TIDMWHI
RNS Number : 9114J
W.H. Ireland Group PLC
16 December 2022
16 December 2022
WH Ireland Group plc
("WH Ireland" or the "Company")
Interim Results for the Six Months ended 30 September 2022
Financial Highlights
-- Revenue of GBP14.3m (H12021: GBP17.0m(*) )
o Wealth Management division revenue GBP7.3m (H12021:
GBP7.8m)
o Capital Markets division revenue GBP7.0m (H12021: GBP9.2m)
-- Administrative expenses reduced by GBP2.2m year on year
-- Underlying loss before tax of (GBP0.9)m (H12021: profit of
GBP1.1m)(+)
-- Statutory loss before tax of GBP(0.38)m (H12021: GBP0.3m)
-- Basic loss per share (0.59)p (H12021: earnings of
0.55p)(+)
-- Cash balances at GBP6.3m (31 March 2022: GBP6.4m; 30
September 2021: GBP8.4m)
Divisional Highlights
-- Wealth Management (including Harpsden):
o Total group AUM of GBP2.1bn (H12021: GBP2.4bn)
o WM AUM held on SEI (UK) platform of GBP1.4bn (H12021:
GBP1.6bn)
o Discretionary assets under management of GBP1.0bn (H12021:
GBP1.2bn)
-- Capital Markets:
o Increase in number of corporate clients to 92 (H12021: 86)
o Won 13 new quoted corporate client retained mandates
o 19 transactions completed in H1 raising GBP37m (H12021:
GBP193m)
Current trading and outlook
-- Challenging market environment has continued
-- With further tight control over costs, we expect to report a
small loss for the year as a whole
-- Net cash as at 9 December stood at GBP6.75m
-- Progressing development opportunities and recruitment (see
separate announcement issued today) in both divisions
Commenting, Phillip Wale, Chief Executive Officer said:
"Our first half was impacted as expected by the fall in markets
and drop off in transactions on AIM. In the circumstances, we
reported a relatively resilient performance and continued to
develop the Group through selective recruitment and complementary
new services, such as our debt capital markets team who completed
another transaction this week. With a continued focus on
operational efficiencies, and the further development of our new
and existing o fferings, I believe we are well placed to take
advantage of a mark et recovery. "
For further information please contact:
WH Ireland Group plc www.whirelandplc.com
Phillip Wale, Chief Executive
Officer +44(0) 20 7220 1666
Canaccord Genuity Limited www.canaccordgenuity.com
Emma Gabriel / Harry
Rees +44(0) 20 7523 8000
MHP Communications whireland@mhpc.com
Reg Hoare / James Bavister +44 (0) 20 3128 8793
*The comparative information for the period end 30 September
2021 has been reclassified to reflect the correct loss on
discontinued operations, together with a reclassification of
investment gains to revenue as laid out in the report and accounts
year ending 31 March 2021. See note 1 for further information.
(+) A reconciliation from underlying profits to statutory
profits is shown within the Chief Executive's statement below
Notes to Editors :
About WH Ireland Group plc
Wealth Management Division
WH Ireland provides independent financial planning advice and
discretionary investment management. Our goal is to build long
term, mutually beneficial, working relationships with our clients
so that they can make informed and effective choices about their
money and how it can support their lifestyle ambitions. By building
a financial plan and investment strategy with us, our clients are
free to focus on the important things, like life.
Capital Markets Division
Our Capital Markets Division is specifically focused on the
public and private growth company marketplace. The team's
significant experience in this exciting segment means that we are
able to provide a specialist service to each of its respective
participants. For companies, we raise public and private growth
capital, as well as providing both day-to-day and strategic
corporate advice. Our tailored approach means that our teams engage
with all of the key investor groups active in our market - High Net
Worth Individuals, Family Offices, Wealth Managers and Funds. Our
broking, trading and research teams provide the link between growth
companies and this broad investor base.
Chair's opening paragraph
P hillip Wale, our CEO, wrote in his last Annual Report that
"the economic and global environment is probably as testing as any
I have experienced in my career" and "we therefore remain cautious
of the very short term". As many of our peers have already
reported, the very challenging market environment has indeed
continued. This has led to a loss for the period.
We remain committed to continuing to focus on our operational
efficiencies across the Group to ensure that the company is well
positioned for market recovery. We also remain committed to further
alignment of shareholder and employee interests.
Chief Executive's statement
Although our results are well down on last year's, we were close
to financial breakeven despite the very testing market conditions,
reflecting the benefit of lower costs and a significant VAT refund.
Positively, we made good operational progress during the period,
including winning 13 new brokerships, and launching our new Debt
Capital business to complement our existing Equity Capital Markets
and Private Growth Capital businesses. Wealth Management also made
good progress enhancing its customer proposition and refining its
business model.
Group revenue of GBP14.2m for the six months to 30 September
2022 fell by 15.9% against the comparative period last year, driven
both by the fall in markets, which impacted revenue for both
divisions, and by the widely reported drop off in transactions on
AIM, which particularly affected Capital Markets.
Administration expenses fell by GBP2.2m, or 13.0%, reflecting
both the continuing efficiency measures undertaken and a reduction
in variable employee compensation. This resulted in an underlying
loss for the period of GBP0.9m (six months to 30 September 2021
GBP1.1m profit) and a statutory loss before tax of GBP0.4m (six
months to 30 September 2021 GBP0.3m profit). Net cash at period end
stood at GBP6.3m (31 March 2022 GBP6.4m, 30 September 2021
GBP8.4m).
Capital Markets
Despite the backdrop of a 23% fall in AIM index over the six
months to 30 September 2022 and a 75% decline in total money raised
over the same period, we successfully delivered a number of Equity
Capital Markets fundraises during the period and won 13 new quoted
corporate client retained mandates, taking our total number of
clients to 92 (2021: 86). This increase not only means an immediate
increase in revenue from retainers but should also position us to
benefit from increased transaction fees when market activity
increases. Success fees generated from fundraising are an important
element of our Capital Markets Division revenue and the significant
drop in total funds raised across the market during the period has
correspondingly impacted our own income
Our new Debt Capital Markets team, who joined the company in May
2022, completed their first transaction during the period, and we
remain confident that they will significantly enhance the business
once market conditions improve. The team complements our existing
Capital Markets and Private Growth Capital expertise and creates a
full Capital Markets offering enabling our clients to undertake a
variety of strategic fundraising options to ensure the best
possible outcome for their businesses.
The Private Growth Capital business continues to see an exciting
pipeline of opportunities, with two fundraises being completed in
the period.
We have been proactive in selectively reducing certain costs,
while at the same time investing in other areas where we see
commercial opportunities.
Wealth Management
The present market backdrop has also impacted our Wealth
Management (WM) revenues, through the impact of market falls on
Assets Under Management (AUM) and through a consequent reduction in
new business opportunities. Despite this there were some
encouraging new business wins, good relative investment performance
and progress in enhancing our client proposition. Total WM AUM fell
12.5% to GBP1.4bn. Discretionary AUM (our main focus) fell 9.1% to
GBP1bn. Net new discretionary AUM totalled GBP15.7m.
We have continued to make progress in improving the efficiency
of the business, focussing around our four offices in London,
Manchester, Henley and Poole. We have been encouraged by the rise
in Financial Planning income as we put added emphasis on this area
of the business.
The Wealth Management business benefitted significantly during
the period from a refund from HMRC in respect of our VAT arising on
services during earlier periods, as set out further in the
accounts.
Employees
As stated above we have continued to look for efficiencies and
cost savings across the group which has seen the total number of
employees reduced to 156 from 163 a year ago whilst at the same
time enhancing our capital market division with the recruitment of
an established debt capital team and private growth capital
expertise.
We remain grateful for the loyalty of employees and shareholders
during this challenging period.
Outlook
Market conditions have continued to be very challenging since
the half year end and are expected to continue to be so for the
remainder of our financial year. As a result, and with further
tight control over costs, we expect to report a small loss for the
year as a whole. Cash & cash equivalents as at 9 December stood
at GBP6.75m in line with the half year end.
With a continued focus on operational efficiencies and the
further development of our new and existing offerings, I believe we
are well placed to take advantage of a market recovery.
Independent Auditor's review
Conclusion
We have been engaged by WH Ireland Group plc ('the Company') to
review the condensed set of financial statements of the Company and
its subsidiaries (the 'Group') in the interim financial report for
the six months ended 30 September 2022 which comprises the
consolidated statement of comprehensive income, consolidated
statement of financial position, consolidated statement of cash
flows, consolidated statement of changes in equity and the related
explanatory notes that have been reviewed. We have read the other
information contained in the interim financial report and
considered whether it contains any apparent material misstatements
of fact or material inconsistencies with the information in the
condensed set of financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the interim financial report for the six months ended 30
September 2022 is not prepared, in all material respects, in
accordance with International Accounting Standard 34, "Interim
Financial Reporting" as contained in UK-adopted International
Accounting Standards, and the AIM Rules for Companies.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" ('ISRE (UK) 2410') issued for use in the United Kingdom. A
review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with UK-adopted International
Accounting Standards. The condensed set of financial statements
included in this interim financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting" as contained in UK-adopted International
Accounting Standards.
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that management have inappropriately adopted
the going concern basis of accounting or that management have
identified material uncertainties relating to going concern that
are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with ISRE (UK) 2410, however future events or conditions
may cause the Group and the Company to cease to continue as a going
concern.
Responsibilities of Directors
The interim financial report, is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the interim financial report in accordance with
International Accounting Standard 34, "Interim Financial Reporting"
as contained in UK-adopted International Accounting Standards and
the AIM Rules for Companies.
In preparing the interim financial report, the directors are
responsible for assessing the Group's and the 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 Company or to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for the Review of the Financial
Information
In reviewing the interim financial report, we are responsible
for expressing to the Company a conclusion on the condensed set of
financial statements in the interim financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK) 2410 "Review of
Interim Financial Information performed by the Independent Auditor
of the Entity". Our review work has been undertaken so that we
might state to the Company those matters we are required to state
to them in an independent review 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, for our review
work, for this report, or for the conclusions we have formed.
RSM UK Audit LLP
Chartered Accountants
25 Farringdon Street
London
EC4A 4AB
15 December 2022
Consolidated statement of comprehensive income
6 months 6 months ended 12 months
ended ended
30 Sep 30 Sep 2021* 31 Mar
2022 2022
Note (unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Revenue 14,289 16,999 32,035
Administrative expenses (14,637) (16,823) (33,143)
---------------------------------------------- ----- ---------------------- ----------------- --------------------
Operating (loss)/ profit (348) 176 (1,108)
---------------------------------------------- ----- ---------------------- -----------------
Other income 1 1,673 - -
Net (losses)/ gains on investments 1 (1,534) 503 1,626
Finance income 1 - 1
Finance expense 1 (176) (354) (511)
---------------------------------------------- ----- ----------------- --------------------
(Loss)/ profit before tax (384) 325 8
Taxation 33 - 67
---------------------------------------------- ----- ----------------- --------------------
(Loss)/ profit and total comprehensive income
for the year (351) 325 75
---------------------------------------------- ----- ---------------------- ----------------- --------------------
Earnings per share 8
-------------------- -------- ------ ------
Basic (0.59p) 0.55p 0.13p
Diluted - 0.49p 0.12p
-------------------- -------- ------ ------
* The comparative revenue and net gains on investments have been
restated. Further details can be found in note 1.
Consolidated statement of financial position
30 Sep 2022 30 Sep 2021 31 Mar 2022
Note (unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------- ----- ------------ ------------ ------------
ASSETS
Non-current assets
Intangible assets 4,006 4,512 4,259
Goodwill 6 3,539 3,539 3,539
Property, plant and equipment 679 376 325
Investments 3 1,402 1,783 3,013
Right of use asset 783 1,377 1,168
Deferred tax asset 190 190 190
10,599 11,777 12,494
------------------------------- ----- ------------ ------------ ------------
Current assets
Trade and other receivables 5,833 5,652 5,758
Other investments 3 1,692 1,675 1,912
Cash and cash equivalents 4 6,303 8,377 6,446
13,828 15,704 14,116
------------------------------- ----- ------------ ------------ ------------
Total assets 24,427 27,481 26,610
------------------------------- ----- ------------ ------------ ------------
LIABILITIES
Current liabilities
Trade and other payables (5,159) (7,001) (6,681)
Lease liability (328) (516) (376)
Deferred consideration 5 (2,541) (1,291) (2,412)
Deferred tax liability (699) (772) (732)
(8,727) (9,580) (10,201)
------------------------------- ----- ------------ ------------ ------------
Non-current liabilities
Lease liability (516) (1,224) (999)
Deferred consideration 5 - (1,011) -
(516) (2,235) (999)
------------------------------- ----- ------------ ------------ ------------
Total liabilities (9,243) (11,815) (11,200)
------------------------------- ----- ------------ ------------ ------------
Total net assets 15,184 15,666 15,410
------------------------------- ----- ------------ ------------ ------------
Capital and reserves
Share capital 7 3,104 3,101 3,104
Share premium 19,014 18,983 19,014
Other reserves 981 981 981
Retained earnings (6,899) (6,755) (6,789)
Treasury shares (1,016) (644) (900)
------------------------------- ----- ------------ ------------ ------------
Shareholders' funds 15,184 15,666 15,410
------------------------------- ----- ------------ ------------ ------------
Signed on behalf of the board
P A Wale
15 December 2022
Consolidated statement of cash flows
6 months ended 6 months ended 12 months ended
30 Sep 2022 30 Sep 2021* 31 Mar 2022
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
Operating activities:
(Loss)/profit for the period: (351) 325 75
(351) 325 75
Adjustments for:
Depreciation and amortisation 468 611 1,229
Finance income - - (1)
Finance expense 176 354 511
Tax (33) - (67)
Non-cash adjustment for share option charge 241 254 470
Non-cash adjustment for investment losses/(gains) 1,552 (336) (1,626)
Non-cash adjustment for revenue (161) (503) (1,651)
Increase in trade and other receivables (183) (951) (601)
Decrease in trade and other payables (1,842) (55) (942)
Net cash used in operations (133) (301) (2,603)
Net cash outflows from operating activities (133) (301) (2,603)
-------------------------------------------------------------- --------------- --------------- ----------------
Investing activities:
Acquisition of property, plant and equipment (202) (4) (103)
Movement in current asset investments 550 815 1,933
Net cash gained from investing activities 348 811 1,830
-------------------------------------------------------------- --------------- --------------- ----------------
Finance activities:
Proceeds from issue of share capital - - 34
Purchase of own shares by Employee Benefit Trust (116) - (256)
Interest paid - - (2)
Lease liability payments (242) (344) (768)
Net cash used in financing activities (358) (344) (992)
-------------------------------------------------------------- --------------- --------------- ----------------
Net (decrease)/increase in cash and cash equivalents (143) 166 (1,765)
Cash and cash equivalents at beginning of period 6,446 8,211 8,211
Cash and cash equivalents at end of period 6,303 8,377 6,446
-------------------------------------------------------------- --------------- --------------- ----------------
Consolidated statement of changes in equity
Share Share Other Retained Treasury Total
capital premium reserves earnings shares equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------------- -------- -------- --------- --------- --------- --------
Balance at 1 April 2021 3,101 18,983 981 (7,334) (644) 15,087
Profit and total comprehensive income for the period - - - 325 - 325
----------------------------------------------------- -------- -------- --------- --------- --------- --------
Employee share option scheme - - - 254 - 254
Balance at 30 September 2021 3,101 18,983 981 (6,755) (644) 15,666
Profit and total comprehensive income for the period (250) (250)
Employee share option scheme - - - 216 - 216
New share capital issued 3 31 - - - 34
Purchase of own shares by Employee Benefit Trust - - - - (256) (256)
Balance at 31 March 2022 3,104 19,014 981 (6,789) (900) 15,410
Balance at 1 April 2022 3,104 19,014 981 (6,789) (900) 15,410
Profit and total comprehensive income for the period (351) (351)
----------------------------------------------------- -------- -------- --------- --------- --------- --------
Employee share option scheme - - - 241 - 241
Purchase of own shares by Employee Benefit Trust - - - - (116) (116)
Balance at 30 September 2022 3,104 19,014 981 (6,899) (1,016) 15,184
----------------------------------------------------- -------- -------- --------- --------- --------- --------
Notes to the financial statements
1. General information
WH Ireland Group plc is a public company incorporated in the
United Kingdom. The shares of the Company are traded on 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 condensed financial statements in this interim report for
the six months to 30 September 2022 has been prepared in accordance
with IAS 34 Interim Financial Reporting. This report has been
prepared on a going concern basis and should be read together with
the Group's annual consolidated financial statements as at and
prepared to 31 March 2022 in accordance with UK-adopted
International Accounting Standards.
The accounting policies, presentation and methods of computation
adopted by the Group in the preparation of its 2022 interim report
are those which the Group currently expects to adopt in its annual
financial statements for the year ending 31 March 2023 which will
be prepared in accordance with UK-adopted International Accounting
Standards and are consistent with those adopted in the audited
annual Report and Accounts for the period ended 31 March 2022.
The financial information in this report does not constitute the
Company's statutory accounts. The statutory accounts for the period
ended 31 March 2022 have been delivered to the Registrar of
Companies in England and Wales. The auditor has reported on those
accounts. Its report was unqualified, did not draw attention to any
matters by way of emphasis, and did not contain a statement under
Section 498(2) or 498(3) of the Companies Act 2006. The financial
information for the six months to 30 September 2022 is unaudited
(six months to 30 September 2021: unaudited).
Going concern
The condensed 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 March 2024 which consider 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 significant market turbulence particularly in the
preceding 12 months resulting from the Russian invasion of Ukraine
presented a range of challenges to the business.
An analysis of the potential downside impacts was conducted as
part of the going concern assessment to assess the potential impact
on revenue and asset values with a particular focus on the variable
component parts of our overall revenue, such as 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. That modelling concluded that transactional,
non-contractual revenue would need to decline by more than 20% from
management's forecasts to create such a crisis situation within
eighteen months' time.
Based on all the aforementioned, the Directors believe 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. The Directors,
conscious of the continuing, challenging external market
environment, will continue to prudently manage the capital and
liquidity position of the firm.
Net (losses)/ gains on investments
Warrants and investments may be received during the course of
business and are designated as fair value through profit or loss.
At each reporting date the warrants and investments are revalued
and any gain or loss is recognised in net (losses)/ gains on
investments. On exercise of warrants and sale of investments the
gain or loss is also recognised in net (losses)/ gains on
investments.
Other income
During the period, the Group received confirmation from HMRC
that the supply of certain Group services was exempt from VAT. As a
result, the Group received a refund from HMRC in respect of VAT
arising on those services during the period from 1 April 2017 to 31
March 2021 of GBP1.7m (net GBP1.5m after advisory costs). This has
been treated as an adjusting item to the underlying profit in view
of its non-recurring nature.
Finance expense
Included within finance expenses is the fair value measurement
arising on deferred consideration payments from the acquisition of
Harpsden together with the associated net finance costs.
Prior period restatement
The income statement and cash flow statement for the six months
ended 30 September 2021 have been restated to reflect the following
errors which were identified by management and corrected during the
previous financial year:
-- Net fair value gains of GBP503,000 arising on movements in
non-cash consideration after initial recognition and sales of
investments were incorrectly recorded within Revenue rather than
within Net gains on investments.
-- Movements in current asset investments have been represented
in the cash flow statements as investing activities in accordance
with IAS 7. Movements in current asset investments have been
restated to exclude non-cash movements identified which were
incorrectly included in calculating the cash flow.
There was no impact upon the profit and total comprehensive
income and net increase in cash and cash equivalents as reported at
31 March 2021 and the net assets as reported at 1 April 2020.
As originally Effect of Group restated
reported restatement amounts
30 September 2021 GBP'000 GBP'000 GBP'000
Statement of
Comprehensive Income
Revenue 17,502 (503) 16,999
Net gains on investments - 503 503
Consolidated and Company statement of cash flows
Operating activities
(extract)
Non-cash adjustment for
revenue - (503) (503)
Non-cash adjustment for
investment
gains - (336) (336)
Decrease/ (increase) in
current asset
investments 815 (815) -
(Increase)/ decrease in
non-current
asset investments (839) 839 -
Net cash (used
in)/generated from
operations 514 (815) (301)
Investing activities
(extract)
Cash on investing
activities - 815 815
Net cash (used in)/
generated
from investing
activities (4) 815 811
There was no impact upon the profit and total comprehensive
income and net increase in cash and cash equivalents as reported at
30 September 2021 and the net assets as reported at 30 September
2021.
2. Segment information
The Group has two principal operating segments, Wealth
Management (WM) and Capital Markets (CM) and a number of minor
operating segments that have been aggregated into one operating
segment.
WM 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. CM provides corporate finance and corporate broking
advice and services to companies and acts as Nominated Adviser
(Nomad) to clients traded on the 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.
Both divisions are located in the UK. 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 (FY21: nil).
The majority of the Group's revenue originates within the
UK.
Wealth Management Capital Group and Group
Markets consolidation
6 months ended 30 Sep 2022 adjustments
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ------------------ --------- ----------------------- -----------
Revenue 7,262 7,027 - 14,289
Direct costs (6,075) (6,243) - (12,318)
------------------ --------- ----------------------- -----------
Contribution 1,187 784 - 1,971
Indirect costs (1,663) (1,171) - (2,834)
Underlying (loss) before tax (476) (387) - (863)
Amortisation (252) - - (252)
Changes in fair value and finance
cost of deferred consideration (129) - - (129)
Net changes in the value of non-current
investment assets - (645) - (645)
Other income 1,505 - - 1,505
Profit/ (loss) before tax 648 (1,032) - (384)
Taxation 33 - - 33
------------------------------------------- ------------------ --------- ----------------------- -----------
Profit/ (loss) for the period 681 (1,032) - (351)
------------------------------------------- ------------------ --------- ----------------------- -----------
Wealth Management Capital Group Group
Markets and consolidation
6 months ended 30 Sep 2021* adjustments
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ------------------ --------- ------------------- -------------
Revenue 7,800 9,199 - 16,999
Direct costs (6,352) (6,622) - (12,974)
------------------ --------- -------------------
Contribution 1,448 2,577 - 4,025
Indirect costs (1,614) (795) (374) (2,783)
Underlying profit/(loss) before
tax (166) 1,782 (374) 1,242
Acquisition related costs (405) - - (405)
Amortisation of acquired client
relationships (218) - - (218)
Changes in fair value and finance
cost of deferred consideration (306) - (306)
Restructuring costs (194) (102) - (296)
Net changes in the value of non-current
investment assets - 308 - 308
Loss/ (profit) before tax (1,289) 1,988 (374) 325
Taxation - - - -
Loss/ (profit) for the period (1,289) 1,988 (374) 325
------------------------------------ ------------------------- --------- ------------------- -------------
* The comparative revenue and net gains on investments have been
restated. Further details can be found in note 1.
Wealth Management Capital Group and Group
Markets consolidation
12 months ended 31 Mar 2022 adjustments
(audited) GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ------------------ --------- --------------- ---------
Revenue 15,837 16,198 - 32,035
Direct costs (13,072) (12,475) - (25,547)
------------------ --------- ---------------
Contribution 2,765 3,723 - 6,488
Indirect costs (3,013) (1,427) (651) (5,091)
Underlying profit/(loss) before
tax (248) 2,296 (651) 1,397
Acquisition related costs (446) - - (446)
Amortisation of acquired client
relationships (505) - - (505)
Changes in fair value and finance
cost of deferred consideration (416) (416)
Restructuring costs (478) (357) - (835)
Net changes in the value of
non-current investment assets - 813 - 813
Loss/ (profit) before tax (2,093) 2,752 (651) 8
Taxation 67 - - 67
Loss/ (profit) for the year (2,026) 2,752 (651) 75
----------------------------------- ------------------ --------- --------------- ---------
3. Investments
As at As at As at
30 Sep 30 Sep 31 Mar
2022 2021 2022
Investments GBP'000 GBP'000 GBP'000
-------- -------- --------
Fair value: unquoted - 48 48
Fair value: quoted - 1 1
Fair value: warrants 1,402 1,734 2,964
Total investments 1,402 1,783 3,012
---------------------- -------- -------- --------
Quoted and unquoted investments include equity investments other
than those in subsidiary undertakings. Warrants may be received
during the ordinary course of business; there is no cash
consideration associated with the acquisition.
Fair value, in the case of quoted investments, represents the
bid price at the reporting 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. These investments are included
in non-current assets.
As at As at As at
30 Sep 30 Sep 31 Mar
2022 2021 2022
GBP'000 GBP'000 GBP'000
------------------- -------- -------- --------
Other investments 1,692 1,675 1,912
Investments are measured at fair value, which is determined
directly by reference to published prices in an active market where
available. Trading investments are included in current assets.
4. Cash, cash equivalents and bank overdrafts
For the purposes of the statement of cash flows, 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 money and money
held for settlement of outstanding transactions.
Money held on behalf of clients is not included in cash and cash
equivalents. Client money at 30 September 2022 was GBP0.4m (30
September 2021: GBP0.4m; 31 March 2022: GBP0.4m).
5. Deferred consideration
As at As at As at
30 Sep 2022 30 Sep 2021 31 Mar 2022
GBP'000 GBP'000 GBP'000
------------ ------------ ------------
At beginning of period 2,412 1,996 1,996
Finance expense of deferred consideration 66 208 318
Change in fair value 63 98 98
------------------------------------------- ------------ ------------ ------------
Balance at end of period 2,541 2,302 2,412
------------------------------------------- ------------ ------------ ------------
Analysed as:
Included in current liabilities 2,541 1,291 2,412
Included in non-current liabilities - 1,011 -
Balance at end of period 2,541 2,302 2,412
------------------------------------------- ------------ ------------ ------------
Deferred consideration relates to the acquisition of Harpsden
Wealth Management Limited and the maximum amounts payable over a
two year period. The following assumptions were made: revenue
growth of 2%, attrition rate of 3% for larger clients and 10% for
smaller clients, discount rate of 13.5%. The total cash
consideration of GBP2.5m was recognised at its fair value of GBP2m
on acquisition.
During the six months ended 30 September 2022, the fair value of
the estimated deferred consideration for Harpsden Wealth Management
Limited was revalued by GBP63k due to the estimated timing of when
the consideration will fall due. During the six months ended 30
September 2022 the Group also recognised a finance expense of
GBP66k on the deferred consideration. The fair value of the
Harpsden deferred consideration at 30 September 2022 was GBP2.5m.
The first payment has not been paid.
6. Goodwill
Goodwill acquired in a business combination is allocated to a
cash generating unit (CGU) that will benefit from that business
combination.
The carrying amount of goodwill acquired in the acquisition of
Harpsden Wealth Management is set out below:
As at As at As at
30 Sep 2022 30 Sep 2021 31 Mar 2022
Group GBP'000 GBP'000 GBP'000
------------ ------------ ------------
Beginning of year 3,539 3,539 3,539
Acquisition of subsidiaries - - -
End of year 3,539 3,539 3,539
----------------------------- ------------ ------------ ------------
Goodwill is assessed annually for impairment and the
recoverability has been assessed at 31 January 2022 by comparing
the carrying value of the CGU to which the goodwill is allocated,
against its recoverable amount. The Harpsden CGU recoverable amount
was calculated as GBP10.9m and the carrying value of the CGU was
GBP6.4m.
Forecasts have been re-visited due to changes in the economic
environment. Market decline has caused a reduction in revenue
growth and the increase in market interest rates has caused the
discount rate used in the value in use calculation to increase. The
revised pre-tax discount rate is 17.2% (31 Mar 2022: 14.7%) and the
revised recoverable amount of the CGU is GBP7.2m. Compared against
the carrying value at 30 September 2022 of GBP6.3m, indicating no
impairment. Client retention remained unchanged for the six months
to 30 September 2022, indicating the reduction in revenue was due
to the market decline, a factor outside the control of management.
Therefore future changes to the headroom remains subject to market
uncertainty.
7. Share capital
The total number of ordinary shares in issue is 62.09 million
(30 September 2021: 62.05 million; 31 March 2022: 62.09
million).
8. Earnings per share
Basic earnings per share (EPS) is calculated by dividing the
profit attributable to equity holders of the Company by the
weighted average number of ordinary shares in issue during the
year, excluding ordinary shares purchased by the Company and held
as treasury shares.
Diluted EPS is the basic EPS, adjusted for the effect of
conversion into fully paid shares of the weighted average number of
all dilutive employee share options outstanding during the period.
At 30 September 2022: 6.48m (30 September 2021: 6.48m; 31 March
2021: 6.48m) options were excluded from the EPS calculation as they
were anti-dilutive. In a period 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.
Reconciliation of the earnings and weighted average number of
shares used in the calculations are set out below.
As at As at As at
30 Sep 2022 30 Sep 2021 31 Mar 2022
---------------------------------------------- ------------ ------------ ------------
Weighted average number of shares in
issue during the period ('000) 59,409 58,690 59,692
Effect of dilutive share options (thousands) - 7,162 1,190
59,409 65,852 60,882
---------------------------------------------- ------------ ------------ ------------
(Loss)/ profit for the year (351) 325 75
Basic EPS (0.59p) 0.55p 0.13p
Diluted EPS - 0.49p 0.12p
---------------------------------------------- ------------ ------------ ------------
9. Dividends
No interim dividend has been paid or proposed in respect of the
current financial period (30 September 2021: nil; 31 March 2022:
nil ).
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END
IR FFLFWIEESELE
(END) Dow Jones Newswires
December 16, 2022 02:00 ET (07:00 GMT)
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