Preliminary Results

W.H. Ireland Group PLC 20 February 2006 WH IRELAND GROUP plc ('WH Ireland' or 'the Group') PRELIMINARY RESULTS FOR THE YEAR TO 30 NOVEMBER 2005 The principal activity of WH Ireland is the provision of stockbroking, corporate finance, investment management and financial services to both private and institutional clients. The firm has a national network of offices including Manchester, London, Birmingham and Cardiff. Key Points * Pre-tax profit increased by 22% to a record £3.2m (2004: £2.6m) * Turnover up by 36% to £23.0m (2004: £16.9m) * Net assets (before minority interests) increased by 26% to £12.8m (2004: £10.1m)representing approximately 80p per share (2004: 64p) * Proposed final dividend of 2.5p per share giving a total of 3.75p for the year (2004: 2.25p), an increase of 67% * Strong progress across all four core business areas: - Investment management - stockbroking funds under management up 34% to £390m (2004: £291m) - Corporate finance - advised on 40 corporate transactions (2004: 29) - IFA business - making excellent progress - Stockbroking - commission up by 23% * Acquisition of WHI Australia Pty Limited * Post year end acquisition of TD Waterhouse's institutional team based in Leeds * Continued expansion of London office * Outlook remains encouraging Laurie Beevers, chief executive, commenting, said, 'The new year has started well with four corporate transactions early in the year and we look forward to a successful outcome for the year as a whole. It is our intention to continue to build the business both organically and by selective acquisition including the addition of further client advisers to increase our market share and support our profitability.' Press enquiries: WH 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 Richard Lee Tel: 0161 832 6644 Biddicks Tel: 020 7448 1000 Zoe Biddick or Katie Tzouliadis Chairman's Statement I am pleased to report to you that 2005 was another year of significant progress for the Group on all fronts. Turnover increased by 36% to a record £23.0m whilst pre-tax profit of £3.2m also reached a record high. The increase of 22% is the third successive year for which we have recorded a substantial increase in pre-tax profit. Our stockbroking funds under discretionary and advisory management have increased by 34% to £390m from £291m last year, on top of which our financial services subsidiary now advises on over £125m of clients assets, and in Australia DJ Carmichael now has £22m under management. In addition we have a further £420m of assets within our nominee accounts and DJ Carmichael has £212m under its nominee control, meaning that the Group has over £1.1bn in total of assets under its management or control. Following our continued strong performance, we intend to propose a further increase in our normal final dividend of 66.7% to 2.5p, making a total of 3.75p for the year as a whole. The final dividend will be paid on 28 April 2006 to shareholders on the register at the close of business on 10 March 2006. Once again, a scrip dividend alternative will be available. We have taken significant steps to strengthen our market position and client services with the appointment of senior executives in both sales and administration functions to ensure the Group has a stable platform on which to develop in the future. I am particularly pleased to welcome Chris Muir who joined us as Managing Director of WH Ireland Ltd in September 2005. In August 2005, as planned, our team in London moved to new offices in Martin Lane in the City. In these offices we now employ 31 people, most of whom are front office staff. As well as providing an excellent working environment for our broking and corporate finance teams, our new London offices provide us with room for further expansion and enhanced facilities for our clients. We are currently in the advanced stages of implementing a new proven stockbroking computer system which will give us access to the latest technology for both our front and back office administration. During the year the private client broking side continued to perform well and we opened further private client offices in Leicester and Stockport where experienced client advisers have joined us. In addition, we have opened our first Scottish office in Kilmarnock. Following the period end in January, we also opened an office in Leeds when we acquired the institutional team of TD Waterhouse. It is our intention to develop the Leeds office into a full service office, including corporate finance and private client broking, to serve the area to the east of the Pennines. We welcome the staff of these offices to the Group, and we anticipate that, in particular, the latter two offices will play a significant part in increasing our institutional research coverage. As we reported in our interim statement in June 2005, we acquired a 51% interest, along with further share options over the remaining shares, in WHI Australia Pty Limited, which owns 100% of DJ Carmichael Pty Limited ('DJC'). DJC is one of the oldest established stockbroking firms in Perth, Western Australia. This investment is performing well and we welcome our many friends in that firm to the Group. This merger brings together considerable expertise in corporate finance and resource stocks as well as general stockbroking and complements our existing expertise in those areas. In corporate finance we have once again had a successful year, completing 25 AIM admissions, 13 secondary fundraisings and 2 other transactions in the period, raising in excess of £80m for clients. We now have a total of 70 retained corporate clients who are serviced by 14 corporate finance personnel supported by corporate broking and research. We are pleased that our new clients come from a spread of industrial and service sectors as well as mining and resources. We have introduced a number of overseas companies to AIM and continue to work with the London Stock Exchange to promote this highly successful market. I am particularly pleased to see the growth achieved by AIM as I was a member of the committee of the London Stock Exchange which established the market some 10 years ago. Our investments continue to grow. In particular, Ultimate Finance, where we have a 23% shareholding, has reported its maiden profit and is trading very successfully in the asset finance market. During the year we sold 300,000 shares in the London Stock Exchange and at the year end still held 314,285. We also hold warrants and options in several client companies on whose flotations we have advised. In July 2005 we acquired a 20% interest in Acceleris Corporate Ventures Limited, a private equity house, increasing by a further 2.5% after the year end on the exercise of an option. Our IFA subsidiary, WH Ireland (Financial Services) Limited, with offices currently in Manchester and Cardiff, has had another excellent year. It provides a significant addition to our client service offering. As the Group has expanded we have considered it important that the composition of the main Board should reflect its growing responsibilities. With this in mind, I am pleased to welcome Mike Frame who is a chartered accountant and is the Group Compliance Officer to the position of Group Company Secretary. In the financial services industry it is sometimes the client advisers and corporate financiers who get the plaudits, but their success depends crucially on the back up they receive from accountancy, compliance and indeed all administration personnel. This is a people business and our staff numbers in the UK have now grown to over 190. I would like to thank each and every one of them for their contribution to the development of the firm at every level. Their hard work and enthusiasm in a changing environment have collectively achieved these impressive results. Sir David Trippier RD JP DL Non-executive Chairman WH Ireland Group plc Consolidated profit and loss account for the year ended 30 November 2005 Year ended Year ended 30 November 30 November 2005 2004 Note £ £ ---------------------- ----- -------- ----------- -------- ----------- Group turnover Continuing operations 20,960,555 16,889,225 Acquisitions 2,046,692 - ----------- ----------- 23,007,247 16,889,225 Administrative expenses (20,562,231) (14,951,179) ---------------------- ----- -------- ----------- -------- ----------- Group operating profit Continuing operations 2,355,624 1,938,046 Acquisitions 89,392 - ----------- ----------- 2,445,016 1,938,046 Share of operating profit before tax in associates 67,675 2,919 ---------------------- ----- -------- ----------- -------- ----------- 2,512,691 1,940,965 Profit on disposal of fixed asset investments 2 653,993 359,057 Income from fixed asset investments 3 47,109 368,704 ---------------------- ----- -------- ----------- -------- ----------- 3,213,793 2,668,726 Other interest receivable and similar income 494,059 354,367 Amounts (written off)/ written back on investments (34,224) 6,730 Interest payable and similar charges (473,579) (405,680) ---------------------- ----- -------- ---------- -------- ----------- Profit on ordinary activities before taxation 3,200,049 2,624,143 Tax on profit on ordinary activities (1,043,694) (763,273) ---------------------- ----- -------- ---------- -------- ---------- Profit on ordinary activities after taxation 2,156,355 1,860,870 Minority Interest (20,806) - ---------------------- ----- -------- ----------- -------- ----------- Profit for the financial year 2,135,549 1,860,870 Dividends 4 (600,302) (668,095) ---------------------- ----- -------- ----------- -------- ----------- Retained profit for the year 1,535,247 1,192,775 ---------------------- ----- -------- ----------- -------- ----------- Earnings per share (in accordance with FRS 14) Basic 5 13.48p 11.88p Diluted 5 12.13p 11.18p ---------------------- ----- -------- ----------- -------- ----------- All turnover and results in the current and previous year relate to continuing operations. WH Ireland Group plc Consolidated statement of total recognised gains and losses For the year ended November 2005 Year ended Year ended 30 November 30 November 2005 2004 £ £ --------------------------- ------- ---------- ----------- Profit for the financial year 2,135,549 1,860,870 Unrealised surplus on revaluation of fixed asset investments 1,083,223 1,722,124 Unrealised gain on revaluation of properties 76,805 - Taxation on current year's realised surplus on revaluation of fixed assets (426,734) - revaluation of fixed assets Currency translation differences 23,724 - Non trading increase in net assets of associate arising from external subscriptions - 43,081 ------------------------------- ------- -------- -------- Total recognised gain for the year 2,892,567 3,626,075 ------------------------------- ------- -------- -------- Note of historical cost profits and losses for the period ended 30 November 2005 Year ended Year ended 30 November 30 November 2005 2004 £ £ ------------------------------- -------- -------- Reported profit on ordinary activities before tax 3,200,049 2,624,143 Realisation of fixed asset investment revaluation gains 1,422,445 1,915 ------------------------------- -------- -------- Historical cost profit on ordinary activities before taxation 4,622,494 2,626,058 ------------------------------- -------- -------- Historical cost profit retained for the year after the provisions for taxation, dividends and Minority Interest 2,530,958 1,194,690 ------------------------------- -------- -------- WH Ireland Group plc Consolidated balance sheet As at 30 November 2005 2005 2005 2004 2004 Note £ £ £ £ ---------------------------- ----- --------- -------- -------- -------- Fixed assets Intangible assets 3,319,466 3,052,104 Tangible assets 5,685,833 5,173,591 Investments - Fixed asset investments 6 6,181,536 6,060,443 - Investments in associates 765,942 484,512 --------- -------- 6,947,478 6,544,955 ---------------------------- ----- --------- -------- -------- -------- 15,952,777 14,770,650 Current assets Debtors 69,730,570 122,661,229 Investments 14,702 15,191 Cash at bank and in hand 7,362,131 10,883,582 ---------------------------- ----- --------- -------- -------- -------- 77,107,403 133,560,002 ---------------------------- ----- --------- -------- -------- -------- Creditors: amounts falling 7 due within one year (72,774,259) (131,789,786) ---------------------------- ----- --------- -------- --------- -------- Net current assets 4,333,144 1,770,216 ---------------------------- ----- --------- -------- --------- -------- Total assets less current liabilities 20,285,921 16,540,866 Creditors: amounts falling due after more than one year 8 (6,177,135) (6,162,692) Provisions for liabilities and charges (115,608) (264,118) --------------------------- ----- --------- -------- --------- -------- Net assets 13,993,178 10,114,056 --------------------------- ----- --------- -------- --------- -------- Capital and reserves Called up share capital 800,820 786,161 Share premium account 1,604,644 1,239,687 Capital redemption reserve 226,333 226,333 Merger reserve 490,511 490,511 Other reserves 753,704 753,704 Revaluation reserve 4,378,655 4,641,072 Profit and loss account 4,531,270 1,976,588 --------------------------- ----- --------- -------- --------- -------- Equity shareholders' funds 12,785,937 10,114,056 Minority Interest (all 1,207,241 - equity) --------------------------- ----- --------- -------- --------- -------- Total Capital Employed 13,993,178 10,114,056 --------------------------- ----- --------- -------- --------- -------- WH Ireland Group plc Consolidated cash flow statement for the year ended 30 November 2005 Year ended Year ended 30 November 30 November 2005 2004 £ £ ---------------------------------------- ------ ----------- ---------- Net cash (outflow)/inflow from operating activities (3,465,512) 5,955,730 Returns on investments and servicing of finance 169,915 370,222 Taxation (1,583,066) (116,161) Capital expenditure and financial investment 1,977,037 426,385 Acquisitions and disposals 327,710 (222,471) Equity dividends paid (691,679) (211,104) ---------------------------------------- ------ ----------- ---------- Cash (outflow)/inflow before financing (3,265,595) 6,202,601 Financing (276,400) (402,849) ---------------------------------------- ------ ----------- ---------- (Decrease)/increase in cash in the year (3,541,995) 5,799,752 ---------------------------------------- ------ ----------- ---------- WH Ireland Group plc Reconciliation of movement in equity shareholders' funds for the year ended 30 November 2005 Group Group 2005 2004 £ £ ---------------------------------------------------- ---------- ----------- Profit for the financial year before dividends 2,135,549 1,860,870 Dividends (600,302) (668,095) ---------------------------------------------------- ---------- ----------- Profit for the financial year 1,535,247 1,192,775 Surplus/(deficit) on investment revaluation reserve 1,083,223 1,722,124 Surplus on property revaluation reserve 76,805 - Tax in respect of current year realised surplus on revaluation (426,734) - Non trading increase in net assets of associates - 43,081 Shares issued in payment of scrip dividends in the year 58,525 24,244 Shares issued on acquisition of subsidiary undertaking 321,091 - New shares issued - 19,176 Shares issued in payment of deferred consideration - 141,667 Transfer from shares to be issued - (141,667) Payment in settlement of shares to be issued - (141,666) Exchange rate adjustments 23,724 - --------------------------------------------------- -------- -------- Increase in shareholders funds during the year 2,671,881 2,859,734 Opening equity shareholders' funds 10,114,056 7,254,322 --------------------------------------------------- -------- -------- Closing equity shareholders' funds 12,785,937 10,114,056 --------------------------------------------------- -------- -------- WH Ireland Group plc Notes to the preliminary statement for the year ended 30 November 2005 1. Basis of accounting for the carried interest scheme During the year the Company maintained a carried interest bonus scheme under which bonuses may be payable to certain corporate finance personnel when certain warrants or shares acquired as part of a corporate finance transaction are ultimately sold at a profit. Details of this scheme are given in the remuneration report. The relevant warrants and shares are included within fixed asset investments and are revalued at the year end reporting date and a bonus is provided on 50% of the expected profit should the warrants or shares be sold at that revalued amount, being the maximum amount of bonus that may be paid out. The amount of the bonus provision relating to warrants where the expiry date is less than one year is shown in creditors under one year, and the balance is shown in creditors over one year. At the 30 November 2005 revaluation the relevant warrants had an additional revaluation gain of £1,066,883 and the shares a revaluation loss of £54,090 and accordingly a bonus of £533,442 would need to be provided on the warrant revaluation gains and a write back of bonus provisions of £27,045 on the revaluation losses on shares. Under the specific requirements of the Companies Acts and relevant Financial Reporting Standards the full amount of the revaluation gain would be taken through the statement of total recognised gains and losses to the revaluation reserve in the balance sheet whilst the provision for the bonuses would be taken to the profit and loss account. The Directors do not consider that adopting this accounting treatment truly matches the bonus expense against the relevant gain and thus does not show a true and fair view of the reasoning and substance behind the relevant accounting entries. In order to show a true and fair view of the carried interest scheme the Directors have departed from the prescribed accounting treatment and have credited a sufficient amount of the gain to the profit and loss account to match the relevant bonus provision, as a credit within administrative expenses where the related bonus is charged. The effect of this is to avoid a reduction in profits of £506,397 should the bonus alone be reported in the profit and loss account. During the current year certain warrants within the carried interest scheme were exercised and the shares acquired therefrom were sold resulting in a profit being credited to the profit and loss account of £326,946 and a bonus being charged of £163,473 was paid out from that profit. Under the specific requirements of the Companies Acts and relevant Financial Reporting Standards the profit on sale of the shares should be disclosed below the operating profit line under the heading profit on disposal of fixed assets and the bonus should be included in staff costs above the operating profit line. The Directors do not believe that this accounting treatment properly reflects the matching of the bonus and the specific gain it is paid out from, nor with the presentation of equivalent revaluations within operating profit (see paragraph above). Accordingly the Directors have departed from these accounting requirements and have taken a sufficient amount of the gain as matches the bonus paid and have reported this above the operating profit line as a credit to administration expenses. This treatment has no effect on the reported profits before tax for the year, but it moves a realised gain of £163,473 from below to above the operating profit line. 2. Profit on disposal of fixed asset investments Year ended Year ended 30 November 30 November 2005 2004 £ £ ------------------------------------ -------- -------- Gross profit on disposal of fixed asset investments 817,466 718,123 Amount taken to administration expenses to offset against the bonus payment thereon (see note 1) (163,473) (359,066) ------------------------------------ -------- -------- Net profit on disposal of fixed asset investments 653,993 359,057 ------------------------------------ -------- -------- 3. Income from fixed asset investments Year ended Year ended 30 November 30 November 2005 2004 £ £ ----------------------------------- -------- -------- Quoted investments 31,839 359,151 Unquoted investments 15,270 9,553 ----------------------------------- -------- -------- 47,109 368,704 ----------------------------------- -------- -------- Income from quoted investments in 2004 includes an exceptional item of a special dividend of £330,000 received on our holding of shares in the London Stock Exchange. 4. Dividends Year ended Year ended 30 November 30 November 2005 2004 £ £ -------------------------------------------------- -------- -------- Equity shares: Interim dividend paid at 1.25p per share (2004:0.75p) 199,892 117,783 Final dividend proposed at 2.5p per share (2004: 1.50p) 400,410 235,848 Special final dividend proposed at nil per share (2004: 2.0p) - 314,464 -------------------------------------------------- -------- -------- 600,302 668,095 -------------------------------------------------- -------- -------- The final proposed dividend is provided on the number of shares in issue at the date of the signing of the accounts. 5. Earnings per share Year ended Year ended 30 November 30 November 2005 2004 £ £ ------------------------------------------------ -------- -------- Profit for the year used for the basic calculation 2,135,549 1,860,870 ------------------------------------------------ -------- -------- Weighted average number of shares used in the basic calculation 15,840,949 15,665,720 Weighted average number of options outstanding for the period 1,764,713 974,352 ------------------------------------------------ -------- -------- Weighted average number of shares used in the diluted calculations 17,605,662 16,640,072 ------------------------------------------------ -------- -------- 6. Fixed asset investments Unquoted Quoted investments Warrants investments Total Group (excluding investments in associates) £ £ £ £ ------------------------ -------- -------- -------- ------- Cost or valuation At beginning of year 85,819 2,763,582 3,211,042 6,060,443 Additions - 548,039 543,794 1,091,833 On acquisition of subsidiary 2,111 - - 2,111 Reclassification of previously unquoted to quoted investment (15) - 15 - Revaluation adjustment - 1,051,883 537,740 1,589,623 Exchange rate adjustments 4 - - 4 Diminution in value - - (34,224) (34,224) Disposals (12,851) (1,452,397) (1,063,006)(2,528,254) ------------------------ -------- -------- -------- -------- At end of year 75,068 2,911,107 3,195,361 6,181,536 ------------------------ -------- -------- -------- -------- The historical cost value of the above quoted investments at the year end was £748,140 (2004: £287,743). The potential tax charge arising if the above quoted investments were sold at their market value is £714,735 (2004: £874,190). In the consolidated financial statements, the interests in the associated undertakings are accounted for using the equity method. 7. Creditors: amounts falling due within one year Group Group 2005 2004 £ £ -------------------------------------------------- -------- -------- Bank overdraft - 703 Bank loans 292,365 280,935 Trade creditors 67,159,024 127,198,502 Amounts owed to Group undertakings - - UK corporation tax payable 839,136 910,576 Taxation and social security 609,358 461,954 Obligation under finance leases and hire purchase contracts 6,982 21,543 Deferred purchase consideration 461,560 161,560 Other creditors 177,931 340,028 Accruals and deferred income 2,827,493 1,863,673 Dividend proposed 400,410 550,312 -------------------------------------------------- -------- -------- 72,774,259 131,789,786 -------------------------------------------------- -------- -------- Accruals and deferred income includes £nil (Company: £nil) (2004: £299,284 (Company: £297,282)) relating to bonuses provided under the carried interest scheme. Details of the accounting treatment thereof are given in note 1. 8. Creditors: amounts falling due after more than one year Group Group 2005 2004 £ £ --------------------------------------------------- -------- -------- Bank loans 3,971,899 4,238,794 Deferred purchase consideration - 400,000 Obligations under finance leases and hire purchase contracts 4,398 10,772 Accruals and deferred income 2,097,059 1,483,927 Deferred rent creditor 103,779 29,199 --------------------------------------------------- -------- -------- 6,177,135 6,162,692 --------------------------------------------------- -------- -------- Accruals and deferred income includes £1,799,891 (Company: £336,836) (2004: £1,483,927 (Company: £104,138)) relating to bonuses provided under the carried interest scheme. Details of the accounting treatment thereof are given in note 1. 9. Financial information The financial information in this press release, which has not been audited, does not constitute Statutory Accounts within the meaning of Section 240 of the Companies Act 1985. The Annual Report and Accounts for the year ended 30 November 2005 will be delivered to the Registrar of Companies following the company's Annual General Meeting. Accounts for the year ended 30 November 2004 have been filed with the Registrar of Companies, and these accounts contained an unqualified audit report and did not contain any statements under Section 237 (2) or (3) of the Companies Act 1985 This information is provided by RNS The company news service from the London Stock Exchange

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