Final Results

W.H. Ireland Group PLC 7 March 2003 7 March 2003 W. H. IRELAND GROUP PLC PRELIMINARY RESULTS FOR THE YEAR TO 30 NOVEMBER 2002 KEY POINTS â€¢ Turnover of Â£6.44 million (2001: Â£6.97 million) â€¢ Operating loss of Â£1.06 million (2001: loss of Â£0.69 million) â€¢ Loss before tax of Â£1.54 million (2001: loss of Â£0.50 million) â€¢ Final dividend of 0.5p per share proposed (2001: 1p per share) â€¢ Scrip dividend scheme proposed, subject to shareholder approval â€¢ New offices opened in Birmingham, Lancaster and Preston â€¢ An active year for Corporate Finance with good level of retained income established â€¢ The Board remains encouraged about the Group's prospects over the medium term but in the shorter term, the Group's performance is geared to a wider recovery in the financial markets. Press enquiries: W.H. Ireland Group plc Tel: 0161 832 6644 Laurie Beevers, Chief Executive David Youngman, Managing Director W. H. IRELAND - PRELIMINARY RESULTS 2/12 Chairman's Statement Results In common with many businesses in the stockbroking profession, the Group has experienced a difficult past two years. During the previous year ended 30 November 2001, we saw a substantial reduction in trading levels, and a number of factors, including financial scandals, problems in the pensions and life assurance sectors, and the possible war in Iraq, combined to reduce trading levels further during the year under review. Against this difficult background, we are pleased to report that the Group's turnover for the year held up well at Â£6.44m compared to Â£6.97m for the same period last year. However, continued investment in the expansion of our national network of branches in major cities has kept overheads at similar levels to the previous year. This resulted in an operating loss of Â£1.06m for the year against a loss of Â£0.69m for the previous year. After charging Â£213,931 for our share of the operating losses in the two associates, W.H.I. Securities Pty Limited ('WHIS') and our start-up investment, Ultimate Finance Group plc ('Ultimate'), and writing off Â£153,539 from the value of our fixed asset investments, the loss before tax increased to Â£1.54m compared to the loss of Â£0.5m last year. WHIS traded profitably in the second half although it still made a loss for the financial year as a whole whilst the operating loss of Ultimate was wholly in line with our expectations for the first five months' of trading. Reflecting our strong balance sheet and in acknowledgement of the loyalty of our shareholders, the Board is proposing a final dividend of 0.5p per share. This will be payable on 30 May 2003 to all shareholders on the register as at 11 April 2003. This year, subject to shareholders' approval, we intend to introduce a scrip dividend scheme. This will enable shareholders to elect to receive the dividend by way of ordinary shares in the company. A letter outlining details of the scheme is being sent to shareholders with the Report and Accounts and a resolution seeking its approval at the AGM is set out in the notice of the meeting. The Board members themselves hold approximately 58.49% of the ordinary issued share capital of the company as at the date of this report, and intend to take up the scrip alternative in the event of the scheme being approved. Branch network We have made good progress in our ambition to build our presence across major cities in the UK. During the year we added branches in Birmingham, Lancaster and Preston. The office in Lancaster commenced trading in February, the Preston office was opened in September and our Birmingham presence was established in October. In the current environment, the progress of our branches has been slower than anticipated, necessitating some consolidation and reorganisation, but we continue to look forward to their long-term future growth. The total number of our UK branches now stands at eleven. Corporate Finance Our corporate finance department has taken full advantage of being granted Nominated Adviser ('Nomad') status by the London Stock Exchange in August 2001 and during the year acted as Nomad on two admissions to AIM. In addition, we acted as Broker in two admissions and were involved in fourteen fundraisings. We are currently Broker or Nomad to a total of twenty two companies on either AIM or the Official List and we are adviser to a further five companies whose shares are traded on OFEX. W. H. IRELAND - PRELIMINARY RESULTS 3/12 Towards the end of the financial year, we took the opportunity to employ a small team from a corporate finance boutique in Birmingham and established a corporate finance office in that city. The team is widely known in the Birmingham area and has already attracted clients to the Group. Progress In the first quarter of the current financial year, substantial fee income has been generated by our corporate finance department which has acted in two admissions to AIM. In particular, the flotation of Highland Gold Mining Limited, which operates substantial gold mining interests in Russia, was the largest mining company to be admitted to AIM and has the second largest market capitalisation of all companies whose shares are traded on that market. The increase in the workload of this department supports our decision to expand our resource in this area and alongside the investment we have made in Birmingham, we have strengthened our London office team. The corporate finance department has had a very satisfactory start to the year and now generates substantial annual retained income for its advisory services. The current volume of equity bargains transacted on the London Stock Exchange is severely depressed for a number of reasons which have been well documented. At present, the most significant is the uncertainty of the situation in the Gulf although general concerns about the global economic outlook continue. As a result, investor confidence in equity markets is lower than at any time since the 1973/4 bear market. If the situation in the Gulf is resolved satisfactorily and quickly, some degree of investor confidence could return to the market. As a result of difficult trading conditions, the Board continues to restructure the Group's staffing requirement in an effort to bring the cost base to a level that is appropriate to those revenues that the Board believes are consistently achievable in the medium term. Further consolidation is taking place within the profession and we continue to explore every opportunity to improve our market position and shareholder value. I would like, once again, to thank all the members of the firm for their support and fortitude in the past year. We look forward to the future knowing that whatever market conditions may transpire, we continue to work hard in building the business with the aim of generating profitable growth. Sir David Trippier RD JP DL MSI Chairman W. H. IRELAND - PRELIMINARY RESULTS 4/12 Consolidated profit and loss account for the year ended 30 November 2002 Note Year ended Year ended 30 November 30 November 2002 2001 Â£ Â£ Group Turnover 6,438,368 6,968,771 Administrative expenses (7,497,392) (7,655,891) Group operating loss (1,059,024) (687,120) Share of operating loss in associates (142,614) (4,685) Share of non trading decrease in net assets of associates (71,317) - (1,272,955) (691,805) Other interest receivable and similar income 141,063 285,343 Amounts written off Investments (153,539) - Interest payable and similar charges (253,582) (94,839) Loss on ordinary activities before taxation (1,539,013) (501,301) Tax on loss on ordinary activities 1 (12,988) 21,892 Loss on ordinary activities after taxation (1,552,001) (479,409) Dividends on equity shares 2 (145,830) (283,448) Retained loss for the year for group (1,697,831) (762,857) Earnings per share (in accordance with FRS 14) Basic 3 (10.84) p (3.45) p Diluted 3 (10.50) p (3.29) p Headline earnings per share (in accordance with guidelines issued by UK Society of Investment Professionals) Basic 3 (10.12) p (3.21) p Diluted 3 (9.81) p (3.07) p All turnover relates to continuing operations. W. H. IRELAND - PRELIMINARY RESULTS 5/12 Statement of total recognised gains and losses for the year ended 30 November 2002 Year ended Year ended 30 November 30 November 2002 2001 Â£ Â£ Loss for the financial year before dividends (1,552,001) (479,409) Dividends (145,830) (283,448) Loss for the financial year (1,679,831) (762,857) Unrealised (deficit) / surplus on revaluation of fixed asset investments (176,712) 473,186 Realised surplus on revaluation of fixed asset investments - 690,739 Taxation refund on previous year's realised surplus on revaluation of fixed asset investments 171,320 - Taxation on current years realised surplus on revaluation of fixed asset investments - (207,221) Foreign exchange difference on the carrying value of the Joint Venture - (2,866) Non trading increase in net assets of associates 15,844 - Total recognised (loss) / gain for the year (1,687,379) 190,981 Prior period adjustment 2,403,941 Total gains and losses recognised since last annual report 2,594,922 Note of historical cost profits and losses for the year ended 30 November 2002 Year ended Year ended 30 November 30 November 2002 2001 Â£ Â£ Reported loss on ordinary activities before tax (1,539,013) (501,301) Realisation of fixed asset investment revaluation gains 377,950 690,739 Historical cost profit on ordinary activities before taxation (1,161,063) 189,438 Historical cost loss retained for the year after the provision for taxation and dividends (1,148,561) (279,339) W. H. IRELAND - PRELIMINARY RESULTS 6/12 Consolidated balance sheet at 30 November 2002 Note 2002 2002 2001 2001 Â£ Â£ Â£ Â£ Fixed assets Intangible assets 1,852,672 1,955,614 Tangible assets 4 4,962,955 925,669 Investments 5 2,453,729 3,189,874 Investments in associates and joint ventures 5 401,528 49,914 9,670,884 6,121,071 Current assets Debtors 28,793,806 45,327,003 Investments 17,563 21,567 Cash at bank and in hand 3,005,014 5,962,490 31,816,383 51,311,060 Creditors: amounts falling due within one year (30,008,821) (48,512,562) Net current assets 1,807,562 2,798,498 Total assets less current liabilities 11,478,446 8,919,569 Creditors: amounts falling due after more than one year (5,114,664) (868,408) Net assets 6,363,782 8,051,161 Capital and reserves Called up share capital 945,578 945,578 Shares to be issued 425,000 425,000 Share premium account 1,299,984 1,299,984 Investment revaluation reserve 2,322,465 2,877,127 Other reserves 544,634 544,634 Profit and loss account 826,121 1,958,838 Equity shareholders' funds 6,363,782 8,051,161 W. H. IRELAND - PRELIMINARY RESULTS 7/12 Consolidated cash flow statement for the year ended 30 November 2002 Year ended Year ended 30 November 30 November 2002 2001 Â£ Â£ Net cash (outflow)/ inflow from operating activities (1,885,264) 570,542 Returns on investments and servicing of finance (107,180) 200,513 Taxation (168,909) (701,175) Capital expenditure and financial investment (3,967,888) 30,747 Acquisitions and disposals (549,701) (425,000) Cash inflow before management of liquid resources and financing (6,678,942) (324,373) Equity dividends paid (215,773) (265,061) Financing 3,937,239 (5,394) Decrease in cash in the period (2,957,476) (594,828) Reconciliation of movements in equity shareholders' funds for the year ended 30 November 2002 Group Group Company Company 2002 2001 2002 2001 Â£ Â£ Â£ Â£ Loss for the financial year before dividends (1,552,001) (479,409) (149,057) 291,472 Dividends (145,830) (283,448) (145,830) (283,448) Loss for the financial year (1,697,831) (762,857) (294,887) 8,024 New share capital subscribed (net of issue costs) - 265,624 - 491,957 Shares to be issued - 425,000 - 425,000 (Deficit) / surplus on Investment revaluation reserve (261,877) 1,163,925 (88,986) - Surplus on Property revaluation reserve 85,165 - - - Tax in respect of current year realised surplus on revaluation - (207,221) - - Tax refund in respect of previous year's realised surplus on - - revaluation reserve 171,320 - Foreign exchange difference on carrying value of the joint venture - (2,866) - - Non trading increase in net assets of associates 15,844 - - - (1,687,379) 881,605 (383,873) 924,981 Opening equity shareholders' funds 8,051,161 7,169,556 3,280,881 2,355,900 Closing equity shareholders' funds 6,363,782 8,051,161 2,897,008 3,280,881 W. H. IRELAND - PRELIMINARY RESULTS 8/12 Notes to the preliminary statement 1. Taxation Year ended 30 November Year ended 30 November 2002 2001 Â£ Â£ UK corporation tax at 30% (2001: 30%) Current tax on income for the period (265,156) 14,570 Offset against prior year realised gains on investments 171,320 - Offset against current year's realised gains on investments 106,824 - Group relief surrendered and paid for - (36,462) Charged/(credited) to profit and loss account 12,988 (21,892) Corporation tax payable on realised investment gains at 30% 106,824 170,759 Losses utilised against this year's realised investment gains (106,824) - Losses utilised against previous year's realised investment gains (171,320) - Group relief received and paid for - 36,462 (Credited)/charged to reserves (171,320) 207,221 Year ended 30 November Year ended 30 November Factors affecting current tax charge in the year 2002 2001 Â£ Â£ Loss on ordinary activities before tax (1,539,013) (501,301) Tax on loss on ordinary activities at 30% (461,703) (150,390) Depreciation in excess of capital allowances 31,085 28,815 Expenses not deductible for tax purposes 67,651 (63,702) Marginal relief (508) - Offset of losses in prior year 171,320 - Increase in losses carried forward - 4,282 Offset of losses in reserves 106,824 - Other timing differences 17,406 1,959 Effects of consolidation 80,913 157,144 Current tax charged/(credited) to profit and loss account 12,988 (21,892) As at 30th November 2002 there were unprovided deferred tax asset balances of Â£18,286 (2001: asset of Â£8,945 and liability of Â£5,264) in relation to accelerated capital allowances and Â£34,355 (2001: Â£7,431) in relation to other short term timing differences. The deferred tax assets have not been recognised as they are not expected to crystallise in the foreseeable future and the 2001 liability has not been considered material enough to require recognition. W. H. IRELAND - PRELIMINARY RESULTS 9/12 Notes to the preliminary statement (continued) 2. Dividends and other appropriations Year ended Year ended 30 November 30 November 2002 2001 Â£ Â£ Equity shares: Interim dividend paid 71,924 139,599 Final dividend proposed 73,906 143,849 145,830 283,448 3. Earnings per share Year ended 30 November 2002 Year ended 30 November 2001 Loss for the year used for the basic calculation (1,552,001) (479,409) Goodwill amortisation 102,942 33,006 Loss for the year used in the 'headline earnings' calculation under the guidelines issued by the UK Society of Investment Professionals (1,449,059) (446,403) Weighted average number of shares used in the basic calculation 14,321,754 13,897,535 Weighted average number of options outstanding for the period 453,997 661,732 Weighted average number of shares used in the diluted calculations 14,775,751 14,559,267 4. Tangible fixed assets Computers, Freehold Motor fixtures and Property vehicles fittings Total Group Â£ Â£ Â£ Â£ Cost At beginning of year - 320,868 1,250,444 1,571,312 Additions 4,079,835 131,669 126,813 4,338,317 Adjustment on revaluation 85,165 - - 85,165 Disposals - (95,637) (85,581) (181,218) At end of year 4,165,000 356,900 1,291,676 5,813,576 Depreciation At beginning of year - 102,528 543,115 645,643 Charge for year - 81,080 262,266 343,346 On disposals - (52,786) (85,582) (138,368) At end of year - 130,822 719,799 850,621 W. H. IRELAND - PRELIMINARY RESULTS 10/12 Notes to the preliminary statement (continued) Net book value At 30 November 2002 4,165,000 226,078 571,877 4,962,955 At 30 November 2001 Nil 218,340 707,329 925,669 Assets purchased under finance leases and hire purchase contracts included in the above:- Computers, Freehold Motor fixtures and Property vehicles fittings Total Net book value At 30 November 2002 Nil 51,423 Nil 51,423 At 30 November 2001 Nil 53,275 Nil 53,275 5. Fixed asset investments Investment in own shares Unquoted investments Quoted investments Total Â£ Â£ Â£ Â£ Group Cost or valuation At beginning of year 31,130 75,057 3,083,687 3,189,874 Additions 8,203 - 138,078 146,281 Revaluation adjustment - - (261,877) (261,877) Diminution in investment value - - (153,539) (153,539) Disposals (4,626) - (462,384) (467,010) At end of year 34,707 75,057 2,343,965 2,453,729 In the consolidated financial statements, the interests in the associated undertakings are accounted for using the equity method. In the company financial statements the interests in the associated undertakings are accounted for at cost. Interest in Interest in Associated Associated Subsidiary undertakings undertakings Quoted undertakings (Quoted) (Unquoted) Investments Total Â£ Â£ Â£ Â£ Â£ Company Cost or valuation At beginning of year 1,994,041 - 57,465 - 2,051,506 Additions 9,999 549,701 - 77,000 636,700 Revaluation Adjustment - (97,024) - 8,039 (88,985) Disposals - - - (62,538) (62,538) At end of year 2,004,040 452,677 57,465 22,501 2,536,683 W. H. IRELAND - PRELIMINARY RESULTS 11/12 Notes to the preliminary statement (continued) Certain quoted investments in the company's balance sheet are currently valued below cost. This is considered to be temporary reduction and not a permanent diminution in value and thus the relevant amount has been debited to the investment revaluation reserve, thus creating a debit balance on that reserve. The undertakings in which the group's and company's interest at the year end is more than 20% are as follows Country of Principal Class and percentage incorporation activity of shares held Group Company Subsidiary undertakings W H Ireland Limited England and Stockbroking Ordinary shares Ordinary shares Wales 100% 100% W H I Leasing Limited England and Leasing Ordinary shares Ordinary shares Wales 100% 100% W H Ireland (Financial England and Dormant Ordinary shares Ordinary shares Services) Limited Wales 100% 100% Readycount Limited England and Property Ordinary shares Ordinary shares Wales 100% 100% Stockholm Investments England and Investment Ordinary shares Ordinary shares Limited Wales consultancy 100% 100% W H Ireland (Stockbrokers) England and Dormant Ordinary shares Ordinary shares Limited Wales 100% 100% W H Ireland Nominees England and Nominee Ordinary shares Limited Wales 100% - W H Ireland Trustees England and Trustee Ordinary shares Limited Wales 100% - Fitel Nominees Limited England and Nominee Ordinary shares Wales 100% - Associated undertakings - W H I Securities Pty Limited Australia Stockbroking Ordinary shares Ordinary shares 34.22% 34.22% Ultimate Finance Group UK Debt Factoring Ordinary shares Ordinary shares PLC 26.88% 26.88% Employee benefit trust 2002 2001 Â£ Â£ Cost At beginning of period 31,130 40,286 Additions 8,203 27,324 Transfers to participants (4,626) (36,480) At end of period 34,707 31,130 Amounts written off Beginning and end of period - - Net book value as at 30 November 34,707 31,130 W. H. IRELAND - PRELIMINARY RESULTS 12/12 Notes to the preliminary statement (continued) The W. H. Ireland Employee Benefit Trust was established in October 1998 for the purpose of holding and distributing shares in the company for the benefit of the employees. All costs of the Trust are borne by W. H. Ireland Limited. At 30 November 2002, the trust held 89,963 shares in the company (2001: 67,315), representing 0.62% of the called up share capital (2001: 0.47%). The maximum number held at any time during the year was 89,963. The nominal value of shares purchased in the year was Â£1,875 and the aggregate consideration paid by the company was Â£37,500. Associated undertakings and joint ventures On 31st October 2000 a joint venture was set up in Australia by the incorporation of a company called W.H.I. Securities Pty Limited. W.H. Ireland Group plc originally owned a 50% interest in this company which was accounted for as a joint venture. On 12th December 2001 this stake was diluted to 45% by the issue of 33,333 new shares to a third shareholder, and the stake was further diluted to 34.22% on 25th November 2002 by the issue of 105,042 shares to a fourth shareholder. Accordingly this company is now treated as an associate in these accounts. On 12th June 2002 Ultimate Finance Group plc was admitted to AIM and started trading as a cash flow finance group from that date. W. H. Ireland Group plc has a 26.88% interest in the shares of that company which accordingly has been treated as an associate in these accounts. The following figures are taken from the audited accounts of W.H.I. Securities Pty Limited for the year ended 30th November 2002 and from the un-audited management accounts of Ultimate Finance Group plc for the five months trading period ended 30th November 2002. Ultimate Finance Group plc has a year end of 30th June. Total Joint Venture Associates Â£ Â£ Â£ Cost or share of net assets at beginning of period 49,914 49,914 - Additions 549,701 - 549,701 Reclassification - (49,914) 49,914 Share of net losses (142,614) - (142,614) Non trading decrease in net assets written off to profit and loss account (71,317) - (71,317) Non trading increase in net assets taken to reserves 15,844 - 15,844 At end of period 401,528 - 401,528 6. Financial Information The financial information is 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 2002 will be delivered to the Registrar of Companies following the company's Annual General Meeting. Accounts for the year ended 30 November 2001 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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