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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| W.h. Ireland Group Plc | LSE:WHI | London | Ordinary Share | GB0009241885 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.25 | -8.06% | 2.85 | 2.50 | 3.20 | 2.85 | 2.85 | 2.85 | 1,804,668 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Finance Services | 21.04M | -5.94M | -0.0252 | -1.13 | 7.32M |
From Dec 2023 to Dec 2024
TIDMWHI
RNS Number : 8427X
W.H. Ireland Group PLC
27 December 2023
27 December 2023
WH Ireland Group plc
("WH Ireland" or the "Company")
Interim Results for the Six Months ended 30 September 2023
Financial Highlights
-- Revenue of GBP10.7m (H1 2022: GBP14.3m)
o Wealth Management division revenue GBP6.3m (H1 2022: GBP7.3m)
o Capital Markets division revenue GBP4.4m (H1 2022: GBP7.0m)
-- Underlying loss before tax of (GBP1.8m) (H1 2022: (GBP0.9)m)(+)
-- Statutory loss before tax of (GBP3.9m) (H1 2022: GBP(0.4)m) included non-recurring costs of GBP1.7m
-- Basic loss per share (4.36p) (H1 2022: earnings of (0.59)p)(+) -- Gross proceeds of GBP5.0m raised through a placing of shares in August 2023 -- Cash balances at GBP6.9m (31 March 2023: GBP4.2m; 30 September 2022: GBP6.3m) -- Cash balances GBP6.8m as at 30 November 2023
Divisional Highlights
-- Wealth Management:
o Total group AUM of GBP1.8bn (H1 2022: GBP2.1bn)
o WM AUM held on SEI (UK) platform of GBP1.2bn (H1 2022: GBP1.4bn)
o Discretionary assets under management of GBP0.9bn (H1 2022: GBP1.0bn)
o Reduction in underlying loss before tax
-- Capital Markets:
o Number of corporate clients 86 (H1 2022: 90)
o Completed eight fundraises in H1 (H1 2022: 15)
o Capital Markets AUM of GBP602m (H1 2022: GBP672m)
o Won two new corporate clients since period end
Board changes announced in November
-- Simon Moore appointed as Non-Executive Chair (subject to FCA regulatory approval) -- Garry Stran appointed as a Non-Executive Director -- Simon Lough, Helen Sinclair and Tom Wood stepped down
Current trading and outlook
-- Substantial cost reduction exercise completed post half year end:
o Total headcount reduced to 111 against 156 a year ago
o GBP3.8m annualised cost savings with benefits in financial performance materialising in the second half of the current financial year and beyond
-- Undertaken some of our largest fund raisings for many months in both public and private markets
-- Underlying monthly profitability (unaudited) was achieved in November 2023
Commenting, Phillip Wale, Chief Executive Officer said:
" WH Ireland's interim results reflect both the well documented challenging market backdrop, as well as the impact of the non-recurring costs incurred in streamlining the business after the refinancing in the summer.
Market conditions, while remaining challenging, have shown some tentative signs of improvement in both indices and activity levels since November; enabling us to undertake some of our largest fundraisings for many months across both public and private markets. WH Ireland is now in a stronger financial position as a result of the delivery of our cost efficiency programme and it was pleasing to see the business deliver underlying monthly profitability (unaudited) in November 2023. "
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@mhpgroup.com Reg Hoare +44 (0) 20 3128 8100
(+) A reconciliation from underlying profits to statutory profits is shown within the Chief Executive's Statement below
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 & effective choices about their money and how it can support their lifestyle ambitions. We help clients to build a long term financial plan and investment strategy for them and their families.
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 Statement
"I am delighted to have been asked to join your Board and would like to take this opportunity to thank Simon Lough and the departing directors for their service to WH Ireland. My own appointment remains subject to FCA approval.
Phillip Wale, your Chief Executive Officer, has commented on the performance for the six month period to 30th September 2023 covered by this interim report in his CEO's Statement. In summary, it has been a challenging six months for both divisions, with adverse market conditions and a challenging macro-economic climate.
The business has had to make several painful and difficult decisions but these are now beginning to deliver the planned benefits. As Phillip reports, we have seen some tentative signs of an improvement in market performance and activity levels in the last few weeks but are mindful that it will take time for a sustained level of confidence to return.
Your Board and your management team continue to focus on restoring the business to sustainable profitability. This will depend on the resumption of growth in revenue in both the Capital Markets business and in Wealth Management, and continued cost discipline. Without these two key objectives being achieved sustainable profitability will remain difficult to achieve. The Board will continue to assess all strategic opportunities and provide updates to the market as appropriate."
Chief Executive's statement
"WH Ireland's interim results reflect both the well documented challenging market backdrop that continued during the period, as well as the non-recurring costs incurred in streamlining the business after the refinancing in the summer.
We remain committed to focusing on operational efficiencies across the Group to ensure that we are well positioned for a recovery in the market and we have seen some tentative signs of an increase in transactional activity throughout November and December (after the reporting period end) in our Capital Markets division.
The market conditions for both Capital Markets and Wealth Management, however, were challenging throughout the period under review. As a result, our financial results for the six months to 30 September 2023 were down on the comparative period, although the impact of the GBP3.8m annualised cost savings will benefit the financial performance in the second half of the financial year and beyond.
Reflecting the difficult backdrop, the Group raised gross proceeds of GBP5m through a placing of shares, as approved by shareholders in August 2023. Cost reduction actions were undertaken in order to reduce losses, with the aim of returning the Group to sustainable profitability. It was pleasing that as a result of these changes, and after the end of the period under review, underlying profitability (unaudited) was delivered in the month of November 2023 from this lower cost base and our aim is to achieve this on a consistent basis.
Group revenue of GBP10.7m for the six months to 30 September 2023 fell by 25.0% against the comparative period, driven both by the fall in indices and lack of transactional activity in light of wider uncertainty in the market, impacting revenue generated by both divisions.
Ahead of the benefit of the GBP3.8m cost reduction initiatives announced in July 2023, total Administration expenses reduced by GBP390k, or 2.7%, reflecting the reduction in variable employee compensation but this was offset by redundancy costs of GBP854k as part of the cost reduction exercise, and GBP806k project costs in relation to the Board exploring strategic opportunities for parts of the business.
This resulted in an underlying loss for the period of GBP1.81m (six months to 30 September 2022 GBP0.86m loss) and a statutory loss before tax of GBP3.92m (six months to 30 September 2022 GBP0.38m loss). Net cash at the period end stood at GBP6.9m (31 March 2023 GBP4.2m, 30 September 2022 GBP6.3m) and GBP6.8m as at 30 November 2023.
Capital Markets
The market backdrop for the division remained extremely challenging during the six months to 30 September 2023. The FTSE AIM All Share Index fell by 11% during the period, with primary and secondary capital raising activity across the market remaining at multi-decade lows.
The division won two new quoted corporate clients in the period. The total number of quoted corporate clients served by the division as at 30 September 2023 stood at 86 (31 March 2023: 90), against an overall decline in the number of companies quoted on AIM.
While total retainer fees remained relatively stable compared to the comparative period, it was transactional fees and trading revenue that fell, in common with our peers. Underlying divisional costs reduced to GBP5.7m from GBP7.4m, reflecting lower variable employee compensation and initial benefits from cost saving measures previously undertaken and prior to the more meaningful actions announced in July 2023. Redundancy costs relating to the latter of GBP597k were incurred in the period.
As the market recovers, we anticipate that our revenue from transactional related fees will increase which, when combined with a lower cost base, should result in an improved financial performance of the Division.
Wealth Management
The market backdrop has also impacted our Wealth Management (WM) revenues, through the impact of market falls on Assets Under Management (AUM). However, costs were reduced, leading to an improved underlying year on year performance. Total WM AUM fell 15.7% to GBP1.2bn. Discretionary AUM (our main focus) fell 11.3% to GBP0.88bn. Net new discretionary AUM totalled (GBP145m).
The market has been severely impacted by the persistent inflationary backdrop, with interest rates in the UK being at their highest since the financial crisis.
The Group has continued to make progress in improving the efficiency of the business, focussing around the division's four offices in London, Manchester, Henley and Poole. Most of the Group's AUM is managed on the Company's core platform, however, off-platform AUM has remained steady at GBP30m.
Employees
We have continued to target efficiencies and cost savings across the Group, which has resulted in redundancies. The total number of employees has reduced to 111 against 156 a year ago. Redundancies occurred in both our divisions and were completed over September and October 2023. The Directors are grateful for the loyalty of all of our remaining employees and shareholders during this challenging period and wish those who have left us well for the future.
Outlook
Market conditions, while still challenging, have seen some tentative signs of improvement in both indices and activity levels since November 2023 as the prospect of interest rates having peaked becomes more plausible.
The Company has undertaken some of its largest fundraisings for many months in both public and private markets, as well as seen the markets rally from the October lows. Underpinned by actions already taken and a continued tight control over costs, the Directors envisage that the Group can return to profitability on an ongoing and consistent basis. However, should market conditions remain challenging, this objective will be more difficult to achieve, although, as previously mentioned, underlying monthly profitability (unaudited) was achieved in November 2023. Cash & cash equivalents as at 30 November 2023 stood at GBP6.8m.
Board
The Company welcomed two new non-executive directors in November 2023, Simon Moore and Garry Stran to the Board, with Simon due to serve as Chair once FCA approval has been received. The Directors thank the previous non-executive directors of the Company for their service to the business.
Summary
The Board believes that the combination of improving market conditions and the benefits of the cost reduction programme will enhance the future prospects for both divisions while remaining mindful of the fragility in market confidence at this point and the impact that a further deterioration in markets, overall economic confidence or operational effectiveness could have on the Group's financial performance.
The Directors will continue to assess strategic opportunities for the Group if, and as, they arise.
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 2023 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 2023 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
22 December 2023
Consolidated statement of comprehensive income
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Premium
6 months 6 months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2023 2022 2023
Note (unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Revenue 10,723 14,289 26,688
Administrative expenses (14,248) (14,637) (27,550)
Expected credit loss - - (239)
------------------------------------- ------------- -------------------------- ------------ --------------
Operating loss (3,525) (348) (1,101)
------------------------------------- ------------- -------------------------- ------------
Other income 1 - 1,673 2,175
Net losses on investments 1 (381) (1,534) (2,683)
Finance income 5 1 10
Finance expense (14) (176) (224)
------------------------------------- ------------- ------------ --------------
Loss before tax (3,915) (384) (1,823)
Taxation 33 33 (121) ------------------------------------- ------------- ------------ -------------- Loss and total comprehensive income for the year (3,882) (351) (1,944) ------------------------------------- ------------- -------------------------- ------------ -------------- Earnings per share 8 ------------------------------------------- --- -------------------------- ------------ ------------ Basic (4.36p) (0.59p) (3.29p) Diluted - - - ------------------------------------------- --- -------------------------- ------------ ------------
Consolidated statement of financial position
30 Sep 2023 30 Sep 2022 31 Mar
2023
Note (unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------- ----- ------------ ------------ ----------
ASSETS
Non-current assets
Intangible assets 3,529 4,006 3,763
Goodwill 6 3,539 3,539 3,539
Property, plant and equipment 484 679 569
Investments 3 276 1,402 820
Right of use asset 462 783 635
Deferred tax asset - 190 -
8,290 10,599 9,326
------------------------------- ----- ------------ ------------ ----------
Current assets
Trade and other receivables 4,732 5,833 5,444
Other investments 3 1,414 1,692 2,049
Cash and cash equivalents 4 6,923 6,303 4,234
13,069 13,828 11,727
------------------------------- ----- ------------ ------------ ----------
Total assets 21,359 24,427 21,053
------------------------------- ----- ------------ ------------ ----------
LIABILITIES
Current liabilities
Trade and other payables (3,442) (5,159) (4,013)
Lease liability (153) (328) (319)
Deferred consideration 5 (1,424) (2,541) (2,121)
Deferred tax liability (630) (699) (663)
(5,649) (8,727) (7,116)
------------------------------- ----- ------------ ------------ ----------
Non-current liabilities
Lease liability (243) (516) (293)
(243) (516) (293)
------------------------------- ----- ------------ ------------ ----------
Total liabilities (5,892) (9,243) (7,409)
------------------------------- ----- ------------ ------------ ----------
Total net assets 15,467 15,184 13,644
------------------------------- ----- ------------ ------------ ----------
Capital and reserves
Share capital 7 4,965 3,104 3,116
Share premium 22,817 19,014 19,014
Other reserves 981 981 981
Retained earnings (12,182) (6,899) (8,374)
Treasury shares (1,114) (1,016) (1,093)
------------------------------- ----- ------------ ------------ ----------
Shareholders' funds 15,467 15,184 13,644
------------------------------- ----- ------------ ------------ ----------
Signed on behalf of the board
S J Jackson
22 December 2023
Consolidated statement of cash flows
6 months 6 months 12 months
ended ended ended
30 Sep 30 Sep 31 Mar
2023 2022 2023
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
Operating activities:
Loss for the period: (3,882) (351) (1,944)
(3,882) (351) (1,944)
Adjustments for:
Depreciation and amortisation 490 468 1,093
Finance income (5) - (10)
Finance expense 14 176 224
Tax (33) (33) 121
Non-cash adjustment for share option
charge 74 241 359
Non-cash adjustment for investment
gains 381 1,552 2,683
Non-cash adjustment for revenue (401) (161) (1,096)
Non-cash adjustment for right of use
assets - - (125)
Decrease/ (increase) in trade and
other receivables 712 (183) 314
Decrease in trade and other payables (571) (1,842) (2,668)
Net cash used in operations (3,221) (133) (1,049)
Net cash outflows from operating
activities (3,221) (133) (1,049)
--------------------------------------------------- ------------ ------------ ----------
Investing activities:
Acquisition of property, plant and
equipment - (202) (475)
Interest received 5 - 10
Movement in current asset investments 1,199 550 430
Net cash gained from investing activities 1,204 348 (35)
--------------------------------------------------- ------------ ------------ ----------
Finance activities:
Proceeds from issue of share capital 5,000 - 12
Purchase of own shares by Employee
Benefit Trust (21) (116) (193)
Deferred consideration paid (43) - (464)
Lease liability payments (230) (242) (483)
Net cash generated / (used in) financing
activities 4,706 (358) (1,128)
--------------------------------------------------- ------------ ------------ ----------
Net increase in cash and cash equivalents 2,689 (143) (2,212)
Cash and cash equivalents at beginning
of period 4,234 6,446 6,446
Cash and cash equivalents at end of
period 6,923 6,303 4,234
--------------------------------------------------- ------------ ------------ ----------
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 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
Profit and total comprehensive
income for the period (1,593) (1,593)
Employee share option
scheme - - - 118 - 118
New share capital issued 12 - - - - 12
Purchase of own shares
by Employee Benefit Trust - - - - (77) (77)
Balance at 31 March
2023 3,116 19,014 981 (8,374) (1,093) 13,644
Balance at 1 April 2023 3,116 19,014 981 (8,374) (1,093) 13,644 Profit and total comprehensive income for the period - - - (3,882) - (3,882) --------------------------------- -------- -------- --------- --------- --------- -------- Employee share option scheme - - - 74 - 74 New share capital issued 1,849 3,803 - - - 5,652 Purchase of own shares by Employee Benefit Trust - - - - (21) (21) Balance at 30 September 2023 4,965 22,817 981 (12,182) (1,114) 15,467 --------------------------------- -------- -------- --------- --------- --------- --------
Notes to the financial statements
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 2023 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 2023 in accordance with UK-adopted International Accounting Standards and in accordance with the requirements of the Companies Act 2006.
The accounting policies, presentation and methods of computation adopted by the Group in the preparation of its 2023 interim report are those which the Group currently expects to adopt in its annual financial statements for the year ending 31 March 2024 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 2023.
The financial information in this report does not constitute the Company's statutory accounts. The statutory accounts for the period ended 31 March 2023 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 2023 are unaudited (six months to 30 September 2022: 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 31 December 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 presented a range of challenges to the business and as a result the Group proceeded to raise additional capital by way of placing of ordinary shares to existing shareholders and new investors, raising GBP5m. Additionally, cost reduction exercises were implemented and the benefits are expected to take effect from quarter 3 of the financial year. The cost savings have been factored into the forecasts.
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 40%, and contractual revenue will need to decline by more than 10% from management's forecasts to create such a crisis situation within twelve 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 to 30 September 2022, following confirmation from HMRC that the supply of certain Group services was exempt from VAT, 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 was treated as an adjusting item to the underlying profit in view of its non-recurring nature and given it is outside the ordinary course of business.
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 (FY22: nil).
Wealth Capital Group Group
Management Markets and consolidation
6 months ended 30 Sep 2023 adjustments
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ------------ --------- ------------------- -------------
Revenue 6,338 4,385 - 10,723
Direct costs (5,142) (4,850) - (9,992)
------------ --------- ------------------- -------------
Contribution 1,196 (465) - 731
Indirect costs (1,365) (876) (308) (2,549)
Underlying (loss) before tax (169) (1,341) (308) (1,818)
Amortisation (234) - - (234)
Redundancy costs (227) (520) - (747)
Holiday Leave paid on termination (29) (77) - (106)
Project Costs - - (806) (806)
Net changes in the value of non-current
investment assets - (204) - (204)
Loss before tax (659) (2,140) (1,114) (3,915)
Taxation 33 - - 33
Profit/ (loss) for the period (626) (2,140) (1,114) (3,882)
------------------------------------------- ------------ --------- ------------------- -------------
Wealth Capital Group Group
Management Markets and consolidation (continuing
6 months ended 30 Sep 2022 adjustments operations)
(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)
Non-operational 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)
------------------------------------- ------------------ --------- ------------------- -------------
2. Segment information (continued)
Wealth Management Capital Group and Group
Markets consolidation (continuing
12 months ended 31 Mar 2023 adjustments operations)
(audited) GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ------------------ --------- --------------- -------------
Revenue 14,443 12,245 - 26,688
Direct costs (11,400) (11,604) - (23,004)
------------------ --------- ---------------
Contribution 3,043 641 - 3,684
Indirect costs (2,798) (1,994) (879) (5,671)
Underlying profit/(loss) before
tax 245 (1,353) (879) (1,987)
Amortisation of acquired client
relationships (496) - - (496)
Changes in fair value and finance
cost of deferred consideration (173) (173)
Other income 1,957 - - 1,957
Net changes in the value of
non-current investment assets - (1,124) - (1,124)
Profit/ (loss) before tax 1,533 (2,477) (879) (1,823)
Taxation 69 - (190) (121)
Profit/ (loss) for the year 1,602 (2,477) (1,069) (1,944)
----------------------------------- ------------------ --------- --------------- -------------
3. Investments
As at As at As at
30 Sep 30 Sep 31 Mar
2023 2022 2023
Investments GBP'000 GBP'000 GBP'000
---------------------- -------- -------- --------
Fair value: warrants 276 1,402 820
Total investments 276 1,402 820
---------------------- -------- -------- --------
Warrants may be received during the ordinary course of business; there is no cash consideration associated with the acquisition.
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
2023 2022 2023
GBP'000 GBP'000 GBP'000
------------------- -------- -------- --------
Other investments 1,414 1,692 2,049
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 2023 was GBP0.3m (30 September 2022: GBP0.4m; 31 March 2023: GBP0.3m).
5. Deferred consideration
As at As at As at
30 Sep 2023 30 Sep 2022 31 Mar 2023
GBP'000 GBP'000 GBP'000
------------ ------------ ------------
At beginning of period 2,121 2,412 2,412
Finance expense of deferred consideration - 66 110
Change in fair value - 63 63
Paid during the year (43) - (464)
Settled during the year (654) - -
------------------------------------------- ------------ ------------ ------------
Balance at end of period 1,424 2,541 2,121
------------------------------------------- ------------ ------------ ------------
Analysed as:
Included in current liabilities 1,424 2,541 2,121
Included in non-current liabilities - - -
Balance at end of period 1,424 2,541 2,121
------------------------------------------- ------------ ------------ ------------
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%.
During the period GBP43k was paid to former shareholders of Harpsden Wealth Management Limited (Harpsden) in relation to the deferred consideration due. A further settlement to the former shareholders of Harpsden of GBP654k was made by way of share issue.
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 2023 30 Sep 2022 31 Mar 2023
Group GBP'000 GBP'000 GBP'000
------------ ------------ ------------
Beginning of year 3,539 3,539 3,539
End of year 3,539 3,539 3,539
------------------- ------------ ------------ ------------
Goodwill is assessed annually for impairment and the recoverability has been assessed at 31 January 2023 by comparing the carrying value of the CGU to which the goodwill is allocated against its recoverable amount. At 31 January 2023, the Harpsden CGU recoverable amount was calculated as GBP9.99m and the carrying value of the CGU was GBP6.00m, showing a total headroom of GBP3,990k.
Indicators of impairment are also assessed throughout the year and the main external sources that could indicate an impairment are the value of assets under management resulting in lower revenue and an increase in market interest rates impacting the applicable discount rate applied to the forward looking cash flows. Indicators of impairment existed at reporting date, as such an impairment assessment has been undertaken.
As part of the impairment review at 30 September 2023 forecasts used at 31 January 2023 were re-worked based on actuals for the 8 months to 30 September 2023. Assumptions on revenue growth have been revised and a range between 0%-3% have been used for the base case over the five year period of forecast. We have used current costs annualised for a 12 month period inflating by 5% per annum for the years three to five of the forecast. We have also revised the pre-tax discount rate applicable which is 18.8% (post-tax 14.1%) and a terminal growth rate of 2%.
Considering these indicators, and using assumptions for revenue growth of of 1% from year 3, 2% in year 4 and 3% in year 5, the revised recoverable amount of the CGU at 30 September 2023 is GBP7.05m and the carrying value GBP6.52m, showing headroom of GBP527k.
This is a significant reduction from the headroom at 31 January 2023 and this is driven mainly by the reduction in future forecast revenues attributable to a fall in AUM. It should be noted that growth in revenue must be achieved in order to retain headroom and for an impairment to not be recognised.
We have then undertaken three sensitivity analyses in relation to the discount rate and rates of growth in revenue and the impact on headroom is shown in the table below.
An increase in pre-tax discount Headroom would fall by GBP159k
rate from 18.8% to 19.2% to GBP368k
Fall in growth rate to negative Headroom would fall by GBP598k
1% in year 2, nil growth in year to (GBP71k) indicating an impairment
3 then increase by 1% each in would be required
years 4 and 5
-----------------------------------------
A decline in revenue growth rate Headroom would fall by GBP1,541k
by 5% in year 2, with no recovery to (GBP1,014k) indicating an impairment
in following years would be required
-----------------------------------------
7. Share capital
Number of
shares
'000
---------------------------------- ----------
As at 1 April 2023 62,311
Shares issued:
To settle deferred consideration 2,842
On placing 170,833
Balance at 31 March 2023 235,986
---------------------------------- ----------
The total number of ordinary shares in issue is 235.99 million (30 September 2022: 62.09 million; 31 March 2023: 62.31 million). The total number of deferred shares is 65.15 million.
In order to permit the Placing Shares to be issued at the Placing Price, which was lower than the nominal value of the Existing Ordinary Shares, the Company divided each issued Existing Ordinary Share (nominal value 5p each) into one New Ordinary Share (nominal value 1p each) and one Deferred Share (nominal value 4p each). The New Ordinary Shares have the same rights and benefits as the Existing Ordinary Shares. Following the Share Sub-division, the number of New Ordinary Shares held by each Shareholder were the same as the number of Existing Ordinary Shares held by them immediately before the Share Sub-division. The Deferred Shares were not admitted to trading on AIM, have only very limited rights on a return of capital and are effectively valueless and non-transferable. As a result of the Share Sub-division, the Company adopted the New Articles, which set out the rights and restrictions applicable to the New Ordinary Shares and the New Deferred Shares.
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 period, 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. 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 2023 30 Sep 2022 31 Mar 2023
-------------------------------------- ------------ ------------ ------------
Weighted average number of shares in
issue during the period ('000) 88,931 59,409 59,172
88,931 59,409 59,172
-------------------------------------- ------------ ------------ ------------
Loss for the year (3,882) (351) (1,944)
Basic EPS (4.36p) (0.59p) (3.29p)
Diluted EPS - - -
-------------------------------------- ------------ ------------ ------------
9. Contingent Liabilities
In the normal course of business, the Group is exposed to certain legal issues that, in the event of a dispute, could develop into litigious proceedings and, in some cases, may result in contingent liabilities.
After the balance sheet date an issue has arisen with our outsourced platform provider whereby incorrect amounts of interest have been paid to clients which may result in a claim for unspecified losses against the Group by the platform provider. It is not possible to reliably estimate the total potential impact of a ruling in their favour, however this is not estimated to be a significant claim. Therefore no provision for any liability has been recognised at this stage.
10. Dividends
No interim dividend has been paid or proposed in respect of the current financial period (30 September 2022: nil; 31 March 2023: nil).
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