Preliminary Results

RNS Number : 4197P

W.H. Ireland Group PLC

25 March 2009

 



WH IRELAND GROUP PLC

('WH Ireland' or 'the Group')

Preliminary Results for the year ended 30 November 2008

Quoted on AIM, WH Ireland is an established financial services group with two distinct segments, private wealth management and securities.

Key Points

• Group turnover decreased by 23.7% to £32.59m (2007: £42.73m)

• Underlying operating profit of £467,000 before non-recurring items

• Loss before tax of £4.02m (2007: profit of £3.93m) after £3.57m fair value charge against investments

• Basic earnings per share of (13.45)p (2007: 15.62p)

• Equity shareholders' funds before minority interests decreased by 0.6% to £16.6m (2007: £16.7m) representing approximately 85.8p per share on the increased share capital (2007: 100.5p)

• Disappointing results from Australian business

• Decrease of 11.9% in private wealth management revenue

• Total funds under management and control of £1.36bn (2007: £1.77bn)

Enquiries:

WH Ireland                                                    Tel: [phone]

Richard Ford

Oriel Securities Ltd                                     Tel: [phone]

Tom Durie

Biddicks (Financial PR to WH Ireland)      Tel: [phone]

Zoe Biddick

Chairman's Statement

Results and Dividend

The result for the full year is an underlying operating profit of £467,000 before charges for non-recurring items and an operating loss after these items of £788,000. The impact of losses on our investment book has resulted in a loss before tax of £4.0 million. This compares with a profit of £3.9 million for the last financial year and is a direct consequence of the very inclement conditions which prevail in both the real economy and financial markets. A more detailed review of these results is to be found in the Chief Executive's report which follows my statement.

In the context of the immense losses which have been sustained by the majority of the Banks and the fall in worldwide stock markets these results are a relative achievement and our balance sheet remains strong. However, your directors consider that the payment of a final dividend is not justified this year.

Trading

Your Board has worked hard to ensure that our Company is well placed to survive the current downturn in financial markets and that we are able to benefit from any upturn when it finally happens. Since joining us in September, Richard Ford, our new Chief Executive, has reviewed our cost base and we have implemented some necessary cost cutting measures. We have, at the same time, reviewed the operation of our business to ensure that we have a platform which can manage the threats associated with a bear market, such as bad debts and regulatory breaches. We will need to keep this process under constant review to ensure that our overheads are in sensible proportion to our revenues but, I believe, we have made good progress over the period.

Since August, when the half year report was issued, there has been an unprecedented collapse of the world's banking system brought about by a combination of greed, short termism and the failure of regulatory oversight. The result has been the partial nationalisation of a significant portion of the banking industry at the expense of tax payers and shareholders. Leaving aside the rights and wrongs of giving support to those who have created the problem in the first place, this dislocation will undoubtedly create opportunities for those in a position to take advantage of them. Many very able people have, and will, lose their jobs as balance sheets are contracted and risk taking is scaled down. I believe WH Ireland is better placed to capitalise on such opportunities when they arise than we were six months ago.

It is my opinion that Manchester and the North of England have suffered less than London and the South from the fallout of the banking crisis. The real economy has to follow the basic rules of economics even if the 'systematic risk guardians' have distorted the financial economy and, as a result, our business in the North has declined to a lesser extent than might have been expected. One exception to this is our Lancaster office where we suffered a large bad debt during the year. We have subsequently sold this office but retain the property and will receive a satisfactory rent. Property values in Manchester have fallen and we have restated the value of our freehold building to cost less depreciation to reflect this reality.

Corporate Finance

Our Corporate Finance activities are underpinned by the seventy-four companies to whom we are either Nomad or Broker. Secondary activity has been quiet but we believe that we can grow this part of our business in these difficult times.

Investment

Our investments have continued to suffer as a result of the dire market conditions and we have recorded a £3.5 million loss on these. A significant element of the investment portfolio relates to warrants which have accrued from past fund raising/corporate advice which were responsible for flattering our results during the bull market but which have to be revalued downwards as well. The residual value of these investments is now modest and so any future write down will not be significant.

Regulation

I believe our regulatory relationships are stronger now than they were a year ago and much credit for this must go to Richard Ford. We have also taken very seriously our responsibilities to 'treat our customers fairly' and are of the belief that 'firm arrangements make for firm friends'.

Australia

The performance of our majority owned Australian subsidiary D J Carmichael has been disappointing after two years of strong contribution to our profits. Cost reductions are being implemented and Laurie Beevers is spending a great deal of his time in Perth to lend support to this part of our business.

Outlook

Shareholders will be aware that we were in advanced talks with Blue Oar Plc to combine the two businesses. Unfortunately these talks could not be finalised satisfactorily for both parties.

It is difficult to forecast with any certainty how the financial crisis will affect the real economy. We remain very cautious and believe that after such an extended period of a leveraged bull market, opportunities may present themselves to those who keep their heads. Wealth preservation is becoming more difficult as interest rates fall to unprecedented levels but we remain committed to helping our clients to prosper.

Rupert Lowe

Chairman

Chief Executive Officer's Report

Having joined the Group during the final quarter of the period under review, I would like to take this opportunity to thank my colleague and predecessor, Laurie Beevers, for all he has done for the Group during his long tenure. I assumed the post of Chief Executive in the midst of what has turned out to be at best a deep recession for Western economies and stock markets and, whilst this period has proven to be a troubling time for the financial services sector as a whole, I am pleased to report that WH Ireland Group plc was not caught swimming naked, to paraphrase Warren Buffet. However, as we predicted at the half year stage, we are not immune from the global downturn.  

One significant development during the period under review was the purchase of a significant interest in the Group by a loose association of like minded investors, headed by Lord Marland and our Chairman Rupert Lowe. The associated injection of capital and talent into the business has ensured that the Group is well placed to act as a consolidator in a sector that is undoubtedly still to face considerable challenge. The strategic objective for the Group is to focus on our two core strengths - securities and wealth management - where the Group has established both market presence and significant revenues on which we can build significantly. We are positioning ourselves to take full advantage of market opportunities.

With regards to the Group's overall performance during the period, it is disappointing to note a decrease in total revenue in the UK of approximately 18%, although it is in Australia where our business has suffered the greatest, where turnover has declined by 43%. Overall, this means that our Group revenue is down approximately 24% year on year. At the operating level, performance has held up well and has remained on the course predicted at our half year end, resulting in an underlying operating profit of £467,000 for the full year stated before charges relating to restructuring costs (£199,000) and a significant bad debt charge (£1,056,000). The operating loss (before goodwill impairment) after accounting for these items is £788,000. We continue to restructure, where appropriate, to refine our systems and to manage our costs carefully and prudently.  

Securities Business

Corporate finance activity has declined during the period, mainly due to a lack of new money raising transactions. However, I am pleased to report that we have taken advantage of opportunities in the challenging economic environment, particularly where our competitors stumble or where they have abandoned or sought to distance themselves from our sector of the smaller companies market place. The securities team as a whole has worked effectively to ensure that our overall client list has stayed largely stable during the period and we finish the year with a total of 74 clients - 68 of which are admitted to AIM, one is on the official list, three are on Plus Markets and two are quoted on the ASX. We continue to target potential retained relationships, helped by the growing instability of some of our peers. We are winning new corporate mandates from some of the less well capitalised brokers and nomads who are actively withdrawing from the market, particularly the sub £15 million market cap sector where our regionally-based teams are able to press home their cost advantage.  

A restructuring of the Securities business continues on a positive footing. We now have a strong and integrated business made up of Corporate Finance, Corporate Broking, Research and Institutional Sales. We continue to look for opportunities to expand our client list through business development opportunities and corporate acquisitions and I am pleased to report that the Securities business is well placed to thrive over the coming 12 months. As importantly, we are not over-staffing and are managing our business appropriately and prudently - but always with an eye to being strongly positioned for when capital transactions return. 

Private Wealth Management

We are bringing further focus to bear within our Private Wealth Management activities. By combining our Asset Management, Financial Services, and Private Client Stockbroking activities, it is our intention to create a unified and holistic Private Wealth Management offering. However, for much of the year under review these activities very much operated on an independent footing.  

I am pleased to highlight an increase in turnover in the Financial Services business of 10%, underpinned by the dedication and hard work of the team as a whole during incredibly difficult trading conditions. The Bristol based IFA team acquired in the autumn of 2007 has been largely integrated into our wider Financial Services business and Simon Pritchard-Jones continues to lead the successful expansion of this division. We firmly believe that significant opportunities are available in the financial services and planning sector.

Private Client Brokerage remains the largest single element of our business by turnover, due in particular to the exceptional and continuing contribution of our London institutional broking team. Overall, our funds have held up remarkably well during the period and, at the close of our financial year, the Group had assets under management or advice in excess of £1.36 billion.

Clearly, our clients overall have been severely affected by the unprecedented trading environment. As with all stockbrokers, we are not immune to the risks of bad debts from our clients. Whilst strong and effective controls have always been in place, we are not complacent and our risk and governance measures are under constant review. However, it is the nature of our business that we will occasionally be impacted by losses suffered by our clients. During the period under review we suffered a significant bad debt for which a specific provision of £1,056,000 has been made in the accounts although subsequent to the year end, judgement has been obtained against this client and enforcement proceedings are underway.  

In Australia, as mentioned above, the strong contributions experienced in previous years have not been replicated in 2007/8. The departure of a group of key individuals in the Corporate team in the third quarter resulted in a considerable loss of momentum and revenue although recruitment of new staff has now largely restored the team. Similarly, the revenues generated by our private client teams held up well in the early part of the year but dropped off dramatically towards the end of the period.  

The UK Growth Fund launched in July 2006 has also not been immune to the vagaries of the stock markets. For the year ended 30 November 2008, it underperformed its peers and its benchmark but since the calendar year end its relative performance has improved.

As part of the strategy to develop our Private Wealth Management offering, we are considering on an ongoing basis the type and range of products to make available to clients, including the use of products from other external providers to minimise the time and cost of entry. This will broaden the diversity of our product offering and will be advantageous to our clients - as well as providing additional revenue streams with strong profit margins.

Investment Book and Property

Our investment in Ultimate Finance plc, an invoice discounting business, is performing comparatively well in an economic environment that is beneficial for its business plan. However, it is disappointing to note that, whilst making a significant contribution to Group profitability in previous years, the decreasing value of our warrant book and our property portfolio has had a negative impact for the year under review. In particular, our freehold property in Manchester has been restated at cost less depreciation and this has had an impact on our balance sheet. Whilst in good times, having property forming a significant element of our balance sheet provides comfort and security, we will continue to consider strategies to maintain diversification within our capital platform. 

Going Concern

In the judgement of the Directors there is a more than reasonable expectation that the Group has adequate resources to continue to trade for the foreseeable future and thus they continue to adopt the going concern basis in preparing the financial information. As with many companies in the current economic environment, the directors acknowledge that there is uncertainty arising from the risk of further deterioration in the market environment and associated declines in trading volumes and corporate finance activity. The uncertainty described above may cast doubt on the Group's ability to meet its regulatory capital requirements and therefore its ability to continue as a going concern. The going concern basis of preparation is discussed in the basis of preparation section of the financial information.

The Future

The general economic outlook is not rosy and stockbroking businesses will continue to be affected in the near to medium term. That said, I believe that the ongoing implementation of our strategic initiatives will stand us in good stead for the future. We have started to implement a build and grow strategy, designed to focus on our two core businesses - Securities and Private Wealth Management. Significant opportunities are increasingly becoming apparent, as competitors stumble and talented and experienced individuals and teams become unexpectedly available. We are looking to add significant revenue generators to our existing team who, without exception, have shown an impressive level of loyalty, commitment and dedication during a difficult and turbulent year. I would like to take this opportunity to thank all my colleagues for their contribution.

The combination of our excellent pool of talent, a strong balance sheet and the support of our broad and diverse range of investors creates an opportunity and a potency that many of our peers lack. In the absence of dramatic events that may be outside our control, we intend to remain focused on the path of strategic restructuring to ensure we come out of the current economic malaise a stronger, fitter and more diverse business. We look forward to building that business.

Richard Ford

Chief Executive Officer

Financial Information

Consolidated income statement 

for the year ended 30 November 2008

		Year ended  30 November 2008		Year ended 30 November 2007
		£'000		£'000
	Note
Revenue	1&2	32,592		42,727
Administrative expenses		(33,380)		(41,370)
Operating (loss) / profit (before goodwill impairment)		(788)		1,357
Share of profit / (loss) of associates		16		(37)
Impairment losses on goodwill		(470)		(100)
Profit on disposal of available-for-sale-investments		693		401
Fair value (losses) / gains on investments		(3,168)		1,963
Income from investments		46		36
Impairment losses on available-for-sale investments	6	(406)		(46)
Finance income		436		752
Finance expense		(378)		(401)
(Loss) / Profit before taxation		(4,019)		3,925
Taxation	3	1,301		(1,222)
(Loss) / Profit after taxation	8	(2,718)		2,703
Attributable to:
Minority interest		(117)		114
Equity shareholders of the parent		(2,601)		2,589
	8	(2,718)		2,703
Earnings per share
Basic	5	(13.45)p		15.62p
Diluted	5	(13.45)p		14.23p

Consolidated statement of recognised income and expense

For year ended 30 November 2008

		Group
		Year ended 30 November 2008	Year ended 30 November 2007
		£'000	£'000
	Note
Foreign exchange translation differences relating to the translation of foreign operations	8	(133)	164
Net change in fair value of available-for-sale financial assets transferred to profit or loss	8	(443)	(289)
Net (expenses) / income recognised directly in equity		(576)	(125)
(Loss) / Profit for the year		(2,718)	2,703
Total recognised income and expense for the year		(3,294)	2,578
Attributable to:
Minority interest		(110)	144
Equity shareholders of the parent		(3,184)	2,434
		(3,294)	2,578

Consolidated balance sheet

As at 30 November 2008

		Group
		30 November 2008	30 November 2007
	Note	£'000	£'000
ASSETS
Non-current assets
Property, plant and equipment		7,323	7,800
Goodwill		3,430	3,960
Intangible assets		587	741
Subsidiaries		-	-
Associates		880	974
Investments	6	1,847	5,690
Loan notes receivable		310	-
Deferred tax asset		762	130
Subordinated Loan		-	-
		15,139	19,295
Current assets
Trade and other receivables		261,284	99,519
Other investments		98	-
Corporation tax recoverable		-	114
Cash and cash equivalents	7	5,759	7,966
		267,141	107,599
Total assets		282,280	126,894
LIABILITIES
Current liabilities
Trade and other payables		(246,881)	(100,867)
Bank overdraft		(11,600)	(948)
Borrowings		(872)	(542)
Provisions		(199)	-
Corporation tax provision		(366)	(527)
		(259,918)	(102,884)
Non-current liabilities
Borrowings		(2,747)	(3,307)
Deferred tax liability		(250)	(902)
Accruals and deferred income		(2,215)	(2,405)
Liability for put and call options		(183)	(243)
Provisions		(160)	(136)
		(5,555)	(6,993)
Total liabilities		(265,473)	(109,877)
Total net assets		16,807	17,017
EQUITY
Share capital	8	1,054	860
Share premium	8	5,633	2,614
Available-for-sale reserve	8	170	613
Revaluation reserve	8	667	667
Foreign exchange reserve	8	31	164
Other reserves	8	1,472	1,472
Retained earnings	8	7,847	10,553
Treasury shares	8	(287)	(287)
Total equity attributable to equity holders of the parent		16,587	16,656
Minority interest	8	220	361
Total equity		16,807	17,017

Consolidated cash flow statement

For year ended 30 November 2008

		Group
		30 November 2008	30 November 2007
		£'000	£'000
Operating activities
Profit for the year		(2,718)	2,703
Adjustments for:
Depreciation, amortisation and impairment		1,099	340
Finance income		(436)	(752)
Finance expense		378	401
Taxation	3	(1,301)	1,222
Share of profit of associates		(16)	37
Changes in investments		2,881	(2,318)
Gain on sale of property, plant and equipment		(21)	(34)
Non-cash adjustment for share option charge		65	40
(Increase) / decrease in trade and other receivables		276,244	(23,140)
Increase / (decrease) in trade and other payables		(292,151)	18,694
(Increase) / decrease in current asset investments		(98)	11
Tax paid		(319)	(2,707)
Net cash generated from operating activities		(16,393)	(5,503)
Investing activities
Proceeds from sale of property, plant and equipment		210	73
Proceeds from sale of investments		1,993	2,118
Interest received		436	752
Purchase of subsidiary net of cash acquired		-	(1,044)
Purchase of associates		(40)	(500)
Acquisition of property, plant and equipment		(227)	(2,222)
Acquisition of investments	6	(480)	(616)
Income from investments		46	36
Loan note receivable		(310)	-
Amounts advanced to subsidiaries		-	-
Amounts repaid by subsidiaries		-	-
Net cash generated from investing activities		1,628	(1,403)
Financing activities
Proceeds from issue of share capital	8	3,059	384
Dividends paid		(573)	(633)
Acquisition of treasury shares		-	(200)
Increase in borrowings		(230)	(66)
Payment of finance lease obligations		-	(4)
Interest paid		(347)	(386)
Net cash generated from financing activities		1,909	(905)
Net increase / (decrease) in cash and cash equivalents		(12,856)	(7,811)
Cash and cash equivalents at beginning of year		7,018	14,773
Effect of foreign exchange movements		(3)	56
Cash and cash equivalents at end of year		(5,841)	7,018
Clients' settlement cash		(8,055)	3,575
Group cash		2,214	3,443
Cash and cash equivalents at end of year		(5,841)	7,018

1.    Principal accounting policies  

Basis of Preparation 

The financial statements of the group have been prepared for the first time in accordance with International Financial Reporting Standards as adopted in the European Union ('IFRS'), and their interpretations adopted by the International Accounting Standards Board ('IASB') or the International Financial Reporting Interpretations Committee ('IFRIC') or their predecessors, which had been approved by the European Commission at 30 November 2008. 

The financial statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: financial instruments classified as fair value through the profit or loss or as available-for-sale. Freehold property is carried at amortised cost, being its cost less any accumulated depreciation. Non-current assets are stated at the lower of previous carrying amount and fair value less costs to sell.

First time adoption of IFRS 

Company law requires the directors to prepare group financial statements for each financial year. As required by the AIM Rules of the London Stock Exchange they are required to prepare the group financial statements in accordance with IFRSs as adopted by the EU and applicable law.

IFRS 1 First time adoption of IFRS outlines how the requirements of IFRS should be applied upon transition to IFRS and to the first financial statements prepared in accordance with IFRS. The standard requires that accounting policies be adopted that comply with IFRS effective at the first reporting date, and for those policies to be applied retrospectively to all periods presented in those first IFRS financial statements. IFRS 1 does however provide a number of optional exemptions to this requirement that can be applied at the date of transition to IFRS. Of these exemptions, the group has chosen to take advantage of the following:  

• IFRS 3 Business combinations has not been applied retrospectively to business combinations that took place 
  prior to the date of transition to IFRS, being 1 December 2006. 
• The group has not early adopted the following amendments to existing standards that will become effective in future periods:
• IAS 1 (Presentation of financial statements). Effective from 1 January 2009. Requires the separate presentation of changes in equity arising from transactions with owners and non-owner changes and introduces new titles for primary financial statements.
• IAS 27 (Consolidated and separate financial statements).  Effective from 1 July 2009. Requires the effects of all transactions with non-controlling interests (previously 'minority interests') to be recorded in equity if there is no change in control. They will no longer result in goodwill or gains and losses. The impact of the amendment on future transactions is not readily determinable.
• IAS 32 (Financial instruments: Presentation).  Effective from 1 January 2009. Introduces changes to the classification of puttable financial instruments as a liability or equity. The impact of the amendment on future transactions is not readily determinable.
• IFRS 2 (Share-based payment). Effective from 1 January 2009. Clarifies the treatment of 'vesting conditions' and 'cancellations' as they relate to features of a share-based payment transaction. The impact of the standard on future transactions is not readily determinable.
• IFRS 3 (Business combinations). Effective from 1 July 2009. Introduces changes for acquisition accounting which impact on the initial and subsequent valuation of the purchase consideration, the calculation of goodwill and the treatment of transaction costs. The impact of the standard on future acquisitions is not readily determinable.
• IFRS 8 (Operating segments). Effective from 1 January 2009 and supersedes IAS 14 (Segment reporting). Requires segment information to be presented on the same basis as that used for internal reporting purposes. Some amendments to the disclosures made for segmental performance are likely. 
• Annual improvements process. Effective from 1 January 2009. The International Accounting Standards Board (IASB) issued its latest standard on 22 May 2008. This is the first standard to be published under the IASB's annual improvements process, dealing with non-urgent, minor amendments to standards and includes 35 amendments.

Additionally, the group has not early adopted the following amendments to existing standards that will become effective in future periods that is still subject to endorsement by the EU:

• IAS 23 (Borrowing costs).  Effective from 1 January 2009. It requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. This standard is currently not applicable to the group as there are no qualifying assets.

Revision to published IFRS restatement

The Group's interim results announcement for the period ended 31 May 2008 (published on 18 August 2008) included an initial analysis of the impact of adopting IFRS on previously reported results. At that stage, the directors indicated their intention to continue to hold freehold land and buildings at market value (as they were treated under UK GAAP) and not take advantage of IFRS 1.16 which allows an entity to elect to measure such assets at costs under IFRS, with cost being determined as fair value at the date of transition.

The directors have reviewed this approach and now consider it would be more appropriate to take advantage of this election and hold all land and building at cost and depreciate over their useful economic life. Accordingly the IFRS restatements have been prepared on this basis and the interim results for the period ended 31 May 2008 will be restated. The impact of this change is to reduce net assets by £1,989,000 at 30 November 2007 (1 December 2006: £nil) and profit before tax for the year ended 30 November 2007 by £90,000.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of WH Ireland Group plc and all its subsidiary undertakings. Subsidiaries are all entities in which the group has a controlling interest, generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the group and are deconsolidated from the date control ceases. Intragroup balances and any unrealised gains or income and expenses arising from intragroup transactions are eliminated on consolidation. Unrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is no evidence of impairment. For the purposes of the consolidated financial statements, uniform accounting policies have been followed by the group.

Associates are those entities in which the group has significant influence, but not control over their financial and operating policies. The consolidated interim financial statements include the group's share of the total recognised gains and losses of associates on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases.

Revenue

The group follows the principles of IAS 18, 'Revenue Recognition', in determining appropriate revenue recognition policies. In principle, therefore, revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will flow into the group.

Revenue comprises brokerage commission, investment management fees, corporate finance fees, commission earned from the provision of independent financial advice and interest receivable in the course of ordinary investment management business and is stated net of VAT and foreign sales tax.

Brokerage commission is recognised when receivable in accordance with the date of the underlying transaction. Investment Management Fees are recognised in the period in which the related service is provided. Corporate Finance fees comprise the value of services supplied by the group: Advisory fees are recognised when the relevant transaction is completed and retainer fees are recognised over the length of time of the agreement. Commission earned from the provision of independent financial advice comprises commission relating to new business written and trail commission earned on existing client business managed by the group. New business commission is recognised when the relevant transaction is completed and trail commission is recognised over the length of time of the customer policy. Interest income is accrued on a time basis by reference to the principal outstanding and at the effective interest rate applicable.

Segment reporting

A segment is a distinguishable component of the group that is engaged either in the provision of products or services (business segment) or in the provision of products or services within a particular economic environment (geographical segment), which are subject to risks and rewards that are different from those of other segments.

Foreign currencies

The group's presentational currency is sterling.

Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate ruling at the balance sheet date. Exchange differences arising are included in the income statement.

Assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated at exchange rates ruling at the balance sheet date. Income and expense items are translated at the average exchange rate for the period. Exchange differences arising from this translation of foreign operations are recognised in a separate component of equity.

Employee benefits 

The group contributes to employees' individual money purchase personal pension schemes. The assets of the schemes are held separately from those of the group in independently administered funds. The amount charged to the income statement represents the contributions payable to the schemes in respect of the period to which they relate.

Short term employee benefits are those that fall due for payment within twelve months of the end of the period in which employees render the related service. The cost of short term benefits is not discounted and is recognised in the period in which the related service is rendered. Short term employee benefits include cash-based incentive schemes and annual bonuses.

Carried interest bonus scheme

The group maintains 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. 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, inclusive of employer-related taxes. The amount of the bonus provision relating to warrants where the expiry date is less than one year is shown in trade payables under one year and the balance is shown in trade payables over one year. 

Under the specific requirements of the Companies Acts and relevant International Financial Reporting Standards the profit on sale of the shares is disclosed below the operating profit line under the heading fair value (losses) / gains on investments and the bonus is included in staff costs above the operating profit line. 

Share-based payments

The share option programme allows group employees to receive remuneration in the form of equity-settled share-based payments granted by the Parent company.

The group has taken advantage of the transitional provisions of IFRS 2 (Share-based payment) in respect of equity-settled awards and has applied IFRS 2 only to awards granted after 7 November 2002 that had not vested before 1 December 2006.

The cost of equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value of the options granted is measured using an option valuation model. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance or service conditions are fulfilled (the 'vesting period'), ending on the date on which the relevant employees become fully entitled to the award (the 'vesting date'). The cumulative expense recognised for equity-settled transactions, at each reporting date until vesting date, reflects the extent to which the vesting period has expired and the group's best estimate of the number of equity instruments that will ultimately vest. The income statement charge or credit for a period represents the movement in cumulative expense recognised at the beginning and end of that period. 

Where the terms of an equity-settled award are modified, an incremental value is calculated as the difference between the fair value of the re-priced option and the fair value of the original option at the date of re-pricing. This incremental value is then recognised as an expense over the remaining vesting period in addition to the amount recognised in respect of the original option grant.

Where an equity-settled award is cancelled or settled (that is, cancelled with some form of compensation) it is treated as if it had vested on the date of cancellation and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and is designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. Any compensation paid up to the fair value of the award is accounted for as a deduction from equity. Where an award is cancelled by forfeiture, when the vesting conditions are not satisfied, any costs already recognised are reversed (subject to exceptions for market conditions).

Associates

Associates are those entities in which the group has significant influence but not control over their financial and operating polices. The consolidated interim financial statements include the group's share of the total recognised gains and losses of associates, on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases. Any goodwill shown as part of the carrying amount of the investment in an associate is not amortised but instead tested annually for impairment. Where the group's share of losses exceeds its interest in an associate, the group's carrying amount is reduced to zero and recognition of further losses is discontinued except to the extent that the group has incurred legal or constructive obligations or made payments on behalf of an associate.

Income taxes

Income tax on the profit or loss for the periods presented, comprising current tax and deferred tax, is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using rates enacted or substantively enacted at the balance sheet date and any adjustment to tax payable in respect of previous years.

Deferred tax is provided for temporary differences, at the balance sheet date, between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. The following temporary differences are not provided for:

a.    Goodwill not deductible for tax purposes;

b.    The initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and

c.    Temporary differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.

The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised for all deductible temporary differences and unused tax losses only to the extent that it is probable that future taxable profits will be available against which the assets can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Put call options

As part of the group's acquisition of a majority stake in DJ Carmichael (part of WHI Australia), 51% interest being acquired in June 2005, there is an option for minority shareholders to put a proportion of their shares to the group in a future period (31 March 2009 to 30 September 2009). The amounts which can be put to the group under these options vary depending on other purchases of shares made by the group but at 30 November 2008 represent 12% of the share capital of DJ Carmichael (2007: 12%). Additionally, the group has a call option over the full minority interest. In combination with the put options, the call option has the effect of creating a forward purchase agreement over the element of shares covered by the put options.  The consideration payable under these options is formula driven but considered by the Directors as equating to market value of those shares at the point of exercise. 

The resulting obligation to the minority shareholders is accounted for as contingent consideration from the date of the original acquisition, with corresponding adjustments to goodwill.

The Group consolidates a higher proportion of the results of DJ Carmichael to reflect the higher ownership which would arise if, as is considered likely by the Directors, these put-options are exercised.  Consequently, the minority interest reserve has been reduced. 

Leases

Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Operating lease payments are recognised as an expense in the income statement, on a straight line basis over the lease term.

Property, plant and equipment

Plant and equipment is stated at cost less accumulated depreciation.

Depreciation is calculated, using the straight-line method, to write down the cost or revalued amount of property, plant and equipment over the assets' expected useful lives, to their residual values, as follows:

Buildings                                                   50 years    

Computers, fixtures and fittings               4 to 7 years

Motor vehicles                                          4 years

The group's freehold land is considered to have a residual value equal to or greater than its carrying amounts and therefore the current depreciation charge in respect of freehold land is zero.

Intangible assets

Intangible assets acquired separately are measured, on initial recognition, at cost. Following initial recognition, intangible assets acquired separately are carried at cost less accumulated amortisation and any accumulated impairment. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. 

Intangible assets are amortised over their useful economic lives. The amortisation period and method for an intangible asset are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method and treated as changes in accounting estimates. Amortisation is calculated on a straight line basis to write down the cost of intangible assets to their residual values over four years.

Business combinations 

All business combinations are accounted for by applying the purchase method. The purchase method involves recognition, at fair value, of all identifiable assets and liabilities, including contingent liabilities, of the subsidiary at the acquisition date, regardless of whether or not they were recorded in the financial statements of the subsidiary prior to acquisition. The cost of business combinations is measured based on the fair value of the equity or debt instruments issued and cash or other consideration paid, plus any directly attributable costs.

Goodwill arising on a business combination represents the excess of cost over the fair value of the group's share of the identifiable net assets acquired and is stated at cost less any accumulated impairment losses. Goodwill is tested annually for impairment. Any impairment is recognised immediately in the income statement and is not subsequently reversed. Negative goodwill arising on an acquisition is recognised immediately in the income statement. On disposal of a subsidiary the attributable amount of goodwill that has not been subject to impairment is included in the determination of the profit or loss on disposal.

In respect of associates, the carrying amount of goodwill is included in the carrying amount of the investment in the associate.

Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date.

Impairment of non-financial assets

The carrying amounts of the group's non-financial assets are reviewed at each reporting date when events or circumstances indicate that the assets may be impaired. If any such indication exists or, as in the case of goodwill, when annual impairment testing is required, the asset's recoverable amount is estimated. 

The recoverable amount is the higher of the asset's fair value less costs to sell (or net selling price) and its value in use. Value in use is the discounted present value of estimated future cash inflows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. 

Impairment is identified at the individual asset level where possible. Where the recoverable amount of an individual asset cannot be identified, it is calculated for the smallest cash-generating unit ('CGU') to which the asset belongs. A CGU is the smallest identifiable group of assets that generates cash inflows independently. 

When the carrying amount of an asset (or CGU) exceeds its recoverable amount, the asset (or CGU) is considered to be impaired and is written down to its recoverable amount. An impairment loss is immediately recognised as an expense.

Financial assets

Initial recognition

The classification of financial assets at initial recognition depends upon the purpose for which they are acquired and their characteristics. Financial assets are measured initially at their fair value. Financial assets not at fair value through profit or loss include any directly attributable incremental costs of acquisition or issue.

Financial assets classified as available-for-sale

Available-for-sale financial assets are financial assets designated as such on initial recognition or those that do not qualify to be classified in another category. They include equity investments, other than those in subsidiary undertakings and those equities which form part of the carried interest bonus scheme that are held for an indefinite period of time.

After initial measurement, available-for-sale financial assets are subsequently measured at fair value. In the case of listed investments, the fair value represents the quoted bid price of the investment at the balance sheet date. The fair value of unlisted investments is estimated by reference to recent arm's length transactions.

Unrealised gains and losses are recognised directly in equity in the 'available-for sale reserve'. When an available-for-sale financial asset is disposed of, the cumulative gain or loss previously recognised in equity is recognised in the income statement in 'profit on disposal of available-for-sale investments'. Losses arising from impairment are recognised in the income statement in 'impairment losses on financial assets' and removed from the available-for-sale reserve.

Financial assets held at cost

Unquoted investments where there is no available quote for the relevant instrument are stated at lower of cost and net realisable value. Any profit or loss on sale is credited or charged to the income statement. 

Financial assets classified as fair value through profit or loss 

In certain circumstances, financial assets may, on initial recognition, be designated to be measured at fair value with fair value changes through profit or loss. They include warrants and those equity investments which form part of the carried interest bonus scheme. In the case of listed investments, the fair value represents the quoted bid price of the investment at the balance sheet date. The fair value of unlisted investments is estimated by reference to recent arms length transactions. In the case of warrants, the fair value is estimated using established valuation models. In the case of put and call options, the fair value is formula driven.

Gains or losses on financial assets classified as fair value through profit or loss are recognised in the income statement. 

Impairment of financial assets

The Group assesses, at each balance sheet date, whether there is objective evidence that a financial asset or a group of financial assets are impaired. In the case of financial assets classified as available-for-sale, a significant or prolonged decline in the fair value of the asset is considered in determining whether the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss, less any impairment loss previously recognised is removed from equity and recognised in the income statement.

If, in a subsequent period, the fair value of an asset classified as available-for-sale increases the loss may not be reversed thought the income statement. Any increase after an impairment loss has been recognised is treated as a revaluation and is recognised directly in equity.

Loan notes receivable

The loan notes were issued on 28 February 2008 by James Baxter Capital Management Limited in the form of £310,000 Unsecured Convertible Loan Notes 2008 - 2013. The notes will be redeemed as follows:

27 February 2011    £100,000

27 February 2012    £100,000

27 February 2013    £110,000

Loan notes are initially recognised as a financial asset at the fair value of the amount paid. Subsequent to initial recognition, loan notes are measured at amortised cost using the effective interest method.

The loan notes have derivative features embedded within them. Where the economic characteristics and risks of the embedded derivative are not closely related to those of the host instrument, and where changes in value on the host instrument are not reflected in the income statement the embedded derivative is separated from the host and carried in the balance sheets at fair value within 'derivative financial instruments', with gains and losses on the embedded derivative being recognised in the income statement in 'fair value movements'. At 30 November 2008 and 30 November 2007 the embedded derivative was immaterial.

Trade receivables

Trade receivables are measured on initial recognition at fair value. Appropriate allowances for estimated irrecoverable amounts are recognised in the income statement when there is objective evidence that the asset is impaired.

Other investments

Other investments, which relate to short term principal positions taken on behalf of clients, are recognised and derecognised on trade date. Other investments are measured at fair value which is determined directly by reference to published prices in an active market where available. Gains or losses arising from changes in fair value or disposal of other investments are recognised through the income statement.

Cash and cash equivalents

For the purpose of the cash flow statement, cash and cash equivalents comprise cash and bank balances, short term highly liquid investments with a maturity of three months or less and bank overdrafts repayable on demand. Client settlement balances are included in cash but are separately disclosed in the Notes to the financial statements.

Financial liabilities

Bank loans and loan notes are initially recognised as financial liabilities at the fair value of the consideration received. Subsequent to initial recognition, bank loans and loan notes are measured at amortised cost using the effective interest method.

Trade payables

Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs. The directors consider that the carrying amount of trade payables approximates to their fair value.

Provisions

A provision is recognised when a present legal or constructive obligation has arisen as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Borrowing costs

Borrowing costs are recognised as an expense in the period in which they are incurred.

Treasury shares

The treasury shares in the Employee Benefit Trust (the 'Trust') are held in the name of WH Ireland Trustees Limited. WH Ireland Group plc is the sponsoring company of the Trust.

Going Concern

Information on the Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's statement and Chief Executive Officer's Report.

The financial statements of the Group have been prepared on the going concern basis. In making the going concern assessment, the directors have prepared detailed financial forecasts for the period to November 2010 which consider the funding and capital position of the Group. Those forecasts make assumptions in respect of future trading conditions, notably the economic environment and its impact on the Group's revenues and costs. In addition to this the nature of the Group's business is such that there can be considerable variation in the timing of cash inflows. The forecasts take into account foreseeable downside risks, based on the information that is available to them at the time of approval of these financial statements  

The Group's funding is provided by bank loans and overdrafts. Bank loans are repayable over a 10 to 25 year period and are secured on the 11 St James's Square property in Manchester. The overdrafts are repayable on demand and are due for renewal on 1 June 2009. The overdrafts are primarily used to facilitate client transactions. The directors have commenced discussions with the bank regarding the renewal and believe that sufficient funding facilities will be available post 1 June 2009 to meet the requirements of the business.

Certain activities of the Group are regulated by the Financial Services Authority (FSA) which is the single statutory regulator for financial services business in the UK and has responsibility for policy, monitoring and discipline for the financial services industry as a whole. The FSA requires the Group's capital resources to be adequate, that is sufficient in terms of quantity, quality and availability, in relation to its regulated activities. At the 30 November 2008, the Group had capital headroom of £2m (on total capital resources of £15.2m). The directors consider that, taking account of foreseeable downside risks, regulatory capital requirements will continue to be met but at certain times headroom may be minimal. In these circumstances the board would take appropriate action. 

However, as with many companies in the current economic environment, the directors acknowledge that there is uncertainty arising from the risk of further deterioration in the market environment and associated declines in trading volumes and corporate finance activity. The directors monitor the Group's regulatory capital resources on a daily basis and they are prepared to implement appropriate management actions to address any potential deficit as required, these actions may include cost reductions, regulatory capital optimisation programmes or further capital raising. However, the substantial achievement of forecasts or, if needed, the availability of additional capital to allow the Group to continue to operate within its regulatory capital requirements represents a material uncertainty that may cast significant doubt on the Group's ability to continue to meet its regulatory capital requirements and therefore its ability to continue as a going concern. After consideration of all the above factors, the directors believe that it remains appropriate to prepare the financial statements on a going concern basis and the financial statements do not include the adjustments that would result if the Company and the Group were unable to continue as a going concern.

Statutory accounts

The financial information set out herein does not constitute the company's statutory accounts for the years ended 30 November 2008 or 2007 but is derived from the accounts for the year ended 30 November 2008. Statutory accounts for year ended 30 November 2007, which were prepared under UK GAAP, have been delivered to the Registrar of Companies, and those for the year ended 30 November 2008 accounts, prepared in accordance with International Financial Reporting Standards adopted for use by the EU, will be delivered in due course. The auditor's report did not contain a statement under section 237(2) or (3) of the Companies Act 1985 in either period. The auditor's report for the period ended 30 November 2008 includes an emphasis of matter paragraph describing a material uncertainty concerning the ability of the Group continuing to operate within its regulatory capital requirements which may cast significant doubt about the ability of the Group to continue as a going concern. The financial information does not include the adjustments that would result if the Group was unable to continue as a going concern.

The Board approved the statutory accounts for the year ended 30 November 2008 on 24 March 2009.

2.    Segment information 

The primary segment reporting format is determined to be business segments. For management purposes, the group is organised into two business streams which reflect the nature of the group's services, client base and risk profile. Secondary information is reported geographically.

This segment information is disclosed in accordance with IAS 14 Segment reporting.  IAS 14 is superseded by IFRS 8 Operating segments which will be effective for annual periods beginning on or after 1 January 2009. IFRS 8 requires the disclosure of segment information based on the information reviewed by the chief operating decision maker. The group has determined that the operating segments that will be disclosed under IFRS 8 will be the same as the business segments disclosed under IAS 14. As IFRS 8 is a disclosure standard it will have no impact on the financial position or financial performance of the group when implemented in 2009.

a.    Business segments

For management purposes, the group is currently organised into the two business streams, presented below, which are the primary basis of segment reporting. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The following tables present revenue and profit and certain assets and liability information regarding the group's business segments.

The Group previously reported on three segments: stock broking, corporate finance and financial services. Following a restructuring of the Group's operations, stock broking and financial services have been combined to create the private wealth management segment and corporate finance has been renamed as the securities segment. The presentation of segmental results has been adjusted for this year and the comparative period.

Year ended 30 November 2008

Group	Private Wealth Management	Securities		Group
	£'000	£'000		£'000
Revenue
External	27,247	5,345		32,592
Inter-segment	-	-		-
Total revenue	27,247	5,345		32,592
Segment result	3,375	992		4,367
Share of profit of associates				16
Profit on disposal of available-for-sale investments				693
Fair value losses on investments				(3,168)
Income from investments				46
Impairment losses on financial assets				(470)
Impairment losses on available-for-sale investments				(406)
Finance income				436
Finance expense				(378)
Unallocated net corporate expenses				(5,155)
Profit / (Loss) before taxation				(4,019)
Taxation				1,301
Profit / (Loss) for the year				(2,718)
Segment assets	265,097	1,698		266,795
Unallocated corporate assets				15,485
Total group assets				282,280
Segment liabilities	252,051	310		252,361
Unallocated corporate liabilities				13,112
Total group liabilities				265,473
Other segment items	Private Wealth Management	Securities	Unallocated corporate items	Group
	£'000	£'000	£'000	£'000
Capital expenditure	-	-	227	227
Depreciation and amortisation	-	-	629	629
Other non-cash expenses	-	-	-	-

  Year ended 30 November 2007

	Private Wealth Management	Securities		Group
	£'000	£'000		£'000
Revenue
External	30,917	11,810		42,727
Inter-segment	-	-		-
Total revenue	30,917	11,810		42,727
Segment result	3,209	3,386		6,595
Share of loss of associates				(37)
Impairment losses on goodwill				(100)
Profit on disposal of available-for-sale investments				401
Fair value gains on investments				1,963
Income from investments				36
Impairment losses on financial assets				(46)
Finance income				752
Finance expense				(401)
Unallocated net corporate expenses				(5,238)
Profit / (Loss) before taxation				3,925
Taxation				(1,222)
Profit / (Loss) for the year				2,703
Segment assets	103,684	3,624		107,308
Unallocated assets				19,586
Total group assets				126,894
Segment liabilities	94,912	953		95,865
Unallocated liabilities				14,012
Total group liabilities				109,877
Other segment items	Private Wealth Management	Securities	Unallocated corporate items	Group
	£'000	£'000	£'000	£'000
Capital expenditure	-	-	2,235	2,235
Depreciation and amortisation	-	-	515	515
Other non-cash expenses	-	-	-	-

b.    Geographical segments

The group's operations are located in the United Kingdom and Australia. The following tables present revenue and certain assets and liability information by geographical area in which the assets are located.

Group Revenue	Year ended  30 November 2008	Year ended 30 November 2007
	£'000	£'000
United Kingdom	26,816	32,655
Australia	5,776	10,072
	32,592	42,727
Group Segment assets	Year ended  30 November 2008		Year ended 30 November 2007
	£'000		£'000
United Kingdom	14,396		13,402
Australia	2,411		3,615
	16,807		17,017
Group Capital expenditure	Year ended  30 November 2008		Year ended 30 November 2007
	£'000		£'000
United Kingdom	201		2,117
Australia	26		118
	227		2,235

3.    Taxation expense

Group	Year ended  30 November 2008	Year ended 30 November 2007
	£'000	£'000
Current tax expense:
United Kingdom corporation tax at 28% (2007: 30%)	77	968
Foreign tax	-	449
Adjustments in respect of prior years	(264)	(138)
	(187)	1,279
Deferred tax expense:
Origination and reversal of temporary differences	(549)	(57)
Effect of change in tax rate	(13)	-
Adjustments in respect of prior years	(44)	-
Adjustments in respect of prior periods taken to reserves	(508)	-
	(1,114)	(57)
Total tax expense in the income statement	(1,301)	1,222
The tax charge for the year and the amount calculated by applying the standard United Kingdom corporation tax rate of 28.67% (2007: 30%) to profit before taxation can be reconciled as follows:
Profit before taxation	(4,019)	3,925
Tax expense using the United Kingdom corporation tax rate of 28.67% (2007: 30%)	(1,152)	1,178
Share based payments	(161)	-
Other expenses not tax deductible	580	93
Income not chargeable to tax	(240)	(11)
Marginal relief	-	-
Higher tax rates on overseas earnings	-	-
Adjustments to current tax in respect of prior years	(264)	(137)
Depreciation in excess of capital allowances	-	-
Other temporary differences	-	-
Tax effect of chargeable gains	5	89
Effects of consolidation	-	-
Adjustments to deferred tax in respect of prior years	(58)	-
Effect of change in tax rate	(11)	10
Total tax expense in the income statement	(1,301)	1,222

The United Kingdom corporation tax rate reduced from 30% to 28% for the tax year commencing 1 April 2008.

4.    Dividends

No final dividend is proposed in respect of the year ended 30 November 2008. Dividends have been recognised as set out below:

Group	Year ended  30 November 2008	Year ended 30 November 2007
	£'000	£'000
Final dividend paid in respect of the year ended 30 November 2007 at 3p per share (2006: 3p)	516	489
Interim dividend paid in respect of the year ended 30 November 2008 at 1p per share (2007: 2p)	210	337
	726	826

Dividends paid during the year comprise a final dividend of 3p per share in respect of the previous year ended 30 November 2007, together with an interim dividend in respect of the year ended 30 November 2008 of 1p per share. The dividends paid were higher in value than the retained profits disclosed in the Company balance sheet as at 30 November 2007. The Company inadvertently overlooked the statutory requirements to file interim accounts demonstrating sufficient distributable profits with the Registrar of Companies prior to paying the dividend. Resolutions in the Notice of the Annual General Meeting seeks to rectify this technical breach by ratifying the appropriation of distributable profits to the payment of that dividend and waiving any claims which the Company may have against shareholders or the Directors arising out of this breach. 

Her Majesty's Revenue and Customs ('HMRC') has confirmed that the final dividend in respect of the year ended 30 November 2007 and the interim dividend in respect of the year ended 30 November 2008 will continue to be treated as a distribution for tax purposes (made at the time at which the dividend was paid) and that a waiver in the form proposed has no tax implications for those shareholders who received such dividends. Accordingly HMRC will treat the tax position of UK tax resident shareholders as being unaffected. Any non-UK tax resident shareholders who have any doubt about their foreign tax position should consult their own professional advisers.

At the year end a debtor has been recognised for amounts owed to the company in respect of this illegal dividend, this will be treated as being irrecoverable if the above resolution becomes effective.

5.    Earnings per share 

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the company and held as treasury shares.

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 employee share options outstanding during the year.

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below:

Group	Year ended  30 November 2008	Year ended 30 November 2007
	£'000	£'000
Weighted average number of shares in issue during the period	19,338	16,574
Effect of share options	1,417	1,619
	20,755	18,193
Earnings attributable to ordinary shareholders	(2,601)	2,589
Earnings per share - basic	(13.45p)	15.62p
Earnings per share - diluted	(13.45p)	14.23p

6.    Investments

Group

Available for sale investments		Unquoted	Quoted	Total
		£'000	£'000	£'000
At 1 December 2007		1,199	838	2,037
Exchange rate adjustments		-	-	-
Additions		-	237	237
Fair value gain / (loss)		(390)	(231)	(621)
Impairment		-	(406)	(406)
Disposals		-	(58)	(58)
At 30 November 2008		809	380	1,189

Other investments	Quoted	Unquoted	Warrants	Total
	£'000	£'000	£'000	£'000
At 1 December 2007	1,233	-	2,420	3,653
Exchange rate adjustments	(5)	-	-	(5)
Additions	243	-	190	433
Fair value gain / (loss)	(844)	-	(1,246)	(2,090)
Impairment	-	-	-	-
Disposals	(266)	-	(1,067)	(1,333)
At 30 November 2008  May 2008	361	-	297	658
Total investments 30 November 2008				1,847

Available-for-sale investments for the group include equity investments, other than those equity investments which form part of the 'carried interest bonus scheme' (see note 1) and investments in subsidiaries. Available-for-sale investments are measured at fair value with fair value gains and losses recognised directly in equity in the 'available-for-sale' reserve.  

Other investments, in the main, comprise financial assets designated as 'fair value through profit or loss', and include equity investments which form part of the 'carried interest bonus scheme' (see note 1). Financial assets designated as 'fair value through profit or loss' are measured at fair value with fair value gains and losses recognised directly in the income statement.  

Warrants are acquired as part of the 'carried interest bonus scheme' (see note 1) and designated as 'fair value through profit or loss'. There is no cash consideration associated with the acquisition.

Fair value, in the case of quoted investments, represents the bid price at the balance sheet date. In the case of unquoted investments, the fair value is estimated by reference to recent arms length transactions. The fair value of warrants is estimated using established valuation models and the fair value of put and call options is formula driven.

7.    Cash, cash equivalents and bank overdraft

		Group
		30 November 2008	30 November 2007
		£'000	£'000
Cash and cash equivalents		5,759	7,966
Bank overdraft		(11,600)	(948)
		(5,841)	7,018

For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand, deposits with banks and financial institutions with a maturity of up to three months and bank overdrafts repayable on demand.

Cash and cash equivalents represent the group's money and money held for settlement of outstanding transactions. 

Of the cash at bank held on the balance sheet, £706,558 (£2007: 3,574,648) relates to client settlement cash and is not available for use in the business.

Free money held in trust on behalf of clients is not included in the balance sheet. Free money at 30 November 2008 for the group was £81,089,000 (2007: £70,990,016). 

8.    Reconciliation of changes in equity attributable to equity holders of the parent

Group	Share capital	Share premium	Available for sale reserve	Revaluation reserve	Exchange reserve	Other reserves	Retained earnings	Treasury shares	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 December 2006	812	1,786	902	667	-	1,472	8,636	(87)	14,188
Profit after taxation	-	-	-	-	-	-	2,703	-	2,703
Prior year dividends paid	-	-	-	-	-	-	(489)	-	(489)
Current year dividends paid	-	-	-	-	-	-	(337)	-	(337)
Shares issued	39	-	-	-	-	-	-	-	39
Shares issued on scrip dividends	9	-	-	-	-	-	-	-	9
Employee share option scheme	-	-	-	-	-	-	40	-	40
Share premium on exercise of options	-	352*	-	-	-	-	-	-	352
Treasury shares purchased	-	-	-	-	-	-	-	(200)	(200)
Share premium on scrip dividends	-	233	-	-	-	-	-	-	233
Share premium on issue of shares on acquisition of subsidiary	-	243	-	-	-	-	-	-	243
Exchange rate adjustments	-	-	-	-	164	-	-	-	164
Loss arising on available-for-sale investments	-	-	(401)	-	-	-	-	-	(401)
Deferred taxation			112						112
Balance at 30 November 2007	860	2,614	613	667	164	1,472	10,553	(287)	16,656
Loss after taxation	-	-	-	-	-	-	(2,718)	-	(2,718)
Prior year dividends paid	-	-	-	-	-	-	(516)	-	(516)
Current year dividends paid	-	-	-	-	-	-	(210)	-	(210)
Amounts owed from shareholders	-	-	-	-	-	-	608	-	608
Shares issued	186*	2,646*	-	-	-	-	65	-	2,897
Shares issued on scrip dividends	8	-	-	-	-	-	-	-	8
Employee share option scheme	-	-	-	-	-	-	65	-	65
Share premium on exercise of options	-	227*	-	-	-	-	-	-	227
Share premium on scrip dividends		146	-	-	-	-	-	-	146
Loss arising on available-for-sale investments	-	-	(615)	-	-	-	-	-	(615)
Exchange rate adjustments	-	-	-	-	(133)	-	-	-	(133)
Deferred taxation	-	-	172	-	-	-	-	-	172
Balance at 30 November 2008	1,054	5,633	170	667	31	1,472	7,847	(287)	16,587

The total number of authorised ordinary shares is 34.5 million shares of 5p each (2007: 34.5 million shares of 5p each). The total number of issued ordinary shares is 21.1 million shares of 5p each (2007: 17.2 million shares of 5p each).

* The cash proceeds from the issue of share capital total £3,059,000 (2007; £384,000)

Shares issued in satisfaction of share options: On 11 April 2008, 30,667 new ordinary shares of 5p each were issued at a price of 75p per share in satisfaction of staff share options. On 10 July 2008, 10,000 new ordinary shares of 5p each were issued at a price of 70p per share in satisfaction of staff share options.

Shares issued in satisfaction of dividends: On 24 April 2008, 85,002 new ordinary shares of 5p each were issued at a price of 114p per share in satisfaction of the final dividend for the year ended 30 November 2007. On 9 October 2008, 62,189 new ordinary shares of 5p each were issued at a price of 114p per share in satisfaction of the interim dividend for the year ended 30 November 2008. Shares issued in satisfaction of the employee share offer: On 30 May 2008, 590,000 new ordinary shares of 5p each were issued at a price of 100p per share in satisfaction of a share offer made to employees and associates. Shares issued in satisfaction of the consortium offer: On 14 May 2008, 400,000 new ordinary shares of 5p each were issued at a price of 30p per share to WL Beevers in satisfaction of the terms of the consortium agreement. On 14 May 2008, 400,000 new ordinary shares of 5p each were issued at a price of 30p per share to DW Youngman in satisfaction of the terms of the consortium agreement. On 14 May 2008, 2,300,000 new ordinary shares of 5p each were issued at a price of 100p per share in satisfaction of the terms of the consortium agreement by the consortium investors including Lord J Marland, R Lowe and R Rudd.

 The nature and purpose of each reserve is summarised below:

Share premium

The share premium is the amount raised on the issue of shares that is in excess of the nominal value of those shares and is recorded less any direct costs of issue. 

Available-for-sale reserve

The available-for-sale reserve reflects gains or losses arising from the change in fair value of available-for-sale financial assets except for impairment losses which are recognised in the income statement. When an available for sale asset is impaired or derecognised, the cumulative gain or loss previously recognised in the available-for-sale reserve is transferred to the income statement. 

Revaluation reserve

The revaluation reserve reflects changes in the fair value of property, plant and equipment until such time as the assets are disposed of. A revaluation surplus is recognised in the revaluation reserve unless it reverses a previous deficit when it is credited to the income statement up to the amount of the previous deficit. A revaluation deficit is charged to the income statement unless it reverses a previous surplus when it is charged to the revaluation reserve up to the amount of the previous surplus.

Exchange reserve

The exchange reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. 

Other reserves

Other reserves comprise a merger reserve of £491,511, a capital redemption reserve of £228,083 and other reserves of £753,704. 

Retained earnings

Retained earnings reflect accumulated income, expenses, gains and losses recognised in the income statement and the statement of recognised income and expense and is net of dividends paid to shareholders. The cumulative effect of changes in accounting policy is also reflected as an adjustment in retained earnings.

Treasury shares

Purchases of the company's own shares in the market are presented as a deduction from equity, at the amount paid, including transaction costs. That is, treasury shares are shown as a separate class of shareholders' equity with a debit balance;

The WH Ireland Employee Benefit Trust (the '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 WH Ireland Limited.  

 

END

 

 

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