Interim Results

W.H. Ireland Group PLC 29 August 2001 W.H. Ireland Group plc ('W.H. Ireland' or the 'Company') Proposed acquisition of Readycount Limited Interim Results for the six month period ended 31 May 2001 Proposed reorganisation of share capital and Notice of Extraordinary General Meeting 29 August 2001 KEY POINTS * Turnover of £3,780,000 (2000: £5,592,000) * Profit before tax of £390,000 (2000: £1,675,000) * Dividend of 1.0p (0.5p) * Fees and commissions earned on placing and broking up four-fold * Joint venture operation in Sydney, Australia performing satisfactorily - group now broker to four Australian companies * New office opened in Cardiff and London office transferred to larger premises. New office in Burnley to be opened in September, taking total of UK offices to nine * NOMAD status gained on 1 August which will assist in the development of corporate finance activities PART 1 Terms and definitions used in this announcement are set out in the circular sent to Shareholders of W.H. Ireland today. Introduction The Company announces today the terms of a proposed acquisition of the entire issued ordinary share capital of Readycount. Readycount was formed on 27 February 1996 to facilitate the acquisition of W.H. Ireland Limited from Davenham Group plc. The acquisition was completed in May 1996 and Readycount acquired 71.14 per cent. of the issued share capital of W.H. Ireland Limited. In July 2000, the Company acquired 100 per cent. of the issued share capital of W.H. Ireland Limited by way of a share for share exchange. Following this, and as a consequence of this acquisition, Readycount owned 35.71% of the Ordinary Shares then in issue. Following Initial Admission, Readycount held and continues to hold 32.43 per cent. of the Existing Ordinary Shares with the balance held by directors and employees of the Group and outside investors. Readycount is wholly owned by three shareholders, being the Chief Executive, the Chairman and the Managing Director of W.H. Ireland. Interim Results The Company today announced its interim results for the six months ended 31 May 2001. Profit before taxation for this period was £390,000 (2000: £1,675,000) on turnover of £3,780,000 (2000: £5,592,000). Basic earnings per share for the period were 1.96p (2000: 9.45p) and the Directors propose the payment of an interim dividend of 1p per share (2000: 0.5p) to those Shareholders on the register of members on 5 October 2001. It is proposed to pay such dividend on 26 October 2001. The full text of this announcement is set out later in Part 2 of this announcement. Background to and reasons for the Acquisition The fact that Readycount's shareholders consist of both executive and non executive directors of W.H. Ireland does not conform with the recommendations of the Combined Code on corporate governance which lays considerable emphasis on the importance of the non-executive directors being independent of the executive directors. The Directors believe that the current ownership structure of the Company could be perceived by certain potential investors as not conducive to creating a fully liquid market in its shares. This is in part due to the significant block holding of shares held by Readycount, which while not enabling it to fully control W.H. Ireland does enable Readycount to block special resolutions of W.H. Ireland, thereby limiting the latter's ability to undertake substantial transactions without the support of Readycount. The Directors consider that this could make W.H. Ireland less attractive as a potential investment to certain classes of investor in the market and could also lead to the need to obtain the backing of Readycount in the event of the need to obtain lines of finance at some point in the future. These issues could lead to differences arising in the future between Readycount and other Shareholders, which would not be in the best interest of Shareholders. Accordingly, the Independent Directors have considered various methods of dealing with this position available to the Company and believe the Acquisition is the most viable method. On the basis of advice received, the Independent Directors believe that, save for the associated cost to the Company of the Proposals (which are set out in Part 4 of the document sent to Shareholders today), the Proposals will have no significant effect on the Group's net asset value or earnings per share. Information on W.H. Ireland W.H. Ireland offers a comprehensive range of stockbroking services including discretionary portfolio management, advisory portfolio management and a professional intermediary service, together with advisory and execution only dealing services. It also provides a range of financial services and W.H. Ireland Limited currently acts as broker to 20 companies either listed on the London Stock Exchange or traded on AIM. The Group and its employees seek to provide a personal service tailored to the needs of each client. It has eschewed setting up an independent execution-only dealing service preferring instead to position itself as an advisory broker with a range of products and services to offer its clients. Information on Readycount Readycount was formed on 27 February 1996, to facilitate the purchase of W.H. Ireland Limited from Davenham Group plc. The acquisition was completed in May 1996 and Readycount acquired 71.14 per cent. of the issued share capital of W.H. Ireland Limited. In July 2000, the Company acquired 100 per cent. of the issued share capital of W.H. Ireland Limited by way of a share for share exchange. At the time of this acquisition, Readycount owned 35.71 per cent. of the Ordinary Shares then in issue. Following Initial Admission, Readycount held and continues to hold 32.43 per cent. of the Existing Ordinary Shares with the balance held by directors and employees of the Group and outside investors. Readycount is wholly owned by three shareholders, being the non-executive Chairman, the Chief Executive and the Managing Director of W.H. Ireland. The latest audited financial statements of Readycount are set out in Part 3 of the document sent to Shareholders today. Readycount's principal asset is the Readycount Holding. Prior to Initial Admission, it provided the services of the Readycount Shareholders to W.H. Ireland Limited in return for fees and commissions, but this arrangement terminated on Initial Admission. Since 31 December 2000, all of its listed investments (other than the Readycount Holding) have been disposed of. Terms of the Acquisition Under the Acquisition Agreement, the Company has conditionally agreed to acquire the entire issued share capital of Readycount from the Readycount Shareholders, to be satisfied by the issue of the New Ordinary Shares. The Acquisition is conditional upon the passing of the Resolutions and Admission. Further details of the Acquisition Agreement are set out in paragraph 4.2 of Part 4 of the document sent to Shareholders today. Reorganisation of share capital Readycount currently holds 4,526,660 Ordinary Shares and, as noted above, the Company is to issue 4,526,660 New Ordinary Shares to the Readycount Shareholders. In order that the interests of the other Shareholders in the Company's equity share capital are not adversely affected, the Readycount Holding is, with the agreement of Readycount, to be converted into 4,526,660 Deferred Shares. These Deferred Shares will have no voting or dividend rights and only limited rights on a return of capital. The rights and restrictions which are to attach to the Deferred Shares are set out in full in resolution 4 in the notice of the EGM at the end of the document sent to Shareholders today. The Readycount Holding will cease to be traded on AIM and no application will be made for the Deferred Shares to be traded on AIM. Dealing arrangements Application will be made for New Ordinary Shares to be admitted to trading on AIM. It is expected that trading in the New Ordinary Shares will commence on 25 September 2001. Extraordinary General Meeting A notice of an Extraordinary General Meeting to be held at 11.00am on 24 September 2001 is set out at the end of the document sent to Shareholders today. The following resolutions will be proposed: 1. to approve the Acquisition (to be proposed as an ordinary resolution); 2. to increase the Company's authorised share capital by £225,000, being 4,500,000 Ordinary Shares (which is approximately the number of the New Ordinary Shares being issued) (to be proposed as an ordinary resolution); 3. to authorise the Directors under section 80 of the Act to allot the authorised but unissued share capital of the Company (to be proposed as an ordinary resolution); 4. to convert the Readycount Holding into Deferred Shares and to make the appropriate alterations to the Company's articles of association (to be proposed as a special resolution); and 5. to disapply the pre-emption powers of section 89 of the Act for certain limited purposes (to be proposed as a special resolution). Recommendation The Independent Directors, who have been so advised by Altium Capital, consider the Proposals to be fair and reasonable so far as Shareholders are concerned. In providing advice to the Independent Directors, Altium Capital has taken into account the commercial assessments of the Independent Directors. Accordingly, the Independent Directors unanimously recommend you to vote in favour of the Resolutions to be proposed at the EGM, as they intend to do in respect of their own beneficial holdings amounting to in aggregate 3,806,020 Ordinary Shares, representing 27.26 per cent. of the Existing Ordinary Shares. Neither Readycount Limited in respect of the Readycount Holding nor any of the Readycount Shareholders in respect of their personal holdings of, in aggregate, 176,700 Ordinary Shares, nor their personal pension scheme in respect of it's holding of 275,000 Ordinary Shares (representing, in aggregate, 35.66 per cent. of the Existing Ordinary Shares) will exercise the votes attaching to such shares on the Resolutions. Enquiries: W.H. Ireland Group plc 0161 832 6644 Derek Ashford, Finance Director Biddicks 020 7448 1000 Katie Tzouliadis / Kathryn Burn PART 2 W.H. Ireland Group plc ('W.H. Ireland' or 'the Company') Interim Results of W.H. Ireland Group plc for the six months period ended 31 May 2001 and the proposed acquisition of Readycount Limited. W.H. Ireland, the financial services group, is pleased to announce its interim results for the six months ended 31 May 2001 and the proposed acquisition of Readycount Limited. Profit before taxation for the six months ended 31 May 2001 was £390,000 (2000: £1,675,000) on turnover of £3,780,000 (2000: £5,592,000). Basic earnings per share for the period were 1.96p (2000: 9.45p). The Directors propose the payment of an interim dividend of 1p per share (2000: 0.5p) to those shareholders on the register on 5 October 2001. All quoted or publicly traded securities, including the Company's investment in the London Stock Exchange plc, held as investments have been revalued in the Company's balance sheet at market value as at 31 May 2001. Accordingly, net assets per share, at that date, stood at 60.1p. I commented in my statement to shareholders at the Company's Annual General Meeting that trading conditions across the industry in the first quarter of our financial year had been difficult and that levels of activity in the immediate future were likely to remain lower than the corresponding period last year leading to significantly lower profitability in the core stockbroking activity in the first six months of the current year. This was, indeed, the case. However, I am pleased to report that we have continued to make good progress in a number of areas, most significantly in our corporate finance activities. A successful move to larger London premises was completed in March and discussions continued with regard to the recruitment of additional private client executives and the opening of further regional offices. Since the half-year end, we have opened a new branch in Cardiff to complement our existing office in Colwyn Bay. It is also planned, during September, to open a further office in Burnley which will bring the total number of UK offices to nine. Funds under management in Personal Equity Plans and Individual Savings Accounts stood at £68.4m at the end of the period, an increase of more than 5 per cent. at the same point in the previous year despite lower market levels. The establishment of a financial services team in May should lead to increasing fee income in this area. In the period under review, corporate broking and placing fees increased by nearly four-fold and accounted for almost 20 per cent. of turnover. W. H. Ireland Limited ('WHI') was involved in six transactions during the period, culminating in acting as broker to AuIron Energy Limited in its £20m Rights Offer. In July, WHI completed a £3.9m fundraising for Virotec International Limited, an Australian environmental company, quoted on the Australian Stock Exchange, which markets and distributes a green technology which neutralises acid and extracts heavy metals from toxic water, on its admission to AIM. It is now broker to four Australian companies and is in discussions with several companies who are actively seeking an AIM quotation. On 1 August, we announced that WHI had been appointed to the Register of Nominated Advisers of the Alternative Investment Market of the London Stock Exchange ('AIM'), being only the second addition to the Register this year and one of only a handful of Nominated Advisers based outside London. The firm currently acts as broker to 20 companies either quoted on the Official List of the UK Listing Authority or trading on AIM. Nominated Adviser status will enable WHI to capitalise on its network of corporate connections, both in the UK and overseas. In particular, we are looking to maximise the potential of our relationships in Australia through our joint venture based in Sydney. WHI is currently looking to be appointed as nominated adviser to a number of companies both in the UK and Australia. WHI has conditionally agreed to acquire Readycount Limited, a company formed to facilitate the purchase, in May 1996, of the 71.14 per cent. holding of Davenham Group plc in WHI. Following the acquisition by the Company of WHI in July 2000, Readycount owned 35.71 per cent. of the ordinary shares then in issue. Readycount is wholly owned by myself, Laurie Beevers and David Youngman who are also Non-Executive Chairman, Chief Executive and Managing Director, respectively, of WHI. The acquisition is subject to the approval of shareholders at an extraordinary general meeting. Further details of which are set out in a circular being posted to shareholders today. With lower volumes pertaining in the stock market it is difficult to predict future trading patterns and consequently the group's performance. I am, however, pleased with the strategic developments which are taking place in the group that I am sure will lead to a stronger group in the longer term. I would like to thank all my colleagues and staff for their contribution and loyalty throughout the period. Sir David Trippier Non-executive Chairman 29 August 2001 W.H. IRELAND GROUP plc INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED 31 MAY 2001 PROFIT & LOSS ACCOUNT Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 2001 31 May 2000 30 November 2000 £,000 £,000 £,000 Turnover 3,780 5,592 9,561 Commissions payable and settlement (584) (1,326) (2,199) fees Administration expenses (2,874) (2,467) (4,893) ---------- ---------- ---------- Operating profit before bonuses 322 1,799 2,469 Bonuses (145) (320) (651) ---------- ---------- ---------- Operating Profit 177 1,479 1,818 Interest receivable 260 234 538 Interest payable (47) (38) (117) ---------- ---------- ---------- Profit on ordinary activities before 390 1,675 2,239 taxation Taxation (119) (503) (683) ---------- ---------- ---------- Profit on ordinary activities after 271 1,172 1,556 taxation Dividend proposed and paid (140) (62) (248) ---------- ---------- ---------- Retained Profit 131 1,110 1,308 ---------- ---------- ---------- Earnings per share (unaudited) - Basic 1.96p 9.45p 12.59p - Diluted 1.87p 9.45p 11.90p Dividends per share 1.0p 0.5p 1.83p BALANCE SHEET Unaudited Unaudited Audited 31 May 2001 31 May 2000 30 November 2000 Restated Restated (Unaudited) £,000 £,000 £,000 Fixed Assets Intangible Assets 435 456 448 Tangible Assets 788 478 626 Investments 3,880 85 2,767 Investment in Joint Venture 58 - 58 ---------- ---------- ---------- 5,161 1,019 3,899 ---------- ---------- ---------- Current Assets Debtors 53,409 68,740 41,361 Investments 45 120 50 Cash at bank and in hand 5,553 3,009 6,523 ---------- ---------- ---------- 59,007 71,869 47,934 Creditors due within one year (54,722) (68,607) (43,570) ---------- ---------- ---------- Net Current Assets 4,285 3,262 4,364 ---------- ---------- ---------- Creditors due after one year (1,060) (1,034) (1,060) ---------- ---------- ---------- 8,386 3,247 7,203 ---------- ---------- ---------- Share Capital 698 620 698 Share Premium Account 1,056 657 1,056 Other Reserves 753 - 753 Revaluation Reserve 3,580 - 2,528 Retained Profits 2,299 1,970 2,168 ---------- ---------- ---------- 8,386 3,247 7,203 ---------- ---------- ---------- Net assets per share 60.07p 26.18p 51.60p SUMMARISED CASH FLOW STATEMENT Unaudited Unaudited Audited 6 months 6 months ended 31 12 months ended May 2000 ended 31 May 30 November 2001 2000 £'000 £'000 £'000 Cash flow from operating activities (325) 2,192 3,402 Returns on investments and servicing of finance 226 196 424 Taxation paid (370) - (215) Capital expenditure and financial (303) (462) (428) investment Equity dividends paid (186) (62) (62) Financing (12) 861 1,793 ---------- ---------- ---------- (Decrease)/Increase in cash (970) 2,725 4,914 ---------- ---------- ---------- STATEMENT OF RECOGNISED GAINS AND LOSSES Unaudited Unaudited Audited 6 months 6 months ended 12 months ended 31 May 2000 ended 31 May 2001 Restated 30 November 2000 Restated (Unaudited) £'000 £'000 £'000 Profit for the year 131 1,110 1,308 Unrealised gains on Investments 1,052 - 2,528 ---------- ---------- ---------- 1,183 1,110 3,836 ---------- ---------- ---------- NOTES 1) The interim report, which is the responsibility of the directors and has not been audited, was approved by the directors on 28 August 2001. 2) The figures for the six months ended 31 May 2001 have been prepared using the same accounting policies as for the year ended 30 November 2000 and the six months ended 31 May 2000 except for a change in the reporting of Fixed Asset Investments. Previously these were stated at historic cost, but now all quoted or publicly traded securities are stated at market value, but where there is no available quote for a particular investment, it is stated at historic cost. The comparable figures for 30 November 2000 and 31 May 2000 have been restated to reflect the position as if this accounting policy had been consistent throughout the period and as such are unaudited in their new form. This has resulted in an increase in reported net assets of nil for the six month period ended 31 May 2000, and £2.528 million for the year ended 30 November 2000. 3) The Company has no current plans to sell any of its Fixed Asset Investments, but should they be sold at the re-valued amount included in the Balance Sheet at 31 May 2001, tax of approximately £1,074,000 would be payable. 4) These unaudited interim financial statements do not constitute statutory accounts. They have however, been reviewed by the auditors whose report is included. The figures for the year ended 30 November 2000 have been extracted from the audited accounts for that year except for the restatement of Fixed Asset Investments outlined above. The comparative figures for the financial year ended 30 November 2000 are not the company's statutory accounts for that year. Those accounts have been reported on by the company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section S237(2) or (3) of the Companies Act 1985. 5) A final dividend for the year ended 30 November 2000 of 1.33p per share costing £185,667 was paid on 26 April 2001. It is proposed that an interim dividend for the year ending 30 November 2001 of 1p per share costing £139,599 be paid on 26 October 2001 to shareholders on the register on 5 October 2001. 6) The basic earnings per share has been calculated by dividing the profit on ordinary activities after taxation for the period by the weighted average number of shares in issue during the period 13,833,961 (six months to 31 May 2000: 12,402,250, and year ended 31 November 2000: 12,353,376). Diluted earnings per share is the basic earnings per share adjusted for the effect of the conversion into fully paid shares of the weighted average number of all share options and warrants outstanding during the year. The additional weighted average number of shares used for the diluted calculation is 697,643 (six months to 31 May 2000: nil, and year ended 30 November 2000: 722,674). INDEPENDENT REVIEW REPORT BY KPMG AUDIT PLC Introduction We have been instructed by W.H. Ireland Group plc (the 'Company') to review the financial information which comprises Profit and Loss Account, Balance Sheet, Summarised Cash Flow Statement, Statement of Recognised Gains and Losses and Notes 1 to 6 and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors of the Company. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999 /4: Review of interim financial information issued by the Auditing Practices Board. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review, we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 May 2001. KPMG Audit Plc Chartered Accountants Registered Auditor Date: 29 August 2001

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