Interim Results
W.H. Ireland Group PLC
05 August 2003
W.H. IRELAND GROUP PLC
INTERIM RESULTS
FOR THE SIX MONTHS TO 31 MAY 2003
Key Points
•Turnover up by 21% to £4.1 million (2002: £3.4 million)
•Operating loss down by 95% to £18,000 (2002: loss £387,000)
•Loss before tax down by 66% to £160,000 (2002: loss £469,000)
•Loss per share down by 62% to 1.09p (2002: loss 2.86p).
•Net Assets of £6.3 million equivalent to 42.14p per ordinary share
•Interim dividend of 0.5p per share (2002: 0.5p) with a scrip dividend
alternative
•Acquisition of Carr Sheppards Crosthwaite's Cardiff office on 4th August
2003
Chairman, Sir David Trippier, commented,
' I am very pleased to be able to report on significantly improved trading
figures for the half year period. During that time the uncertainty in the market
and the subsequent fall in volumes prior to the second major conflict with Iraq
led to difficult market conditions and it is a great credit to all involved in
the group that we have produced such an improved result. We have continued to
invest in our business, developing our branch offices and improving our
corporate finance capability.
Trading in the second half of the financial year has started well and it is to
be hoped that the current stock market stability will remain, in which case we
are well positioned for further progress. However, we remain a volume sensitive
business and the results for the next four months will depend on the market
remaining firm'.
Press enquiries:
W.H. Ireland Group plc Tel: 0161 832 6644
Laurie Beevers, chief executive
Richard Lee, director
Biddicks Tel: 020 7448 1000
Katie Tzouliadis
CHAIRMAN'S STATEMENT
I am very pleased to be able to report on significantly improved trading figures
for the half year period. During that time the uncertainty in the market and the
subsequent fall in volumes prior to the second major conflict with Iraq led to
difficult market conditions and it is a great credit to all involved in the
group that we have produced such an improved result. We have continued to invest
in our business, developing our branch offices and improving our corporate
finance capability.
The results for the period show that on turnover which increased from £3.4m to
£4.1m, our losses before tax declined from £410,000 to £160,000 - a significant
improvement, even more pleasing when compared with our losses in the second half
of last year of £1,142,000. Our operating loss was reduced to £18,000 from the
figure of £387,000 for the same period last year.
As referred to in my chairman's statement in the published annual accounts, in
December 2002 the corporate finance department concluded its largest transaction
since inception. Highland Gold became the second largest company on AIM
following its £210m admission and placing by W H Ireland Limited. This was a
complex cross BORDER='0' transaction of the third largest operating gold mine in
Russia where we acted alongside a number of City advisors to bring the flotation
to a successful completion. We continue to act as Nominated Adviser and Broker
to the company. After the period end we gained approval from the United Kingdom
Listing Authority to act as sponsor in all aspects of flotations, rights issues,
takeovers etc. for fully listed companies in the United Kingdom, again a credit
to our corporate finance team.
Our traditional stockbroking activity has continued to develop and we have
opened one new office in Tunbridge Wells and have continued to add to the team.
In Cardiff we have acquired the branch office of Carr Sheppards Crosthwaite and
added this to our existing office in Cardiff which now numbers 6 stockbrokers
and 3 support staff. We also have added stockbroking activities to our Corporate
Finance office in Birmingham. Our London office has also performed particularly
well in a difficult trading period. We have continued to re-adjust our overhead
base and add to our sales force. Although our overheads have risen during the
period, this expenditure includes redundancy and reorganisation costs and
certain special insurance costs where we took out additional insurance to cover
the level of corporate transactions we were completing.
Our associated investments have performed broadly as expected. Ultimate Finance,
the invoice finance company in which we have a 27% holding has made a loss in
line with budget for its start up period. Our holding in W.H.I. Securities Pty
Limited, our Australian associate, has reduced since the period end and in
future will be treated as an investment.
Trading in the second half of the financial year has started well and it is to
be hoped that the current stock market stability will remain, in which case we
are well positioned for further progress. However, we remain a volume sensitive
business and the results for the next four months will depend on the market
remaining firm. In view of the improving performance evidenced above, the Board
has decided to pay a dividend of 0.5p on 31st October 2003 to shareholders on
the register at 12th September 2003. We will again be offering a scrip dividend
alternative.
We believe strongly that over the longer term investment in the equity market,
coupled with sound investment advice will provide one of the best vehicles to
protect client assets for the future.
I would like to thank all my colleagues at W.H.Ireland for their hard work and
commitment during the past months.
Sir David Trippier, RD, JP, DL, MSI.
Chairman
Consolidated Profit and Loss Account
For the six months ended 31 May 2003
Unaudited Unaudited
6 months 6 months Audited
ended ended 12 months ended
31 May 2003 31 May 2002 30 Nov 2002
£'000 £'000 £'000
Group turnover 4,096 3,386 6,438
Administration expenses (4,114) (3,773) (7,497)
----------- ----------- -----------
Group operating loss (18) (387) (1,059)
Share of operating loss
in associates (81) (41) (143)
----------- ----------- -----------
Share of non trading
decrease in net assets
of associates - - (71)
----------- ----------- -----------
(99) (428) (1,273)
Other interest receivable
and similar income 81 66 141
Amounts written off
investments - - (153)
Interest payable and
similar charges (142) (107) (254)
----------- ----------- -----------
Loss on ordinary
activities before
taxation (160) (469) (1,539)
Tax on loss on ordinary
activities - 59 (13)
----------- ----------- -----------
Loss on ordinary
activities after
taxation (160) (410) (1,552)
Dividends on equity
shares (75) (72) (146)
----------- ----------- -----------
Retained loss for the
period for the group (235) (482) (1,698)
----------- ----------- -----------
Earnings per share - in accordance with FRS
14
- Basic (1.09)p (2.86)p (10.84)p
- Diluted (1.09)p (2.78)p (10.50)p
Earnings per share - in accordance with
guidelines issued by UK Society of
Investment Professionals
- Basic (0.74)p (2.50)p (10.12)p
- Diluted (0.74)p (2.43)p (9.81)p
Statement of Total Recognised Gains and Losses
Unaudited Unaudited Audited
6 months 6 months 12 months ended
ended ended 30 Nov 2002
31 May 2003 31 May 2002
£'000 £'000 £'000
Loss for the period (235) (482) (1,698)
Unrealised surplus on
revaluation of fixed
asset investments 175 746 (176)
Realised surplus on
revaluation of fixed
asset investments - 48 -
Taxation on realised
surplus on revaluation of
fixed asset investments - (10) -
Taxation refund on
previous year's realised
surplus on revaluation of
fixed asset investments - - 171
Foreign exchange
difference on the
carrying value of the
joint venture - 3 -
Non trading increase in
net assets of
associates - - 16
----------- ----------- -----------
Total recognised (loss)/
gain for the period (60) 305 (1,687)
----------- ----------- -----------
Note of Historical Cost Profits and Losses
Unaudited Unaudited
6 months 6 months Audited
ended ended 12 months ended
31 May 2003 31 May 2002 30 Nov 2002
£'000 £'000 £'000
Reported loss on ordinary
activities before
taxation (160) (469) (1,539)
----------- ----------- -----------
Realisation of fixed
asset investment
revaluation gains - 48 378
----------- ----------- -----------
Historical cost loss on
ordinary activities
before taxation (160) (421) (1,161)
----------- ----------- -----------
Historical cost loss
retained for the period
after the provision for
taxation and dividends (235) (441) (1,149)
----------- ----------- -----------
Consolidated Balance Sheet
As at 31 May 2003
Unaudited Unaudited Audited
31 May 2003 31 May 2002 30 Nov 2002
£'000 £'000 £'000
Fixed
assets
Intangible
assets 1,801 1,904 1,853
Tangible
assets 4,835 4,926 4,963
Investments 2,642 4,005 2,453
------- ------- -------
Investment in
associates
and joint
ventures 329 12 402
------- ------- -------
9,607 10,847 9,671
Current
assets
Debtors 35,817 26,769 28,794
Investments 7 15 18
Cash at bank
and in hand 3,079 4,362 3,005
------- ------- -------
38,903 31,146 31,817
Creditors due (37,215) (28,489) (30,009)
within one ------- ------- -------
year
Net current 1,688 2,657 1,808
assets ------- ------- -------
Total assets
less current
liabilities 11,295 13,504 11,479
Creditors due
after one
year (4,961) (5,148) (5,115)
------- ------- -------
Net assets 6,334 8,356 6,364
------- ------- -------
Capital &
reserves
Called up
share
capital 752 946 946
Shares to be
issued 283 425 425
Share premium
account 1,457 1,300 1,300
Capital
redemption 226 - -
reserve
Investment
revaluation 2,497 3,623 2,323
reserve
Other
reserves 754 544 544
Retained
profits 365 1,518 826
------- ------- -------
Equity
shareholders
funds 6,334 8,356 6,364
------- ------- -------
Net assets
per ordinary
share 42.14p 58.09p 44.24p
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
6 months 6 months 12 months ended
ended ended 30 Nov 2002
31 May 2003 31 May 2002
£'000 £'000 £'000
Net cash inflow/(outflow)
from operating
activities 172 (1,190) (1,885)
Returns on investments
and servicing of
finance (61) (35) (107)
Taxation 115 3 (169)
Capital expenditure and
financial investment (80) (4,207) (3,968)
Acquisitions and
disposals - - (550)
----------- ----------- -----------
Cash inflow/(outflow)
before management of
liquid resources and
financing 146 (5,429) (6,679)
Equity dividends paid (26) (144) (216)
Financing (46) 3,973 3,937
----------- ----------- -----------
Increase/(decrease) in
cash in the period 74 (1,600) (2,958)
----------- ----------- -----------
Reconciliation of operating profit to operating cash flow
Unaudited Unaudited Audited
6 months 6 months 12 months ended
ended ended 30 Nov 2002
31 May 2003 31 May 2002 £'000
£'000 £'000
Operating loss (18) (387) (1,059)
Depreciation 172 192 343
Amortisation 51 51 103
Profit on sale of fixed
assets (1) (7) (7)
(Increase)/decrease in
debtors (7,138) 18,551 16,663
Increase/(decrease) in
creditors 7,096 (19,597) (17,932)
Decrease in current asset
investments 10 7 4
----------- ----------- -----------
172 (1,190) (1,885)
----------- ----------- -----------
Analysis of net debt
At beginning of Cash flow At end of the
the period period
£'000 £'000 £'000
Cash at bank and in hand 3,005 74 3,079
Debt due within one year (176) (88) (264)
Debt due after one year (4,770) 135 (4,635)
Finance leases (44) (2) (46)
----------- ----------- -----------
(1,985) 119 (1,866)
----------- ----------- -----------
NOTES
1. The interim report, which is the responsibility of the directors and has
not been audited, was approved by the directors on 4th August 2003.
2. The figures for the six months ended 31st May 2003 have been prepared
using the same accounting policies as for the year ended 30th November 2002.
3. 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 30th November 2002 have been
extracted from the audited accounts for that year. The comparative figures
for the financial year ended 30th November 2002 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 237(2) or (3) of the Companies Act 1985.
4. Share premium and reserves
Revaluation Capital reserve Capital Share Profit and
reserve redemption Premium loss account
reserve account
£'000 £'000 £'000 £'000 £'000
At beginning
of period 2,322 545 - 1,300 826
Premium on
new shares
issued as
part
consideration
on
acquisition
of Stockholm
Investments - - - 122 -
Premium on
shares issued
in settlement
of scrip
dividend - - - 35 -
Increase in
value of
investments 175 - - - -
Transfer on
cancellation
of deferred
ordinary
shares - - 226 - (226)
Consolidation
adjustment on
redemption of
deferred
ordinary
shares - 209 - - -
--------- -------- --------- -------- --------
Retained loss
for the
period - - - - (235)
--------- -------- --------- -------- --------
2,497 754 226 1,457 365
--------- -------- --------- -------- --------
5. •On 31st December 2002 396,270 new ordinary shares of 5p each were issued at
a price of 35.75p per share in part consideration of the first tranche of
the deferred consideration due on the acquisition of Stockholm Investments
Limited. On 30th May 2003 249,943 new ordinary shares of 5p each were issued
in satisfaction of the scrip dividend alternative for the final dividend for
the year ended 30th November 2002. On 30th May 2003 4,526,660 deferred
ordinary shares of 5p each, being the total number of issued deferred
ordinary shares, were bought back at par and cancelled. Accordingly at the
same time an amount equal to the nominal value of the shares cancelled was
transferred from the Profit and Loss Account Reserve to a Capital Redemption
Reserve.
6 The company has adopted FRS19 'Deferred Tax' for the six months ended 31st
May 2003, but adopting this policy has no material effect on the comparative
figures for the six months ended 31st May 2002.
7. A final dividend for the year ended 30th November 2002 of 0.5p per share
costing £73,906 was paid on 30th May 2003. It is proposed that an interim
dividend for the year ending 30th November 2003 of 0.5p per share costing
£75,156 be paid on 31st October 2003 to shareholders on the register on 12th
September 2003.
8 The basic earnings per share for the period has been calculated by
dividing the profit on ordinary activities after taxation by the weighted
average number of shares in issue during the period being 14,625,082 (six
months to 31st May 2002, 14,319,506) and year ended 30th November 2002,
14,321,754). 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 nil (six months to 31st May 2002 448,058, and year
ended 30th November 2002 453,997).
9. In a number of instances Split Capital Investment Trusts ('Splits') have
either failed or performed poorly in the past two years. The UK's financial
regulator, The Financial Services Authority, is currently undertaking a
review of the Splits sector. There has also been speculation that legal
action may be brought against a range of parties involved in the sector. No
legal action has been served against any company in the group and in the
event that the group were to be included in any such proceedings this would
be robustly defended. A detailed review of the group's exposure to clients
deriving from their holdings in Splits has been undertaken. Based on this
review, the facts at the current time and the present progress of the
regulatory review, the board does not consider that any material provision
is required in respect of this issue.
INDEPENDENT REVIEW REPORT BY KPMG AUDIT PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31st May 2003, which comprises: the consolidated profit and
loss account; statement of total recognised gains and losses; note of historical
cost profits and losses; consolidated balance sheet; consolidated cash flow
statement; reconciliation of operating profit to operating cash flow; analysis
of net debt and notes 1 to 9. 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.
This report is made solely to the company in accordance with the terms of our
engagement. Our review has been undertaken so that we might state to the company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by company law we do not accept or
assume responsibility to anyone other than the company for our review work, for
this report, or for conclusions we have reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors.
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 31st May 2003.
KPMG Audit Plc
Chartered Accountants
Leeds
4th August 2003
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