Final Results

W.H. Ireland Group PLC 8 April 2002 W H IRELAND GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 30TH NOVEMBER 2001 KEY POINTS â€¢ Turnover for the year was Â£6.97m (2000: Â£9.74m) â€¢ Further investment of Â£600,000 in the expansion of the business â€¢ Net assets increased to Â£8.05m (2000: Â£7.17m) â€¢ The loss before tax was Â£0.50m â€¢ Proposed dividend of 1.00p per share (2000: 1.33p per share) â€¢ Stockholm Investments, a portfolio management specialist, acquired in October 2001 â€¢ Total funds under management of Â£140m at the year end and Â£170m as at 31st March 2002 â€¢ AIM nominated adviser status achieved in August 2001, resulting in increased opportunities for our Corporate Finance department â€¢ Joint venture established with Australian stockbroker, Joseph Palmer & Sons in Sydney â€¢ New offices opened in Cardiff and Burnley - with Lancaster added after the year end Commenting on the results, Chief Executive Laurie Beevers said 'Clearly the results reflect the lower levels of trading which were experienced across the market compared with the extraordinarily buoyant conditions of the previous year. Despite this, we have continued to invest heavily in the future of the business both through organic growth in the establishment of new offices and joint ventures and through acquisition. We have significantly expanded the range of services we offer and our geographical coverage. As a result, I believe we are better placed to benefit from an upturn in the market. Press enquiries: W.H. Ireland Group plc Laurie Beevers Tel: 0161 832 6644 David Youngman Biddicks, Financial Public Relations Zoe Biddick/Katie Tzouliadis Tel: 020 7448 1000 CHAIRMAN'S STATEMENT Results In common with other stockbroking businesses, we experienced a reduction in trading levels during 2001 compared with the unusually buoyant market conditions of 2000. The decline, in particular, of the technology sector, together with fears of a possible recession and the events of September 11th, has led to a prolonged period of uncertainty which has, in turn, taken its toll on investor confidence. There are, however, indications that market sentiment is beginning to turn although this may take time to translate into increased volumes and commission. Consequently, our turnover for the year ended November 30, 2001 reduced from Â£9.74m to Â£6.97m. Despite the market conditions, we have continued to expand our network of offices and our range of skills, products and services. We have invested a total of over Â£600,000 in a series of strategic initiatives designed to position your company to take advantage of any upturn in the market. The resulting loss before tax for the year was Â£501,301. At the beginning of the year we changed our accounting policy to one of continual revaluation of our Fixed Asset Investments. During the latter half of the year we took the decision to dispose of approximately one-fifth of our London Stock Exchange shares, resulting in a profit of Â£690,739 which, due to the revaluation policy, was taken straight to reserves. At the year end, our net assets stood at Â£8.05 million, up from the restated figure of Â£7.17 million as at the previous year end. In view of our strong balance sheet and medium term confidence, the directors are proposing a final dividend of 1p per share which it is proposed will be paid on 13th May to all shareholders on the register as at 19th April. Corporate Finance I am delighted to report that, in August 2001, we were granted Nominated Adviser status by the London Stock Exchange to act as Nomad (as well as broker) to companies either on, or intending to join, the Alternative Investment Market. This considerably increased the range of business opportunities for our Corporate Finance Department in what had already been a very busy year. We have expanded the number of corporate finance personnel in both London and Manchester to cope with the volume of work we are now attracting. We have been involved in eight admissions to AIM and a further five fundraisings during the course of the year, and have recently completed our first issue as Nomad and broker. We are currently broker or adviser to a total of 19 companies on either AIM or the Official List. Achieving Nomad status has raised our profile, not only in this country but also in Australia where, historically, we have been linked to companies seeking quotations for their equity on the London Stock Exchange. In November 2000, in order to exploit fully the market opportunity in Australia, we established a joint company, WHI Securities Pty Ltd, with a long established Australian stockbroking firm and now benefit from an office in Sydney and a representative office in Perth. We now formally represent a number of Australian companies on AIM. Corporate Development We continue to take a long-term view of the business, whilst mindful of the need to review our cost structure where appropriate. We have therefore continued to take initiatives during the year in order to drive our business forward strategically. We continued to expand our network of local offices, opening in Burnley and Cardiff, and established a further new branch in Lancaster after the year end. We also took advantage of the expiry of our existing lease to relocate our London office to larger premises to facilitate further expansion in London. The acquisition of Stockholm Investments Limited at the end of October 2001 demonstrates our desire to add businesses to the group which complement our core stockbroking activities. This business comprised an advisory and discretionary portfolio management business run by two individuals with combined private client advisory experience in excess of 40 years. The initial consideration paid was Â£850,000 together with a performance-related element over the next three years. The acquisition of Stockholm has helped to significantly increase our total funds under management which had increased to Â£170m as at 31st March, 2002. Two of the major objectives at the time of listing, that is to create an institutional sales and research function and a designated fund management department, were both achieved during the course of the year. In order to broaden our product offering to private and corporate investors, we have established an Independent Financial Adviser operation offering advice on pensions, life assurance and other financial services to our existing client base and new clients. This unit, comprising six individuals, commenced trading in May 2001 and has already achieved breakeven. Freehold Property In January 2002 we acquired the freehold of our modern office building at St. James's Square in the centre of Manchester for Â£3.75m, partly funded from our own resources, augmented with a term loan from our bankers. We are pleased to have secured our future in this building and the low cost of funding means that this investment will have a positive effect on our profit and loss account and also offer the potential for capital growth. Share capital reorganisation At the time of our interim statement we circulated shareholders with proposals to re-organise our share capital to create greater transparency and separate the shareholding interests of the executive and non-executive directors. This was approved at the Extraordinary General Meeting in September 2001and implemented thereafter by the acquisition of Readycount Ltd. Prospects Market conditions are improving but still remain difficult. Unless there is a sustained uplift in trading volumes, it is unlikely that further progress will come solely from organic growth. As markets tend to anticipate economic trends, if the general view establishes itself that the recession in America has been a shallow one and is drawing to a close, then markets could react very quickly to a change in mood. The investment we have made in expanding both the range of products and services we are able to offer our clients (both private and corporate) and in our geographical expansion should bear fruit in the medium to long term. We continue to seek opportunities to develop the group in the wider area of financial services and to augment our core stockbroking business. Our increased range of services means that we are now considerably better placed to benefit from an upturn in the market. Sir David Trippier Non Executive Chairman Consolidated profit and loss account for the year ended 30 November 2001 Year ended Year ended 30 November 30 November Notes 2001 2000 (As restated) Â£ Â£ Group Turnover 1 6,968,771 9,742,146 Administrative expenses (7,655,891) (7,637,921) Group operating (loss)/profit (687,120) 2,104,225 Share of operating loss in joint venture (4,685) - (691,805) 2,104,225 Other interest receivable and similar income 285,343 358,594 Interest payable and similar charges (94,839) (126,293) (Loss)/profit on ordinary activities before taxation (501,301) 2,336,526 Tax on (loss)/profit on ordinary activities 2 21,892 (708,656) (Loss)/profit on ordinary activities after taxation and profit for the financial year (479,409) 1,627,870 Dividends on equity shares 3 (283,448) (164,840) Retained (loss)/profit for the year for group (762,857) 1,463,030 Earnings per share (per FRS 14) 4 Basic (3.45) 13.18 Diluted (3.29) 12.45 Headline Earnings per share (per guidelines issued by the UK Society of Investment Professionals.) 4 Basic (3.21) 13.38 Diluted (3.07) 12.64 All turnover relates to continuing operations. The post acquisition results of subsidiaries purchased during the year are disclosed in Note 8 Consolidated balance sheet at 30 November 2001 Notes 2001 2001 2000 2000 (As restated) (As restated) Â£ Â£ Â£ Â£ Fixed assets Intangible assets 1,955,614 448,095 Tangible assets 925,669 645,085 Investments 1 3,189,874 2,643,041 Investments in joint ventures 49,914 57,465 6,121,071 3,793,686 Current assets Debtors 45,327,003 41,386,421 Investments 21,567 98,887 Cash at bank and in hand 5,962,490 6,557,318 51,311,060 48,042,626 Creditors: amounts falling due within one year (48,512,562) (43,601,306) Net current assets 2,798,498 4,441,320 Total assets less current liabilities 8,919,569 8,235,006 Creditors: amounts falling due after more than one year (868,408) (1,065,450) Net assets 8,051,161 7,169,556 Capital and reserves Called up share capital 5 945,578 697,995 Shares to be issued 5 425,000 226,333 Share premium account 6 1,299,984 1,055,610 Investment revaluation reserve 6 2,877,127 2,403,941 Other reserves 6 544,634 544,634 Profit and loss account 6 1,958,838 2,241,043 Equity shareholders' funds 8,051,161 7,169,556 Statement of total recognised gains and losses for the year ended 30 November 2001 Year ended Year ended 30 30 November November 2001 2000 (As restated) Â£ Â£ (Loss)/profit for the financial year (762,857) 1,463,030 Unrealised surplus on revaluation of fixed asset investments 473,186 2,403,941 Realised surplus on revaluation of fixed asset investments 690,739 - Taxation on realised surplus on revaluation of fixed asset investments (207,221) - Foreign exchange difference on the carrying value of the joint venture (2,866) - Total recognised gain for the year 190,981 3,866,971 Prior period adjustment 2,403,941 Total gains and losses recognised since the last annual report 2,594,922 Note of historical cost profit and losses for the year ended 30 November 2001 Year ended Year ended 30 November 2001 30 November 2000 (As restated) Â£ Â£ Reported (loss)/profit on ordinary activities before tax (501,301) 2,336,526 Realisation of fixed asset investment revaluation gains 690,739 - Historical cost profit on ordinary activities before taxation 189,438 2,366,526 Historical cost (loss)/profit retained for the year after taxation and dividends (279,339) 1,463,030 Consolidated cash flow statement for the year ended 30 November 2001 Year ended Year ended 30 November 30 November 2001 2000 (As restated) Â£ Â£ Net cash inflow from operating activities 570,542 3,730,556 Returns on investments and servicing of finance 200,513 234,794 Taxation (701,175) (211,123) Capital expenditure and financial investment 30,747 (427,909) Acquisitions and disposals (425,000) - Cash (outflow)/inflow before management of liquid resources and financing (324,373) 3,326,318 Equity dividends paid (265,061) (39,378) Financing (5,394) 1,710,153 (Decrease)/Increase in cash in the period (594,828) 4,997,093 Reconciliation of movements in equity shareholders' funds for the year ended 30 November 2000 Group Group 2001 2000 (As restated) Â£ Â£ (Loss)/profit for the financial year (479,409) 1,627,870 Dividends (283,448) (164,840) (762,857) 1,463,030 New share capital subscribed (net of issue costs) 265,624 1,509,743 Shares to be issued 425,000 226,333 Surplus on investment revaluation reserve 1,163,925 2,403,941 Tax on realised surplus on revaluation of fixed asset investments (207,221) - Foreign exchange difference on carrying value of the joint venture (2,866) - Adjustments on the merger of Readycount Ltd - (290,439) 881,605 5,312,608 Opening equity shareholders' funds 7,169,556 1,856,948 Closing equity shareholders' funds 8,051,161 7,169,556 Notes 1 Financial Information a. General 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 2001will be delivered to the Registrar of Companies following the company's Annual General Meeting. Accounts for the year ended 30 November 2000 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. b. Basis of preparation The directors have considered Financial Reporting Standard 18 'Accounting Policies' which requires directors to adopt the most appropriate accounting policies having regard to factors including normal industry practice and comparability with other entities in the same sector. Accordingly the directors have revised the accounting policy in relation to the presentation of turnover. Previously, interest receivable and interest payable arising in the normal course of investment business were shown net below operating profit within interest receivable. Under the revised accounting policy, the company follows generally accepted industry practice and the financial statements show net interest receivable and interest payable in the normal course of investment business within turnover. The directors have also changed the accounting policy in relation to fixed asset investments. Previously, fixed asset investments were stated at cost less a provision for permanent diminution in value. The directors consider a more appropriate accounting policy is to state all quoted or publicly traded fixed asset investments, (other than shares held in the Employee Benefit Trust) at market value. The Employee Benefit Trust investment is stated at cost. These restatements have no effect on the result disclosed in the profit and loss account. However, the balance sheet and statement of recognised gains and losses for the year ended 30 November 2000 have been restated to take account of the change in accounting policy in relation to fixed asset investments. The effect on current and prior year's balance sheet is to increase the carrying value of fixed asset investments and revaluation reserve by Â£2,877,127 and Â£2,403,941 respectively. 2 Taxation Year ended 30 Year ended 30 November November 2001 2000 (As restated) Â£ Â£ UK corporation tax at 30% (2000: 30.5%) Current tax on income for the period 14,570 710,150 Adjustments in respect of prior periods - (1,494) Group relief surrendered and paid for (36,462) - (Credited)/charged to profit and loss account (21,892) 708,656 Corporation tax payable on realised investment gains at 30% 170,759 - Group relief received and paid for 36,462 - Charged to reserves 207,221 - 3 Dividends and other appropriations Year ended 30 Year ended 30 November November 2001 2000 (As restated) Â£ Â£ Equity shares: Interim dividend paid 139,599 62,011 Final dividend proposed 143,849 185,667 283,448 247,678 Dividend receivable by Readycount Ltd now treated as inter-group on the restatement of the profit and loss account due to merger accounting - (82,838) 283,448 164,840 4 Earnings per share Year ended Year ended 30 November 2001 30 November 2000 (As restated) (Loss)/profit for the year used for the basic calculation (479,409) 1,627,870 Goodwill amortisation 33,006 24,711 (Loss)/profit for the year used in the 'headline earnings' calculation under the guidelines issued by the UK Society of Investment Professionals (446,403) 1,652,581 Weighted average number of shares used in the basic calculation 13,897,535 12,353,376 Weighted average number of options outstanding for the period 661,732 722,674 Weighted average number of shares used in the diluted calculations 14,559,267 13,076,050 5 Called up share capital 2001 2000 Â£ Â£ Authorised 29,373,340 (2000: 30,000,000) Ordinary shares of 5 pence each 1,498,667 1,500,000 4,526,660 (2000: nil) Deferred shares of 5 pence each 226,333 - 1,725,000 1,500,000 Allotted, called up and fully paid 14,384,898 (2000: 13,959,898) Ordinary shares of 5 pence each 719,245 697,995 4,526,660 (2000: nil) Deferred shares of 5 pence each 226,333 - 945,578 697,995 On 24 September 2001 4,526,660 ordinary shares with a nominal value of Â£226,333 were issued on the acquisition of Readycount Ltd. At the same time, Readycount Ltd's holding of 4,526,660 ordinary shares in W H Ireland Group plc were converted into 4,526,660 deferred shares with a nominal value of Â£226,333. On 26 October 2001 425,000 ordinary shares with a nominal value of Â£21,250 were issued as part consideration for the acquisition of Stockholm Investments Ltd. Shares to be issued 2001 Under the terms of the acquisition of Stockholm Investments Ltd, further shares with a total value of Â£425,000 may be issued depending on the meeting of certain performance criteria within the next three years. 2000 Under merger accounting the deferred shares issued in 2001 with a total value of Â£226,333 are shown in the prior year as shares to be issued. 6. Share premium and reserves Group Investment Share Profit Revaluation Capital Premium and loss Reserve Reserve account account Â£ Â£ Â£ Â£ At beginning of year - 753,698 1,055,610 2,167,577 Prior year adjustment 2,403,941 (209,064) - 73,466 2,403,941 544,634 1,055,610 2,241,043 Premium on shares issued, net of issue costs - - 244,374 - Retained profit - - - (762,857) Surplus on revaluation of fixed asset investments 1,163,925 - - - Transfer realised gain on fixed asset investments (690,739) - - 690,739 Tax on realised gain on fixed asset investments - - - (207,221) Foreign exchange difference on carrying value of the joint venture - - - (2,866) At end of year 2,877,127 544,634 1,299,984 1,958,838 7 Analysis of net cash At beginning At end of of year Cash flow year Â£ Â£ Â£ Cash in hand, at bank 6,557,318 (594,828) 5,962,490 Overdrafts - - - 6,557,318 (594,828) 5,962,490 Debt due after one year (1,000,000) 500,000 (500,000) Debt due within one year - (500,000) (500,000) Finance leases (57,999) 5,394 (52,605) Total 5,499,319 (589,434) 4,909,885 8 Purchase of subsidiaries (a) Readycount Ltd On 24 September the company acquired the entire issued share capital of Readycount Ltd. a company wholly owned by certain directors of W H Ireland Group plc. This has been accounted for under merger accounting principles in line with a true and fair override on the grounds that the overall effect of the transaction was merely to change the names of the holders of ordinary shares in W H Ireland Group plc as in substance no additional ordinary shares have been issued and therefore the transaction is effectively a share reorganisation. Accordingly the income and expenditure of Readycount Ltd from the beginning of the year has been included in this years profit and loss account, and last years figures have been restated to include the results of Readycount Ltd as if it had been part of the group from the beginning of that year. The balance sheet at 30 November 2000 has also been restated to include the relevant figures for Readycount Ltd. In the period following acquisition Readycount Ltd had no income or expenditure nor any gains or losses. 4,526,660 ordinary shares were issued to the shareholders of Readycount Ltd, and upon acquisition, Readycount Ltd's holding of 4,526,660 ordinary shares in W H Ireland Group plc were converted into 4,526,660 deferred shares. These deferred shares have no rights to receive any dividend or distribution, and on a return of capital or winding up or otherwise, shall not be entitled to the repayment of the capital paid up on the deferred shares until after the capital paid up on the ordinary shares and the payment of Â£10,000 in respect of each ordinary share shall have been paid. (b) Stockholm Investments Ltd On 26 October 2001 the company acquired the entire issued share capital of Stockholm Investments Ltd for an initial consideration of 425,000 new ordinary shares in W H Ireland Group plc and the payment of Â£425,000 cash into Stockholm Investments Ltd to enable existing directors loans within that company to be repaid. Additional consideration of up to Â£850,000 may be payable depending on the turnover generated from the business purchased over the next three years. Any additional consideration may be satisfied as to up to 50% by the issue of new ordinary shares and 50% by the issue of guaranteed loan notes. In the period between the acquisition on 26 October 2001 to 30 November 2001 Stockholm Investments had a turnover of Â£18,740 and a profit before tax of Â£1,198. This information is provided by RNS The company news service from the London Stock Exchange

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