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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Westhouse | LSE:WHL | London | Ordinary Share | JE00B4N02Q47 | ORD 0.005P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 9.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMWHL
RNS Number : 8903D
Westhouse Holdings PLC
23 May 2012
23 May 2012
Westhouse Holdings plc
(with its subsidiaries "Westhouse" or the "Group" or the "Company")
Preliminary Results
Westhouse Holdings plc (AIM:WHL), the corporate and institutional broking group, announces its Preliminary Results for the year ended 31 December 2011.
-- Revenues grew by 32% to GBP8.0m (2010: GBP6.0m) despite continuing poor market conditions
-- Loss for the year of GBP3.0m (2010: Loss GBP1.6m) reflecting in particular disappointing corporate finance revenues in H2
-- Westhouse completes integration of Arbuthnot Securities in January 2012
-- Corporate client numbers grew from 28 at the end of 2010 to 38 during 2011; and to over 80 post completion of the acquisition
-- GBP8m cost efficiencies identified and implemented during integration programme
-- Agreement in principle for GBP1.25m of equity capital, conversion of the Perpetual Convertible Loan (PCL) and for a loan facility
Commenting on the results, Garth Milne, Chairman, said:
"This has been a transformational year for Westhouse, during which we have addressed the structural changes required of the corporate broking sector while dramatically enhancing the efficiency of our own operations. The Board and our executives are united in their determination to build further on this strong position, driven by the high quality of our client service and our effectiveness in the market place."
Christopher Getley, Chief Executive, commented:
"While 2011 was a tough and demanding year across the corporate broking sector, our teams have responded enthusiastically to the challenge of creating a business that is best suited to the future needs of our clients. The results now reported are pre-acquisition, the acquisition being in January, and before the equity placings completed in February and announced today. Following our combination with Arbuthnot Securities our high quality corporate client base and the strength of our institutional relationships ensure that we are well positioned to compete and develop with confidence."
For further information:
Westhouse Holdings plc
Christopher Getley, Chief Executive Tel: +44 (0) 20 7601 6100
Christopher.getley@westhousesecurities.com www.westhousesecurities.com
Nominated Adviser
Smith & Williamson Corporate Finance Limited
Azhic Basirov / David Jones Tel: +44 (0) 20 7131 4000
corpfinance@smith.williamson.co.uk www.smith.williamson.co.uk
Media Enquiries
Tim Grey Associates Limited
Tim Grey Tel: +44 (0) 20 7871 8611
tg@timgrey.org
Notes to editors:
Westhouse is a corporate and institutional stockbroking group with particular sectoral expertise in resources, investment funds, UK industrial, growth companies, technology, media and environmental technology. Regionally the group's clients have significant exposure across Europe, Africa, Central Asia and China.
Westhouse is based in London and employs approximately 65 people. Westhouse Securities is authorised and regulated by the FSA, is a member of the London Stock Exchange, a NOMAD for AIM listed companies and a Sponsor of Official List companies.
CHAIRMAN's and chief executive's statement
Westhouse continued to make progress in the development of its business in 2011. Revenue grew to GBP8.0m (2010: GBP6.0m), most notably due to the acquisitions of the investment funds team and Smith's Corporate Advisory (Smith's) in late 2010. However, after a promising start, market conditions deteriorated considerably and corporate finance revenues in the second half of the year were particularly disappointing.
Against this background, Westhouse recognised the need for substantial consolidation in the corporate broking sector. The acquisition of Arbuthnot Securities, announced in November 2011 and completed in January 2012, delivered the opportunity for Westhouse to develop a leading market position while making significant efficiency gains.
Westhouse is now the fifth largest corporate broker by client numbers on the London Stock Market and fourth largest on AIM [Source: Morningstar Q1 2012].
Corporate clients expect reliable advice and a clear approach to informing and widening their shareholder base. Institutional clients expect investment ideas that are well researched, effectively conveyed and executed. Westhouse is committed to achieving these objectives for all its clients, and it is our belief that outstanding service levels, consistently delivered, will be rewarded.
Results
Whilst the headline growth in revenues during the year of 32% to GBP8.0m (2010: GBP6.0m) was satisfactory, the net loss of GBP3.0m was not and this has been rapidly addressed. The reason for this poor result was the increase in expenses. Staff costs rose to GBP6.3m (2010: GBP4.8m) as a result of the hiring of the investment funds team and the acquisition of Smith's.
Through the integration of Arbuthnot, management has significantly reduced the cost base of the combined businesses, both through eliminating duplicate functions and by a thorough review of all supply contracts and other costs.
Corporate finance fees of GBP3.2m (2010: GBP2.1m) and equity commissions of GBP3.9m (2010: GBP2.3m) were both up strongly year on year, which given the challenging market conditions is pleasing. The market making desk, which was established during 2010, made a strong return on capital within tight risk parameters.
Although the loss for the year has reduced the net assets of the firm, the year end balance sheet had total assets of GBP6.6m (2010: GBP10.8m) and cash of GBP2.0m (2010: GBP3.9m). Since the year end, in February, Westhouse announced a placement of shares which raised a further GBP2.4m and today announces agreement in principle for a further GBP1.25m.
Growth
The investment funds team has started well in its first year and is making markets in the shares of over 100 investment companies.
Smith's has brought new and complementary revenue streams to Westhouse, as well as access to larger corporate clients. Smith's emphasis is on widening share ownership and undertaking perception analysis for quoted companies of all sizes. This clear approach to identifying the most appropriate investors at a given time for each corporate client adds an extra dimension to our corporate broking model and differentiates Westhouse from its competitors.
The integration of Arbuthnot Securities into the Westhouse businesses has now been completed, and we would like to thank clients, advisers and staff for making this as smooth as possible.
Supportive Shareholders
The introduction of new, large and supportive shareholders has enabled the business to pursue its strategic goals and expand.
In addition to the capital raising in February 2012, agreement in principle has been reached with Bermuda Commercial Bank (BCB):
for the placing of 4,166,667 ordinary shares at a price of 30p each to raise GBP1,250,000;
for the conversion of all of the existing PCL into ordinary shares at a price of 30p; and
for a loan facility for GBP1,250,000.
These new transactions are dependent on consent from Financial Services Authority, the grant of a waiver by the Takeover Panel from the requirements of Rule 9 of the Takeover Code and the approval of the independent shareholders. Once completed BCB will have the option to request that the company appoints a director to the board. The intention is to strengthen and simplify the Company's Balance Sheet and to provide additional working capital.
The commitment of existing and new shareholders continues to give Westhouse a distinct competitive advantage.
Employees
On behalf of the Board we thank all of the Group's employees for their continued contribution to a significant year of development and achievement for Westhouse. The rapidly changing nature of our business creates a particular pressure on existing employees and the enthusiasm with which they are embracing that change is encouraging. Retaining, recruiting and developing a high quality team of individuals is of the highest importance to the business.
Board changes
We are pleased that Grant Foley, previously Chief Operating Officer of Arbuthnot Securities, is to join the board as Finance Director with immediate effect. Tom Price is standing down from the board but retaining his key role within Corporate Finance. Bill Staple who had been executive deputy chairman became non-executive on 1 January 2012. It is anticipated that after the completion of the additional capital raise the Company will appoint a director representing BCB.
Outlook
The improvement of the underlying Westhouse business and the successful integration of Arbuthnot Securities give the Board reason to be cautiously optimistic about the prospects for 2012 notwithstanding the volatile and tough market environment.
As a corporate broker with over 80 corporate clients and in excess of 400 institutional dealing relationships, Westhouse is well positioned to take advantage of an improvement in levels of market confidence and activity.
The start of 2012 has been encouraging; secondary commissions are 65% higher than the same period last year and a number of transactions have been completed. The Group's performance in the first quarter was in line with management's expectations at the time of the acquisition. The second quarter is proving more challenging, with the continued turbulence in the financial markets, corporate transactions are taking longer than expected to complete. Nevertheless, the pipeline of corporate opportunities is encouraging.
Garth Milne Christopher Getley Chairman Chief Executive 22 May 2012 22 May 2012
Consolidated income statement
Hot Features
Premium
2011 2010
For the year ended 31 December Note GBP GBP
Revenue 4 7,969,897 6,038,648
Gains on sale of investments 83,179 994,220
Losses on assets held at fair value
through profit or loss (50,248) (246,954)
Losses on available for sale assets
- impairments (438,906) (315,325)
Finance revenue 5,103 5,239
------------- ------------
Total income 7,569,025 6,475,828
Administration expenses 5,6 (10,612,227) (8,026,960)
Finance costs (175,691) (71,142)
Gain on change in fair value of
embedded derivative 219,800 -
Loss before tax (2,999,093) (1,622,274)
Tax (21,185) 9,155
------------- ------------
Net result for the period (3,020,278) (1,613,119)
============= ============
Attributable to owners of the parent (3,020,278) (1,613,119)
============= ============
Loss per share - basic and diluted 8 (0.25) (0.14)
Consolidated statement of financial position
2010
2011 (Restated)
As at 31 December Note GBP GBP
Assets
Non current assets
Goodwill 718,015 718,015
Intangible assets 68,972 86,215
Property plant and equipment 326,800 411,873
------------ ------------
1,113,787 1,216,103
------------ ------------
Current assets
Available for sale assets 13 528,117 377,839
Financial assets designated at FVTPL
on initial recognition 13 388,922 439,170
Financial assets held for trading 9 649,502 1,990,650
Market counterparties 9 647,750 1,594,876
Trade and other receivables 9 838,457 402,434
Prepaid expenses 9 435,360 858,443
Tax - 3,301
Cash and cash equivalents 2,017,550 3,902,867
------------ ------------
5,505,658 9,569,580
------------ ------------
Total assets 6,619,445 10,785,683
============ ============
Equity
Share capital 607 607
Share premium account 3,993,744 3,993,744
Merger reserve 2,025,707 2,025,707
Reserve in respect of share based
payments 370,376 360,094
Reverse acquisition reserve (1,686,801) (1,686,801)
Revaluation reserve 37,604 75,032
Profit and loss account (3,561,771) (541,493)
------------ ------------
Equity attributable to owners of
the parent 1,179,466 4,226,890
Liabilities
Current
Accounts payable and accrued liabilities 10 1,370,738 1,538,367
Financial liabilities held for trading 10 285,090 456,710
Market counterparties 10 454,565 1,050,844
Tax 10 42,188 -
Total current liabilities 2,152,581 3,045,921
------------ ------------
Non-current
Finance lease 11 7,198 12,872
Perpetual convertible loan 11 2,773,200 2,773,200
Embedded derivative 11 507,000 726,800
Non current liabilities 3,287,398 3,512,872
------------ ------------
Total liabilities 5,439,979 6,558,793
------------ ------------
Total equity and liabilities 6,619,445 10,785,683
============ ============
Consolidated cash flow statement
2010
2011 (Restated)
For the year ended 31 December GBP GBP
Cash flows from operating activities
Loss before tax (2,999,093) (1,622,274)
Adjustments for:
Losses on investments (83,179) (994,220)
Losses in fair value assets held
at fair value 50,248 246,954
Losses on available for sale investments
- impairments 438,906 315,325
Finance revenue (5,103) (5,239)
Finance costs 175,691 71,142
Gain on change in fair value of (219,800) -
embedded derivative
Depreciation and amortisation 182,151 155,905
Loss on disposal of assets 45,886 -
Shares received in kind - (300,000)
Dividends received in kind (31,343) -
Share based expense 10,282 70,049
Decrease / (Increase) in receivables 2,015,146 (3,785,361)
(Decrease) / increase in payables (564,720) 2,031,191
Tax refund / (paid) in period 24,305 (17,810)
Net cash flows from operating activities (960,623) (3,834,338)
------------- ------------
Cash flows from investing activities
Purchase of equipment (107,328) (242,002)
Proceeds from sale of investments 167,156 3,808,274
Purchase of investments (681,681) (568,997)
Cash paid on acquisition net of
cash acquired (134,866) 190,522
Interest received 5,103 5,239
Net cash flows from investing activities (751,616) 3,193,036
------------- ------------
Cash flows from financing activities
Purchase of own shares - (258,597)
Net repayment of perpetual subordinated
loan - (375,000)
Receipt from perpetual convertible
loan - 3,500,000
Repayment of finance lease (5,014) (2,283)
Interest paid (168,064) (71,142)
Net cash flows from financing activities (173,078) 2,792,978
Net (decrease) / increase in cash
and cash equivalents (1,885,317) 2,151,676
Cash and cash equivalents at beginning
of period 3,902,867 1,751,191
------------- ------------
Cash and cash equivalents at end
of period 2,017,550 3,902,867
============= ============
1. General information
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards as adopted by the EU.
The accounting policies set out in the consolidated financial statements of the Group for the year ended 31 December 2011 have been followed in all respects. Westhouse Holdings plc, a public limited company, is the Group's Ultimate Parent Company. It is incorporated in Jersey. The address of Westhouse Holdings plc is One Angel Court, London, EC2R 7HJ.
The financial statements for the year ended 31 December 2011 were approved by the Board of Directors on 22 May 2012.
The financial information contained in this announcement does not constitute statutory accounts. The figures for the years ended 31 December 2010 and 2011 have been extracted from the audited financial statements. The financial statements for 2011 will be delivered to the Registrar of Companies following the Annual General Meeting.
2. Consolidation
This consolidated financial information includes the accounts of the Company and its subsidiaries, after the elimination of inter-company transactions and balances.
On 31 December 2010 Westhouse Holdings plc acquired the entire issued share capital of Smith's Holdings Limited and its subsidiaries Smith's Corporate Advisory Limited and Smith's EBT Limited. The total consideration was GBP734,686, satisfied in part by the issue of 1,224,489 ordinary shares in Westhouse Holdings plc at a price of 49p each. The balance of the consideration was paid in cash.
3. Prior year adjustment
During the year the Company obtained further information concerning the acquisition of Smith's Holdings Limited that existed at the acquisition date. The information related to the impairment of its operating lease, bad debt provisions and a tax liability provision which had the effect of reducing the net assets of Smith's by GBP172,215. Therefore, in accordance with IFRS 3 - Business Combinations, the Company has retrospectively adjusted the provisional amounts for goodwill, other receivables and other payables recognised at the acquisition date to reflect this new information.
4. Segmental reporting
Revenue is wholly attributable to the principal activity of Westhouse and arises solely within the UK.
In 2011, Westhouse identified two operating segments, Westhouse Securities Holdings Limited (formerly Westhouse Securities Limited) and Smith's Corporate Advisory Limited. These operating segments were monitored by the chief decision maker and strategic decisions were made on the basis of the segments' operating results. In February 2012, the entities were combined with Westhouse Securities Limited (formerly Arbuthnot Securities Limited) and will operate as a single operating segment.
Westhouse Securities Holdings Limited (formerly Westhouse Securities Limited) Total
Revenue 7,659,996
Other income 87,725
Cost of sales (2,146,419)
---------------------------
Gross profit 5,601,302
Employees and staff costs (6,071,959)
Other expenses (2,506,332)
---------------------------
Total expenses (8,578,291)
---------------------------
Net loss (2,976,989)
===========================
Total assets 6,624,082
===========================
Smith's Corporate Advisory Limited Total
Revenue 1,083,977
Other income 499
Cost of sales (34,461)
------------
Gross profit 1,050,015
Employees and staff costs (591,475)
Other expenses (527,837)
------------
Total expenses (1,119,312)
------------
Net loss (69,297)
============
Total assets 298,390
============
The split of the revenue for each company is shown below:
Revenue Equity based Corporate finance Market making Investment income Total
commissions
Westhouse Securities
Holdings Limited
(formerly Westhouse
Securities Limited) 3,848,437 2,844,784 935,432 31,343 7,659,996
Smith's Corporate
Advisory Limited 679,689 404,288 - - 1,083,977
The totals presented for the Group's operating segments reconcile to the key financial figures as presented in its financial statements as follows:
Revenue Total
Total reportable segment revenues 8,743,973
Elimination of intersegment revenues (784,012)
Consolidation adjustment 9,936
------------
Group revenues 7,969,897
============
Profit or loss
Total reportable segment net loss (3,046,286)
Profit of other companies in the Group 35,701
Consolidation adjustment (9,693)
------------
Group loss for the period 3,020,278
============
Assets
Total reportable segment assets 6,922,472
Add assets of other companies in the Group 547,122
Less intercompany balances (850,149)
Group assets 6,619,445
============
Profit in the other companies in the Group is due to the ultimate holding company, Westhouse Holdings plc. This company incurred costs relating to it being quoted on AIM as well as a credit in relation to the embedded derivative in the PCL.
Prior to the acquisition of Smith's Holdings Ltd on 31 December 2010 the business was regarded as one operating segment due to the nature of services provided, the methods used to provide those services and the clients to which they are provided, the nature of management and decision making and the way that financial information was analysed and reported to management. Because Smith's Holdings was acquired at close of business on the last day of the prior year reporting period it was not treated as a segment to report.
2011 2010
Revenue GBP GBP
Equity based commissions 3,853,044 2,250,255
Corporate finance 3,150,078 2,148,957
Market making 935,432 1,588,908
Investment income 31,343 50,528
---------- ----------
Total revenue 7,969,897 6,038,648
========== ==========
5. Loss before taxation
2011 2010
Loss for the year has been arrived at GBP GBP
after charging:
Staff costs 6,342,836 4,769,476
Depreciation and amortisation 182,151 155,905
Operating lease payments - land and
buildings 295,237 239,510
Impact of exchange differences (2,250) 20,972
Audit of the parent company 21,650 21,150
Audit of subsidiaries 17,700 17,000
Fees payable to the Company's auditor
and its associates for other services:
Other service relating to taxation 18,175 -
All other services - -
6. Employees' compensation and benefits
2011 2010
GBP GBP
Wages and salaries 5,221,766 3,861,396
Social security costs 661,747 454,902
Equity settled share-based payments 10,282 70,050
Pension costs 449,041 383,128
---------- ----------
6,342,836 4,769,476
========== ==========
The average number of employees (including executive directors) was as follows:
2011 2010
No No
Management and administration 55 40
7. Directors' remuneration
The remuneration of the directors, who are key management personnel of Westhouse, is analysed below.
Benefits 2011 2010
Salary in kind Pensions Total Total
Director GBP GBP GBP GBP GBP
Garth Milne, Chairman 30,000 - - 30,000 30,000
Andrew Beeson 25,000 - - 25,000 25,000
Sir Hayden Phillips 25,000 - - 25,000 25,000
Nicholas Bull 60,000 - - 60,000 -
Christopher Getley 125,000 2,526 15,000 142,526 -
William Staple 125,000 3,130 31,992 160,122 170,792
Jonathan Azis 125,000 2,007 21,250 148,257 149,060
Tom Price 125,000 824 15,000 140,824 -
-------- --------- ---------- -------- --------
640,000 8,487 83,242 731,729 399,852
======== ========= ========== ======== ========
The executive directors participate in a discretionary bonus scheme, membership of which includes most employees, payments from which are of such amounts and at such times as the Company may in its absolute discretion determine. No payments were made during or in respect of the period to 31 December 2011 (2010: GBP nil).
The executive directors participate in the Company's share option schemes but no options were issued to them.
Westhouse operates a defined contribution scheme for its employees and executive directors. The contributions are paid to a life assurance company or SIPP provider to secure the benefits accruing to members. Contributions are charged against profits as they fall due. The funds of the scheme are held separately to those of Westhouse.
8. Earnings per share
2011 2010
GBP GBP
Net result for the period (3,020,278) (1,613,119)
------------ ------------
Weighted average number of ordinary
shares
Basic weighted average number of shares 12,155,935 11,459,196
Effect of options - 260,500
Diluted weighted average number of shares 12,155,935 11,719,696
Basic and diluted loss per share (0.25) (0.14)
Diluted loss per share (0.25) (0.14)
Basic earnings per share are calculated by dividing the earnings attributable to ordinary shares by the weighted average number of ordinary shares during the year. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all dilutive potential ordinary shares.
Westhouse has two categories of potentially dilutive potential ordinary shares, share options granted to employees under the EMI Share Option Scheme and the Unapproved Share Option Scheme, and convertible debt under the PCL where the exercise price is less than the average price of the Company's ordinary shares during the year.
When a loss was incurred, since the conversion of potential ordinary shares to ordinary shares would have decreased net loss per share, options were not dilutive and therefore diluted and basic losses per share are the same.
9. Trade and other receivables
2010
2011 (Restated)
GBP GBP
Trade receivables 160,845 402,434
Investments held for trading 649,502 1,990,650
Counterparties 647,750 1,594,876
Prepayments 435,360 300,283
Other receivables 677,612 558,160
Taxation - 3,301
---------- ------------
2,571,069 4,849,704
========== ============
Due to the short term maturity of trade receivables, the directors consider the carrying amounts to approximate their fair value. All receivables are non-interest bearing and unsecured. No impairment provision is considered necessary by reference to past default experience. Investments held for trading and counterparties are valued at fair value.
Details regarding the prior year restatement are shown on note 3.
10. Trade and other payables
2010
2011 (Restated)
GBP GBP
Trade payables 227,262 244,457
Amounts owing to related parties 16,457 16,457
Finance lease 4,562 3,516
Investments held for trading 285,090 456,710
Counterparties 454,565 1,050,844
Accruals 968,072 752,245
Taxation and social security 189,601 387,006
Other Creditors 6,972 134,686
---------- ------------
2,152,581 3,045,921
========== ============
Due to the short term maturity of trade payables, the directors consider the carrying amounts to approximate their fair value. All payables are non-interest bearing and unsecured. Trade payables are normally settled within terms. Investments held for trading and counterparties are valued at fair value.
Details regarding the prior year restatement are shown on note 3.
11. Non current liability
2011 2010
GBP GBP
Finance lease 7,198 12,872
Perpetual convertible loan 2,773,200 2,773,200
Embedded derivatives 507,000 726,800
---------- ----------
3,287,398 3,512,872
========== ==========
On 4 August 2010, Westhouse entered into the PCL with BCB for the amount of GBP3.5 million. The PCL has no fixed repayment date and carries a coupon of 5% to 30 September 2015 and 8% thereafter. The Company has the right to defer payment of the interest which is payable quarterly in arrears. The holders of the PCL will have the right to convert the principal amount of the loan outstanding into ordinary shares of Westhouse ("Ordinary Shares"). This conversion right is for a period of five years from 4 August 2010 (the "Conversion Period"). The price per share for the conversion will be the lower of 60 pence per share and a 10% premium to the most recently published interim or final statement of shareholders' funds on a per share basis, subject to a minimum of 50 pence per share. Within the Conversion Period, Westhouse can require exercise of the conversion right, on the conversion terms stated above, if the mean average mid-market price for the Ordinary Shares at the close of business on 90 consecutive trading days exceeds 90 pence per share.
As the conversion options contained within it lead to a potentially variable number of shares it is accounted for as a debt instrument which contains 3 embedded derivatives, the issuer conversion option, the holder conversion option and the issuer early repayment option. The embedded derivatives are accounted for at fair value through profit or loss and fair valued at each reporting date. All changes in the instrument's fair value are reported in profit or loss and included within financing costs or finance income.
Key assumptions made in arriving at the fair value include a risk free rate of 2.5% and historic volatility of 46%. It is also calculated on the basis that Westhouse will always enforce its conversion option if the share price reaches the stated level.
12. Operating lease commitments
Westhouse and Smith's have entered into three leases for their offices in London and Leeds:
Future payments due 2011 2010
GBP GBP
Within 1 year 381,871 441,512
2 - 5 years 232,619 669,736
The Group's operating lease agreements do not contain any contingent rent clauses. None of the operating lease agreements contain renewal or purchase options or escalation clauses or any restrictions regarding dividends, further leasing or additional debt.
13 Financial assets and liabilities
13.1 Available for sale financial assets
2011 2010
GBP GBP
Listed equity securities 381,466 211,462
Unlisted financial assets 146,651 166,377
528,117 377,839
======== ========
The listed financial assets have been stated at fair value. Fair value is determined by valuing the financial assets at the appropriate closing bid price on 31 December 2011.
The unlisted financial assets have been stated at fair value. Fair value is determined by using recent arm's length transactions and valuation models where a recent arm's length transaction does not exist. Where this is not possible Westhouse uses the directors' valuation.
All the listed equity securities have been issued by publicly traded companies.
13.2 Financial assets at fair value through profit or loss
2011 2010
GBP GBP
Convertible debt 354,633 352,768
Stock warrants and options 34,289 86,402
Investments held for trading 649,502 1,990,650
Counterparties 647,750 1,594,876
1,686,174 4,024,696
========== ==========
Convertible debt has been designated at fair value through profit or loss where it has not been possible to separately value the embedded derivative.
Stock warrants and options are held for trading and have been valued using an appropriate Black-Scholes option pricing model at the time of acquisition and as at 31 December 2011.
Investments held for trading and counterparties are valued at bid price.
13.3 Financial assets and liabilities
Available for
sale
Listed Unlisted Held at Total
fair value
GBP GBP GBP GBP
Assets
Opening fair value 1 January 2011 211,462 166,377 4,024,696 4,402,535
Transfer of assets between categories 58,958 (58,958) - -
Additions 681,681 31,343 1,285,660 1,998,684
Disposals (169,591) - (3,585,526) (3,755,117)
Losses in net income from disposals 83,179 - - 83,179
-------------- --------- ------------ ------------
865,689 138,762 1,724,830 2,729,281
Fair value movements recognised
in equity (45,317) 7,889 - (37,428)
Impairment recognised in income
statement (438,906) - (38,656) (477,562)
-------------- --------- ------------ ------------
Total 381,466 146,651 1,686,174 2,214,291
-------------- --------- ------------ ------------
Liabilities
Opening fair value 1 January 2011 - - (2,234,354) (2,234,354)
Additions - - (1,251,022) (1,251,022)
Disposals in period at cost - - 2,234,354 2,234,354
-------------- --------- ------------ ------------
- - (1,251,022) (1,251,022)
Impairment recognised in income
statement - - 4,367 4,367
-------------- --------- ------------ ------------
Total - - (1,246,655) (1,246,655)
-------------- --------- ------------ ------------
Closing fair value 31 December
2011 381,466 146,651 439,519 967,636
============== ========= ============ ============
Closing cost 31 December 2011 820,099 138,762 473,807 1,432,668
(Loss) / gain in period (438,633) 7,889 (34,288) (465,032)
-------------- --------- ------------ ------------
Closing fair value 31 December
2011 381,466 146,651 439,519 967,636
============== ========= ============ ============
A transfer of assets between categories will occur when the characteristics of an asset change, for example on the IPO of an unlisted equity, the exercise of an option or the conversion of a convertible.
Available for
sale
Listed Unlisted Held at Total
fair value
GBP GBP GBP GBP
Assets
Opening fair value 1 January 2010 3,075,499 489,317 803,224 4,368,040
Transfer of assets between categories 92,968 24,133 (117,101) -
Additions 868,997 - 3,573,607 4,442,604
Disposals (2,814,055) - - (2,814,055)
-------------- ---------- ------------ ------------
1,223,409 513,450 4,259,730 5,996,589
Fair value movements recognised
in equity (964,456) (79,239) - (1,043,695)
Impairment recognised in income
statement (47,491) (267,834) (235,034) (550,359)
-------------- ---------- ------------ ------------
Total 211,462 166,377 4,024,696 4,402,535
Liabilities
Additions - - (2,229,382) (2,229,382)
-------------- ---------- ------------ ------------
- - (2,229,382) (2,229,382)
Impairment recognised in income
statement - - (4,972) (4,972)
Total - - (2,234,354) (2,234,354)
-------------- ---------- ------------ ------------
Closing fair value 31 December
2010 211,462 166,377 1,790,342 2,168,181
Closing cost 31 December 2010 213,432 404,699 2,030,348 2,648,479
Loss in period (1,970) (238,322) (240,006) (480,298)
-------------- ---------- ------------ ------------
Closing fair value 31 December
2010 211,462 166,377 1,790,342 2,168,181
============== ========== ============ ============
13.4 Revaluation reserve
Listed Unlisted Total
GBP GBP GBP
Opening reserve 1 January 2011 45,521 29,511 75,032
Transfer of assets between categories 26,208 (26,208) -
Fair value movements recognised
in equity (45,317) 7,889 (37,428)
---------- --------- ------------
Closing reserve 31 December 2011 26,412 11,192 37,604
========== ========= ============
Opening reserve 1 January 2010 1,001,644 117,083 1,118,727
Movements on disposals 8,333 (8,333) -
Fair value movements recognised
in equity (964,456) (79,239) (1,043,695)
---------- --------- ------------
Closing reserve 31 December 2010 45,521 29,511 75,032
========== ========= ============
A movement of 20% in the value of the listed and unlisted investments would result in a movement of GBP105,623 (2010: GBP114,872) in equity.
14. Post-reporting date events
On 20 January 2012, Westhouse acquired the entire issued share capital of Arbuthnot Securities Limited, a corporate finance and stock broking business from Arbuthnot Banking Group plc.
The rationale for the acquisition was that the directors of Westhouse believe that the greater critical mass of the combined businesses will provide an enhanced service to both corporate and investor clients, through a wider, and complementary, range of sector expertise. In addition, the business now has a larger and better connected sales and trading ability giving greater access to capital and investment opportunities. It is anticipated that the synergies of combining the businesses will also enable the Group to benefit from an improvement in the recurring revenue to cost ratio.
The initial consideration comprised a cash payment of GBP1,000,000, the issue of 1,250,000 ordinary shares in Westhouse and the issue of a perpetual convertible loan of GBP350,000. Further consideration is payable based on 75% of corporation tax saved by the use of any trading losses (up to a maximum of GBP1,900,000) existing in Arbuthnot Securities Limited at the date of acquisition. Depending on when the tax saving is received the further consideration may be payable in different tranches.
Due to the proximity of the date of approval of the financial statements to the date of acquisition, there has been insufficient time available to enable the identification of all assets, liabilities and contingent liabilities existing at date of acquisition and to perform a full and reliable fair value exercise thereon. Consequently, full disclosure as set out in IFRS 3R "Business combinations" has not been given as it is impracticable to provide this information.
In February 2012 a placing of GBP2.4m ordinary shares was completed. The aim of the placing was to strengthen the balance sheet and put the Group in a position to continue to take advantage ofopportunities from consolidation of the corporate broking sector and provide greater flexibility in trading.
This information is provided by RNS
The company news service from the London Stock Exchange
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