Interim Results

W.H. Ireland Group PLC 29 July 2005 W.H. IRELAND GROUP plc ('W.H. Ireland' or 'the Group') Interim Results For the Six Months to 31 May 2005 The principal activity of W.H. Ireland is the provision of stockbroking, corporate finance, investment management and financial services to both private and institutional clients. It has a national network of offices including Manchester, London, Birmingham and Cardiff. Key Points * Turnover up by 35% to £11.0m (2004: £8.1m) * Operating profit increased by 41% to £1.5m (2004: £1.1m) * Pre-tax profit grew by 85% to £1.9m (2004: £1.0m) * Earnings per share up by 86% to 8.20p (2004: 4.41p) * Interim dividend of 1.25p per share (2004: 0.75p) * Excellent progress across core business areas - record first half for Corporate Finance, with 17 AIM flotations * Continued expansion of branch network - entry into Scotland and offices in Leicester and Stockport opened. Now operating from total of 13 locations. * Expansion of capacity in London * Controlling interest in Australian stockbroker, D. J. Carmichael Pty Ltd acquired in June. * Outlook positive Laurie Beevers, chief executive, commenting, said, 'I am delighted to report record results for the first half. All areas of the business made good progress. Corporate finance, in particular, enjoyed a strong first half, floating 17 companies on AIM and advising on a further seven secondary placing, to raise a total of £52m. We are particularly excited by our acquisition, in June, of a controlling interest in Australian stocking broking firm, D.J.Carmichael. The second half has started well and assuming stable market conditions, we look forward to making good progress over the remainder of the year.' Press enquiries: W.H. Ireland Group plc Tel: 020 7448 1000 (today) Laurie Beevers, chief executive Tel: 0161 832 6644 Mobile: 07903 164004 David Youngman, managing director Tel: 0161 832 6644 Mobile: 07900 887142 Biddicks Tel: 020 7448 1000 Zoe Biddick or Katie Tzouliadis Chairman's Statement I am pleased to report record results for the half year ended 31 May 2005. Group operating profit rose by 41% to £1.5m from £1.1m last year, an excellent performance. Pre-tax profits rose by 85% to £1.9m against £1.0m for the same period last year. The current year's figure includes a profit of £0.3m on the disposal of quoted investments. All areas of the business are developing well and, in particular, corporate finance, corporate broking and financial services have enjoyed a strong first half year. Reflecting the Group's strong performance over the period, the Board is increasing the interim dividend to 1.25p (2004: 0.75p) per share, to be paid on 28 October 2005 to shareholders on the register on 9 September 2005. Again, a scrip dividend alternative will be available. In this reporting period, our corporate finance offices in Manchester, Birmingham and London have floated 17 companies on AIM, including the first Ukrainian based trading company and have been responsible for a further seven secondary placings. These activities raised a total in excess of £52m for our corporate client companies which now total 60 compared with 39 last year. We are continuing to expand our stockbroking activities and, in the first half, opened our first office in Scotland, in Kilmarnock, as well as an office in Leicester. Since the period end, we have also acquired an office in Stockport. These openings have increased our representation in the UK to 13 locations. I am also pleased to report that we have now received planning permission for a major refurbishment of our head office in Manchester. In London, we have signed a lease on new premises in Martin Lane in the City, not far from our current office. The new London office provides us with significantly increased capacity and we expect to complete our relocation during August. On the international front, as well as being associated with a number of flotations of overseas companies, in June 2005 we reached agreement to acquire a controlling interest in the Australian stockbroking firm, D.J. Carmichael Pty Limited ('DJC'). DJC is one of the oldest established stockbrokers in Perth and we have worked together very successfully over a number of years. The merger brings together the considerable expertise of both companies in covering, amongst other things, resource-based investments, both in research and corporate finance and we believe that it will create considerable opportunities for both firms in the UK and Australia. We are continuing to look for opportunities to grow the business further, both organically and by acquisition. In order to facilitate this, the management team of our principal subsidiary, WH Ireland Limited, has been strengthened by the appointment of several key individuals. Most recently, we have appointed Chris Muir as managing director, who joined us from Brewin Dolphin Securities Ltd. where he was group operations director. I would like to welcome into the Group all new staff, both in the UK and Australia. The second half has begun well with the level of corporate finance activity remaining strong. By comparison, stockbroking has been quieter due in part to a general weakening of equity activity and in part reflecting seasonal norms. Assuming market conditions remain stable, we look forward to making good progress over the second half of the year. Sir David Trippier RD JP DL MSI Chairman W.H. IRELAND GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT for the six months ended 31 May 2005 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 31 May 30 November 2005 2004 2004 £'000 £'000 £'000 ------------------------------ -------- -------- --------- Group turnover 10,982 8,117 16,889 Administration expenses (9,446) (7,030) (14,951) ------------------------------ -------- -------- --------- Group operating profit 1,536 1,087 1,938 Share of operating profit/(loss) in associates 5 (36) 3 ------------------------------ -------- -------- --------- 1,541 1,051 1,941 Profit on disposal of fixed assets 330 - 359 Income from fixed asset investments 11 - 369 ------------------------------ -------- -------- --------- 1,882 1,051 2,669 Other interest receivable and similar income 274 139 354 Amounts written off investments - - 7 Interest payable and similar charges (248) (158) (406) ------------------------------ -------- -------- --------- Profit on ordinary activities before taxation 1,908 1,032 2,624 Tax on profit on ordinary activities (619) (344) (763) ------------------------------ -------- -------- --------- Profit on ordinary activities after taxation 1,289 688 1,861 Dividends on equity shares (200) (118) (668) ------------------------------ -------- -------- --------- Retained profit for the period for the Group 1,089 570 1,193 ------------------------------ -------- -------- --------- Earnings per share (in accordance with FRS 14) Basic 8.20p 4.41p 11.88p Diluted 7.37p 4.17p 11.18p ------------------------------ -------- -------- --------- Earnings per share (in accordance with guidelines issued by UK Society of Investment Professionals) Basic 7.29p 4.97p 10.72p Diluted 6.55p 4.71p 10.09p W.H. IRELAND GROUP PLC STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES for the six months ended 31 May 2005 Restated (note 11) Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 31 May 30 November 2005 2004 2004 ------------------------------ -------- -------- --------- £'000 £'000 £'000 ------------------------------ -------- -------- --------- Profit for the period 1,089 570 1,193 Unrealised surplus on revaluation of fixed asset investments (note 4) (The figure for 31 May 2004 includes a prior year adjustment of £179,380) 321 264 1,722 Non trading increase in net assets of associates - 43 43 Taxation on realised surplus on revaluation of fixed asset investments (244) - - ------------------------------ -------- -------- --------- Total recognised gain for the period 1,166 877 2,958 ------------------------------ -------- -------- --------- The restatement above for the six month period 31 May 2004 has no effect on the total recognised gains and losses for the year ended 30 November 2004. NOTE OF HISTORICAL COST PROFITS AND LOSSES for the six months ended 31 May 2005 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 31 May 30 November 2005 2004 2004 £'000 £'000 £'000 ------------------------------ -------- -------- --------- Reported profit on ordinary activities before taxation 1,908 1,032 2,624 Realisation of fixed asset investment revaluation gains 678 2 2 ------------------------------ -------- -------- --------- Historical cost profit on ordinary activities before taxation 2,586 1,034 2,626 ------------------------------ -------- -------- --------- Historical cost profit retained for the period after the provision for taxation and dividends 1,523 572 1,195 ------------------------------ -------- -------- --------- W.H. IRELAND GROUP PLC CONSOLIDATED BALANCE SHEET for the six months ended 31 May 2005 Restated (note 11) Unaudited Unaudited Audited 31 May 2005 31 May 2004 30 November 2004 ---------- ---------- ------------ £'000 £'000 £'000 £'000 £'000 £'000 ------------------- ------ ------- ------- ------ ------- ------- Fixed assets Intangible assets 2,963 3,141 3,052 Tangible assets 5,127 5,237 5,174 Investments 5,869 2,835 6,060 Investment in associates 443 415 485 ------------------- ------ ------- ------- ------ ------- ------- 14,402 11,628 14,771 Current assets Debtors 89,702 177,862 122,661 Investments 7 22 15 Cash at bank and in hand 10,479 6,931 10,884 ------------------- ------ ------- ------- ------ ------- ------- 100,188 184,815 133,560 Creditors due within one year (97,226) (182,904) (131,790) ------------------- ------ ------- ------- ------ ------- ------- Net current assets 2,962 1,911 1,770 ------------------- ------ ------- ------- ------ ------- ------- Total assets less current liabilities 17,364 13,539 16,541 Creditors due after one year (5,829) (4,996) (6,163) Provisions for liabilities and charges (228) (381) (264) ------------------- ------ ------- ------- ------ ------- ------- Net assets 11,307 8,162 10,114 ------------------- ------ ------- ------- ------ ------- ------- Capital and reserves Called up share capital 787 785 786 Shares to be issued - 142 - Share premium account 1,266 1,718 1,240 Capital redemption reserve 226 226 226 Merger reserve 491 - 491 Revaluation reserve 4,284 3,183 4,641 Other reserves 754 754 754 Retained profits 3,499 1,354 1,976 ------------------- ------ ------- ------- ------ ------- ------- Equity shareholders' funds 11,307 8,162 10,114 ------------------- ------ ------- ------- ------ ------- ------- Net assets per ordinary share 70.70p 51.97p 64.32p ------------------- ------ ------- ------- ------ ------- ------- W.H. IRELAND GROUP PLC CONSOLIDATED CASH FLOW STATEMENT for the six months ended 31 May 2005 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 31 May 30 November 2005 2004 2004 £'000 £'000 £'000 ------------------------------ -------- -------- --------- Net cash (outflow)/inflow from operating activities (927) 2,660 5,956 Returns on investments and servicing of finance 84 (18) 370 Taxation (71) 42 (116) Capital proceeds/(expenditure) and financial investment 1,135 (199) 426 Acquisitions and disposals - (139) (222) ------------------------------ -------- -------- --------- Cash inflow before management of liquid resources and financing 221 2,346 6,414 Equity dividends paid (523) (106) (211) Financing (110) (392) (403) ------------------------------ -------- -------- --------- Increase/(decrease) in cash in the period (412) 1,848 5,800 ------------------------------ -------- -------- --------- RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOW for six months ended 31 May 2005 Unaudited Unaudited Audited 6 months 6 months 12 months ended ended ended 31 May 31 May 30 November 2005 2004 2004 £'000 £'000 £'000 ------------------------------ -------- -------- --------- Operating profit 1,536 1,087 1,938 Less non cash transfer from revaluation reserve (note 4) (321) - (1,744) Less carried interest bonus set against profit on disposal (77) - - Depreciation 151 162 314 Amortisation 89 89 177 Profit on sale of fixed assets - (19) (389) (Increase)/decrease in debtors 32,965 (64,073) (8,859) Increase/(decrease) in creditors (35,278) 65,425 14,523 Decrease in current asset investments 8 (11) (4) ------------------------------ -------- -------- --------- (927) 2,660 5,956 ------------------------------ -------- -------- --------- W.H. IRELAND GROUP PLC ANALYSIS OF NET DEBT At beginning Other non At the end of the period Cash flow cash changes of the period £'000 £'000 £'000 £'000 ------------------------ -------- -------- -------- -------- Cash at bank and in hand 10,884 (405) - 10,479 Overdrafts (1) (7) - (8) ------------------------ -------- -------- -------- -------- 10,883 (412) - 10,471 Debt due within one year (281) 102 (113) (292) Debt due after one year (4,239) - 113 (4,126) Finance leases (32) 8 - (24) ------------------------ -------- -------- -------- -------- 6,331 (302) - 6,029 ------------------------ -------- -------- -------- -------- W.H. IRELAND GROUP PLC NOTES TO THE INTERIM STATEMENT 1. The interim report, which is the responsibility of the Directors and has not been audited, was approved by the Directors on 28 July 2005. 2. The figures for the six months ended 31 May 2005 have been prepared using the same accounting policies as for the year ended 30 November 2004. 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 30 November 2004 have been extracted from the audited accounts for that year. The comparative figures for the financial year ended 30 November 2004 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 Capital Share Share redemption Merger Revaluation Other Retained capital premium reserve reserve reserve reserve profits £'000 £'000 £'000 £'000 £'000 £'000 £'000 ------------ ------ ------- -------- ------ -------- ------ ------- At beginning of the period 786 1,240 226 491 4,641 754 1,976 Shares issued 1 26 - - - - - Adjustment on.investment revaluation (see below) - - - - 321 - - Transfer of realised gain - - - - (678) - 678 Tax on realised investment gain - - - - - - (244) Retained profit for the period - - - - - - 1,089 --------- ------- -------- -------- ------- -------- ------- -------- At end of the period 787 1,266 226 491 4,284 754 3,499 --------- ------- -------- -------- ------- -------- ------- -------- The adjustment on investment revaluation is after £320,466 has been credited directly to the profit and loss account and offset against the applicable bonus provision made under the carried interest scheme, as detailed in the 30 November 2004 audited accounts. 5. On 28 April 2005, 17,334 new ordinary shares of 5p each were issued at 156p per share in satisfaction of the scrip dividend alternative for the final dividend for the year ended 30 November 2004. 6. A final dividend for the year ended 30 November 2004 of 1.5p per share costing £235,848 and a special dividend for the year ended 30 November 2004 of 2.0p per share were paid on 28 April 2005. It is proposed that an interim dividend for the six months ending 31 May 2005 of 1.25p per share costing £199,892 be paid on 28 October 2005 to shareholders on the register on 9 September 2005. 7. 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 15,726,260 (six months to 31 May 2004: 15,623,268 and year ended 30 November 2004: 15,665,720). 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 1,778,656 (six months to 31 May 2004: 887,484 and year ended 30 November 2004: 974,352). The calculation done in accordance with the guidelines issued by the UK Society of Investment Professionals uses the profit on ordinary activities after tax adjusted for goodwill amortisation and the profit on sale of fixed assets. 8. The tax charged to the profit and loss account of £619,000 represents a tax charge of 32.44% (six months to 31 May 2004: £344,000 and 33.33% and year ended 30 November 2004; £763,000 and 29.08%). In addition, there is a tax charge transferred to reserves relating to tax payable on realised gains previously credited to the Revaluation Reserve of £245,585 (six months ended 31 May 2004: nil and year ended 30 November 2004: nil) 9. Creditors due within one year includes £303,334 (six months ended 31 May 2004: nil and year ended 30 November 2004: £299,284) relating to bonuses provided under the carried interest scheme, and creditors due after one year includes £1,663,752 (six months ended 31 May 2004: nil and year ended 30 November 2004: £1,483,927) relating to bonuses provided under the carried interest scheme. 10. Reference was made in previous years' annual report and financial statements to the Group's position concerning split capital investment trusts ('splits') and to the review into those being undertaken by the UK's financial regulator, The Financial Services Authority, which is ongoing. The group has continued to review its exposure to clients deriving from their holdings of splits and based on this review the Board has made a provision where cases have been referred to the Financial Ombudsman although the Company continues to robustly defend its position in such cases. The provision takes account of any potential claims that may be made against the compensation fund established by certain managers of splits. No Group company has ever been a manager to a split capital investment trust and therefore was not required to contribute to the compensation fund. 11.The 31 May 2004 comparative figures have been restated for the change of accounting policy during the financial year ended 30 November 2004 which resulted in fixed asset investments being valued at each year end only. Thus fixed asset investments at 31 May 2004 have been revalued to reflect their value at 30 November 2003, being the previous accounting year end. This has resulted in a reduction of £179,380 in the value of such investments. 12.On 30 June 2005 the Group acquired a 51% holding in a newly formed Australian subsidiary, WHI Australia Pty Limited, which was formed to acquire 100% of the Perth based stockbroking firm D.J. Carmichael Pty Limited, for a total consideration of A$2,110,250 cash and 250,852 new ordinary shares of 5p each in W H Ireland Group plc. W.H. IRELAND GROUP PLC 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 31 May 2005, 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 12. 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 31 May 2005. KPMG Audit plc Chartered Accountants Leeds 28 July 2005 This information is provided by RNS The company news service from the London Stock Exchange

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