315 1,728
Other administrative expenses 14,462 18,743
Charge for share options granted to employees
(note 29) 109 214
Less amounts included within Restructuring
and non-recurring costs (206) (835)
14,365 18,122
------------------------------------------------ ------------- -------------
Non-salaried staff are commission-only brokers and therefore do
not receive a salary.
Year ended Year ended
31 Mar 2020 31 Mar 2019
Company GBP'000 GBP'000
------------- -------------
Wages and salaries 226 138
Bonuses - 15
226 153
--------------------- ------------- -------------
The average number of persons (including Directors) employed
during the year was:
Year ended Year ended
Group 31 Mar 2020 31 Mar 2019
Executive and senior management 7 7
Corporate Broking 34 33
Wealth Management 59 72
Support staff 50 62
Salaried staff 150 174
Non salaried staff 9 10
Total 159 184
---------------------------------- ------------- -------------
Year ended Year ended
Company 31 Mar 2020 31 Mar 2019
Executive and senior management 5 4
5 4
---------------------------------- ------------- -------------
The total amount paid to Directors in the period, including
social security costs was GBP1.0m (2019: GBP1.2m). Full details of
Directors' remuneration, including that of the highest paid
Director, are disclosed in the Remuneration Report of these
financial statements.
8. FINANCE INCOME AND EXPENSE
Year ended Year ended
31 Mar 2020 31 Mar 2019
Group GBP'000 GBP'000
------------- -------------
Bank interest receivable 11 12
Other interest - -
Finance income 11 12
-------------------------------------- ------------- -------------
-
Interest payable on lease liability 149 17
Other interest 2 -
Finance expense 151 17
-------------------------------------- ------------- -------------
9. TAX EXPENSE
Year ended Year ended
31 Mar 2020 31 Mar 2019
Group GBP'000 GBP'000
-------------- -------------
Current tax expense:
United Kingdom corporation tax at 19% (2019: - -
19%)
Adjustment in respect of prior years - -
Total current tax - -
----------------------------------------------- -------------- -------------
Deferred tax expense (note 19):
Current year - 1,304
Effect of change in tax rate - (137)
Adjustment in respect of prior years - 9
Total deferred tax - 1,176
----------------------------------------------- -------------- -------------
Total tax in the statement of comprehensive
income - 1,176
----------------------------------------------- -------------- -------------
Equity items:
Deferred tax current year credit/ charge - (21)
Total tax in the statement of equity - (21)
----------------------------------------------- -------------- -------------
The tax expense for the year and the amount calculated by
applying the standard United Kingdom corporation tax rate of 19%
(2019: 19%) to profit before tax can be reconciled as follows:
Year ended Year ended
31 Mar 2020 31 Mar 2019
Group GBP'000 GBP'000
------------- -------------
(Loss) before tax (3,316) (10,113)
----------------------------------------------------- ------------- -------------
Tax expense using the United Kingdom corporation
tax rate of 19% (2019: 19%) (630) (1,921)
Other expenses not tax deductible 71 97
Income not chargeable to tax - (45)
Impact of share options 21 67
Movement in unrecognised deferred tax 568 3,130
Adjustments in respect of prior years - 9
Difference in overseas tax rates (30) (24)
Effect of other tax rates/credits - (137)
Total tax credit in the statement of comprehensive
income - 1,176
----------------------------------------------------- ------------- -------------
10. DISCONTINUED OPERATIONS AND ASSETS & LIABILITIES HELD
FOR SALE
The Group announced its intention to sell its subsidiary WH
Ireland (IOM) Limited on 29 June 2020. In accordance with IFRS 5
non-current assets held for sale and discontinued operations, the
results for WH Ireland (IOM) Limited are included in discontinued
operations in both the current and prior period; its assets and
liabilities have been classified as held for sale and recorded at
the lower of the carrying value and fair value less costs to sell.
The associated assets and liability were therefore presented as
held for sale in this year's financial statements.
Financial performance and cash flow information
Year ended Year ended
31 Mar 2020 31 Mar 2019
GBP'000 GBP'000
------------- -------------
Revenue 1,255 1,245
Administrative expenses (1,122) (1,283)
Operating profit 133 (38)
Realised gains/ (losses) - -
Finance income 1 1
Finance expense (17) -
---------------------------------------------
Profit/(loss) before tax 117 (37)
Tax income/(charge) - -
--------------------------------------------- ------------- -------------
Profit/(loss) from discontinued operations 117 (37)
---------------------------------------------- ------------- -------------
Year ended
31 Mar 2020
GBP'000
Net cash (used in)/generated from operations 100
Net cash (used in)/generated from investing
activities 1
Net cash (used in)/generated from financing
activities (60)
Net (decrease)/increase in cash and cash equivalents 41
-------------------------------------------------------- -------------
Assets and liabilities of disposal group classified as held for
sale
The following assets and liabilities relating to WH Ireland
(IOM) Limited were reclassified as held for sale at 31 March
2020:
Year ended
31 Mar 2020
Assets classified as held for sale GBP'000
Property, plant and equipment 46
Right of use asset 321
Trade and other receivables 607
Cash and cash equivalents 1,154
Total assets of subsidiary held for sale 2,128
------------------------------------------------- -------------
Year ended
31 Mar 2020
Liabilities directly associated with assets GBP'000
classified as held for sale
-------------
Trade and other payables (385)
Lease liability (319)
Total liabilities of subsidiary held for sale (704)
------------------------------------------------- -------------
11. DIVID
No dividend is proposed in respect of 2020 (2019: none).
12. EARNINGS PER SHARE
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 Year ended
31 Mar 2020 31 Mar 2019
Group
------------- -------------
Weighted average number of shares in issue
during the period 44,957 31,955
(thousands)
44,957 31,955
----------------------------------------------- ------------- -------------
From continuing operations
----------------------------------------------- ------------- -------------
Loss for the year attributable to ordinary
shareholders (GBP'000) (3,316) (11,289)
----------------------------------------------- ------------- -------------
Basic (7.38p) (35.33p)
Diluted (7.38p) (35.33p)
From discontinued operations
----------------------------------------------- ------------- -------------
Profit for the year attributable to ordinary
shareholders (GBP'000) 117 (37)
----------------------------------------------- ------------- -------------
Basic 0.26p (0.12p)
Diluted 0.26p (0.12p)
Total
----------------------------------------------- ------------- -------------
Loss for the year attributable to ordinary
shareholders (GBP'000) (3,199) (11,326)
----------------------------------------------- ------------- -------------
Basic (7.11p) (35.44p)
Diluted (7.11p) (35.44p)
----------------------------------------------- ------------- -------------
Share options are anti-dilutive as they reduce the stated loss
per share.
13. PROPERTY, PLANT AND EQUIPMENT
Group Company
----------------------- --------------
Computers, Computers,
fixtures and fittings fixtures and
fittings
GBP'000 GBP'000
-------------------------------- ----------------------- --------------
Cost
At 31 March 2018 4,930 33
Additions 380 -
Disposals - -
At 31 March 2019 5,310 33
Additions 214 -
Reclassified as held for sale (80) -
Disposals - -
At 31 March 2020 5,444 33
-------------------------------- ----------------------- --------------
Depreciation and impairment
At 31 March 2018 3,656 31
Charge for the year 492 2
Adjustment on disposal - -
At 31 March 2019 4,148 33
Charge for the year 499 -
Reclassified as held for sale (34)
Adjustment on disposal - -
At 31 March 2020 4,613 33
-------------------------------- ----------------------- --------------
Net book values
At 31 March 2020 831 -
At 31 March 2019 1,162 -
At 31 March 2018 1,274 2
-------------------------------- ----------------------- --------------
14. INTANGIBLE ASSETS
Client
relationships
Group GBP'000
Cost
At 31 March 2018 4,581
Additions -
At 31 March 2019 4,581
Additions -
At 31 March 2020 4,581
---------------------- ---------------
Amortisation
At 31 March 2018 1,156
Charge for the year 197
Impairment losses 2,348
At 31 March 2019 3,701
Charge for the year 122
At 31 March 2020 3,823
---------------------- ---------------
Net book values
At 31 March 2020 758
At 31 March 2019 880
---------------------- ---------------
At 31 March 2018 3,425
---------------------- ---------------
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
ending 31 March 2019, 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.
15. SUBSIDIARIES
Year ended Year ended
31 Mar 2020 31 Mar 2019
Company GBP'000 GBP'000
------------- -------------
Beginning of year 16,501 9,550
Additions 2,797 6,951
End of year 19,298 16,501
-------------------- ------------- -------------
Investments in subsidiaries are stated at cost less
impairment.
The Group raised GBP2.80m on 22 November 2019 by way of placings
to existing and new shareholders. The Group intends to use the
placing to create a significant buffer to its minimum regulatory
capital position. The additions in the year relate to additional
subscriptions for shares in WH Ireland Limited, a wholly owned
subsidiary, in November 2019.
The Company's subsidiaries, all of which are included in the
consolidated financial statements, are presented below:
Proportion Proportion
Country of Principal Class held by held by
Subsidiary incorporation activity of shares Group 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% -
England &
WH Ireland Nominees Limited Wales Nominee Ordinary 100% -
England &
WH Ireland Trustee Limited Wales Trustee Ordinary 100% -
England &
Fitel Nominees 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.
The following dormant subsidiaries are guaranteed by the Company
and therefore take advantage of the Companies Act (2006) in
obtaining exemption from an individual audit:
Country of
Subsidiary incorporation
WH Ireland (Financial Services) England &
Limited Wales
England &
Readycount Limited Wales
England &
Stockholm Investments Limited Wales
ARE Business and Professional England &
Limited Wales
SRS Business and Professional England &
Limited Wales
England &
WH Ireland Nominees Limited Wales
England &
WH Ireland Trustee Limited Wales
England &
Fitel Nominees Limited Wales
--------------------------------- ----------------
16. INVESTMENTS
Group
Quoted Unquoted Total
Financial assets at fair value through GBP'000 GBP'000 GBP'000
profit or loss
---------- ----------- ----------
At 31 March 2018 - 48 48
At 31 March 2019 - 48 48
-----------------------------------------
At 31 March 2020 - 48 48
----------------------------------------- ---------- ----------- ----------
Quoted Warrants Total
Other financial assets at fair value GBP'000 GBP'000 GBP'000
through profit or loss
---------- ----------- ----------
At 31 March 2018 1 196 197
Additions - - -
Fair value loss - 289 289
Disposals - (305) (305)
At 31 March 2019 1 180 181
Additions - 60 60
Fair value loss - (11) (11)
Disposals - - -
At 31 March 2020 1 229 230
----------------------------------------- ---------- ----------- ----------
Total investments at 31 March 2020 1 277 278
Total investments at 31 March 2019 1 228 229
----------------------------------------- ---------- ----------- ----------
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.
The fair value of the warrants was determined using the Black
Scholes model and grouped within level 3 with fair value
measurements derived from formal valuation techniques (see note
25). The key inputs into this calculation are the share price as at
31 March 2020, exercise price, risk free interest rate and
volatility which is based on the share price movements during the
period 1 December 2019 to 31 March 2020.
17. RIGHT OF USE ASSET & LEASE LIABILITY
Leasehold Properties
GBP'000
Cost
At 31 March 2019 -
Adjustment for transition to IFRS16 3,399
Restated at 1 April 2019 3,399
Reclassified as held for sale (363)
At 31 March 2020 3,036
-------------------------------------- ----------------------
Depreciation and impairment
At 31 March 2019 -
Charge for the year 604
Reclassified as held for sale (42)
At 31 March 2020 562
Net book values
At 31 March 2020 2,474
At 31 March 2019 -
-------------------------------------- ----------------------
Maturity of discounted lease payments in relation to
non-cancellable leases
The table below represents the minimum lease payments in
relation to non-cancellable leases where the group is a lessee:
31 March 2020
Payable after
Payable within Payable in more than Total contractual
1 year 2 to 5 years 5 years payments
Group GBP'000 GBP'000 GBP'000 GBP'000
------------------ ---------------- --------------- --------------- -------------------
Lease liability 629 1,905 369 2,903
------------------ ---------------- --------------- --------------- -------------------
The following represents the lease expense in relation to leases
which is recognised in the statement of comprehensive income:
Year ended Year ended
31 Mar 2020 31 Mar 2019
Group GBP'000 GBP'000
------------- -------------
Depreciation of right of use asset 562 -
Interest charge 149 -
Total charge 711 -
------------------------------------ ------------- -------------
Nature of leases
The Group leases a number of properties in the jurisdictions it
operates.
These leases are usually for a fixed term although the Group
sometimes negotiates break clauses in its leases. On a case-by-case
basis, the Group will consider whether the absence of a break
clause would exposes the group to excessive risk. Typically factors
considered in deciding to negotiate a break clause include:
- the length of the lease term;
- the economic stability of the environment in which the
property is located; and
- whether the location represents a new area of operations for
the Group
As at 31 March 2020, the carrying amounts of the lease
liabilities are not reduced by the amounts that would not be paid
as a result of exercising the break clauses because the Group does
not anticipate to exercise its rights to the break clauses.
18. SUBORDINATED LOAN
Year ended Year ended
31 Mar 2020 31 Mar 2019
Company GBP'000 GBP'000
------------- -------------
Beginning of year 985 985
Additions - -
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. As part of the agreement for
the sale of WH Ireland (IOM) Limited, announced on 29 June 2020,
the subordinated loan will be repaid on completion. Accordingly,
the loan has been classified as a current asset. 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 nil.
19. 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% (2019: 19%). 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.
No deferred tax asset or liability has been recognised in the
year. The balance as at 31 March 2020 is GBPnil (2019: GBPnil).
The unrecognised tax losses amount to GBP19.5m (2019:
GBP16.5m)
20. TRADE AND OTHER RECEIVABLES
Group Company
31 Mar 31 Mar 31 Mar 31 Mar
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- ---------
Trade receivables 1,184 2,082 - -
Amounts due from Group companies - - 2,477 2,383
Other receivables 2,032 637 100 75
Accrued income 1,995 2,547 - (1)
Prepayments 733 432 12 4
5,944 5,698 2,589 2,461
----------------------------------- --------- --------- --------- ---------
The carrying value of trade and other receivable balances are
denominated fully in British pounds (2019: 100%).
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 2020, trade receivables (net of
provisions for impairment and doubtful debts) comprised of the
following:
Group Company
31 Mar 31 Mar 31 Mar 31 Mar
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ---------- ---------- ---------- ----------
Not past due 362 471 - -
Up to 5 days due 9 241 - -
from 6 to 15 days past due 21 27 - -
From 16 to 30 days past due 170 196 - -
From 31 to 45 days past due 229 190 - -
More than 45 days past due 393 957 - -
1,184 2,082 - -
------------------------------ ---------- ---------- ---------- ----------
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 (adjusted for forward looking information) 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 (adjusted for forward looking
information) 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 GBP44k (2019: GBP641k).
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 Mar 31 Mar 31 Mar 31 Mar
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ---------- ---------- ---------- ----------
Opening balance 603 436 - -
Amount released from provision
due to recovery (179) (51) - -
Amounts written off, previously
fully provided (10) (474) - -
Amount charged to the statement
of comprehensive income 44 692 - -
Closing balance 458 603 - -
---------------------------------- ---------- ---------- ---------- ----------
21. OTHER INVESTMENTS
Group Company
31 Mar 31 Mar 31 Mar 31 Mar
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- --------- ---------
Current asset investment 1,223 1,168 - -
--------------------------- --------- --------- --------- ---------
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.
22. CASH AND CASH EQUIVALENTS
Group Company
31 Mar 31 Mar 31 Mar
31 Mar 2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
------------ --------- --------- ---------
Cash and cash equivalents 2,580 7,702 - 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 2020 for the Group was GBP430k (2019: GBP469k). There is
no client money held in the Company (2019: GBPnil).
23. TRADE AND OTHER PAYABLES
Group Company
31 Mar 31 Mar
31 Mar 2020 31 Mar 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------- --------- ---------
Trade payables 996 1,553 51 41
Amounts due to Group companies - - - -
Other payables 359 1,149 - (12)
Tax and social security 459 373 - (1)
Deferred income 394 311 - -
Accruals 1,895 3,082 105 67
4,103 6,468 156 95
--------------------------------- ------------- ------------- --------- ---------
The Directors consider that the carrying amounts of trade and
other payables approximate their fair value.
Deferred income relates to retainer fees invoiced in advance and
spread over the length of the period, typically quarterly.
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 1 April 2019 1,194
Additions during the year:
Charged to Statement of Comprehensive -
Income
Paid during the year (1,194)
At 31 March 2020 -
---------------------------------------- ----------------------
31 Mar 2020 31 Mar 2019
GBP'000 GBP'000
-------------
Included in current liabilities - 1,194
Included in non-current liabilities - -
- 1,194
---------------------------------------- ---------------------- -------------
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 2020
Fair value
through
Amortised profit or
cost loss Total
Group GBP'000 GBP'000 GBP'000
----------- ------------ ---------
Financial assets
Investments - 48 48
Other investments - 1,453 1,453
Trade and other receivables 5,211 - 5,211
Cash and cash equivalents 2,580 - 2,580
Financial liabilities
Trade and other payables 3,250 - 3,250
Lease liability 2,903 - 2,903
------------------------------ ----------- ------------ ---------
31 March 2019
Fair value
Amortised through profit
cost or loss Total
Group GBP'000 GBP'000 GBP'000
----------- ----------------- ---------
Financial assets
Investments - 48 48
Other investments - 1,349 1,349
Trade and other receivables 5,266 - 5,266
Cash and cash equivalents 7,702 - 7,702
Financial liabilities
Trade and other payables 5,784 - 5,784
Deferred consideration 1,194 - 1,194
------------------------------ ----------- ----------------- ---------
*The numbers have been re-presented to be consistent with
current year disclosures
The tables below summarise the Company's main financial
instruments by financial asset type:
31 March 2020
Fair value
Amortised through profit
cost or loss Total
Company GBP'000 GBP'000 GBP'000
----------- ----------------- ---------
Financial assets
Subordinated loan (note 18) 985 - 985
Group balances 2,477 - 2,477
Financial liabilities
Trade and other payables 156 - 156
------------------------------ ----------- ----------------- ---------
31 March 2019
Fair value
through
Amortised profit or
cost loss Total
Company GBP'000 GBP'000 GBP'000
----------- ------------ ---------
Financial assets
Subordinated loan (note 18) 985 - 985
Group balances 2,383 - 2,383
Financial liabilities
Trade and other payables 108 - 108
------------------------------ ----------- ------------ ---------
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.
The credit risk in the Company principally comes from
intercompany balances and subordinated loan. Since these are all
within the Group, the Directors are able to closely monitor the
risk of default on a regular basis to minimise any potential
losses.
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.
This ensures that the group and the company both have sufficient
funds/current assets available to meet the liabilities as they fall
due.
The table below summarises the maturity profile of the Group's
financial liabilities based on contractual undiscounted
payments:
31 March 2020
Payable
Payable Payable after more
within in 2 to than 5 Total contractual
1 year 5 years years payments
Group GBP'000 GBP'000 GBP'000 GBP'000
--------- ---------- ------------- -------------------
Trade and other payables 3,250 - - 3,250
Lease liability 751 2,059 387 3,197
4,001 2,059 387 6,447
--------------------------- --------- ---------- ------------- -------------------
31 March 2019
Payable
Payable Payable after more
within in 2 to than 5 Total contractual
1 year 5 years years payments
Group GBP'000 GBP'000 GBP'000 GBP'000
--------- ---------- ------------- -------------------
Trade and other payables 5,784 - - 5,784
Deferred consideration 1,194 - - 1,194
6,978 - - 6,978
*The numbers have been re-presented to be consistent with
current year disclosures
The table below summarises the maturity profile of the Company's
financial liabilities based on contractual undiscounted
payments:
31 March 2020
Payable
Payable Payable after more
within in 2 to than 5 Total contractual
1 year 5 years years payments
Company GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables 156 - - 156
156 - - 156
31 March 2019
Payable
Payable Payable after more
within in 2 to than 5 Total contractual
1 year 5 years years payments
Company GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables 108 - - 108
108 - - 108
*The numbers have been re-presented to be consistent with
current year disclosures
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 GBP1,501k (2019: GBP1,397k). See
note 16 and 21.
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 2020
Level 1 Level 2 Level 3 Total
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 1,223 - 230 1,453
Total 1,223 - 278 1,501
31 March 2019
Level 1 Level 2 Level 3 Total
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 1,168 - 181 1,349
Total 1,168 - 229 1,397
There were no transfers between levels in either financial
year.
Unquoted
equities Other investments
GBP'000 GBP'000
Balance at 31 March 2018 48 890
Total gains or losses in Statement of Comprehensive
Income - 459
Balance at 31 March 2019 48 1,349
Total gains or losses in Statement of Comprehensive
Income - 104
Balance at 31 March 2020 48 1,453
26. CAPITAL MANAGEMENT
The capital of the Group comprises share capital, share premium,
retained earnings and other reserves. The total capital at 31 March
2020 amounted to GBP8.5m for the Group (2019: GBP8.8m) and GBP23.3m
for the Company (2019: GBP20.5m). 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 Year ended
31 Mar 2020 31 Mar 2019
Group GBP'000 GBP'000
At 31 March 644 746
Additions - -
Disposals - (102)
At 31 March 644 644
At 31 March 2020 no shares in the Company were held in Treasury
(2019: nil shares). At 31 March 2020 no shares in the Company were
held in the EBT (2019: nil shares) and the ESOT held 720,000 shares
(2019: 2,139,500), at a nominal value of 5p per share. This
represents 1.48% of the called up share capital (2019: 4.64%).
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 720,000 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 though 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 28).
Details of these schemes can be found in the Remuneration Report.
SAYE 3 matured during the period in May 2019.
Under the terms of the LTIP, options over the Company's shares
may be granted on a discretionary basis to employees and
consultants of the Group (including Directors) at a price to be
agreed between the Company and the relevant option holder. Under
the terms of the options granted under the current LTIP, such
options vest on the third anniversary of the award dates; are
exercisable at the market price at the time the option was issued
and are exercisable for ten years after the vesting date.
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 2020
CSOP ESOT SAYE 3 ESOT 2019 LTIP
Options WAEP Options WAEP Options WAEP Options WAEP Options WAEP
Outstanding
at
beginning
of year 128,589 66.23p 1,650,000 78.14p 794,564 82.00p 450,000 92.50p - -
Granted 43,413 58.00p - - - - - 1,800,000 46.00p
Expired - - - - (794,564) 82.00p - - - -
Forfeited (30,000) 66.17p (1,000,000) 75.00p - - (380,000) 99.26p - -
Exercised - - - - - - - - - -
Outstanding
at end
of year 142,002 63.88p 650,000 40.12p - - 70,000 92.50p 1,800,000 46.00p
Exercisable
at end
of year 142,002 63.88p 650,000 40.12p - - 70,000 92.50p - -
WA Life* 1.71 yrs 5.19 yrs - 6.01 yrs 10.03 yrs
* WA Life represents the weighted average contractual life in
years to the expiry date for options outstanding at the end of the
year
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 - - -
WA Life* 2.72 yrs 5.17 yrs 0.17 yrs 7.63 yrs
* WA Life represents the weighted average contractual life in
years to the expiry date for options outstanding at the end of the
year
The pricing models used to value these options and their inputs
are as follows:
Pricing Models
CSOP ESOT ESOT 2019 LTIP
Pricing model Black Scholes Monte Carlo N/A N/A
Date of grant 02/11/11-24/05/12 28/10/13-13/4/16 30/05/17 28/06/19
& 28/12/19
Share price at grant 56.5-83.0 74.5-114.5 125 45.0 & 49.0
(p)
Exercise price (p) 57.0-84.5 0.0-114.5 - 45.0 & 49.0
Expected volatility
(%) 32.6332-33.2130 43.0000-37.0000 N/A 50
Expected life (years) 5 5 3 3
Risk-free rate (%) 1.2993-.0.7999 0.8000-1.9300 N/A 2
Expected dividend yield - 0.67-2.19 N/A 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 (2019:
252 trading days). For options granted in 2004, volatilities were
calculated back to the date of the Group's flotation in July
2000.
30. CAPITAL COMMITMENTS
There were no capital commitments for the Group or the Company
as at 31 March 2020 (2019: GBPnil ).
31. 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
(2019: 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/services Amounts owed
to related from relates to related
parties parties parties
GBP'000 GBP'000 GBP'000
Key management personnel 2020 - - -
2019 - - -
Other related parties 2020 - - -
2019 - - -
The total compensation of key management personnel is shown
below:
Year ended Year ended
31 Mar 2020 31 Mar 2019
GBP'000 GBP'000
Short-term employee benefits 1,831 1,564
Post-employment benefits - 170
Termination benefits - 322
Share-based payment - -
1,831 2,056
The highest paid Director for 2020 was P Wale receiving
emoluments of GBP371,145 (2019: former Director RW Killingbeck
GBP376,883)
Company
The Parent Company receives interest from subsidiaries in the
normal course of business. Total interest received during the year
was GBPnil (2019: GBPnil). In addition, the Parent Company received
a management charge of GBP479k (2019: GBP481k) from its subsidiary
WH Ireland Limited. WH Ireland Limited also charged the Parent
Company GBPnil (2019: GBP25k) for broker services.
It has been agreed between WH Ireland Group Plc and WH Ireland
(IOM) Limited that they agree the right to set off certain existing
inter-company balances.
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 15 and 20 and in detail in the
following table:
Amounts owed by related Amounts owed to related
parties parties
2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
Readycount Limited 4,157 4,157 - -
WH Ireland (IOM)
Limited 110 108 - -
Stockholm Investments
Limited 410 410 - -
WH Ireland Limited - - 2,183 2,275
WH Ireland Trustee
Limited - - 17 17
4,677 4,675 2,200 2,292
The net amount owed by related parties is GBP2,477k (2019:
GBP2,383k) (see note 20).
32. EVENTS AFTER THE REPORTING DATE
On 29 June 2020 the Group announced its intention to sell its
subsidiary WH Ireland (IOM) Limited
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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(END) Dow Jones Newswires
July 09, 2020 02:00 ET (06:00 GMT)
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