Final Results and Notice of AGM

RNS Number : 8353T
W.H. Ireland Group PLC
27 July 2022
 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (MAR) as in force in the United Kingdom pursuant to the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via Regulatory Information Service (RIS), this inside information is now considered to be in the public domain.

 

WH Ireland Group Plc

 

("WH Ireland" or the "Company" and with its subsidiaries the "Group")

 

Financial Results for the Twelve Months ended 31 March 2022

Notice of AGM

"A year of underlying progress despite a challenging second half market backdrop"

WH Ireland announces its final results for the year ended 31 March 2022.  

Financial & Operating Highlights

· Revenue increased 11% to £32.0m (FY 2021: £28.7m)

· Underlying profit* before tax £1.4m (FY 2021: £1.5m)

· Statutory profit before tax from continuing operations £0.1m (FY 2021: £1.1m)

· Underlying earnings per share* (basic from continuing operations) of 2.34p (FY 2021: 2.95p)

· Statutory earnings per share (basic from continuing operations) of 0.13p (FY 2021: 2.47p)

· Cash and cash equivalents as at 31 March 2022 of £6.4m (FY 2021: £8.2m)  

· Cash balances at 26 July 2022: £9.25m.

· Group Assets under Management ("AUM") increased 14% to £2.4bn (FY 2021: £2.1bn)

· Senior appointments during the year to strengthen the executive team:

o  Simon Jackson appointed Group CFO in October 2021

o  Michael Bishop appointed Head of Wealth Management in January 2022

o  Stephen Balonwu appointed as Chief Risk and Compliance Officer in May 2022

Note: These numbers do not include partial year contributions from WH Ireland (IOM) Limited, which was disposed of during August 2020.

* A reconciliation from underlying profits to statutory profits is shown within the financial review.

Note: The comparative information for the year end 31 March 2021 has been restated to reflect the correct net gains on investment from revenue, further details can be found in note 3 of these financial statements.

Divisional Highlights

Wealth Management:

· Revenue up 19% to £15.8m (FY 2021: £13.3m), reflecting a significant increase in management fees and wealth planning including the first full year of contribution from Harpsden, and despite a fall in commission income

· Continued improvement in the quality of the business with fee income now representing 85% of total wealth management income (FY 2021: 76%)

· Discretionary managed assets ("DFM") increased 6% to £1.0bn (FY2021: £0.9bn)

· Wealth Management total AUM remained at £1.6bn (FY2021: £1.6bn)

Capital Markets:

· Revenue up 5% to £16.2m (FY 2021: £15.5m)

· £236m funds raised for public and private corporate clients (FY 2021: £232m)

· Total equity transactions: 38 (FY 2021: 42) including 5 IPOs (FY 2021: 2)

· Won 21 new quoted corporate clients to end the year with 88 quoted corporate clients (FY 2021: 82)

· Strengthened position as a top AIM broker, climbing from number five to number two, while maintaining our top three ranking by client numbers for the role of NOMAD

· Ultra High Net Worth and Family Office AUM of £0.7bn (FY 2021: £0.5bn)

 

Current Trading and Outlook

· Volatile and testing global and economic environment impacting markets, volumes and transaction levels

· Despite this, the number of quoted corporate clients has increased in the new financial year to 94  

· Creation of our Debt Capital Markets (DCM) business, which completed its first transaction in April 2022

· Aim to return the Company to sustainable profitability, grow the business and reward shareholders

Commenting, Phillip Wale, Chief Executive Officer said:

" WH Ireland has had another year of underlying progress across both divisions, set against a number of well-publicised and evolving wider market challenges in our second half. We remain confident that we are ready to take advantage of conditions when they improve given our strengthened and improving platform across the Group, despite a cautious near-term outlook."

Annual General Meeting

The Company confirms that it will today post to shareholders the annual report and accounts for the period ended 31 March 2022, and a notice convening the annual general meeting of the Company. A copy of the annual report and accounts along with the notice of AGM is available on the Company's website www.whirelandplc.com .  The Annual General Meeting of the Company will be held at the Company's offices at  24 Martin Lane, London EC4R 0DR on 8 September 2022   at  11.00   a.m . 

The Directors continue to closely monitor developments relating to COVID-19 and if any change to the Annual General Meeting arrangements are required, the Company will notify this to all shareholders as soon as possible.

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

Andrew Potts / Harry Rees 

+44(0) 20 3523 8000

MHP Communications

whireland@mhpc.com

Reg Hoare / Charles Hirst

+44 (0) 20 3128 8193

 

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 & effective choices about their money and how it can support their lifestyle ambitions.  We can trace our history of helping individuals and their families as well as entrepreneurs, charities and trustees back to 1872.  By building a financial plan & investment strategy with us, our clients are free to focus on the important things, like life.

Capital Markets Division

Our Capital Markets Division is focused across 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 equity and debt 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.

Chief Executive's statement

 

The financial year began with another set of restrictions due to the Covid-19 pandemic. Our employees continued to work diligently and professionally throughout these difficult times, ensuring our clients' needs were met across all business areas.

Further global challenges emerged as the year progressed, culminating in the war in Ukraine, and this created difficult market conditions. We have adjusted well to these challenges, but as already reported by many of our peers, these have inevitably had a significant impact on activity levels in our Capital Markets division. 

The Financial Year 2022

Overall revenue for the Group was £32.0m (FY21 restated: £28.7m*). Administrative expenses were £33.1m (FY21: £28.4m).

On a divisional basis, revenue in Capital Markets stood at £16.2m (FY21 restated: £15.5m), despite the downturn in the second half after a rise in income in the first six months of the year. Wealth Management continued its improvement in the quality of its earnings with an increase in the proportion of assets under discretionary management. The division also completed the full integration of its first acquisition, Harpsden. Wealth management delivered revenue in the year of £15.8m (FY21: £13.3m).

Clients

Our clients remain our priority and our central mission is to continue providing excellent and improved service to our corporate, institutional and private clients. I would like to take the opportunity to thank all of our clients for their loyalty and flexibility as we have continued to introduce change and improvements during another year of challenges.

We believe that our platform now is starting to show the quality of service that will continue to differentiate us in the future.

Employees

We have maintained our focus on our core people, while continuing to attract new individuals and teams across both divisions. Group headcount presently stands at 159, including the addition of our Debt Capital Markets team and additional corporate finance strength.

Building on solid foundations

It has been important to ensure that we build a strong central expertise to support both divisions and our strengthened capabilities in Finance, HR and Compliance equip us for expansion. We were delighted in the first half of the year to attract Simon Jackson to join the business as CFO and as a member of the Board. We have recently welcomed Stephen Balonwu to the executive team as Chief Risk and Compliance Officer.  This is a key role in ensuring that we conduct business to the highest possible standards.

I would like to thank my fellow Board members and all employees of the firm for their hard work and dedication during the year. I am also grateful to Phil Shelley, our previous Chair, for his dedication and commitment to the business over the past two years.

Shareholders

I would like to thank our shareholders for their continuing support as we continue to implement our strategy.

Wealth Management (WM)

We were delighted to attract Michael Bishop as Head of Wealth Management during the year.  Michael has most recently had a senior role at UBS AG and has 22 years of experience in wealth management.  We are now focused on driving the WM business from our four offices in London, Manchester, Henley and Poole, and addressing the efficiency of the wider WM division with renewed vigour. 

Capital Markets (CM)

Our Equity Capital Markets (ECM) business strengthened its position as a top AIM broker, climbing from number five to number two*, while maintaining our top three ranking by client numbers for the role of NOMAD. During the year the division welcomed 21 new quoted corporate clients, acting for 88 at year-end (FY21: 82), and we are pleased that this number has continued to grow into the new financial year and is 94 at the date of this report. These client relationships are key to our business and our strategy and are the key driver of revenue in CM. 

Away from public markets, we continued to raise capital for a number of growing private company clients.

Gross transaction fees across CM in the 12-month period stood at £10.0m (FY21 restated: £8.8m) and the average transaction size increased as the team completed 38 transactions raising £236m for clients (FY21: 42 and £232m respectively).

The drive to strengthen our capabilities continued into 2022, diversifying our offering to clients with selective hires. This continued in the new financial year with the creation of our Debt Capital Markets (DCM) business. We completed our first DCM transaction, as joint lead manager to EnQuest PLC following the launch of its sterling denominated 9% guaranteed retail eligible notes, which successfully raised £133m in April 2022.

Total Group AUM increased to £2.4bn (FY21: £2.1bn) including £1.6bn in WM. WM discretionary managed assets increased by 6% to £1.02bn (FY21: £0.96bn)

Looking forward

The calendar year has started in the grip of the conflict in the Ukraine, with an almost unprecedented effect on markets, volumes and transaction levels on AIM in particular.  The economic and global environment is probably as volatile and testing as any I have experienced in my career. We therefore remain cautious of the very short-term, but remain confident that we are ready to take advantage of conditions when they improve given our strengthened and improving platform across both divisions. I would like to thank my colleagues who have continued to work with real dedication to return the Company to sustainable profitability, and I remain committed to working with them to grow the business and rewarding shareholders for their loyalty.

Phillip Wale

Chief Executive Officer

 

 

Consolidated statement of comprehensive income



Year ended

 

Year ended



31 March 2022

 

31 March 2021*


Note

£'000

 

£'000

Continuing operations

 

 

 




 

 

 

Revenue

5

  32,035

 

  28,741

Administrative expenses

 

  (33,062)

 

  (28,390)

Expected credit loss

 

  (81)

 

  (28)

Operating profit/ (loss)

6

  (1,108)

 

  323



 

 


Net gains on investments

18, 23

  1,626

 

  818

Finance income

8

  1

 

  2

Finance expense

8

  (511)

 

  (96)

Profit before tax

 

  8

 

  1,047

Taxation

9

  67

 

  192

Profit from continuing operations

 

  75

 

  1,239

Loss from discontinued operations

10

  - 

 

  (86)

Profit and total comprehensive income for the year

  75

 

  1,153

*The comparative revenue, net gains on investments and earnings per share have been restated. Further details can be found in note 3 of these financial statements

There were no items of other comprehensive income for the current year or prior years.

 

Consolidated and Company statement of financial position



Group

Company



31 March

31 March

31 March

31 March



2022

2021

2022

2021


Note

£'000

£'000

£'000

£'000

ASSETS

 

 

 

 

 

Non-current assets

 

 

 

 

 

Intangible assets

16

4,259

4,764

-

-

Goodwill

15

3,539

3,539

-

-

Investment in subsidiaries

17

-

-

26,448

26,448

Property, plant and equipment

13

325

511

4

-

Investments

18

3,013

1,099

-

-

Right of use asset

19

1,168

1,603

-

-

Deferred tax asset

21

190

190

-

-

Loan receivable

20

-

-

900

644


 

12,494

11,706

27,352

27,092

Current assets

 

 

 

 

 

Trade and other receivables

22

5,758

5,156

113

56

Other investments

23

1,912

2,490

-

-

Cash and cash equivalents

24

6,446

8,211

1,246

1,246


 

14,116

15,857

1,359

1,302

Total assets

 

26,610

27,563

28,711

28,394

LIABILITIES

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

25

(6,681)

(7,623)

(2,357)

(2,960)

Lease liability

19

(376)

(552)

-

-

Deferred consideration

26

(2,412)

(1,087)

(2,412)

(1,087)

Deferred tax liability

21

(732)

(799)

-

-

 

 

(10,201)

(10,061)

(4,769)

(4,047)

Non-current liabilities

 

 

 

 

 

Lease liability

19

(999)

(1,506)

-

-

Deferred consideration

26

-

(909)

-

(909)

 

 

(999)

(2,415)

-

(909)

Total liabilities

 

(11,200)

(12,476)

(4,769)

(4,956)

Total net assets

 

15,410

15,087

23,942

23,438



 

 

 

 

Capital and reserves

 

 

 

 

 

Share capital

29

3,104

3,101

3,104

3,101

Share premium

29

19,014

18,983

19,014

18,983

Other reserves


981

981

228

228

Retained earnings


(6,789)

(7,334)

1,596

1,126

Treasury shares

30

(900)

(644)

-

-

Shareholders' funds

 

15,410

15,087

23,942

23,438

The Company has elected to take the exemption under Section 408 of the Companies Act 2006 not to present the Company statement of comprehensive income.  The loss after tax of the Company for the year was £Nil (FY21: £5,347k).

These financial statements were approved by the Board of Directors on 26 July 2022 and were signed on its behalf by:

S Jackson

Director

 

Consolidated and Company statement of cash flows



Group

Company

 


Year ended

Year ended

Year ended

Year ended



31 Mar 2022

31 Mar 2021*

31 Mar 2022

31 Mar 2021


Notes

£'000

£'000

£'000

£'000

Operating activities:

 

 


 


Profit/ (Loss) for the year:


 

 

 

 

Continuing operations


75

1,239

-

(5,347)

Discontinuing operations


-

(86)

-

-


 

75

1,153

-

(5,347)

Adjustments for non-cash items:

 

 

 

 

 

Depreciation and amortisation

13, 16, 19

1,229

1,242

-

-

Finance income

8

(1)

(2)

-

-

Finance expense

8

511

96

416

-

Tax

9

(67)

(196)

-

-

Non-cash adjustment for share option charge

7

470

90

470

90

Non-cash adjustment for investment gains

18, 23

(1,626)

(48)

-

-

Non-cash consideration for revenue*

18, 23

(1,651)

(3,988)

-

-

Losses in investments


-

-

-

283

Working capital changes:

 

 

 

 

 

Decrease/ (increase) in trade and other receivables


(601)

1,975

(57)

2,533

(Decrease)/ increase in trade and other payables


(942)

2,602

(603)

2,804

Net cash (used in)/generated from operations

 

(2,603)

2,924

226

363

Income taxes received/(paid)

9

-

-

-

 

Net cash inflows/ (outflows) from operating activities

 

(2,603)

2,924

226

363

Investing activities:

 

 

 

 

 

Cost on disposal of subsidiary undertaking


-

(90)

-

-

Interest received

8

-

3

-

-

Investment in subsidiary

17

-

(4,765)

-

(5,437)

Acquisition of property, plant and equipment

13

(103)

(201)

(4)

-

Increase in loan receivables


-

-

(256)

-

Movement in current asset investments

18, 23

1,933

2,170

-

-

Net cash used in investing activities

 

1,830

(2,883)

(260)

(5,437)

Finance activities:

 

 

 

 

 

Proceeds from issue of share capital


34

5,335

34

5,335

Proceeds from repayment of subordinated loan


-

-

-

985

Purchase of own shares by Employee Benefit Trust


(256)

-

-

-

Interest paid

8

(2)

(1)

-

-

Lease liability payments


(768)

(898)

-

-

Net cash (used in)/generated from financing activities

 

(992)

4,436

34

6,320

Net (decrease)/increase in cash and cash equivalents

 

(1,765)

4,477

-

1,246

Cash and cash equivalents at beginning of year


8,211

3,734

1,246

-

Cash and cash equivalents at end of year

 

6,446

8,211

1,246

1,246

* The comparative group cash flow figures have been restated. Further details can be found in note 3 of these financial statements.

Reconciliation of Group cash and cash equivalents at the end of the year:



Year ended

 


31 Mar 2022

Group

 

£'000

Cash and cash equivalents from continuing operations

6,446

Cash and cash equivalents from discontinuing operations

-

Cash and cash equivalents at end of year

 

6,446

 








Year ended



31 Mar 2021

Group


£'000

Cash and cash equivalents from continuing operations

8,211

Cash and cash equivalents from discontinuing operations

-

Cash and cash equivalents at end of year


8,211

 

Reconciliation of Group and Company liabilities arising from financing activities in the year:

 

 


As at

Cash flows

Non-cash

As at


1 April 2021


 changes

31 March 2022

Group

£'000

£'000

£'000

£'000

Lease liability

2,058

(768)

85

1,375


2,058

(768)

85

1,375

 

 

Reconciliation of Group and Company liabilities arising from financing activities in the prior year:

 

 


As at

Correction of

Cash flows

Non-cash

As at


1 April 2020

calculation


 changes

31 March 2021

Group

£'000

£'000

£'000

£'000

£'000

Lease liability

3,223

(369)

(898)

102

2,058


3,223

(369)

(898)

102

2,058

 

There are no Company liabilities arising from financing activities .

Consolidated and Company changes in equity


Share

Share

Other

Retained

Treasury

Total

 

capital

premium

reserves

earnings

shares

equity

Group

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 April 2020

2,435

14,314

981

(8,580)

(644)

8,506

Profit and total comprehensive income for the year

-

-

-

1,153

-

1,153

Transactions with owners in their capacity as owners:

 





Employee share option scheme

-

-

-

90

-

90

New share capital issued

666

4,669

-

-

-

5,335

Other movements

-

-

-

3

-

3

Balance at 31 March 2021

3,101

18,983

981

(7,334)

(644)

15,087








Profit and total comprehensive income for the year

-

-

-

75

-

75

Transactions with owners in their capacity as owners:

 





Employee share option scheme

-

-

-

470

-

470

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

Retained earnings include £10k (2021: £10k) ESOT reserve.


Share

Share

Other

Retained

Treasury

Total

 

capital

premium

reserves

earnings

shares

equity

Company

£'000

£'000

£'000

£'000

£'000

£'000

Balance at 1 April 2020

2,435

14,314

228

6,385

-

23,362

Loss and total comprehensive income for the year

-

-


(5,347)

-

(5,347)

Transactions with owners in their capacity as owners:

 





Employee share option scheme

-

-

-

90

-

90

New share capital issued

666

4,669

-

-

-

5,335

Other movements

-

-

-

(2)


(2)

Balance at 31 March 2021

3,101

18,983

228

1,126

-

23,438








Profit/(loss) after tax

-

-

-

-

-

-

Transactions with owners in their capacity as owners:

 





Employee share option scheme

-

-

-

470

-

470

New share capital issued

3

31

-

-

-

34

Balance at 31 March 2022

3,104

19,014

228

1,596

-

23,942

The nature and purpose of each reserve, whether consolidated or Company only, is summarised below:

Share premium

The share premium is the amount raised on the issue of shares that is in excess of the nominal value of those shares and is recorded less any direct costs of issue.

Other reserves

Other reserves comprise a (consolidated) merger reserve of £753k (FY21: £753k) and a (consolidated and company) capital redemption reserve of £228k (FY21: £228k).

Retained earnings

Retained earnings reflect accumulated income, expenses, gains and losses, recognised in the statement of comprehensive income and the statement of recognised income and expense and is net of dividends paid to shareholders.  It includes £10k (FY21: £10k) of ESOT reserve.

Treasury shares

Purchases of the Company's own shares in the market are presented as a deduction from equity, at the amount paid, including transaction costs.  That is, shares are shown as a separate class of shareholders' equity with a debit balance. This includes shares in the company held by the EBT or ESOT, both of which are consolidated within the consolidated figures.

 

Notes to the financial statements

1. General information

WH Ireland Group plc is a public company incorporated in the United Kingdom. The shares of the Company are traded on the AIM, a market of the London Stock Exchange Group plc. The address of its registered office is 24 Martin Lane, London, EC4R 0DR.

Basis of preparation

The consolidated and parent company financial statements have been prepared in accordance with International Accounting Standards as adopted by the UK and in accordance with the Companies Act 2006. The principal accounting policies adopted in the preparation of the consolidated financial statements are set out in note 3. The policies have been consistently applied to all the years presented, unless otherwise stated.

The consolidated financial statements are presented in British Pounds (GBP), which is also the Group's functional currency. Amounts are rounded to the nearest thousand, unless otherwise stated.

Going concern

The financial statements of the Group have been prepared on a going concern basis. In making this assessment, the Directors have prepared detailed financial forecasts for the period to September 2023 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 H2 resulting from the Russian invasion of Ukraine presented a range of challenges to the business. The business reacted well and with increasing levels of recurring revenue supplementing a buoyant performance by CM delivering a profit for the twelve months.

Whilst there always remains uncertainty over what the future impact will be on the economy, the business has improved its resilience. By executing its first acquisition WM has increased the total value of assets under management, and importantly the proportion of that total represented by discretionary managed assets.  CM has been appointed by several new clients and completed a record number of IPOs.

Certain activities of the Group are regulated by the Financial Conduct Authority, the statutory regulator for financial services business in the UK which has responsibility for policy, monitoring and discipline for the financial services industry. The FCA requires the Group's capital resources to be adequate; that is sufficient in terms of quantity, quality and availability, in relation to its regulated activities. The Directors monitor the Group's regulatory capital resources on a daily basis and they have developed appropriate scenario tests and corrective management plans which they are prepared to implement to address any potential deficit as required. Further actions open to the Directors include incremental cost reductions, regulatory capital optimisation programmes or further capital raising.

An analysis of the potential downside impacts was conducted as part of the going concern assessment to assess the potential impact on revenue 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 70% from management's forecasts to create such a crisis situation within eighteen months' time.

Based on all the aforementioned, the Directors believe that regulatory capital requirements will continue to be met and that the Group has sufficient liquidity to meet its liabilities for the next twelve months and that the preparation of the financial statements on a going concern basis remains appropriate.

2. Adoption of new and revised standards

New and amended standards that are effective for the current year

A number of new or amended standards became applicable for the current reporting period and as a result the group and company has applied the following standards:

- Amendments to IFRS 16: COVID-19 related rent concessions (effective for periods commencing on or after 1 June 2020

- Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16: Interest Rate Benchmark Reform, phase 2.

The above requirements did not have a material impact on the financial statements of the group or company.

New standards, interpretations and amendments not yet effective

Name

Description

Effective date

IAS 16 (amendments)

Property, Plant and Equipment - Proceeds before Intended Use

1 January 2022

Annual Improvements 2018-2020 Cycle

Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 4)

1 January 2022

IFRS 3 (amendments)

Reference to the Conceptual Framework

1 January 2022

IAS 37 (amendments)

Onerous Contracts - Cost of Fulfilling a Contract

1 January 2022

IAS 1 (amendments)

Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current and Classification of Liabilities as Current or Non-Current - Deferral of Effect Date

1 January 2023

The Directors do not expect the adoption of these standards and amendments to have a material impact on the Financial Statements.

3. Significant accounting policies

Basis of consolidation

Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full. The consolidated financial statements incorporate the results of business combinations using the acquisition method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive income from the date on which control is obtained until the date on which control ceased.

In the Company's accounts, investments in subsidiary undertakings are stated at cost less any provision for impairment.

Business combinations

All business combinations are accounted for by applying the purchase method. The purchase method involves recognition, at fair value, of all identifiable assets and liabilities, including contingent liabilities, of the subsidiary at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. The cost of business combinations is measured based on the fair value of the equity or debt instruments issued and cash or other consideration paid, plus any directly attributable costs. Any directly attributable costs relating to business combinations before or after the acquisition date are charged to the statement of comprehensive income in the period in which they are incurred.

Goodwill arising on a business combination represents the excess of cost over the fair value of the Group's share of the identifiable net assets acquired and is stated at cost less any accumulated impairment losses. The cash generating units to which goodwill is allocated are tested annually for impairment. Any impairment is recognised immediately in administrative expenses in the statement of comprehensive income and is not subsequently reversed. On disposal of a subsidiary the attributable amount of goodwill that has not been subject to impairment is included in the determination of the profit or loss on disposal.

Discontinued operations

The Group presents its results from its discontinued operations separately from its continuing operations. In line with IFRS 5, an operation is classed as discontinued if it has been or in the process of being disposed, represents either a separate major line of business or a geographical area of operations or is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operation.

Prior period restatements

The income statement and cash flow statement for the year ended 31 March 2021 has been restated to reflect the following errors which have been identified by management and corrected during the current financial year:

· Net fair value gains of £818,000 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.

· The calculation of dilutive earnings per share used an incorrect dilutive share figure.

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 reported

Effect of restatement

Group restated amounts

31 March 2021



£'000

£'000

£'000

Statement of Comprehensive Income




Revenue




  29,559

  (818)

  28,741

Net gains on investments


  - 

  818

  818








 

Consolidated and Company statement of cash flows

 


 

Operating activities (extract)




 

Non-cash consideration for revenue

  - 

  (3,988)

  (3,988)

Non-cash adjustment for investment gains

  - 

  (48)

  (48)








Trade and other receivables


  1,815

  160

  1,975

Movement in current asset investments

(1,706)

1,706

-

Net cash (used in)/ generated from operations

5,094

(2,170)

2,924





Investing activities (extract)





Movement in current asset investments

-

2,170

2,170








Earnings per share

 





Effect of dilutive share options (£'000)


  9,614

  (8,931)

  683

Diluted From continuing operations


2.07p

0.36p

2.43p

Total diluted



1.93p

0.33p

2.26p

 

A restated comparative balance sheet has not been produced as there was no change to the statement of financial position following the restatements.  The net effect of these restatements on the statement of cash flows was nil.

Assets and liabilities held for sale

An asset or liability is classified as held for sale if its carrying value is intended to be recovered through its sale rather than its continuing use, management is committed to a plan to sell, the asset is available for immediate sale, an active programme to locate a buyer has been initiated, the sale is highly probable within 12 months of classification as held for sale and the actions required to complete the transaction indicate it is unlikely it will be significantly changed or withdrawn. Assets held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Any impairment losses is recognised through the consolidated comprehensive income.

Revenue

WEalth management (WM)

Management and custody fees

Investment management fees are recognised in the period in which the related service is provided. It is a variable fee based on the average daily market value of assets under management and is invoiced on a calendar quarter basis in arrears. The performance obligation is satisfied over time as the contractual obligations are on ongoing throughout the period under contract. The revenue accrued but not yet invoiced is recognised as a contract asset.

Initial and ongoing advisory fees

Initial advisory fees are charged to clients on a fixed one-off fee agreement. The performance obligation is satisfied as the initial advice is provided.  Ongoing advisory fees are variable fees based on the average daily market value of assets under management and invoiced on a calendar quarter basis in arrears. Both initial and ongoing advisory fees are recognised in the period in which the related service is provided. The performance obligation of ongoing advice is satisfied over time as the contractual obligations are ongoing throughout the period under contract. The revenue accrued but not yet invoiced is recognised as a contract asset.

Commission and transaction charges

Commission is recognised when receivable in accordance with the date of settlement. It is a variable fee based on a percentage of the transaction and therefore the performance obligation is satisfied at the date of the underlying transaction. The transaction price is calculated based on the agreed percentage of the underlying consideration of the trade. The underlying consideration being the number of shares multiplied by the share price at the time of the underlying transaction.

CApital markets (cM)

Commission

Brokerage commission is recognised when receivable in accordance with the date of settlement. It is a variable fee based on a percentage of the transaction and therefore performance obligation is satisfied at the date of the underlying transaction. The transaction price is calculated based on the agreed percentage of the underlying consideration of the trade. The underlying consideration being the number of shares multiplied by the share price at the time of the underlying transaction.

Corporate finance advisory fees

Corporate finance advisory fees are fixed fees agreed on a deal by deal basis and might include non-cash consideration received in the form of shares, loan notes, warrants or other financial instruments recognised at the fair value on the date of receipt and therefore the performance obligation is satisfied at a point in time when the Group has fully completed the performance obligations per the contract.

Retainer fees

Retainer fees are recognised over the length of time of the agreement. Fees are fixed and invoiced quarterly in advance based on the agreed engagement letter. The performance obligation is satisfied over time as the contractual obligations are on ongoing throughout the period under contract. The deferred revenue is recognised as a contract liability.

Corporate placing commissions

Corporate placing commissions are variable fees agreed on a deal by deal basis based on a percentage of the funds raised as part of a transaction. This includes non-cash consideration received in the form of shares, loan notes, warrants or other financial instruments recognised at the fair value on the date of receipt. Given that fees related to this work are success based, there is a significant risk of reversal of the variable revenue and therefore the performance obligation is satisfied at a point in time when the transaction is completed. The combination of corporate placing commissions and corporate finance advisory fees are referred to as corporate success fees.

Employee benefits

The Group contributes to employees' individual money purchase personal pension schemes. The assets of the schemes are held separately from those of the Group in independently administered funds. The amount charged to the statement of comprehensive income represents the contributions payable to the schemes in respect of the period to which they relate.

Short term employee benefits are those that fall due for payment within twelve months of the end of the period in which employees render the related service. The cost of short term benefits is not discounted and is recognised in the period in which the related service is rendered. Short term employee benefits include cash-based incentive schemes and annual bonuses.

Share-based payments

The share option programmes allows Group employees to receive remuneration in the form of equity-settled share-based payments granted by the Company.

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value of the options granted is measured using an option valuation model. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date). The cumulative expense recognised for equity settled transactions, at each reporting date until the vesting date, reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The statement of comprehensive income charge or credit for a period represents the movement in cumulative expense recognised at the beginning and end of that period.

Where the terms of an equity-settled award are modified, an incremental value is calculated as the difference between the fair value of the repriced option and the fair value of the original option at the date of re-pricing. This incremental value is then recognised as an expense over the remaining vesting period in addition to the amount recognised in respect of the original option grant.

Where an equity-settled award is cancelled or settled (that is, cancelled with some form of compensation) it is treated as if it had vested on the date of cancellation and any expense not yet recognised for the award is recognised immediately.

However, if a new award is substituted for the cancelled award and is designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. Any compensation paid up to the fair value of the award is accounted for as a deduction from equity. Where an award is cancelled by forfeiture, when the vesting conditions are not satisfied, any costs already recognised are reversed (subject to exceptions for market conditions).

In all instances, the charge/credit is taken to the statement of comprehensive income of the Group or Company by which the individual concerned is employed.

Employee Benefit Trust (EBT)

The cost of purchasing own shares held by the EBT are shown as a deduction against equity. The proceeds from the sale of own shares held increase equity. Neither the purchase nor sale of own shares leads to a gain or loss being recognised in the consolidated statement of comprehensive income.

Employee Share Ownership Trust (ESOT)

The Company has established an ESOT. The assets and liabilities of this trust comprise shares in the Company and loan balances due to the Company. The Group includes the ESOT within these consolidated Financial Statements and therefore recognises a Treasury shares reserve in respect of the amounts loaned to the ESOT and used to purchase shares in the Company. Any cash received by the ESOT on disposal of the shares it holds, will be used to repay the loan to the Company.

Treasury shares

The costs of purchasing Treasury shares are shown as a deduction against equity. The proceeds from the sale of own shares held increase equity. Neither the purchase nor sale of treasury shares leads to a gain or loss being recognised in the consolidated statement of comprehensive income.

Income taxes

Income tax on the profit or loss for the years presented, comprising current tax and deferred tax, is recognised in the statement of comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using rates enacted or substantively enacted at the reporting year end date and any adjustment to tax payable in respect of previous years.

· Deferred tax is provided for temporary differences, at the reporting year end date, between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The following temporary differences are not provided for;

· goodwill which is not deductible for tax purposes;

· the initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and

· temporary differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting period end date (note 21).

A deferred tax asset is recognised for all deductible temporary differences and unused tax losses only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. A deferred tax asset has been recognised, £190k (FY21: £190k).

Plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and impairment. Depreciation is calculated, using the straight line method, to write down the cost or revalued amount of plant and equipment over the assets' expected useful lives, to their residual values, as follows:

Computers, fixtures and fittings  -   4 to 7 years

Intangible assets

Measurement

Intangible assets with finite useful lives that are acquired separately are measured, on initial recognition at cost. Following initial recognition, they are carried at cost less accumulated amortisation and any accumulated impairment. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition.

Intangible assets other than goodwill are amortised over the expected pattern of their consumption of future economic benefits, to write down the cost of the intangible assets to their residual values as follows:

Client relationships   -  10 to 12 years

Brand  -    2 years

The amortisation period and method for an intangible asset are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset or its residual value are accounted for by changing the amortisation period or method.

Impairment

The carrying amounts of the Group's intangible assets, excluding goodwill, are reviewed when there is an indicator of impairment and the asset's recoverable amount is estimated.

The recoverable amount is the higher of the asset's fair value less costs to sell (or net selling price) and its value-in-use. Value-in- use is the discounted present value of estimated future cash inflows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Where the recoverable amount of an individual asset cannot be identified, it is calculated for the smallest cash-generating unit (CGU) to which the asset belongs. A CGU is the smallest identifiable group of assets that generates cash inflows independently.

When the carrying amount of an asset (or CGU) exceeds its recoverable amount, the asset (or CGU) is considered to be impaired and is written down to its recoverable amount. An impairment loss is immediately recognised as an expense. Any subsequent reversal of impairment credited to the statement of comprehensive income shall not cause the carrying amount of the intangible asset to exceed the carrying amount that would have been determined had no impairment been recognised.

Impairment of assets

Goodwill and other intangible assets that have an indefinite life are not subject to amortisation, they are tested annually for impairment. Other assets are tested for impairment when any changes in circumstance indicate the carrying amount is possibly not recoverable. An impairment loss is recognised when the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and the value in use. Goodwill is allocated to cash generating units for the purpose of assessing impairment, assets (excluding goodwill) are grouped together based on the assets that independently generates cash flow whose cash flow is largely independent of the cash flows generated by other assets (cash generating units).

Leased assets

Measurement and recognition of leases as a lessee

For any new lease contracts entered into on or after 1 April 2019, as permitted under IFRS 16, the Group recognises a right of use asset and a lease liability except for:

· Leases with a term of 12 months or less from the lease commencement date

· Leases of low value assets

Lease liabilities are measured at the present value of the unpaid lease payments discounted using an incremental borrowing rate.

Right of use assets are initially measured at the amount of the lease liabilities plus initial direct costs, costs associated with removal and restoration and payments previously made. Right of use assets are amortised on a straight line basis over the term of the lease.

Lease liabilities are subsequently increased by the interest charge using the incremental borrowing rate and reduced by the principal lease.

Financial instruments

Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Financial assets and liabilities

Investments are recognised and derecognised on the trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

Assets and liabilities are presented net where there is a legal right to offset and an intention to settle in that way.

The three principal classification categories for financial assets are: measured at amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics.

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

· it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

· its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment's fair value in OCI. This election is made on an investment-by-investment basis.

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Assets held at FVTPL are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.

Financial assets at amortised cost are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Trade receivables and other receivables are measured and carried at amortised cost using the effective interest method, less any impairment. If impaired, the carrying amount of other receivables is reduced by the impairment loss directly and a charge is recorded in the Income Statement. For trade receivables, the carrying amount is reduced by the expected credit lifetime losses under the simplified approach permitted under IFRS9. Subsequent recoveries of amounts previously written off are credited against the allowance account and changes in the carrying amount of the allowance account are recognised in the Income Statement.

Equity investments at OCI are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.

The following financial assets & liabilities are held at FVTPL; investments and deferred consideration. The following financial assets and liabilities are held at amortised cost; Cash and cash equivalents, trade and other receivables, accrued income, trade and other lease liabilities.

Trade payables

Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs. The Directors consider that the carrying amount of trade payables approximates to their fair value.

Deferred consideration

Deferred consideration is recognised at the discounted present value of amounts payable. Subsequent to initial recognition, it is rebased over the period in which the consideration is payable, with the unwinding of the discount being taken to the statement of comprehensive income.

4. Critical accounting judgements and key sources of estimation and uncertainty

The preparation of financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including reasonable expectations of future events. The estimates and judgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Amortisation and impairment of non-financial assets

As noted above, the Group estimates the useful economic lives of intangible assets, in order to calculate the appropriate amortisation charge. This is done by the Directors using their knowledge of the markets and business conditions that generated the asset, together with their judgement of how these will change in the foreseeable future.

Where an indicator of impairment exists, value in use calculations are performed to determine the appropriate carrying value of the asset. The value in use calculation requires the Directors to estimate the future cash flows expected to arise for the CGU and a suitable discount rate in order to calculate present value. Where the actual future cash flows are less than expected, a material impairment loss may arise (see note 16).

Goodwill is subject to an annual impairment review which is performed by comparing the balance value with the recoverable amount of the asset or it's CGU. The recoverable amount is the higher of the value in use and fair value to sell less costs.

Investments in subsidiaries

Where an indicator of impairment exists, management uses its judgement to assess the carrying value of the asset by determining the fair value by independent assessment of the carrying value of the business units and by comparative analysis against other similar businesses in the peer group. The carrying value of investments in subsidiaries at 31 March 2022 was £26.4m (FY21: £26.4m) (see note 17).

Investments

Included in investments are unlisted shares totalling a value of £701k. Judgement has been applied to the value of these shares based on recent transactions around the year end 31 March 2022. If the share price were to change by 2% the value of this investment would change by £7k. Further details are provided in note 23.

Warrants

Included in non-current investments are warrants valued at the estimated fair value at the reporting date. These values are obtained by applying an appropriate valuation model for which most of the inputs are based on contracts and external sources. Therefore no reasonable change in assumptions would lead to a material change in the fair value.

Deferred consideration

As described in note 26, the Group has a deferred consideration balance in respect of the acquisition in December 2020 of Harpsden Wealth Management Limited. The expected future payment is recognised at its fair value, this being the estimate of future payments due. This has been discounted to present value using an estimated discount rate of 13.5% (2021: 13.5%).

5. 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 with a non-material element originating overseas in the Isle of Man which has been included in "Other Group companies" for the prior period of the year up until the sale of the IoM entity in August 2020.

The following tables represent revenue and cost information for the Group's business segments:

Year ended 31 March 2022

Wealth Management

Capital Markets

Group  and consolidation adjustments

Group


£'000

£'000

£'000

£'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 brand and 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

Profit/(loss) before tax

(2,093)

2,752

(651)

8

Tax

67

-

-

67

Profit/(loss) for the year

(2,026)

2,752

(651)

75

 

Year ended 31 March 2022

Wealth Management

Capital Markets

Group


£'000

£'000

£'000

Statutory operating costs included the following:




Amortisation

505

-

505

Depreciation

199

90

289

 

Year ended 31 March 2021

Wealth Management

Capital Markets

Group  and consolidation adjustments

Less Discontinued Operations

Group (continuing operations)


£'000

£'000

£'000

 '000

£'000

Revenue

13,291

15,467

467

(484)

28,741

Direct costs

(10,271)

(11,120)

(569)

570

(21,390)

Contribution

3,020

4,347

(102)

86

7,351

Indirect costs

(3,099)

(1,312)

(1,459)

-

(5,870)

Underlying profit/(loss) before tax

(79)

3,035

(1,561)

86

1,481

 

Acquisition related costs

(465)




(465)

 

Amortisation of acquired client relationships

(219)

-

-

-

(219)

 

Dual running operating platform costs

(35)

-

-

-

(35)

 

Restructuring costs

(91)

(38)

-

-

(129)

 

Net changes in the value of non-current investment assets


414

-

-

414

 

Profit/(loss) before tax

(889)

3,411

(1,561)

86

1,047

 

Tax

2

-

190

-

192

 

Profit/(loss) for the year

(887)

3,411

(1,371)

86

1,239

 

 

 

Year ended 31 March 2021

Wealth Management

Capital Markets

Group  and consolidation adjustments

Less Discontinued Operations

Group (continuing operations)


£'000

£'000

£'000

 '000

£'000

Statutory operating costs included the following:






Amortisation

219

-

-

-

219

Depreciation

381

140

6

(6)

521

 

Segment assets and segment liabilities are reviewed by the Chief Executive Officer based on the consolidated statement of financial position. Accordingly, this information is replicated in the Group Consolidated statement of financial position. As no measure of assets or liabilities for individual segments is reviewed regularly by the Chief Executive Officer, no disclosure of total assets or liabilities has been made.

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.

Revenue disaggregated by division and timing of recognition below:

 

Year ended 31 March 2022

Wealth Management

Capital Markets

Group  and consolidation adjustments

Group


£'000

£'000

£'000

£'000

Point in time

2,443

12,429

-

14,872

Over time

13,394

3,769

-

17,163


15,837

16,198

-

32,035

 

Year ended 31 March 2021

Wealth Management

Capital Markets

Group  and consolidation adjustments

Less Discontinued Operations

Group (continuing operations)


£'000

£'000

£'000

£'000

£'000

Point in time

3,419

11,786

35

(53)

15,187

Over time

9,872

3,681

432

(431)

13,554


13,291

15,467

467

(484)

28,741

 

The following movement of contract liabilities was recognised in the year:


As at 31 Mar 2021

Recognised in revenue

Amounts deferred

As at 31 Mar 2022

Group

£'000

£'000

£'000

£'000

Contract liabilities

372

(372)

39

39

 

Contract liabilities relate to deferred recognition of retainer fees invoices quarterly. During the year the billing period was aligned to the financial year quarters causing a reduction in contract liabilities at the year end 31 March 2022.


Year ended

Year ended


31 Mar 2022

31 Mar 2021

Group

£'000

£'000

Operating (loss)/profit is stated after charging/(crediting):

 

 

Depreciation of property, plant and equipment (note 13)

289

521

Amortisation of intangibles (note 16)

505

219

Short term and low value leases

59

-

IFRS 16 depreciation (note 19)

435

502

Employee benefit expense (note 7)

21,300

19,260

Restructuring and non-recurring legal and regulatory costs

1,191

616

Other administrative expenses

9,083

7,097

 

 

 

Auditors' remuneration:

 

 

Audit of these financial statements

50

52

Amounts payable to the principal auditors and their associates in respect of:

 

 

- audit of financial statements of subsidiaries pursuant to legislation

95

106

- audit related assurance services

55

17


33,062

28,390

Expected credit loss (note 22)

81

28

Total

33,143

28,418

 

O ther administrative expenses are incurred in the ordinary course of the business and do not include any non-recurring items.

7. Employee benefit expense

The Group claimed £7k of grants during the year (FY21: £180k) from the UK Government through the Coronavirus Job Retention Scheme. No staff remained on furlough from 30 June 2021.

Non-salaried staff are commission-only brokers and therefore do not receive a salary.

 


Year ended

Year ended


31 Mar 2022

31 Mar 2021

Group

£'000

£'000

Wages and salaries

12,139

9,162

Bonuses

2,148

3,801

Social security costs

1,975

1,634

Other pension costs

508

401


16,770

14,998

Non salaried staff

4,895

4,301

Other administrative expenses

21,665

19,299

Charge for share options granted to employees (note 32)

470

90

Less amounts included within Restructuring and non-recurring costs

(835)

(129)


21,300

19,260


 



Year ended

Year ended


31 Mar 2022

31 Mar 2021

Company

£'000

£'000

Wages and salaries

260

167


 





The average number of persons (including Directors) employed during the year was:

 





Year ended

Year ended

Group

31 Mar 2022

31 Mar 2021

Executive and senior management

8

8

Corporate Broking

42

35

Wealth Management

75

64

Support staff

26

24

Salaried staff

151

131

Non salaried staff

7

8

Total

158

139


 

 


Year ended

Year ended

Company

31 Mar 2022

31 Mar 2021

Executive and senior management

4

5

 

The total amount paid to Directors in the period, including social security costs was £1.6m (FY21: £1.0m). Full details of Directors' remuneration, including that of the highest paid Director, are disclosed in the Remuneration Report.

8. Finance income and expense


Year ended

Year ended


31 Mar 2022

31 Mar 2021

Group

£'000

£'000

Bank interest receivable

1

2

Finance income

1

2



-


 

 

Interest payable on lease liabilities

93

95

Fair value and present value discount of deferred consideration (see note 26)

416

-

Other interest

2

1

Finance expense

511

96

9. Taxation


Year ended

Year ended


31 Mar 2022

31 Mar 2021

Group

£'000

£'000

Current tax expense:



United Kingdom corporation tax at 19% (FY21: 19%)

-

-

Total current tax

-

-


 


Deferred tax credit (note 21):



Current year

(67)

(192)

Effect of change in tax rate

-

-

Total deferred tax

(67)

(192)

Total tax in the statement of comprehensive income

(67)

(192)

 

The tax credit for the year and the amount calculated by applying the standard United Kingdom corporation tax rate of 19% (FY21: 19%) to profit before tax can be reconciled as follows:


Year ended

Year ended


31 Mar 2022

31 Mar 2021

Group

£'000

£'000

Profit before tax

8

1,047

Tax expense using the United Kingdom corporation tax rate of 19% (FY21: 19%)

2

199

Other expenses not tax deductible

183

4,845

Income not chargeable to tax

(6)

(4,753)

Movement in unrecognised deferred tax

(246)

(522)

Difference in overseas tax rates

-

39

Total tax credit in the statement of comprehensive income

(67)

(192)

10. Discontinued operations and assets & liabilities held for sale

2021 - Disposal of WH Ireland (IOM) Limited

The Group announced its intention to sell its subsidiary WH Ireland (IOM) Limited on 29 June 2020, and the sale subsequently completed on 21 August 2020. In accordance with IFRS 5 non-current assets held for sale and discontinued operations, the results for WH Ireland (IOM) Limited were included in discontinued operations in the prior period; its assets and liabilities were classified as held for sale and recorded at the lower of the carrying value and fair value less costs to sell. The associated assets and liability were therefore presented as held for sale in the prior year's financial statements.

Financial performance and cash flow information



Year ended



31 Mar 2021



£'000

Revenue

 

484

Administrative expenses


(433)

Operating profit

 

51




Loss on disposal of discontinued operations


(137)

Finance income


-

Finance expense


-

(Loss) before tax

 

(86)

Tax


-

(Loss) from discontinued operations


(86)

 



 



Year ended

 


31 Mar 2021

 


£'000

Net cash generated from operations

 

163

Net cash generated from investing activities


1

Net cash used in financing activities


(997)

Net decrease in cash and cash equivalents


(833)

 

Assets and liabilities of disposal group classified as held for sale

The assets and liabilities relating to WH Ireland (IOM) Limited were reclassified as held for sale at 31 March 2020.  As at 31 March 2021, these were all nil values as the sale of WH Ireland (IOM) Limited completed on 21 August 2020.

11. Dividend

No dividend is proposed in respect of 2022 (FY21: none).

12. Earnings per share

Basic EPS is calculated by dividing the profit or loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company (note 29).

Diluted EPS is the basic EPS, adjusted for the effect of the conversion into fully paid shares of the weighted average number of all employee share options outstanding. In a year when the Company presents positive earnings attributable to ordinary shareholders, anti-dilutive options represent options issued where the exercise price is greater than the average market price for the period.

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below:


Year ended

Year ended


31 Mar 2022

31 Mar 2021*

Group

 


Weighted average number of shares in issue during the period

59,692

50,249

Effect of dilutive share options

1,190

683

(thousands)

 

 


60,882

50,932


 

 

From continuing operations

 


Profit for the year attributable to ordinary shareholders (£'000)

75

1,239

Basic

0.13p

2.47p

Diluted

0.12p

2.43p


 


From discontinued operations

 


Loss for the year attributable to ordinary shareholders (£'000)

-

(86)

Basic

-

(0.17p)

Diluted

-

-


 


Total

 


Profit for the year attributable to ordinary shareholders (£'000)

75

1,153

Basic

0.13p

2.30p

Diluted

0.12p

2.26p

*The comparative dilutive share options have been restated, further details can be found in note 3.

13. Property, plant and equipment


Group


Company


Computers,


Computers,


fixtures and fittings


fixtures and fittings

 

£'000


£'000

Cost

 



At 31 March 2020

5,444


33

Additions

201


-

At 31 March 2021

5,645


33

Additions

103


4

At 31 March 2022

5,748

 

37

 



-

Depreciation and impairment

 



At 31 March 2020

4,613


33

Depreciation charge

521


-

At 31 March 2021

5,134


33

Depreciation charge

289


-

At 31 March 2022

5,423

 

33

 



-

Net book values

 



At 31 March 2022

325


4

At 31 March 2021

511


-

14. Business Combinations

2021 - Acquisition of Harpsden Wealth Management Limited

On 22 December 2020, WH Ireland Group Plc acquired Harpsden Wealth Management Limited (Harpsden) for a total consideration of £7.4m.

The fair value of the assets and liabilities of Harpsden as at the date of acquisition are as per the table below:


Book value

Adjustments

Fair value

 

£'000

£'000

£'000

Net Assets at date of acquisition:

 



Intangible assets

-

4,225

4,225

Tangible assets

13

-

13

Debtors

309

-

309

Cash

671

-

671

Creditors

(523)

-

(523)

Deferred tax liability

-

(803)

(803)

Net assets acquired

470

3,422

3,892

Goodwill arising on acquisition



3,539

Total

 

 

7,431

 

 




Discharged by:

 



Initial cash consideration



5,300

Deferred consideration payable



2,585

Effect of discounting of deferred consideration


(589)

Costs associated with acquisition



135

Total

 

 

7,431

In the period from acquisition to 31 March 2021, the Harpsden acquisition earned revenue of £782k and statutory profit before tax of £125k.

15. 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:


Year ended

Year ended


31 Mar 2022

31 Mar 2021

Group

£'000

£'000

Beginning of year

3,539

-

Acquisition of subsidiaries

-

3,539

End of year

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 recoverable amount is the higher of the CGU's fair value less cost to sell and the value in use. The value in use has been calculated using pre-tax discounted cash flow projections based on the most recent budgets and forecasts approved by the board of directors.

The projections cover a five year period and a terminal multiple has been applied to the cashflows extrapolating the projections consistent with the assumed indefinite useful life of the goodwill.

The Harpsden CGU recoverable amount was calculated as £10.94m, indicating that there is no impairment. The main underlying assumptions used in the calculations are the pre-tax discount rate, the short term growth in revenue and expenditure and the long term growth rate to perpetuity. The revenue growth used in the cash flow forecast is based on the AUM forecasts multiplied by the relevant yields. AUM forecasted growth ranges from 5% to 13%. Cash outflows have been estimated at 5% annual increase where no other significant growth has been forecasted. A pre-tax discount rate of 14.7% has been used. This is based on the Group's assessment of the risk-free rate of interest and specific risks relating to Harpsden. A 2% long-term growth rate has been applied, which is prudent when compared against the growth rates used in the forecast calculations for the first five years.

Sensitivity analysis has been performed and no impairment would arise if either of the following occurred:

· An increase in pre-tax discount rate from 14.7% to 16.7%

· A fall in perpetuity growth rate from 2% to -3%

· No AUM growth in the first year of the forecast

An impairment would arise if there was no increase in AUM over the five year forecast and the subsequent terminal growth was 0%.

16. Intangible assets

Client relationships arise when the group acquires a broker business with an existing client base.  The assets below represent the fair value of future benefits arising from these client relationships. Amortisation of client relationships is charged to administrative expenses in the consolidated statement of comprehensive income on a straight line basis over the estimated useful lives (2 to 12 years). No impairment indicators were present for the acquired client relationship contracts.


Client

 

 

 

relationships

Brand

Total

Group

£'000

£'000

£'000

Cost

 

 

 

At 31 March 2020

4,581

-

4,581

Additions

4,150

75

4,225

At 31 March 2021

8,731

75

8,806

Additions

-

-

-

At 31 March 2022

8,731

75

8,806

 



 

Amortisation

 

 

 

At 31 March 2020

3,823

-

3,823

Charge for the year

210

9

219

At 31 March 2021

4,033

9

4,042

Charge for the year

467

38

505

At 31 March 2022

4,500

47

4,547

 



 

Net book values

 

 

 

At 31 March 2022

4,231

28

4,259

At 31 March 2021

4,698

66

4,764

 

During the year ended 31 March 2021, the group acquired client relationships totalling £4.2m as part of the Harpsden acquisition (note 14) and at the year ending 31 March 2022 the net book value was £3.72m and remaining useful economic life of 9 years. An intangible asset was also recognised representing the Harpsden brand totalling £75k and at the year ending 31 March 2022 the net book value was £28k and remaining useful economic life of 1 year.

An intangible asset was recognised relating to the client relationships brought in by Robert Race when he joined the group. At the year ended 31 March 2022 the net book value was £489k and remaining useful economic life of 4 years.

The company did not have any intangible assets either at 31 March 2022 or 31 March 2021.

17. Subsidiaries

 

Year ended

Year ended


31 Mar 2022

31 Mar 2021

Company

£'000

£'000

Beginning of year

26,448

19,298

Additions

-

7,433

Disposals

-

(283)

End of year

26,448

26,448

 

Investments in subsidiaries are stated at cost less impairment.

During the financial year the Group raised £Nil (FY21: £5.3m) by way of placings to existing and new shareholders. In the prior year the Group used the placings to fund the purchase of Harpsden Wealth Management Limited.

The Company's subsidiaries, all of which are included in the consolidated financial statements, are presented below:

Subsidiary

Country of incorporation

Principal activity

Class of shares

Proportion held by Group

Proportion held by Company

WH Ireland Limited

England & Wales

WM and CIB

Ordinary

100%

100%

Harpsden Wealth Management Limited

England & Wales

WM

Ordinary

100%

100%

WH Ireland (Financial Services) Limited

England & Wales

Dormant

Ordinary

100%

-

Readycount Limited

England & Wales

Dormant

Ordinary

100%

100%

Stockholm Investments Limited

England & Wales

Dormant

Ordinary

100%

100%

ARE Business and Professional Limited

England & Wales

Dormant

Ordinary

100%

-

SRS Business and Professional Limited

England & Wales

Dormant

Ordinary

100%

-

WH Ireland Nominees Limited

England & Wales

Nominee

Ordinary

100%

-

WH Ireland Trustee Limited

England & Wales

Trustee

Ordinary

100%

-

Fitel Nominees Limited

England & Wales

Nominee

Ordinary

100%

-

 

The registered office of Harpsden Wealth Management Limited is Newtown House, Newtown Road, Henley-on-Thames, Oxfordshire RG9 1HG.

The registered office of all other companies listed above is 24 Martin Lane, London, EC4R 0DR.

The following dormant subsidiaries are guaranteed by the Company and therefore take advantage of the Companies Act (2006) in obtaining exemption from an individual audit:

Subsidiary

Country of incorporation

Company registration number

WH Ireland (Financial Services) Limited

England & Wales

4279349

Readycount Limited

England & Wales

3164863

Stockholm Investments Limited

England & Wales

4215675

ARE Business and Professional Limited

England & Wales

3681185

SRS Business and Professional Limited

England & Wales

4238969

WH Ireland Nominees Limited

England & Wales

2908691

WH Ireland Trustee Limited

England & Wales

3559373

Fitel Nominees Limited

England & Wales

1401140

18. Investments

Group

 




Quoted

Unquoted

Total

Financial assets at fair value through profit or loss

£'000

£'000

£'000

At 31 March 2021

-

48

48

At 31 March 2022

-

48

48

 





 Quoted

 Warrants*

 Total 

Other financial assets at fair value through profit or loss

 '000

 '000

 '000

At 31 March 2020

1

229

230

Additions*

-

823

823

Fair value gain*

-

46

46

Disposals*

-

(48)

(48)

At 31 March 2021

1

1,050

1,051

Additions

-

850

850

Fair value gain

-

1,072

1,072

Disposals

-

(8)

(8)

At 31 March 2022

1

2,964

2,965

 




Total investments at 31 March 2022

1

3,012

3,013

Total investments at 31 March 2021

1

1,098

1,099

* The comparative additions and fair value gain have been restated. Further details can be found in note 3 of these financial statements

 

Financial assets at fair value through profit or loss include equity investments other than those in subsidiary undertakings. These are measured at fair value with fair value gains and losses recognised through profit and loss.

Other investments, in the main, comprise financial assets designated as fair value through profit or loss and include warrants and equity investments.

Warrants may be received during the ordinary course of business and are designated as fair value through profit or loss. There is no cash consideration associated with the acquisition.

Fair value, in the case of quoted investments, represents the bid price at the reporting year end date. In the case of unquoted investments, the fair value is estimated by reference to recent arm's length transactions. The fair value of warrants is estimated using established valuation models.

The fair value of the warrants was determined using the Black Scholes model and grouped within level 3 with fair value measurements derived from formal valuation techniques (see note 27). The key inputs into this calculation are the share price as at 31 March 2022, exercise price, risk free interest rate and volatility which is based on the share price movements during the period 1 December 2021 to 31 March 2022.

Included in non-operational income is the fair value gain totalling £1,072k (2021: £46k).



Year ended

Year ended



31 Mar 2022

31 Mar 2021*

Net gains on investing activities

ref

£'000

£'000

Fair value gain on warrants


1,072

46

Fair value gain on investments

23

554

772

*The comparative information for the year end 31 March 2021 has been restated to reflect the correct net gains on investment from revenue, further details can be found in note 3 of these financial statements.

 
Total net gain on investing activities


1,626

818

 

19. Right of use asset & lease liability


Leasehold Properties

 

£'000

Cost

 

At 31 March 2020

3,036

Adjustment for deferred rent invoices

(50)

Correction of calculation of right of use asset

(319)

At 31 March 2021

2,667

Additions

-

At 31 March 2022

2,667

 


Depreciation and impairment

 

At 31 March 2020

562

Charge for the year

502

At 31 March 2021

1,064

Charge for the year

435

At 31 March 2022

1,499

 

 

Net book values

 

At 31 March 2022

1,168

At 31 March 2021

1,603

 

Maturity of discounted lease payments in relation to non-cancellable leases

The table below represents the minimum lease payments in relation to non-cancellable leases where the group is a lessee:


Group

 

Payable within 1 year

Payable in 2 to 5 years

Payable after more than 5 years

Total contractual payments

Group

£'000

£'000

£'000

£'000

2022

376

956

43

1,375

2021

552

1,295

211

2,058

 

The following represents the lease expense in relation to leases which is recognised in the statement of comprehensive income:


Year ended

Year ended


31 Mar 2022

31 Mar 2021

Group

£'000

£'000

Depreciation of right of use asset

435

502

Interest charge

85

95

Total charge

520

597

Nature of leases

The Group leases a number of properties in the jurisdictions it operates.

These leases are usually for a fixed term although the Group sometimes negotiates break clauses in its leases. On a case-by-case basis, the Group will consider whether the absence of a break clause would expose the group to excessive risk. Typically factors considered in deciding to negotiate a break clause include:

· the length of the lease term;

· the economic stability of the environment in which the property is located; and

· whether the location represents a new area of operations for the Group

As at 31 March 2022, the carrying amounts of the lease liabilities are not reduced by the amounts that would not be paid as a result of exercising the break clauses because the Group does not anticipate to exercise its rights to the break clauses.

The total cash outflow for leases, including short-term leases, in the year ending 31 March 2022 was £827k (FY21: £898k)

Payments associated with short-term leases and all leases of low-value assets are recognised on a straight-line basis in administrative expenses. Short-term leases are leases with a lease term of 12 months or less without a purchase option.

The Company did not have any right of use assets or lease liabilities either at 31 March 2022 or 31 March 2021.

20. Subordinated loan


Year ended

Year ended


31 Mar 2022

31 Mar 2021

Company

£'000

£'000

Beginning of year

-

985

Disposals

-

(985)

End of year

-

-

 

This interest-free, subordinated loan was originally issued to WH Ireland (IOM) Limited on 31 March 2014 and was increased in line with the needs of the subsidiary. As part of the agreement for the sale of WH Ireland (IOM) Limited, announced on 29 June 2020, the subordinated loan was repaid on completion, 21 August 2020. Accordingly, the loan was classified as a current asset in the prior year. The impact of applying IFRS 9 has been considered and probability of default was assessed and consequently, it was determined that the expected credit loss is nil.

21. Deferred tax assets and liabilities

Deferred tax is provided for temporary differences, at the reporting year end date, between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes using a tax rate of 19% (FY21: 19%). A deferred tax asset is recognised for all deductible temporary differences and unutilised tax losses only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

A net deferred tax liability has been recognised in the year:

 


Year ended

Year ended


31 Mar 2022

31 Mar 2021

Group

£'000

£'000

Tax losses

190

  190

Intangible acquired on business combinations

(736)

(803)

Other

4

4

Deferred tax liability

(542)

(609)

 

The change in deferred tax assets and liabilities during the year was as follows:


Trading losses carried forward

Total

Group

£'000

£'000

Deferred tax asset



As at 1 April 2020

190

190

Charge to the Consolidated statement of comprehensive income

-

-

As at 31 March 2021

190

190

As at 31 March 2022

190

190




The carrying amount of the deferred tax asset is reviewed at each reporting date and is only recognised to the extent that it is probable that future taxable profits of the Group will allow the asset to be recovered.





Intangible asset amortisation

Total

Group

£'000

£'000

Deferred tax liabilities



As at 1 April 2020

-

-

Adjustment on acquisition of business combination

803

803

Other

(4)

(4)

As at 31 March 2021

799

799

Credit to the Consolidated statement of comprehensive income

(67)

(67)

As at 31 March 2022

732

732

 

The unrecognised tax losses and fixed asset timing differences amount to £13.4m (FY21: £16.0m).

The Company had no deferred tax balances either at 31 March 2022 or 31 March 2021.

22. Trade and other receivables


Group

Company


31 Mar 2022

31 Mar 2021

31 Mar 2022

31 Mar 2021


£'000

£'000

£'000

Trade receivables

751

1,322

-

-

Other receivables

893

1,065

95

47

Accrued income

3,079

2,139

-

-

Prepayments

1,035

630

18

9

 

5,758

5,156

113

56

 

The carrying value of trade and other receivable balances are denominated fully in British pounds (FY21: 100%).

Accrued income relates to management fee accruals. Management fees are accrued on a monthly basis and reconciled to fees collected quarterly. Consideration to IFRS 9 has been made and it has been determined that there is a low probability of default and therefore the expected credit loss is not material.

The impact of applying IFRS 9 to intercompany balances for the Company has been considered and probability of default was assessed and consequently, it was determined that the expected credit loss is not material.

Fees and charges owed by clients are generally considered to be past due where they remain unpaid five working days after the relevant billing date. At 31 March 2022, trade receivables (net of provisions for impairment and doubtful debts) comprised of the following:


Group

Company


31 Mar 2022

31 Mar 2021

31 Mar 2022

31 Mar 2021


 '000

 '000

 '000

 '000

Not past due

194

496

-

-

Up to 5 days due

9

-

-

-

from 6 to 15 days past due

219

42

-

-

From 16 to 30 days past due

1

148

-

-

From 31 to 45 days past due

113

68

-

-

More than 45 days past due

215

568

-

-

 

751

1,322

-

-

Included in aged receivables more than 45 days past due is the provisions for impairment of £502k (FY21: £421k).

Trade receivables are largely amounts due from retainer clients, who are invoiced on a quarterly basis in advance. The Group's policy is to allow 30 days for payment. Consequently, these receivables have no significant financing component and the Group have applied the simplified approach in line with IFRS 9. Calculation of loss allowances are measured at an amount equal to lifetime expected credit losses (ECLs). The approach taken by the Group in arriving at the expected credit loss is as follows:

Step 1: The Group have determined the appropriate brackets by grouping each trade receivables based on the ageing structure.

Step 2: Having determined the appropriate groupings, a historical loss rate (adjusted for forward looking information) was calculated for each age bracket by reviewing the pattern of payment of trade receivables over the past 12 months.

Step 3: This historical loss rate (adjusted for forward looking information) has been applied to each ageing bracket of trade receivables as at the balance sheet date to arrive at an expected credit loss for each grouping. All trade receivables over 365 days have a 100% historical loss rate loss applied to them.

Based on the above, the group recognised an expected credit loss of £81k (FY21: £28k expected credit loss).

The maximum exposure to credit risk, before any collateral held as security, is the carrying value of each class of receivable set out above.

The Directors consider that the carrying amounts of trade and other receivables approximate their fair value.

Movements in impairment provisions were as follows:


Group

Company


31 Mar 2022

31 Mar 2021

31 Mar 2022

31 Mar 2021


 '000

 '000

 '000

 '000

Opening balance

421

458

-

-

Amount released from provision due to recovery

(57)

(57)

-

-

Amounts written off, previously fully provided

-

(65)

-

-

Amount charged to the statement of comprehensive income

138

85

-

-

Closing balance

502

421

-

-

 

23. Other investments


Group

Company


31 Mar 2022

31 Mar 2021


31 Mar 2022

31 Mar 2021


£'000

£'000


£'000

£'000

Current asset investment

1,490

962


-

-

Restricted cash

422

1,528


-

-

Total

1,912

2,490


-

-

 

Current asset investments represent short-term principal positions in the form of listed and unquoted investments which are held at market value.

Included in current asset investments are unquoted investments totalling a value of £701k. Judgement has been applied to the value of these shares based on recent transactions around the year end 31 March 2022. If the share price were to change by 2% the value of this investment would change by £7k.

Restricted cash represents monies held by the Group which have some restrictions on their conversion to cash.

 

Included in non-operational income is the fair value gain and the sale of investments. Further details can be found in note 18.

24. Cash and cash equivalents


Group

Company


31 Mar 2022

31 Mar 2021

31 Mar 2022

31 Mar 2021


£'000

£'000

£'000

£'000

Cash and cash equivalents

6,446

8,211

1,246

1,246

 

For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand and deposits with banks and financial institutions with a maturity of up to three months.

Cash and cash equivalents represent the Group's and the Company's money and money held for settlement of outstanding transactions.

Money held on behalf of clients is not included in cash and cash equivalents on the statement of financial position. Client money at 31 March 2022 for the Group was £366k (FY21: £401k). There is no client money held in the Company (FY21: £nil).

25. Trade and other payables


Group

Company


31 Mar 2022

31 Mar 2021

31 Mar 2022

31 Mar 2021


£'000

£'000

£'000

£'000

Trade payables

2,963

1,897

84

35

Amounts due to Group companies

-

-

2,194

2,824

Other payables

319

618

-

-

Tax and social security

886

662

-

-

Deferred income

39

372

1

1

Accruals

2,474

4,074

78

100

 

6,681

7,623

2,357

2,960

 

The Directors consider that the carrying amounts of trade and other payables approximate their fair value.

Deferred income relates to retainer fees invoiced in advance and spread over the length of the period, typically quarterly. The balance at year end was fully recognised in the following financial year.

Amounts due to Group companies are unsecured, interest free and repayable on demand.

26. Deferred consideration

Group

£'000

At 31 March 2020

-

Additions during the year:

1,996

Paid during the year

-

At 31 March 2021

1,996

Additions during the year:

-

Charged to Statement of Comprehensive Income

416

At 31 March 2022

2,412

 

The increase in deferred consideration in the year ended 31 March 2022 represents the fair value adjustment and unwinding of present value discount.


31 Mar 2022

31 Mar 2021


 '000

 '000

Included in current liabilities

2,412

1,087

Included in non-current liabilities

-

909


2,412

1,996

 

Deferred consideration relates to the acquisition of Harpsden 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%.

27. Financial risk management

The fair value of all of the Group's and the Company's financial assets and liabilities approximated to their carrying value at the reporting year end date. The carrying amount of non-current financial instruments, including floating interest rate borrowing, are not significantly different from the fair value of these instruments based on discounted cash flows. The significant methods and assumptions used in estimating fair values of financial instruments are summarised below:

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include equity investments, other than those in subsidiary undertakings. In the case of listed investments, the fair value represents the quoted bid price at the reporting period end date. The fair value of unlisted investments is estimated by reference to recent arm's length transactions.

Other investments

Other investments include warrants and equity investments, categorised as fair value through profit or loss. In the case of listed investments, the fair value represents the quoted bid price at the reporting year end date. The fair value of unlisted investments is estimated by reference to recent arm's length transactions. In the case of warrants, the fair value is estimated using established valuation models.

Trade receivables and payables

The carrying value less impairment provision of trade receivables and payables is assumed to approximate to their fair values due to their short-term nature.

Borrowings

Borrowings are measured at amortised cost using the effective interest rate method. The tables below summarise the Group's main financial instruments by financial asset type:


31 March 2022

 

Amortised cost

Fair value through profit or loss

Total

Group

£'000

£'000

£'000

Financial assets

 



Investments

-

48

48

Other investments

-

4,877

4,877

Trade and other receivables

4,723

-

4,723

Cash and cash equivalents

6,446

-

6,446

Financial liabilities




Trade and other payables

5,756

-

5,756

Lease liability

1,375

-

1,375

 


31 March 2021

 

Amortised cost

Fair value through profit or loss

Total

Group

£'000

£'000

£'000

Financial assets

 



Investments

-

48

48

Other investments

-

3,541

3,541

Trade and other receivables

4,526

-

4,526

Cash and cash equivalents

8,211

-

8,211

Financial liabilities




Trade and other payables

6,589

-

6,589

Lease Liability

2,058

-

2,058

 

The tables below summarise the Company's main financial instruments by financial asset type:


31 March 2022

 

Amortised cost

Fair value through profit or loss

Total

Company

£'000

£'000

£'000

Financial assets

 



Trade and other receivables

95

-

95

Cash and cash equivalents

1,246

-

1,246

Financial liabilities




Trade and other payables

162

-

162

Group balances

2,194

-

2,194

 


31 March 2021

 

Amortised cost

Fair value through profit or loss

Total

Company

£'000

£'000

£'000

Financial assets

 



Trade and other receivables

47

-

47

Cash and cash equivalents

1,246

-

1,246

Financial liabilities




Trade and other payables

135

-

135

Group balances

2,824

-

2,824

Risks

The main risks arising from the Group's financial instruments are credit risk, liquidity risk and market risk. Market risk comprises, interest rate risk and other price risk. The Directors review and agree policies for managing each of these risks which are summarised below:

Credit risk

Credit risk is the risk that clients or other counterparties to a financial instrument will cause a financial loss by failing to meet their obligations. Credit risk relates, in the main, to the Group's trading and investment activities and is the risk that third parties fail to pay amounts as they fall due. Formal credit procedures include approval of client limits, approval of material trades, collateral in place for trading clients and chasing of overdue accounts. Additionally, risk assessments are performed on banks and custodians.

The maximum exposure to credit risk at the end of the reporting period is equal to the statement of financial position figure. The impairment policy can be found in note 22. There were no other past due, impaired or unsecured debtors.

Financial assets that are neither past due nor impaired in respect of trade receivables relate mainly to accrued management fees.

The credit risk on liquid funds, cash and cash equivalents is limited due to deposits being held at the Group's main bank with a credit rating of "A", assigned by Standard and Poor's.

There has been no change to the Group's exposure to credit risk or the manner in which it manages and measures the risk during the period.

The credit risk in the Company principally comes from intercompany balances and subordinated loan. Since these are all within the Group, the Directors are able to closely monitor the risk of default on a regular basis to minimise any potential losses.

Liquidity risk

Liquidity risk is the risk that obligations associated with financial liabilities will not be met. The Group monitors its risk to a shortage of funds by considering the maturity of both its financial investments and financial assets (for example, trade receivables) and projected cash flows from operations.

The Group's objective is to maintain the continuity of funding through the use of bank facilities where necessary, which are reviewed annually with the Group's Banker, the Bank of Scotland. Items considered are limits in place with counterparties which the bank are required to guarantee, payment facility limits, as well as the need for any additional borrowings.

The table below summarises the maturity profile of the Group's financial liabilities based on contractual undiscounted payments:


31 March 2022

 

Payable within 1 year

Payable in 2 to 5 years

Payable after more than 5 years

Total contractual payments

Group

£'000

£'000

£'000

£'000

Trade and other payables

5,756

-

-

5,756

Lease liability

568

1,032

31

1,631

Deferred consideration

2,500

-

-

2,500


8,824

1,032

31

9,887

 

 


31 March 2021

 

Payable within 1 year

Payable in 2 to 5 years

Payable after more than 5 years

Total contractual payments

Group

£'000

£'000

£'000

£'000

Trade and other payables

6,589

-

-

6,589

Lease liability

634

1,425

206

2,265

Deferred consideration

1,250

1,250

-

2,500


8,473

2,675

206

11,354

 

The table below summarises the maturity profile of the Company's financial liabilities based on contractual undiscounted payments:


31 March 2022

 

Payable within 1 year

Payable in 2 to 5 years

Payable after more than 5 years

Total contractual payments

Company

£'000

£'000

£'000

£'000

Trade and other payables

162

-

-

162

 


31 March 2021

 

Payable within 1 year

Payable in 2 to 5 years

Payable after more than 5 years

Total contractual payments

Company

£'000

£'000

£'000

£'000

Trade and other payables

135

-

-

135

 

Market Risk

Interest rate risk

The Group's exposure to the risk of changes in market interest rates relates to the Group's amount of interest receivable on cash deposits. The maximum exposure for interest is not significant.

Other price risk

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk) whether those changes are caused by factors specific to the individual financial instrument or its issuer or factors affecting all similar financial instruments traded in the market. Other investments are recognised at fair value and subject to changes in market prices.

The Group manages other price risk by monitoring the value of its financial instruments on a monthly basis and reporting these to the Directors and Senior Management. The Group has disposed of a number of its investments during the course of the year, which has helped mitigate risk. However, the risk of deterioration in prices remains high whilst the market continues to be volatile.

The risk of future losses is limited to the fair value of investments as at the year-end of £4,925k (FY21: £3,589k). See note 18 and 23.

Fair value measurement recognised in the statement of financial position

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

· Level 1 at fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets and liabilities;

· Level 2 fair value measurements are those derived from inputs other than the quoted price included within Level 1 that are observable for the asset or a liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

· Level 3 fair value measurements are those derived from formal valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). The valuation technique used in determining the fair value is the Black Scholes model. The key inputs into this calculation are the share price as at 31 March 2022, exercise price, risk free interest rate and volatility which is based on the share price movements during the period 1 December 2021 to 31 March 2022.

 

31 March 2022

 

Level 1

Level 2

Level 3

Total


£'000

£'000

£'000

£'000

Financial assets at fair value through profit or loss

 




Unquoted equities

701

-

48

749

Financial instruments designated at fair value through profit or loss

 




Quoted equities

-

-

1

1

Other investments (note 18 & 23)

1,211

-

2,964

4,175

Deferred consideration

-

-

(2,412)

(2,412)

Total

1,912

-

601

2,513

 


31 March 2021

 

Level 1

Level 2

Level 3

Total


£'000

£'000

£'000

£'000

Financial assets at fair value through profit or loss

 




Unquoted equities

-

-

48

48

Financial instruments designated at fair value through profit or loss

 




Quoted equities

-

-

-

-

Other investments (note 18 & 23)

2,490

-

1,051

3,541

Deferred consideration

-


(1,996)

(1,996)

Total

2,490

-

(897)

1,593

28. Capital management

The capital of the Group comprises share capital, share premium, retained earnings and other reserves. The total capital at 31 March 2022 amounted to £15.4m for the Group (FY21: £15.1m) and £23.9m for the Company (FY21: £23.4m). The primary objective of the Group's capital management is to ensure that it maintains a strong capital structure in order to support the development of its business, to maximise shareholder value and to provide benefits for its other stakeholders.

These objectives are met by managing the level of debt and setting dividends paid to shareholders at a level appropriate to the performance of the business.

Certain activities of the Group are regulated by the FCA which is the statutory regulator for financial services business and has responsibility for policy, monitoring and discipline for the financial services industry. The FCA requires the Group's resources to be adequate, that is, sufficient in terms of quantity, quality and availability, in relation to its regulated activities.

The Group monitors capital on a daily basis by measuring movements in the Group regulatory capital requirement and through its Internal Capital Adequacy and Risk Assessment Process (ICARA), which was formerly through its Internal Capital Adequacy Assessment Process (ICAAP). Compliance with FCA minimum common equity tier 1 regulatory capital requirements was maintained during the year and the Group is satisfied that there is and will be, sufficient capital to meet these regulatory requirements for the foreseeable future.

29. Share capital and share premium account


Number of

Share

Share

 

shares

capital

premium

 

£'000

£'000

£'000

As at 1 April 2020

48,699

2,435

14,314

Shares issued:




On placing

13,323

666

4,669

Balance at 31 March 2021

62,022

3,101

18,983





Shares issued:




On placing

64

3

31

Balance at 31 March 2022

62,086

3,104

19,014

 

At 31 March 2022 the total number of issued ordinary shares is 62.09 million shares of 5p each (FY21: 62.02 million shares of 5p each).  0.06million shares were issued during the period (FY21: 13.32 million). 

On 11 March 2021 a new NED scheme was announced which would issue ordinary shares to certain Non-Executive director's in lieu of 25% of the fees that would otherwise be due to them.

The following ordinary shares have been issued to Non-Executive directors under the NED scheme


Number of

 

Amount paid

 

shares

Nominal value

per share

 

£'000

£'000

£'000

30-Jul-20

31,248

48p

16-Mar-21

41,664

48p

30-Jul-21

30,545

58p

11-Feb-22

33,897

50.7p

 

On 27 November 2020 the Group issued 13,250,000 ordinary shares by way of placing at a price of 40p per share to support the acquisition of Harpsden Wealth Management Limited.

30. Treasury shares

 


Year ended 31 March 2022

Year ended 31 March 2021

Group

£'000

£'000

At 31 March

644

644

Additions

256

-

At 31 March

900

644

 

At 31 March 2022 no shares in the Company were held in the EBT (FY21: nil shares) and the ESOT held 2,639,500 shares (FY21: 2,139,500), at a nominal value of 5p per share and represents the full balance above. This represents 4.25% of the called up share capital (FY21: 3.45%).

During the year the Company's Employee Share Option trust (ESOT) purchased the following ordinary shares in the Company


Number of shares

Nominal value

Total consideration

Date of issue

£'000

£'000

£'000

15-Jun-21

50,000

5p

28,250

20-Jul-21

50,000

5p

29,000

05-Aug-21

40,000

5p

22,800

09-Sep-21

50,000

5p

29,000

25-Oct-21

50,000

5p

27,430

08-Nov-21

50,000

5p

25,500

13-Dec-21

50,000

5p

25,000

05-Jan-22

50,000

5p

23,500

09-Feb-22

50,000

5p

22,750

09-Mar-22

50,000

5p

22,750

31. Employee Benefit Trusts (EBT)

The WH Ireland EBT was established in October 1998 and the WH Ireland Group plc Employee Share Ownership Trust (ESOT) was established in October 2011, both for the purpose of holding and distributing shares in the Company for the benefit of the employees. All costs of the EBT and ESOT are borne by the Company or its subsidiary WH Ireland Limited.

Joint Ownership Arrangements (the 'JOE Agreements') are in place in relation to 400,000 shares between the trustees of the ESOT and a number of employees (the 'Employees'). Under the JOE Agreements, the option for the Employees to acquire the interest that the trustees of the ESOT has in the jointly owned shares, lapses when an employee is deemed to be a Bad Leaver. If an Employee ceases to be an employee of the Group, other than in the event of critical illness or death, the Employee is deemed to be a Bad Leaver.

The shares carry dividend and voting rights though these have been waived by all parties to the JOE Agreements.  Due to the consolidation of the ESOT into the Group accounts, these shares are shown in Treasury (note 30). Due to the nature of these arrangements, the options contained in the JOE Agreements are accounted for as share-based payments (note 32).

32. Share-based payments

The Group had two schemes for the granting of non-transferable options to employees during the reporting period; the approved Company Share Ownership Plan (CSOP) and a Save as You Earn Schemes (SAYE). In addition, options are held in the ESOT (note 30). SAYE matures in July 2025.

Company Share Ownership Plan (CSOP)

Under the terms of the Unapproved Options, options over the Company's shares may be granted on a discretionary basis to employees and consultants of the Group (including Directors) at a price to be agreed between the Company and the relevant option holder. Under the terms of the options granted, such options vest on the third anniversary of the award dates; are exercisable at the market price at the time the option was issued and are exercisable for ten years after the vesting date.

Movements in the number of share options outstanding that were issued post 7 November 2002 and their related weighted average exercise prices (WAEP) are as follows:


 31 March 2022

 

CSOP

ESOT

ESOT

2019 LTIP

2020 EMI Option Plan


Options

WAEP

Options

WAEP

Options

WAEP

Options

WAEP

Options

WAEP

Outstanding at beginning of year

127,002

64.69p

350,000

74.50p

50,000

92.50p

1,800,000

45.00p

4,330,719

40.43p

Granted

-

-

-

-

-

-

-

-

387,929

25.78p

Expired / forfeited

(91,500)

57.00p

-

-

-

-

-

-

(1,074,478)

45.60p

Exercised

-

-

-

-

-

-

-

-

-

-

Outstanding at end of year

35,502

84.50p

350,000

74.50p

50,000

92.50p

1,800,000

45.00p

3,644,170

37.34p

Exercisable at end of year

35,502

84.50p

350,000

74.50p

50,000

92.50p

-

-

-

-

WA Life*

  0.08 yrs

  1.50 yrs

4.01 yrs

8.03 yrs

10.26 yrs

* WA Life represents the weighted average contractual life in years to the expiry date for options outstanding at the end of the year.


 

 31 March 2021

 


CSOP

ESOT

ESOT

Unapproved Options

2020 EMI Option Plan



Options

WAEP

Options

WAEP

Options

WAEP

Options

WAEP

Options

WAEP

Outstanding at beginning of year


142,002

63.88p

650,000

40.12p

70,000

92.50p

1,800,000

46.00p

-

-

Granted


-

-

-


-

-

-

-

4,330,719

40.43p

Expired / forfeited


(15,000)

57.00p

(300,000)

0.00p

(20,000)

92.50p

-

-

-

-

Exercised


-

-

-

-

-

-

-

-

-

-

Outstanding at end of year


127,002

64.69p

350,000

74.50p

50,000

92.50p

1,800,000

45.00p

4,330,719

40.43p

Exercisable at end of year


127,002

64.69p

350,000

74.50p

50,000

92.50p

-

45.00p

-

40.43p

WA Life*


0.73 yrs

2.5 yrs

5.01 yrs

9.03 yrs

12.46 yrs

* WA Life represents the weighted average contractual life in years to the expiry date for options outstanding at the end of the year.

The pricing models used to value these options and their inputs are as follows:


Pricing Models

 

CSOP

ESOT

ESOT

2019 LTIP

2020 EMI Option Plan

Pricing model

Black Scholes

Monte Carlo

N/A

N/A

N/A

Date of grant

02/11/11-24/05/12

28/10/13-13/4/16

30/05/17

28/06/19 & 28/12/19

01/11/20 - 01/09/21

Share price at grant (p)

56.5-83.0

74.5-114.5

125

45.0 & 49.0

42.0-56.5

Exercise price (p)

57.0-84.5

0.0-114.5

-

45.0 & 49.0

0.0-58.0

Expected volatility (%)

32.6332-33.2130

43.0000-37.0000

N/A

50

50

Expected life (years)

5

5

3

3

1-3

Risk-free rate (%)

1.2993-.0.7999

0.8000-1.9300

N/A

2

5

Expected dividend yield (%)

-

0.67-2.19

N/A

N/A

N/A

 

33. Capital commitments

There were no capital commitments for the Group or the Company as at 31 March 2022 (FY21: £nil).

34. Related party transactions

Group

Services rendered to related parties were on the Group's normal trading terms in an arms' length transaction. Amounts outstanding are unsecured and will be settled in accordance with normal credit terms. No guarantees have been given or received. No provision (FY21: £nil) has been made for impaired receivables in respect of the amounts owed by related parties.

Key management personnel include Executive and Non-Executive Directors of WH Ireland Group plc and all its subsidiaries. They are able to undertake transactions in stocks and shares in the ordinary course of the Group's business, for their own account and are charged for this service, as with any other client. The transactions are not material to the Group in the context of its operations, but may result in cash balances on the Directors' client accounts owing to or from the Group at any one point in time. The charges made to these individuals and the cash balances owing from/due to them are disclosed in the table below. There are no other material contracts between the Group and the Directors.

No transactions occurred with key management personnel and other relates parties during the year ended 31 March 2022 or 31 March 2021.

The total compensation of key management personnel is shown below:


Year ended 31 March 2022

Year ended 31 March 2021

 

£'000

£'000

Short-term employee benefits

  3,784

  1,685

Post-employment benefits

15

  - 

Termination benefits

443

  - 

Share-based payment

  - 

  - 


  4,242

  1,685

 

The highest paid Director for 2022 was P Wale receiving emoluments of £468,325 (FY21: £354,831).

Company

The Parent Company receives interest from subsidiaries in the normal course of business. Total interest received during the year was £nil (FY21: £nil). In addition, the Parent Company received a management charge of £651k (FY21: £453k) from its subsidiary WH Ireland Limited. WH Ireland Limited also charged the Parent Company £nil (FY21: £nil) for broker services.

During the comparative year, the intercompany balances with Stockholm Investments Limited and Readycount Limited were converted into loans and then released through a deed of release.

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation. The captions in the primary statements of the Parent Company include amounts attributable to subsidiaries. These amounts have been disclosed in aggregate in the notes 17, 22 and 25 and in detail in the following table:


Amounts owed by related parties

Amounts owed to related parties


2022

2021

2022

2021


£'000

£'000

£'000

£'000

Readycount Limited

-

-

-

-

Stockholm Investments Limited

-

-

-

-

WH Ireland Limited

-

-

1,882

2,807

Harpsden Wealth Management Limited

-

-

295

-

WH Ireland Trustee Limited

-

-

17

17


-

-

2,194

2,824

The net amount owed to related parties is £2,194k (FY21: £2,824k owed by related parties) (see note 22 and 25).

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