TIDMWHI
RNS Number : 7512N
W.H. Ireland Group PLC
27 September 2023
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 (MAR) as in force in
the United Kingdom pursuant to the European Union (Withdrawal) Act
2018. Upon the publication of this announcement via Regulatory
Information Service (RIS), this inside information is now
considered to be in the public domain.
WH Ireland Group Plc
("WH Ireland" or the "Company" and with its subsidiaries the
"Group")
Financial Results for the Twelve Months ended 31 March 2023
Notice of AGM
WH Ireland announces its final results for the year ended 31
March 2023.
Financial & Operating Highlights
-- Revenue of GBP26.7m (FY 2022: GBP32.0m)
-- Underlying* loss before tax GBP2.0m (FY 2022: underlying profit before tax of GBP1.4m)
-- Statutory loss before tax GBP1.8m (FY 2022: profit before tax
GBP0.1m) reflecting impact of:
o Substantial fall in revenue as above
o Significant reduction in administration expenses to GBP27.6m
(FY 2022: GBP33.1m)
o Loss on investments of GBP2.7m (FY 2022: profit of
GBP1.6m)
o Significant VAT rebate in Wealth Management of GBP2.2m (FY
2022: nil)
-- Loss per share (basic) of 3.29p (FY 2022: profit of 0.13p)
-- Cash and cash equivalents as at 31 March 2023 of GBP4.2m (FY 2022: GBP6.4m)
o Cash and cash equivalents of GBP7.8m as at 22 September 2023,
ahead of the receipt of quarterly recurring cash from the Company's
platform providers (anticipated to be c. GBP2.5m), due
imminently
-- Group Assets under Management ("AUM") of GBP2.1bn (FY 2022: GBP2.4bn)
*A reconciliation from underlying profits to statutory profits
is shown within the financial review on page 8.
Divisional Highlights
Wealth Management:
-- Revenue of GBP14.4m (FY 2022: GBP15.8m), principally reflecting a fall in commission income
-- Returned to profitability during the year on an underlying and statutory basis
-- Continued improvement in the quality of the business with fee
income now representing 89% of total wealth management income (FY
2022: 85%)
-- Discretionary managed assets ("DFM") at GBP1.00bn (FY2022: GBP1.02bn)
-- Wealth Management total AUM at GBP1.4bn (FY2022: GBP1.6bn)
Capital Markets:
-- Revenue of GBP12.2m (FY 2022: GBP16.2m) reflecting
significant reduction in transaction fees, and despite increase in
retainer fees and commissions & trading income
-- GBP111m funds raised for public and private corporate clients (FY 2022: GBP236m)
-- Total equity transactions 25 (FY 2022: 38) reflecting very
challenging AIM market conditions
-- Won 18 new quoted corporate clients to end the year with 90
quoted corporate clients (FY 2022: 88)
-- Retained strong position as a top AIM broker: top three
ranking as corporate broker and top five as NOMAD
-- Ultra High Net Worth and Family Office AUM of GBP0.7bn (FY 2022: GBP0.7bn)
Current Trading and Outlook
-- Challenging first half due to the continuing very difficult market backdrop
-- Successful GBP5m placing completed in August 2023 to restore regulatory capital position
-- Successful cost reduction exercise completed in September
2023 to reduce annualised costs by c.GBP3.8m
-- Stable platform to navigate challenging markets and to take
advantage of better market conditions in future
Commenting, Phillip Wale, Chief Executive Officer said:
"The market backdrop has been extremely challenging. While the
FTSE 100 was relatively resilient compared with overseas exchanges,
the AIM market fell 22% over the period and this severely impacted
transactional business (and particularly fundraisings) in our
Capital Markets business.
"Following the fundraise in July, we have a s table platform to
navigate challenging markets and to take advantage of better market
conditions in future. After significant first half losses, the
completion of our cost reduction programme gives us the opportunity
of returning to a break-even position in the remainder of the
financial year."
Annual General Meeting
The Company confirms that it will today post to shareholders the
annual report and accounts for the period ended 31 March 2023, and
a notice convening the annual general meeting of the Company. A
copy of the annual report and accounts along with the notice of AGM
is available on the Company's website www.whirelandplc.com . The
Annual General Meeting of the Company will be held at the Company's
offices at 24 Martin Lane, London EC4R 0DR on 24
October 2023 at 10.00 a.m .
For further information please contact:
WH Ireland Group plc www.whirelandplc.com
Phillip Wale, Chief Executive
Officer +44(0) 20 7220 1666
Canaccord Genuity Limited www.canaccordgenuity.com
Emma Gabriel / Harry Rees +44(0) 20 3523 8000
MHP Communications whireland@mhpgroup.com
Reg Hoare / Charles Hirst +44 (0) 20 3128 8193
Notes to Editors:
About WH Ireland Group plc
Wealth Management Division
WH Ireland provides independent financial planning advice and
discretionary investment management. Our goal is to build long
term, mutually beneficial, working relationships with our clients
so that they can make informed & effective choices about their
money and how it can support their lifestyle ambitions. We help
clients to build a long term financial plan and investment strategy
for them and their families.
Capital Markets Division
Our Capital Markets Division is specifically focused on the
public and private growth company marketplace. The team's
significant experience in this exciting segment means that we are
able to provide a specialist service to each of its respective
participants. For companies, we raise public and private growth
capital, as well as providing both day-to-day and strategic
corporate advice. Our tailored approach means that our teams engage
with all of the key investor groups active in our market - High Net
Worth Individuals, Family Offices, Wealth Managers and Funds. Our
broking, trading and research teams provide the link between growth
companies and this broad investor base.
Chief Executive's statement
Phillip Wale, Chief Executive's statement
Market backdrop
The market backdrop has been extremely challenging. While the
FTSE 100 has been relatively resilient compared with overseas
exchange, the AIM All Share Index fell 22% over the period. These
market conditions severely impacted transactional business (and
particularly fundraisings) in our Capital Markets Divisions.
The Financial Year 2023
Overall revenue fell 17% from the previous year from GBP32.0m to
GBP26.7m, but we also reduced administrative expenses by 17% from
GBP33.1m to GBP27.6m. However in the previous financial year we had
benefited from gains on investments (GBP1.6m), principally warrants
or equity received in partial payment of fees. Many of these
investments are in smaller companies, and the reversal in markets
during the year saw a loss on investments of GBP2.7m. While we
benefitted from significant VAT rebates during the year of GBP2.2m,
this led to a loss overall for the business of GBP1.8m.
In October 2022, in response to continuingly poor market
conditions the Board engaged external corporate advisors to assist
in a review of the strategy for the group. As a result of this
review the Board actively explored asset sales of parts of the
business.
Following the end of the period under review, the Group
announced in July 2023, it had conditionally raised GBP5m through a
placing of shares in the Company. The placing with both new and
existing shareholders was approved by shareholders on 15 August
2023 (see note 33 for further details).
At the same time, the Group also commenced a cost reduction
exercise, the benefit of which is expected to take effect from Q3
of Financial Year ending 31 March 2024. The Directors believe the
recent placing and the cost reduction exercise gives the Group an
improved chance of returning to a break-even position and securing
the future of the Group.
Clients
Our clients remain our priority and our central mission is to
continue to provide excellent and improved service to our
corporate, institutional and private clients. I would like to take
the opportunity to thank all of our clients for their loyalty and
flexibility as we have continued to introduce change and
improvements during another year of challenges.
Employees
We have kept tight controls on costs throughout the year and
finished the year with 159 employees against 158 at the start of
the period. A further fall in headcount is expected after the year
end following the cost reduction exercise.
On behalf of the Board, I would like to express our appreciation
for the continuing hard work and loyalty of employees throughout a
difficult period.
Shareholders
I would like to thank our shareholders for their continuing
support and welcome the new investors who joined in our most recent
placing in July 2023.
Wealth Management (WM)
WM income was more resilient, but market falls still led to a
reduction of assets under management from GBP1.6bn to GBP1.4bn.
This was the principal reason for a fall in revenue of 9% (from
GBP15.8m to GBP14.4m). However we also acted to reduce costs,
including the closure of our Cardiff office, and WM recorded a
small profit for the year, after receipt of the VAT rebate .
Capital Markets (CM)
CM revenue is derived from retainer income, earned from our role
as NOMAD or broker to clients, and transactional income. While
retainer income held up well, and we finished the year with 90
clients, against 88 at the beginning of the period, transactional
income was severely hit, with a particularly sharp fall in
corporate fundraisings. This led to an overall drop in CM revenue
of 25%, from GBP16.2m to GBP12.2m.
Looking forward
Following the July fundraise after the year-end and together
with the implementation of our cost reduction programme, we believe
the Group has an improved chance of returning to a break-even
position.
Financial review
Overview
The WH Ireland Group consists of a principal operating
subsidiary, WH Ireland Limited.
WH Ireland Limited consists of two business divisions: Wealth
Management (WM), which provides investment management solutions and
financial advisory services to retail clients and Capital Markets
(CM) which provides a range of services to both public and private
companies, including day to day regulatory and strategic corporate
advice, institutional sales and broking services; and the
production of equity research. It also provides trading services to
Funds, High Net worth individuals and Family Offices.
Total assets managed by the Group are GBP2.1bn (FY22: GBP2.4bn).
Of this total, GBP1.4bn (FY22: GBP1.6bn) is held in WM with a
further GBP0.7bn (FY22: GBP0.7bn) within CM's Ultra High Net Worth
business.
The Group's income is derived from activities conducted in the
UK with a number of retail, high net worth, ultra-high net worth,
institutional and corporate clients.
The average Group headcount for the year was 163 (FY22: 158) in
the UK.
Strategy summary
Following the fundraise that took place after the year ended 31
March 2023 (see note 33 for further details), the Group's aim is to
increase the value of discretionary assets under management in WM.
We also aim to continue to service our new and existing corporate
client list in CM, whilst sourcing new transactional activity
utilising our strong distribution capability in public and private
markets.
Group financial results summary
Year to Year to
31 Mar 2023 31 Mar 2022
GBP'000 GBP'000
----------------------------------------------- --------------- -------------
Revenue 26,688 32,035
Administrative expenses (27,550) (33,062)
Expected credit loss (239) (81)
Operating loss (1,101) (1,108)
Net (loss) / gains on investments (2,683) 1,626
Finance income 10 1
Finance expense (224) (511)
Other income 2,175 -
(Loss) / profit before tax (1,823) 8
Taxation (121) 67
----------------------------------------------- --------------- -------------
(Loss) /profit and total comprehensive income
for the year (1,944) 75
----------------------------------------------- --------------- -------------
Reconciliation between underlying and statutory profits
Underlying profit before tax is considered by the Board to be an
accurate reflection of the Group's performance when compared to the
statutory results, as this excludes income and expense categories
which are deemed of a non-recurring nature or non-cash operating
item. Reporting at an underlying level is also considered
appropriate for external analyst coverage and peer group
benchmarking. A reconciliation between underlying and statutory
profit before tax for the year ended 31 March 2023 with comparative
is shown below:
Year to Year to
31 Mar 2023 31 Mar 2022
GBP'000 GBP'000
--------------------------------------------------------- ------------- ---------------
Underlying (loss) / profit before tax (1,987) 1,397
Acquisition related items
- Deal structuring and integration costs - (446)
Amortisation of acquired brand and client relationships (496) (505)
Changes in fair value and finance cost of deferred
consideration (173) (416)
Restructuring costs - (835)
Other income 1,957 -
Net changes in the value of non-current investments (1,124) 813
Total underlying adjustments 164 (1,389)
Statutory (loss) / profit before tax (1,823) 8
--------------------------------------------------------- ------------- ---------------
Underlying earnings per share
--------------------------------------------------------- ------------- -------------
Weighted average number of shares in issue during
the period (note 12) 59,206 59,692
--------------------------------------------------------- ------------- -------------
Basic underlying earnings per share (3.36p) 2.34p
--------------------------------------------------------- ------------- -------------
Deal restructuring and integration costs
These represent costs incurred in relation to the acquisition of
Harpsden and include the integration and retention costs of staff
and the costs of the transfer of assets on to the SEI operating
platform.
Amortisation of acquired brand and client relationships
These intangible assets are created in the course of acquiring
funds under management and are amortised over their useful life
which have been assessed between two to 12 years. This charge has
been excluded from underlying profit as it is a significant
non-cash item.
Changes in fair value and finance cost of deferred
consideration
This comprises the fair value measurement arising on the
deferred consideration payments from acquisitions together with the
associated finance costs from the unwinding of the present value
discount relating to the Harpsden acquisition.
Restructuring costs
These costs relate to the restructuring costs within both WM and
CM and the resultant costs of redundancies of staff in the London
office arising from the closure of the Cardiff office.
Other income
During the year the Group received a refund of GBP2.2m from
HMRC. This was following confirmation from HMRC that the supply of
certain Group services were exempt from VAT during the period from
2017 to 2022. This is presented net of commission payable to third
parties of GBP218k.
Net changes in value of investments
As part of the fee arrangement with corporate clients in CM,
there is often a grant of warrants over shares or the issue of
actual shares in addition to the cash element of the fee. The value
of such warrants and shares are credited to revenue on the date of
the fee note and then any changes in the valuation are recorded as
net gains or losses. In view of the nature of these gains or
losses, including non-cash, these gains or losses have been
excluded from underlying profit. Corresponding commission payable
of GBP1,559k on the gain or loss of these warrants are included in
the net changes above.
Revenue
Wealth Management
The Wealth Management Division incorporates both investment
management services and financial planning advice from offices in
London, Manchester, Poole and Henley.
The strategy in this division is to focus our efforts on growing
the number of discretionary portfolios. This will be achieved by a
mixture of organic growth through new business initiatives,
continued personal referrals and the movement of existing advisory
and execution clients to our discretionary service.
Total WM AUM at 31 March 2023 was GBP1.4bn (FY22: GBP1.6bn) as
detailed in the table below. The majority of client assets are
managed on the SEI platform with a small balance of ex-Harpsden
clients remaining on another third-party platform.
Discretionary funds on SEI fell by 5.8% over the year (FY22:
increased by 6.2%), due to net business outflows of GBP26.7m (FY22:
net inflows GBP64.9m) representing a loss of 2.6% of opening funds
(FY22: a gain of 6.7%) and a market performance reduction of
GBP30.6m (FY22: GBP22.1m) due to negative market conditions.
WM funds flow table for the year:
Execution
Discretionary Advisory Only Custody* Total
GBPm GBPm GBPm GBPm GBPm
---------------------- -------------- --------- ---------- -------- --------
As at 1 April 2022 1,019.5 84.8 362.9 101.2 1,568.4
Inflows 115.2 3.5 44.7 18.7 182.1
Outflows (141.9) (6.8) (102.3) (22.0) (273.0)
Service switches (2.2) (24.5) 26.7 - -
Market Performance (30.6) (13.7) (22.3) (13.0) (79.6)
---------------------- -------------- --------- ---------- -------- --------
SEI at 31 March 2023 960.0 43.3 309.7 84.9 1,397.9
External platforms 36.2 - - - 36.2
---------------------- -------------- --------- ---------- -------- --------
Total WM AUM at 31
March 2023 996.2 43.3 309.7 84.9 1,434.1
---------------------- -------------- --------- ---------- -------- --------
*Custody represents discretionary managed assets held on our SEI
platform by New Horizons LLP a company with whom revenues are
shared. Note that growth in discretionary assets under management
is represented by the sum of net inflows, net service switches and
market performance.
Total WM revenue fell by 8.8% to GBP14.4m (FY22: increased
19.2%). Market conditions impacted on trading activity resulting in
a reduction of commission revenue in the year of 48.0% to GBP1.2m
(FY22: GBP2.2m).
2023 2022
GBP'000 GBP'000
------------------------------------- --------- ---------
Management fees and wealth planning 13,223 13,549
Commissions 1,156 2,221
Other 64 67
Total 14,443 15,837
------------------------------------- --------- ---------
Capital Markets
Our Capital Markets Division is specifically focused on the
public and private growth company marketplace. The team's
significant experience in this dynamic segment means that we are
able to provide a specialist service to each of its respective
participants. For companies, we raise public and private growth
capital, as well as providing both day-to-day and strategic
corporate advice. Our tailored approach means that our teams engage
with all of the key investor groups active in our market - High Net
Worth Individuals, Family Offices, Wealth Managers and Funds. Our
broking, trading and research teams provide the link between growth
companies and this broad investor base. Total CM AUM at 31 March
2023 was GBP0.7bn (FY22: GBP0.8bn). The client assets are managed
on the Pershing platform and the majority are held as execution
only.
Total revenue for the year decreased by 24.4% to GBP12.2m (FY22:
GBP16.2m) due to challenging market conditions impacting on
activity levels and the number of transactio ns. The number of
retained clients increased to 90 at the year-end and an increase in
retainer fees provided an uplift in retainer revenue of 12.4% to
GBP4.2m (FY22: GBP3.8m). The completion of three successful IPOs
(compared to five in the previous period) and fall in total num ber
of transactions to 25 (FY22: 38) were the drivers for the 48.6%
decrease to GBP5.1m (FY22: GBP9.9m) in transaction fees. CM also
executed a wide range of advisory work for its clients. Despite the
market backdrop, trading and commission revenue increased by 17.7%
in the year.
2023 2022
GBP'000 GBP'000
-------------------------------- --------- ---------
Transaction fees 5,128 9,979
Retainer fees 4,234 3,769
Equity Commissions and Trading 2,883 2,450
Total 12,245 16,198
-------------------------------- --------- ---------
Transaction fees are further analysed as follows:
2023 2022
GBP'000 GBP'000
-------------------------------------- --------- ---------
IPOs 934 1,878
Secondary equity issues 4,060 4,311
Other revenue incl. advisory and M&A 134 3,790
Total 5,128 9,979
-------------------------------------- --------- ---------
Expenses
Total o perational costs decreased by 16.7%. As part of cost of
sales, third party commission reduced by 87.6%, due to agreements
that are revenue contingent. Variable people costs, mainly related
to bonus payments have reduced by 40%.
2023 2022
GBP'000 GBP'000
------------------------------------------------ --------- ---------
Cost of sales - non-salaried staff costs (note
7) 605 4,895
Fixed non-people costs 10,826 10,464
Fixed people costs 14,243 14,577
Variable people costs 1,876 3,126
Total 27,550 33,062
------------------------------------------------ --------- ---------
Financial position and regulatory capital: Net assets decreased
to GBP13.6m at 31 March 2023 (FY22: GBP15.4m) and tangible net
assets (net assets excluding intangible assets and goodwill)
decreased by 14.1% to GBP6.5m (FY22 : GBP7.6m).
The Investment Firms Prudential Regime (IFPR) applies to all
solo-regulated MiFID investment firms and WH Ireland is a non-SNI
(small and non-interconnected) MIFIDPRU investment firm.
Accordingly, the Group's regulatory capital requirement is its
fixed overhead requirement as defined by the Financial Conduct
Authority (FCA). Due to market conditions remaining challenging and
losses incurred during the period, the Group notified the FCA that
it had fallen within its regulatory capital planning buffer. The
Group had further discussions with the FCA in order to ensure that,
in the absence of the injection of further capital pursuant to the
Placing, the Company could deliver a solvent wind down for the
Group, if required, in line with the Company's solvent wind down
plan (SWDP). A solvent wind down plan is a plan drawn up in
accordance with regulatory requirements in order to facilitate an
orderly wind down of a regulated firm. After the year-end the Group
carried out a placing to raise GBP5m by way of the issue of
ordinary shares (further details can be found in note 33), to
ensure that the Group's own funds are in excess of its regulatory
capital requirement.
Cost reduction exercises were also implemented after the
year-end, including certain members of senior management agreeing
to sacrifice a proportion of their salary in return for share
options, alongside a collective consultation regarding headcount
reduction.
As a result, the Directors have reviewed the forward-looking
position as part of the going concern modelling and stress testing
and in light of post year-end events believe that the regulatory
requirements will be met.
Future developments
The Group was subject to challenging market conditions resulting
from a number of well documented public events. The Directors
believe that the combination of the placing, approved by
shareholders in August 2023, and the cost reduction exercise gives
the Group an improved chance of returning to a break-even position.
The funds from the placing have been used to provide working
capital, secure the current regulatory capital position and achieve
a more stable financial position for the Group against the current
market backdrop. Prior to the placing, the Board had actively
explored asset sales. The Directors will continue to assess the
benefit of asset sales to shareholders should any future market
opportunities arise.
Key Performance Indicators
The following financial and strategic measures have been
identified as the key performance indicators (KPIs) of the Group's
overall performance for the financial year.
1. GROUP ASSETS UNDER MANAGEMENT *FY 2021 includes acquisition of
The total value of funds under management Harpsden Wealth Management Limited.
has a direct impact on the Group's
revenue.
-11%
------------------------------------------- ---------------------------------------
2. NUMBER OF RETAINED CAPITAL MARKETS
CORPORATE CLIENTS
The number of retained clients has
a direct relationship to the value
of fees earned from success fees
and retainer income in Capital Markets.
+2
------------------------------------------- ---------------------------------------
3. TOTAL REVENUE
The amount of revenue generated *FY 2021 revenue has been restated
by Wealth Management and Capital to reflect the reclassification from
Markets together is one of the key revenue to net gains on investments.
growth indicators.
-16%
------------------------------------------- ---------------------------------------
4. DISCRETIONARY AND ADVISORY ASSETS
UNDER MANAGEMENT (WM)
Discretionary and advisory funds
are the main income driver for our
Wealth Management business.
-10%
*FY 2021 includes acquisition of Harpsden Wealth Management
Limited.
Dividends
The Board does not propose to pay a dividend in respect of the
financial year (FY22: GBPnil).
Statement of Financial Position and Capital Structure
Maintaining a strong and liquid statement of financial position
remains a key objective for the Board, alongside its regulatory
capital requirement. Due to losses during the period, the group
notified the FCA on 21 December 2022 that it was within its Capital
Planning Buffer of GBP2.8m, which forms part of its regulatory
capital requirement, and further losses in the final quarter of the
financial year meant that at the year-end the Group was GBP0.9m
below the regulatory capital requirement of GBP9.6m. The Group has
been in discussion with the FCA with regard to its capital position
and having actively explored the option of an asset sale, undertook
a successful placing of shares subsequent to the year-end as
detailed in note 33 below in order to provide working capital,
secure the current regulatory capital position and achieve a more
stable financial position for the Group against the current market
backdrop. As at 31 March 2023, total net assets were GBP13.6m
(FY22: GBP15.4m) and net current assets GBP4.6m (FY22: GBP3.9m).
Cash balances at year-end were GBP4.2m (FY22: GBP6.4m).
Risks and Uncertainties
Risk appetite is established, reviewed and monitored by the
Board. The Group, through the operation of its Committee structure,
considers all relevant risks and advises the Board as necessary.
The Group maintains a comprehensive risk register as part of its
risk management framework encouraging a risk-based approach to the
internal controls and management of the Group. The risk register
covers all categories including human capital risk, regulatory
risk, conduct (client) risk, competition, financial risk, IT and
operational resilience risk and legal risk. Each risk is ranked on
impact and likelihood and mitigating strategies are identified. In
addition, the Executive Committee which is formed of the Executive
Directors, the Heads of the business divisions, a representative
from HR and Chief Risk and Compliance Officer meet to assess and
monitor these. An Executive Risk Committee has recently been
established to manage and monitor risks and report into the
Board.
The Group has outsourced its internal audit function to Deloitte
since April 2021. Deloitte formally report to Tom Wood, Chair of
the Audit Committee with Stephen Balonwu, Chief Risk and Compliance
Officer, being the principal day to day contact.
Liquidity and capital risk
The Group continues to focus on managing the costs of its
business and returning to growth and sustainable profitability
whilst increasing the proportion of recurring revenue with CM and
the building of its discretionary fee paying client base in WM to
better fit the regulatory environment in which it operates.
To mitigate risk, the Board continues to focus on ensuring that
the financial position remains robust and suitably liquid with
sufficient regulatory capital being maintained over the minimum
common equity tier 1 capital requirements. Regulatory capital and
liquid assets are monitored on a daily basis.
Operational risk
Operational risk is the risk of loss to the Group resulting from
inadequate or failed internal processes, people and systems, or
from external events.
Business continuity risk is the risk that serious damage or
disruption may be caused as a result of a breakdown or
interruption, from either internal or external sources, of the
business of the Group. This risk is mitigated in part by the number
of branches across the UK and the Group having business continuity
and disaster recovery arrangements including business interruption
insurance.
The Group seeks to ensure that its risk management framework and
control environment is continuously evolving which Compliance and
Risk monitor on an ongoing basis.
Credit risk
The Board takes active steps to minimise credit losses including
formal new business approval, and the close supervision of credit
limits and exposures, and the proactive management of any overdue
accounts. Additionally, risk assessments are performed on an
ongoing basis on all deposit taking banks and custodians and our
outsourced relationships.
Regulatory risk
The Company operates in a highly regulated environment in the
UK. The Directors monitor changes and developments in the
regulatory environment and ensure that sufficient resources are
available for the Group to implement any required changes. The
impact of the regulatory environment on the Group's management of
its capital is discussed in note 27 of the financial
statements.
Section 172 Statement
Broader Stakeholder Interests
Directors of the Group must consider Section 172 of the
Companies Act 2006 which requires them to act in the way that would
most likely promote the success of the Group for the benefit of all
its stakeholders. The Board and its committees consider who its key
stakeholders are, the potential impact of decisions made on them
taking into account a wider range of factors, including the impact
on the Company's operations and the likely consequences of
decisions made in the long-term. The Group's key stakeholders and
how the Board and the Group have engaged with them during the year
is set out below.
Employees
The CEO and his management team on behalf of the Board engage
with employees through a variety of methods including periodic 'all
staff' updates, information and points of interest, staff forums,
group meetings and Town Hall meetings. Further details can be found
in the corporate social responsibility section on page 29.
Shareholders
Our shareholders have been pivotal in supporting the Group and
its management team and Board. The Board recognise and frequently
discuss the importance of good, open and constructive relationships
with both potential new shareholders as well as existing
shareholders and is committed to this communication. The way in
which this has been achieved during the year has been by our Chief
Executive Officer, supported by the management team, maintaining
regular contact and meetings with individual and institutional
shareholders, both existing and potential, and communicating and
discussing shareholders' views with the Board. A number of Board
members and employees also hold the Group's shares and regular
communications are provided. The Group's strategy and results are
presented to shareholders through meetings following announcements
of the final and interim results. Shareholders are also invited to
meet the Board and management team, who attend the Annual General
Meeting. The annual report and accounts for the year ended 31 March
2023 along with all past accounts, regulatory communications and
other material is set out on the Group's website at
https://www.whirelandplc.com/investor-relations .
Regulators
The Board maintains continuous and open communication with our
regulators at the FCA as well as with the London Stock Exchange.
Regular ongoing dialogue has continued through the CEO and CFO with
the FCA who receive regular Management information. The FCA have
approved the appointments of each member of the Management team and
the Board members as required.
Clients
Our clients are fundamental to the business of the Group and the
Board recognise that their interests are of paramount importance.
Management of WM and CM closely engage with clients to understand
their objectives so that the service provided by the business is
appropriate. In WM the client's profile and the suitability of the
investment strategy provided is frequently assessed by our
professional investment managers and this is supplemented by a
second line of review from management and our compliance team. It
is recognised that the status of our clients can and does change in
line with the environment and vulnerable clients in particular are
identified and discussed at management and at Committee level to
ensure that they are provided with the best possible advice.
In CM the Group's objective is also to achieve the best outcome
and this applies equally to institutional corporate clients.
Regular contact is maintained with them across all departments
including corporate broking, corporate finance, trading and
research. Our investor relations team arranges meetings with
investors, undertakes site visits and organises events for a wide
range of our clients' teams.
Community and Suppliers
The Board through its Executive Directors is keenly focused on
its key supplier relationships and regularly challenges and reviews
its arrangements. The Group openly encourages its offices and
employees to engage in local charitable, community groups and other
causes. Further detail can be found on page 31.
Each of the Board members consider that they have acted
together, in good faith in a way most likely to promote the success
of the Group for the benefit of its broader range of stakeholders
as a whole taking into account section 172 (1) (a-f) of the
Companies Act 2006.
The Strategic Report on pages 7 - 14 has been approved by the
Board and signed on its behalf by:
S Jackson
Chief Finance Officer
September 2023
Consolidated statement of comprehensive income
Year ended Year ended
31 March 2023 31 March 2022
Note GBP'000 GBP'000
Revenue 5 26,688 32,035
Administrative expenses (27,550) (33,062)
Expected credit loss (239) (81)
----------------------------------------- ----- ----------------
Operating loss 6 (1,101) (1,108)
17,
Net (loss) / gains on investments 21 (2,683) 1,626
Finance income 8 10 1
Finance expense 8 (224) (511)
Other income 9 2,175 -
----------------------------------------- ----- ----------------
(Loss) / profit before tax (1,823) 8
Taxation 10 (121) 67
----------------------------------------- ----- --------------- ----------------
(Loss) / profit and total comprehensive
income for the year (1,944) 75
----------------------------------------- ----- --------------- ----------------
Earnings per share 12
----------------------------------------- ----- --------------- --------------
From continuing operations
Basic (3.29p) 0.13p
Diluted - 0.12p
----------------------------------------- ----- --------------- --------------
There were no items of other comprehensive income for the
current year or prior years.
Consolidated and Company statement of financial position
Group Company
31 March 31 March 31 March 31 March
2023 2022 2023 2022
Note GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ----- --------- --------- --------- ---------
ASSETS
Non-current assets
Intangible assets 15 3,763 4,259 - -
Goodwill 14 3,539 3,539 - -
Investment in subsidiaries 16 - - 26,448 26,448
Property, plant and
equipment 13 569 325 - 4
Investments 17 820 3,013 - -
Right of use asset 18 635 1,168 - -
Deferred tax asset 19 - 190 - -
Treasury note 28 - - 1,093 900
9,326 12,494 27,541 27,352
----------------------------- ----- --------- --------- --------- ---------
Current assets
Trade and other receivables 20 5,444 5,758 29 113
Other investments 21 2,049 1,912 - -
Cash and cash equivalents 22 4,234 6,446 - 1,246
11,727 14,116 29 1,359
----------------------------- ----- --------- --------- --------- ---------
Total assets 21,053 26,610 27,570 28,711
----------------------------- ----- --------- --------- --------- ---------
LIABILITIES
Current liabilities
Trade and other payables 23 (4,013) (6,681) (1,136) (2,357)
Lease liability 18 (319) (376) - -
Deferred consideration 24 (2,121) (2,412) (2,121) (2,412)
Deferred tax liability 19 (663) (732) - -
(7,116) (10,201) (3,257) (4,769)
----------------------------- ----- --------- --------- --------- ---------
Non-current liabilities
Lease liability 18 (293) (999) - -
(293) (999) - -
----------------------------- ----- --------- --------- --------- ---------
Total liabilities (7,409) (11,200) (3,257) (4,769)
----------------------------- ----- --------- --------- --------- ---------
Total net assets 13,644 15,410 24,313 23,942
----------------------------- ----- --------- --------- --------- ---------
Capital and reserves
Share capital 27 3,116 3,104 3,116 3,104
Share premium 27 19,014 19,014 19,014 19,014
Other reserves 981 981 228 228
Retained earnings (8,374) (6,789) 1,955 1,596
Treasury shares 28 (1,093) (900) - -
----------------------------- ----- --------- --------- --------- ---------
Shareholders' funds 13,644 15,410 24,313 23,942
----------------------------- ----- --------- --------- --------- ---------
The Company has elected to take the exemption under Section 408
of the Companies Act 2006 not to present the Company statement of
comprehensive income. The loss after tax of the Company for the
year was GBPnil (FY22: GBPnil).
These financial statements were approved by the Board of
Directors on 26 September 2023 and were signed on its behalf
by:
S Jackson
Director
Consolidated and Company statement of cash flows
Group Company
-------------------------- --------------------------
Year ended Year ended Year ended Year ended
31 Mar 2023 31 Mar 2022 31 Mar 2023 31 Mar 2022
Notes GBP'000 GBP'000 GBP'000 GBP'000
Operating activities:
(Loss) / profit for the year: (1,944) 75 - -
(1,944) 75 - -
Adjustments for non-cash items:
Depreciation and amortisation 13, 15, 18 1,093 1,229 - -
Finance income 8 (10) (1) - -
Finance expense 8 224 511 173 416
Tax 10 121 (67) - -
Non-cash adjustment for share option charge 7 359 470 359 470
Non-cash adjustment for investment gains 17, 21 2,683 (1,626) - -
Non-cash consideration for revenue (1,096) (1,651) - -
Non-cash adjustment for right of use assets 18 (125) - - -
Working capital changes:
Decrease / (increase) in trade and other
receivables 314 (601) 88 (57)
(Decrease) / increase in trade and other
payables (2,668) (942) (1,221) (603)
Net cash (used in) / generated from operations (1,049) (2,603) (601) 226
Income taxes received/(paid) 10 - - -
Net cash inflows / (outflows) from operating
activities (1,049) (2,603) (601) 226
------------------------------------------------- ----------- ------------ ------------ ------------ ------------
Investing activities:
Acquisition of property, plant and equipment 13 (475) (103) - (4)
Decrease / (increase) in loan receivables - - (193) (256)
Interest received 8 10 - - -
Movement in current asset investments 17, 21 430 1,933 - -
Net cash (used in) / generated from investing
activities (35) 1,830 (193) (260)
------------------------------------------------- ----------- ------------ ------------ ------------ ------------
Finance activities:
Proceeds from issue of share capital 27 12 34 12 34
Purchase of own shares by Employee Benefit Trust (193) (256) - -
Interest paid 8 - (2) - -
Deferred consideration paid 24 (464) - (464) -
Lease liability payments (483) (768) - -
Net cash (used in) / generated from financing
activities (1,128) (992) (452) 34
------------------------------------------------- ----------- ------------ ------------ ------------ ------------
Net (decrease) / increase in cash and cash
equivalents (2,212) (1,765) (1,246) -
Cash and cash equivalents at beginning of year 6,446 8,211 1,246 1,246
Cash and cash equivalents at end of year 4,234 6,446 - 1,246
------------------------------------------------- ----------- ------------ ------------ ------------ ------------
Reconciliation of Group and Company liabilities arising from
financing activities in the year:
As at Cash flows Non-cash As at
31 March
1 April 2022 changes 2023
Group GBP'000 GBP'000 GBP'000 GBP'000
----------------- ------------- ----------- --------- ---------
Lease liability 1,375 (483) (280) 612
1,375 (483) (280) 612
----------------- ------------- ----------- --------- ---------
Reconciliation of Group and Company liabilities arising from
financing activities in the prior year:
As at Cash flows Non-cash As at
31 March
1 April 2021 changes 2022
Group GBP'000 GBP'000 GBP'000 GBP'000
----------------- ------------- ----------- --------- ---------
Lease liability 2,058 (768) 85 1,375
2,058 (768) 85 1,375
----------------- ------------- ----------- --------- ---------
There are no Company liabilities arising from financing
activities.
Consolidated and Company statement of changes in equity
Share Share Other Retained Treasury Total
capital premium reserves earnings shares equity
Group GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- -------- --------- --------- --------- --------
Balance at 1 April 2021 3,101 18,983 981 (7,334) (644) 15,087
Profit and total comprehensive
income for the year - - - 75 - 75
-------------------------------- -------- -------- --------- --------- --------- --------
Transactions with owners in their
capacity as owners:
Employee share option scheme - - - 470 - 470
New share capital issued 3 31 - - - 34
Purchase of own shares by
Employee Benefit Trust - - - - (256) (256)
Balance at 31 March 2022 3,104 19,014 981 (6,789) (900) 15,410
-------------------------------- -------- -------- --------- --------- --------- --------
Loss and total comprehensive
income for the year - - - (1,944) - (1,944)
-------------------------------- -------- -------- --------- --------- --------- --------
Transactions with owners in their
capacity as owners:
Employee share option scheme - - - 359 - 359
New share capital issued 12 - - - - 12
Purchase of own shares by
Employee Benefit Trust - - - - (193) (193)
-------------------------------- -------- -------- --------- --------- --------- --------
Balance at 31 March 2023 3,116 19,014 981 (8,374) (1,093) 13,644
-------------------------------- -------- -------- --------- --------- --------- --------
Retained earnings include GBP10k (2022: GBP10k) ESOT
reserve.
Share Share Other Retained Treasury Total
capital premium reserves earnings shares equity
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------- -------- --------- --------- --------- --------
Balance at 1 April 2021 3,101 18,983 228 1,126 - 23,438
Profit / (loss) and total - - - - -
comprehensive income for the
year
------------------------------- -------- -------- --------- --------- --------- --------
Transactions with owners in their
capacity as owners:
Employee share option scheme - - - 470 - 470
New share capital issued 3 31 - - - 34
Balance at 31 March 2022 3,104 19,014 228 1,596 - 23,942
------------------------------- -------- -------- --------- --------- --------- --------
Profit / (loss) and total - - - - - -
comprehensive income for the
year
------------------------------- -------- -------- --------- --------- --------- --------
Transactions with owners in their
capacity as owners:
Employee share option scheme - - - 359 - 359
New share capital issued 12 - - - - 12
------------------------------- -------- -------- --------- --------- --------- --------
Balance at 31 March 2023 3,116 19,014 228 1,955 - 24,313
------------------------------- -------- -------- --------- --------- --------- --------
The nature and purpose of each reserve, whether consolidated or
Company only, 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.
Other reserves
Other reserves comprise a (consolidated) merger reserve of
GBP753k (FY22: GBP753k) and a (consolidated and company) capital
redemption reserve of GBP228k (FY22: GBP228k).
Retained earnings
Retained earnings reflect accumulated income, expenses, gains
and losses, recognised in the statement of comprehensive income and
the statement of recognised income and expense and is net of
dividends paid to shareholders. It includes GBP10k (FY22: GBP10k)
of ESOT reserve.
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, shares are shown as a separate class of
shareholders' equity with a debit balance. This includes shares in
the Company held by the EBT or ESOT, both of which are consolidated
within the consolidated figures.
Notes to the financial statements
1. General information
WH Ireland Group plc is a public company incorporated in the
United Kingdom. The shares of the Company are traded on the AIM, a
market of the London Stock Exchange Group plc. The address of its
registered office is 24 Martin Lane, London, EC4R 0DR.
Basis of preparation
The consolidated and Parent Company financial statements have
been prepared in accordance with International Accounting Standards
as adopted by the UK and in accordance with the Companies Act 2006.
The principal accounting policies adopted in the preparation of the
consolidated financial statements are set out in note 3. The
policies have been consistently applied to all the years presented,
unless otherwise stated.
The consolidated financial statements are presented in British
Pounds (GBP), which is also the Group's functional currency.
Amounts are rounded to the nearest thousand, unless otherwise
stated.
Going concern
The financial statements of the Group have been prepared on a
going concern basis. In making this assessment, the Directors have
prepared detailed financial forecasts for the period to September
2024 which consider the funding and capital position of the Group
and Company. 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 the Directors at the time of the approval of these
financial statements.
Certain activities of the Group are regulated by the FCA, the
statutory regulator for financial services business in the UK which
has responsibility for policy, monitoring and discipline for the
financial services industry. The FCA 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.
The Directors monitor the Group's regulatory capital resources on a
regular basis.
The Group had been in discussion with the FCA (including in
respect of the Group's relevant net asset and regulatory capital
positions) in order to ensure that, in the absence of the injection
of further capital pursuant to the Placing, the Company could
deliver a solvent wind down for the Group, if required, in line
with the Company's solvent wind down plan (SWDP). A solvent wind
down plan is a plan drawn up in accordance with regulatory
requirements in order to facilitate an orderly wind down of a
regulated firm, as further described below. On the basis of the
adverse current and forecast trading and resultant losses, without
further funding pursuant to the placing, the SWDP would have been
required to be implemented post year-end.
The Directors have conducted full and thorough assessments of
the Group's business and the past financial year has provided a
thorough test of those assessments. The significant market
turbulence presented a range of challenges to the business and as a
result after the year-end the Group proceeded to raise additional
capital by way of placing of ordinary shares to existing
shareholders and new investors (further details can be found in
note 33) raising GBP5m. Additionally, cost reduction exercises were
implemented and the benefits expected to take effect from quarter 3
of the financial year. The cost savings have been factored into the
forecasts.
Whilst there always remains uncertainty over the economic
environment, after the year-end the business has improved its
capital position and likelihood of a return to a break-even
position. Further actions open to the Directors include incremental
cost reductions, regulatory capital optimisation programmes or
further capital raising.
An analysis of the potential downside impacts was conducted as
part of the going concern assessment to assess the potential impact
on revenue and asset values with a particular focus on the variable
component parts of our overall revenue, such as corporate finance
fees and commission. Furthermore, reverse stress tests were
modelled to assess what level the Group's business would need to
reduce to before resulting in a liquidity crisis or a breach of
regulatory capital. That modelling concluded that transactional,
non-contractual revenue would need to decline by more than 60% from
management's forecasts to create such a crisis situation within 18
months' time.
Based on all the aforementioned, the Directors believe that
regulatory capital requirements will continue to be met and that
the Group and Company has sufficient liquidity to meet its
liabilities for the next twelve months and that the preparation of
the financial statements on a going concern basis remains
appropriate.
2. Adoption of new and revised standards
New and amended standards that are effective for the current
year
A number of new or amended standards became applicable for the
current reporting period and as a result the Group and Company has
applied the following standards:
- Amendments to IFRS 16: Property, Plant and Equipment -
Proceeds before Intended Use
- Amendments to IFRS 3: Reference to Conceptual Framework
- Amendments to IAS 37: Onerous Contracts - Cost
The above requirements did not have a material impact on the
financial statements of the group or company.
New standards, interpretations and amendments not yet
effective
Name Description Effective date
------------------- ------------------------------------------- ---------------
IAS 1 (amendments) Presentation of Financial Statements: 1 January 2023
Classification of Liabilities as
Current or Non-Current and Classification
of Liabilities as Current or Non-Current
- Deferral of Effect Date.
IAS 1 (amendments) Non-current Liabilities with covenants 1 January 2024
The Directors do not expect the adoption of these standards and
amendments to have a material impact on the Financial
Statements.
3. Significant accounting policies
Basis of consolidation
Where the company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
The consolidated financial statements present the results of the
Company and its subsidiaries ("the Group") as if they formed a
single entity. Intercompany transactions and balances between group
companies are therefore eliminated in full. The consolidated
financial statements incorporate the results of business
combinations using the acquisition method. In the statement of
financial position, the acquiree's identifiable assets, liabilities
and contingent liabilities are initially recognised at their fair
values at the acquisition date. The results of acquired operations
are included in the consolidated statement of comprehensive income
from the date on which control is obtained until the date on which
control ceased.
In the Company's accounts, investments in subsidiary
undertakings are stated at cost less any provision for
impairment.
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. Any directly
attributable costs relating to business combinations before or
after the acquisition date are charged to the statement of
comprehensive income in the period in which they are incurred.
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. The cash generating units to which
goodwill is allocated are tested annually for impairment. Any
impairment is recognised immediately in administrative expenses in
the statement of comprehensive income and is not subsequently
reversed. 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.
Revenue
WEalth management (WM)
Management and custody fees
Investment management fees are recognised in the period in which
the related service is provided. It is a variable fee based on the
average daily market value of assets under management and is
invoiced on a calendar quarter basis in arrears. The performance
obligation is satisfied over time as the contractual obligations
are on ongoing throughout the period under contract. The revenue
accrued but not yet invoiced is recognised as a contract asset.
Initial and ongoing advisory fees
Initial advisory fees are charged to clients on a fixed one-off
fee agreement. The performance obligation is satisfied as the
initial advice is provided. Ongoing advisory fees are variable fees
based on the average daily market value of assets under management
and invoiced on a calendar quarter basis in arrears. Both initial
and ongoing advisory fees are recognised in the period in which the
related service is provided. The performance obligation of ongoing
advice is satisfied over time as the contractual obligations are
ongoing throughout the period under contract. The revenue accrued
but not yet invoiced is recognised as a contract asset.
Commission and transaction charges
Commission is recognised when receivable in accordance with the
date of settlement. It is a variable fee based on a percentage of
the transaction and therefore the performance obligation is
satisfied at the date of the underlying transaction. The
transaction price is calculated based on the agreed percentage of
the underlying consideration of the trade. The underlying
consideration being the number of shares multiplied by the share
price at the time of the underlying transaction.
CApital markets (cM)
Commission
Brokerage commission is recognised when receivable in accordance
with the date of settlement. It is a variable fee based on a
percentage of the transaction and therefore performance obligation
is satisfied at the date of the underlying transaction. The
transaction price is calculated based on the agreed percentage of
the underlying consideration of the trade. The underlying
consideration being the number of shares multiplied by the share
price at the time of the underlying transaction.
Corporate finance advisory fees
Corporate finance advisory fees are fixed fees agreed on a deal
by deal basis and might include non-cash consideration received in
the form of shares, loan notes, warrants or other financial
instruments recognised at the fair value on the date of receipt and
therefore the performance obligation is satisfied at a point in
time when the Group has fully completed the performance obligations
per the contract.
Retainer fees
Retainer fees are recognised over the length of time of the
agreement. Fees are fixed and invoiced quarterly in advance based
on the agreed engagement letter. The performance obligation is
satisfied over time as the contractual obligations are on ongoing
throughout the period under contract. The deferred revenue is
recognised as a contract liability.
Corporate placing commissions
Corporate placing commissions are variable fees agreed on a
deal-by-deal basis based on a percentage of the funds raised as
part of a transaction. This includes non-cash consideration
received in the form of shares, loan notes, warrants or other
financial instruments recognised at the fair value on the date of
receipt. Given that fees related to this work are success based,
there is a significant risk of reversal of the variable revenue and
therefore the performance obligation is satisfied at a point in
time when the transaction is completed. The combination of
corporate placing commissions and corporate finance advisory fees
are referred to as corporate success fees.
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 statement of comprehensive income
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 12 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.
Share-based payments
The share option programmes allow Group employees to receive
remuneration in the form of equity-settled share-based payments
granted by the Company.
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 the 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 statement of comprehensive income
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 repriced 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).
In all instances, the charge/credit is taken to the statement of
comprehensive income of the Group or Company by which the
individual concerned is employed.
Employee Benefit Trust (EBT)
The cost of purchasing own shares held by the EBT are shown as a
deduction against equity. The proceeds from the sale of own shares
held increase equity. Neither the purchase nor sale of own shares
leads to a gain or loss being recognised in the consolidated
statement of comprehensive income.
Employee Share Ownership Trust (ESOT)
The Company has established an ESOT. The assets and liabilities
of this trust comprise shares in the Company and loan balances due
to the Company. The Group includes the ESOT within these
consolidated Financial Statements and therefore recognises a
Treasury shares reserve in respect of the amounts loaned to the
ESOT and used to purchase shares in the Company. Any cash received
by the ESOT on disposal of the shares it holds, will be used to
repay the loan to the Company.
Treasury shares
The costs of purchasing Treasury shares are shown as a deduction
against equity. The proceeds from the sale of own shares held
increase equity. Neither the purchase nor sale of treasury shares
leads to a gain or loss being recognised in the consolidated
statement of comprehensive income.
Income taxes
Income tax on the profit or loss for the years presented,
comprising current tax and deferred tax, is recognised in the
statement of comprehensive income 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
reporting year-end date and any adjustment to tax payable in
respect of previous years.
Deferred tax is provided for temporary differences, at the
reporting year-end 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;
-- goodwill which is not deductible for tax purposes;
-- the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit; and
-- 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 reporting period end date (note 19).
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. The deferred tax asset of GBP190k
was released during the period in light of recent forecasts (FY22:
GBP190k).
Plant and equipment
Plant and equipment is stated at cost less accumulated
depreciation and impairment. Depreciation is calculated, using the
straight-line method, to write down the cost or revalued amount of
plant and equipment over the assets' expected useful lives, to
their residual values, as follows:
Computers, fixtures and fittings - 4 to 7 years
Intangible assets
Measurement
Intangible assets with finite useful lives that are acquired
separately are measured, on initial recognition at cost. Following
initial recognition, they 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 other than goodwill are amortised over the
expected pattern of their consumption of future economic benefits,
to write down the cost of the intangible assets to their residual
values as follows:
Client relationships - 10 to 12 years
Brand - 2 years
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 or its residual
value are accounted for by changing the amortisation period or
method.
Impairment
The carrying amounts of the Group's intangible assets, excluding
goodwill, are reviewed when there is an indicator of impairment and
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. 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. Any subsequent reversal of
impairment credited to the statement of comprehensive income shall
not cause the carrying amount of the intangible asset to exceed the
carrying amount that would have been determined had no impairment
been recognised.
Impairment of assets
Goodwill and other intangible assets that have an indefinite
life are not subject to amortisation, they are tested annually for
impairment. Other assets are tested for impairment when any changes
in circumstance indicate the carrying amount is possibly not
recoverable. An impairment loss is recognised when the asset's
carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset's fair value less costs to sell
and the value in use. Goodwill is allocated to cash generating
units for the purpose of assessing impairment, assets (excluding
goodwill) are grouped together based on the assets that
independently generates cash flow whose cash flow is largely
independent of the cash flows generated by other assets (cash
generating units).
Leased assets
Measurement and recognition of leases as a lessee
For any new lease contracts entered into on or after 1 April
2019, as permitted under IFRS 16, the Group recognises a right of
use asset and a lease liability except for:
-- Leases with a term of 12 months or less from the lease commencement date
-- Leases of low value assets
Lease liabilities are measured at the present value of the
unpaid lease payments discounted using an incremental borrowing
rate.
Right of use assets are initially measured at the amount of the
lease liabilities plus initial direct costs, costs associated with
removal and restoration and payments previously made. Right of use
assets are amortised on a straight-line basis over the term of the
lease.
Lease liabilities are subsequently increased by the interest
charge using the incremental borrowing rate and reduced by the
principal lease.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets and liabilities
Investments are recognised and derecognised on the trade date
where the purchase or sale of an investment is under a contract
whose terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at
fair value, plus transaction costs, except for those financial
assets classified as at fair value through profit or loss, which
are initially measured at fair value.
Assets and liabilities are presented net where there is a legal
right to offset and an intention to settle in that way.
The three principal classification categories for financial
assets are: measured at amortised cost, fair value through other
comprehensive income (FVOCI) and fair value through profit or loss
(FVTPL). The classification of financial assets under IFRS 9 is
generally based on the business model in which a financial asset is
managed and its contractual cash flow characteristics.
Financial assets are not reclassified after their initial
recognition unless the Group changes its business model for
managing financial assets, in which case all affected financial
assets are reclassified on the first day of the first reporting
period following the change in the business model.
A financial asset is measured at amortised cost if it meets both
of the following conditions and is not designated as at FVTPL:
-- it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
-- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held
for trading, the Group may irrevocably elect to present subsequent
changes in the investment's fair value in OCI. This election is
made on an investment-by-investment basis.
All financial assets not classified as measured at amortised
cost or FVOCI as described above are measured at FVTPL. This
includes all derivative financial assets. On initial recognition,
the Group may irrevocably designate a financial asset that
otherwise meets the requirements to be measured at amortised cost
or at FVOCI as at FVTPL if doing so eliminates or significantly
reduces an accounting mismatch that would otherwise arise.
Assets held at FVTPL are subsequently measured at fair value.
Net gains and losses, including any interest or dividend income,
are recognised in profit or loss.
Financial assets at amortised cost are subsequently measured at
amortised cost using the effective interest method. The amortised
cost is reduced by impairment losses. Trade receivables and other
receivables are measured and carried at amortised cost using the
effective interest method, less any impairment. If impaired, the
carrying amount of other receivables is reduced by the impairment
loss directly and a charge is recorded in the Income Statement. For
trade receivables, the carrying amount is reduced by the expected
credit lifetime losses under the simplified approach permitted
under IFRS9. Subsequent recoveries of amounts previously written
off are credited against the allowance account and changes in the
carrying amount of the allowance account are recognised in the
Income Statement.
Equity investments at OCI are subsequently measured at fair
value. Dividends are recognised as income in profit or loss unless
the dividend clearly represents a recovery of part of the cost of
the investment. Other net gains and losses are recognised in OCI
and are never reclassified to profit or loss.
The following financial assets & liabilities are held at
FVTPL; investments and deferred consideration. The following
financial assets and liabilities are held at amortised cost; Cash
and cash equivalents, trade and other receivables, accrued income,
trade and other lease liabilities.
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.
Deferred consideration
Deferred consideration is recognised at the discounted present
value of amounts payable. After initial recognition, it is rebased
over the period in which the consideration is payable, with the
unwinding of the discount being taken to the statement of
comprehensive income.
4. Critical accounting judgements and key sources of estimation
and uncertainty
The preparation of financial statements in accordance with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including reasonable
expectations of future events. The estimates and judgements that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are discussed below:
Amortisation and impairment of non-financial assets
As noted above, the Group estimates the useful economic lives of
intangible assets, in order to calculate the appropriate
amortisation charge. This is done by the Directors using their
knowledge of the markets and business conditions that generated the
asset, together with their judgement of how these will change in
the foreseeable future.
Where an indicator of impairment exists, value in use
calculations are performed to determine the appropriate carrying
value of the asset. The value in use calculation requires the
Directors to estimate the future cash flows expected to arise for
the CGU and a suitable discount rate in order to calculate present
value. Where the actual future cash flows are less than expected, a
material impairment loss may arise (see note 15).
Goodwill is subject to an annual impairment review which is
performed by comparing the balance value with the recoverable
amount of the asset or it's CGU. The recoverable amount is the
higher of the value in use and fair value to sell less costs.
Investments in subsidiaries
Where an indicator of impairment exists, management uses its
judgement to assess the carrying value of the asset by determining
the fair value by independent assessment of the carrying value of
the business units and by comparative analysis against other
similar businesses in the peer group. The carrying value of
investments in subsidiaries on 31 March 2023 was GBP26.4m (FY22:
GBP26.4m) (see note 16).
At the year-ended 31 March 2023, the carrying values of the
investments in subsidiaries were assessed for indicators of
impairment.
The value of Harpsden Wealth Managements Limited (Harpsden)
forming part of the total value of investments in subsidiaries, is
tested as part of the annual impairment of goodwill. Since this
test showed no impairment due (see note 19 for further detail) it
has been viewed there is no requirement for a further impairment to
the carrying value of the related investment.
The value of WH Ireland Limited can be considered in the sum of
two parts, for the two divisions. The Wealth Management (WM)
revenue, excluding Harpsden (tested separately), is predominantly
derived from the assets under management. An AUM multiple was
applied to obtain an indication of the value of the total WM.
Capital Markets was valued by a multiple of annual revenue based on
success fees and retainer fee revenue.
The total value of the two divisions together did not indicate
an impairment was necessary for WH Ireland Limited, therefore no
adjustment has been made for the year ended 31 March 2023.
Warrants
Included in non-current investments are warrants valued at the
estimated fair value at the reporting date. These values are
obtained by applying an appropriate valuation model for which most
of the inputs are based on contracts and external sources.
Therefore, no reasonable change in assumptions would lead to a
material change in the fair value, see note 17 for details of the
fair value at 31 March 2023.
Deferred consideration
As described in note 24, the Group has a deferred consideration
balance in respect of the acquisition in December 2020 of Harpsden
Wealth Management Limited. The expected future payment is
recognised at its fair value, this being the estimate of future
payments due. This was previously discounted to present value,
however as at 31 January 2023 was fully unwound.
5. Segment information
The Group has two principal operating segments, Wealth
Management (WM) and Capital Markets (CM) and a number of minor
operating segments that have been aggregated into one operating
segment.
WM offers investment management advice and services to
individuals and contains our Wealth Planning business, giving
advice on and acting as intermediary for a range of financial
products. CM provides corporate finance and corporate broking
advice and services to companies and acts as Nominated Adviser
(Nomad) to clients traded on the AIM and contains our Institutional
Sales and Research business, which carries out stockbroking
activities on behalf of companies as well as conducting research
into markets of interest to its clients.
Both divisions are located in the UK. Each reportable segment
has a segment manager who is directly accountable to, and maintains
regular contact with, the Chief Executive Officer.
No customer represents more than ten percent of the Group's
revenue (FY22: nil).
The following tables represent revenue and cost information for
the Group's business segments. The key line items below are not
consistent with the statement of comprehensive income.
Wealth Capital Group Group
Management Markets and consolidation
Year ended 31 March 2023 adjustments
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ------------ --------- ------------------- ---------
Revenue 14,443 12,245 - 26,688
Direct costs (11,400) (11,604) - (23,004)
------------ --------- -------------------
Contribution 3,043 641 - 3,684
Indirect costs (2,798) (1,994) (879) (5,671)
Underlying profit / (loss) before
tax 245 (1,353) (879) (1,987)
Amortisation of acquired brand
and client relationships (496) - - (496)
Changes in fair value and finance
cost of deferred consideration (173) - - (173)
Other income 1,957 - - 1,957
Net changes in the value of non-current
investment assets - (1,124) - (1,124)
Profit / (loss) before tax 1,533 (2,477) (879) (1,823)
Tax 69 - (190) (121)
Profit / (loss) for the year 1,602 (2,477) (1,069) (1,944)
----------------------------------------- ------------ --------- ------------------- ---------
Wealth Management Capital Group
Year ended 31 March 2023 Markets
GBP'000 GBP'000 GBP'000
---------------------------------------- ------------------ --------- --------
Statutory operating costs included the
following:
Amortisation 496 - 496
Depreciation 141 90 231
Depreciation from Right of Use assets 218 148 366
---------------------------------------- ------------------ --------- --------
Wealth Management Capital Group and Group
Markets consolidation
Year ended 31 March 2022 adjustments
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- ------------------ --------- --------------- -----------
Revenue 15,837 16,198 - 32,035
Direct costs (13,072) (12,475) - (25,547)
------------------ --------- ---------------
Contribution 2,765 3,723 - 6,488
Indirect costs (3,013) (1,427) (651) (5,091)
Underlying profit/(loss) before
tax (248) 2,296 (651) 1,397
Acquisition related costs (446) - - (446)
Amortisation of acquired brand
and client relationships (505) - - (505)
Changes in fair value and finance
cost of deferred consideration (416) - - (416)
Restructuring costs (478) (357) - (835)
Net changes in the value of non-current
investment assets - 813 - 813
Profit/(loss) before tax (2,093) 2,752 (651) 8
Tax 67 - - 67
Profit/(loss) for the year (2,026) 2,752 (651) 75
----------------------------------------- ------------------ --------- --------------- ---------
Wealth Management Capital Group
Year ended 31 March 2022 Markets
GBP'000 GBP'000 GBP'000
---------------------------------------- ------------------ --------- --------
Statutory operating costs included the
following:
Amortisation 505 - 505
Depreciation 199 90 289
Depreciation from Right of Use assets 267 168 435
---------------------------------------- ------------------ --------- --------
Segment assets and segment liabilities are reviewed by the Chief
Executive Officer based on the consolidated statement of financial
position. Accordingly, this information is replicated in the Group
Consolidated statement of financial position. As no measure of
assets or liabilities for individual segments is reviewed regularly
by the Chief Executive Officer, no disclosure of total assets or
liabilities has been made.
The accounting policies of the operating segments are the same
as those described in the summary of significant accounting
policies.
Revenue disaggregated by division and timing of recognition
below:
Wealth Capital Group and
Management Markets consolidation
Year ended 31 March 2023 adjustments Group
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------ --------- --------------- --------
Point in time 1,528 8,011 - 9,539
Over time 12,915 4,234 - 17,149
14,443 12,245 - 26,688
-------------------------- ------------ --------- --------------- --------
Wealth Capital Group and Group
Management Markets consolidation (continuing
Year ended 31 March 2022 adjustments operations)
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------ --------- --------------- -------------
Point in time 2,443 12,429 - 15,187
Over time 13,394 3,769 - 13,554
15,837 16,198 - 28,741
-------------------------- ------------ --------- --------------- -------------
The following movement of contract liabilities was recognised in
the year:
As at 31 Recognised Amounts As at 31
Mar 2022 in revenue deferred Mar 2023
Group GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ---------- ------------ ---------- ----------
Contract liabilities 39 (39) 7 7
---------------------- ---------- ------------ ---------- ----------
Contract liabilities relate to deferred recognition of retainer
fees invoices quarterly. During the year the billing period was
aligned to the financial year quarters causing a reduction in
contract liabilities at the year-end 31 March 2023.
6. Operating profit/ (loss)
Year ended Year ended
31 Mar 2023 31 Mar 2022
Group GBP'000 GBP'000
------------ ------------
Operating (loss)/profit is stated after charging/(crediting):
Depreciation of property, plant and equipment (note
13) 231 289
Amortisation of intangibles (note 15) 496 505
Short term and low value leases 112 59
IFRS 16 depreciation (note 18) 366 435
Employee benefit expense (note 7) 16,744 21,300
Restructuring and non-recurring legal and regulatory
costs - 1,191
Other administrative expenses 9,326 9,083
Auditors' remuneration:
Audit of these financial statements 60 50
Amounts payable to the principal auditors and their
associates in respect of:
- audit of financial statements of subsidiaries
pursuant to legislation 115 95
- audit related assurance services 50 55
- audit of financial statements relating for prior 50 -
year
27,550 33,062
Expected credit loss (note 20) 239 81
Total 27,789 33,143
--------------------------------------------------------------- ------------ ------------
O ther administrative expenses are incurred in the ordinary
course of the business and do not include any non-recurring
items.
7. Employee benefit expense
The Group claimed GBPnil of grants during the year (FY22: GBP7k)
from the UK Government through the Coronavirus Job Retention
Scheme. No staff remained on furlough from 30 June 2021.
Non-salaried staff are commission-only brokers and therefore do
not receive a salary.
Year ended Year ended
31 Mar 2023 31 Mar 2022
Group GBP'000 GBP'000
------------ ------------
Wages and salaries 11,970 12,139
Bonuses 1,537 2,148
Social security costs 1,734 1,975
Other pension costs 539 508
15,780 16,770
Non salaried staff 605 4,895
Other administrative expenses 16,385 21,665
Charge for share options granted to employees (note
30) 359 470
Less amounts included within Restructuring and
non-recurring costs - (835)
16,744 21,300
----------------------------------------------------- ------------ ------------
Year ended Year ended
31 Mar 2023 31 Mar 2022
Company GBP'000 GBP'000
----------------------------------------------------- ------------ ------------
Wages and salaries 207 260
The average number of persons (including Directors) employed
during the year was:
Year ended Year ended
Group 31 Mar 2023 31 Mar 2022
Executive and senior management 6 8
Capital Markets 50 42
Wealth Management 74 75
Support staff 30 26
Salaried staff 160 151
Non salaried staff 3 7
Total 163 158
----------------------------------------------------- ------------ ------------
Year ended Year ended
Company 31 Mar 2023 31 Mar 2022
----------------------------------------------------- ------------ ------------
Executive and senior management 4 4
----------------------------------------------------- ------------ ------------
The total amount paid to Directors in the period, including
social security costs was GBP0.9m (FY22: GBP1.6m).
8. Finance income and expense
Year ended Year ended
31 Mar 2023 31 Mar 2022
Group GBP'000 GBP'000
--------------------------------------------------- ------------ ------------
Bank interest receivable 10 1
Other interest - -
Finance income 10 1
--------------------------------------------------- ------------ ------------
-
Interest payable on lease liabilities 51 93
Fair value and present value discount of deferred
consideration (see note 24) 173 416
Other interest - 2
Finance expense 224 511
--------------------------------------------------- ------------ ------------
9. Other income
Year ended Year ended
31 Mar 2023 31 Mar 2022
Group GBP'000 GBP'000
------------------- ------------ ------------
VAT refund 2,175 -
------------------- ------------ ------------
Total other income 2,175 -
------------------- ------------ ------------
During the year the Group received a refund of GBP2.2m from
HMRC. This was following confirmation from HMRC that the supply of
certain Group services were exempt from VAT during the period from
2017 to 2022.
10. Taxation
Year ended Year ended
31 Mar 2023 31 Mar 2022
Group GBP'000 GBP'000
------------ ------------
Current tax expense:
United Kingdom corporation tax at 19% (FY22: 19%) - -
Total current tax - -
---------------------------------------------------- ------------ ------------
Deferred tax credit (note 19):
Current year 121 (67)
Effect of change in tax rate - -
Total deferred tax 121 (67)
---------------------------------------------------- ------------ ------------
Total tax in the statement of comprehensive income 121 (67)
---------------------------------------------------- ------------ ------------
The tax credit for the year and the amount calculated by
applying the standard United Kingdom corporation tax rate of 19%
(FY22: 19%) to profit before tax can be reconciled as follows:
Year ended Year ended
31 Mar 2023 31 Mar 2022
Group GBP'000 GBP'000
------------ ------------
(Loss)/ profit before tax (1,823) 8
---------------------------------------------------- ------------ ------------
Tax expense using the United Kingdom corporation
tax rate of 19% (FY22: 19%) (346) 2
Other expenses not tax deductible 334 183
Income not chargeable to tax (11) (6)
Movement in unrecognised deferred tax (60) (246)
Movement in recognised deferred tax 190 -
Amounts not recognised 14 -
Total tax credit in the statement of comprehensive
income 121 (67)
---------------------------------------------------- ------------ ------------
11. Dividend
No dividend is proposed in respect of 2023 (FY22: none).
12. Earnings per share (EPS)
Basic EPS is calculated by dividing the profit or loss
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 (note 28).
Diluted EPS is the basic EPS, adjusted for the effect of the
conversion into fully paid shares of the weighted average number of
all employee share options outstanding. In a year when the Company
presents positive earnings attributable to ordinary shareholders,
anti-dilutive options represent options issued where the exercise
price is greater than the average market price for the period.
Reconciliations of the earnings and weighted average number of
shares used in the calculations are set out below:
Year ended Year ended
31 Mar 2023 31 Mar 2022
Group
------------ ------------
Weighted average number of shares in issue during
the period 59,172 59,692
Effect of dilutive share options - 1,190
(thousands)
59,172 60,882
----------------------------------------------------------- ------------ ------------
Total
----------------------------------------------------------- ------------ ------------
Profit for the year attributable to ordinary shareholders
(GBP'000) (1,944) 75
----------------------------------------------------------- ------------ ------------
Basic (3.29p) 0.13p
Diluted - 0.12p
----------------------------------------------------------- ------------ ------------
13. Property, plant and equipment
Group Company
---------------------- -------------
Computers, Computers,
fixtures and fittings fixtures and
fittings
GBP'000 GBP'000
----------------------------- ---------------------- -------------
Cost
At 31 March 2021 5,645 33
Additions 103 4
At 31 March 2022 5,748 37
Additions 475 -
Disposal - (4)
At 31 March 2023 6,223 33
----------------------------- ---------------------- -------------
-
Depreciation and impairment
At 31 March 2021 5,134 33
Depreciation charge 289 -
At 31 March 2022 5,423 33
Depreciation charge 231 -
At 31 March 2023 5,654 33
----------------------------- ---------------------- -------------
-
Net book values
At 31 March 2023 569 -
---------------------- -------------
At 31 March 2022 325 4
----------------------------- ---------------------- -------------
Included in the above, are software costs capitalised in the
year with a net book value at 31 March 2023 of GBP116k (FY22:
GBPnil).
14. Goodwill
Goodwill acquired in a business combination is allocated to a
cash generating unit (CGU) that will benefit from that business
combination.
The carrying amount of goodwill acquired in the acquisition of
Harpsden Wealth Management is set out below:
Year ended Year ended
31 Mar 2023 31 Mar 2022
Group GBP'000 GBP'000
------------ ------------
Beginning of year 3,539 3,539
End of year 3,539 3,539
------------------- ------------ ------------
Goodwill is assessed annually for impairment and the
recoverability has been assessed at 31 January 2023 by comparing
the carrying value of the CGU to which the goodwill is allocated
against its recoverable amount. The recoverable amount is the
higher of the CGU's fair value less cost to sell and the value in
use. The value in use has been calculated using pre-tax discounted
cash flow projections based on the most recent budgets and
forecasts approved by the Board of Directors.
The projections cover a five-year period and a terminal multiple
has been applied to the cash-flows extrapolating the projections
consistent with the assumed indefinite useful life of the
goodwill.
The Harpsden CGU recoverable amount was calculated as GBP10.0m
(FY22: GBP10.94m), indicating that there is no impairment. The main
underlying assumptions used in the calculations are the pre-tax
discount rate, the short-term growth in revenue and expenditure and
the long-term growth rate to perpetuity. The revenue growth used in
the cash flow forecast is based on the AUM forecasts multiplied by
the relevant yields. AUM forecasted growth ranges from -2.6% to
5.0% (FY22: 5% to 13%). Cash outflows have been estimated at 5%
(FY22: 5%) annual increase where no other significant growth has
been forecasted. A pre-tax discount rate of 17.9% (14.7%) has been
used. This is based on the Group's assessment of the risk-free rate
of interest and specific risks relating to Harpsden. A 2% (FY22:
2%) long-term growth rate has been applied, which is prudent when
compared against the growth rates used in the forecast calculations
for the first five years.
Sensitivity analysis has been performed and no impairment would
arise if the following scenarios occurred:
-- An increase in pre-tax discount rate from 17.9% to 21.0%
-- A fall in perpetuity growth rate from 2% to -3%
-- If there was no increase in AUM over the five-year forecast
and the subsequent terminal growth was 0%.
-- A further fall in AUM in FY25 of 8%, no AUM growth in FY26
and 2% and 5% growth in AUM in FY26 & FY27 respectively would
result in a break-even position
Further sensitivity was performed post year-end due to
non-adjusting subsequent events that could materially impact the
results of the impairment calculation. These events were not known
at the reporting date and could not reliably be measured at the
time of approval of these finance statements as certain elements
remained under negotiation. For instance if AUM were to fall in
FY25 from FY24 forecasts by a further 14.6% an impairment charge
would be required. Given the uncertainty no impairment charge has
been recognised at the year-end 31 March 2023.
15. Intangible assets
Client relationships arise when the group acquires a broker
business with an existing client base. The assets below represent
the fair value of future benefits arising from these client
relationships. Amortisation of client relationships is charged to
administrative expenses in the consolidated statement of
comprehensive income on a straight-line basis over the estimated
useful lives (2 to 12 years). No impairment indicators were present
for the acquired client relationship contracts.
Client
relationships Brand Total
Group GBP'000 GBP'000 GBP'000
Cost
At 31 March 2021 8,731 75 8,806
Additions - - -
At 31 March 2022 8,731 75 8,806
Additions - - -
At 31 March 2023 8,731 75 8,806
--------------------- -------------- -------- --------
Amortisation
At 31 March 2021 4,033 9 4,042
Charge for the year 467 38 505
At 31 March 2022 4,500 47 4,547
Charge for the year 468 28 496
At 31 March 2023 4,968 75 5,043
--------------------- -------------- -------- --------
Net book values
At 31 March 2023 3,763 - 3,763
At 31 March 2022 4,231 28 4,259
--------------------- -------------- -------- --------
During the year ended 31 March 2021, the group acquired client
relationships totalling GBP4.2m as part of the Harpsden acquisition
and at the year ending 31 March 2023 the net book value was
GBP3.37m (FY22: GBP3.72m) and remaining useful economic life of 8
years (FY22: 9 years). An intangible asset was also recognised
representing the Harpsden brand totalling GBP75k and at the year
ending 31 March 2023 the net book value was fully amortised.
An intangible asset was recognised relating to the client
relationships brought in by Robert Race when he joined the group.
At the year ended 31 March 2023 the net book value was GBP367k
(FY22: GBP489k) and remaining useful economic life of 3 years
(FY22: 4 years).
The company did not have any intangible assets either at 31
March 2023 or 31 March 2022.
16. Subsidiaries
Year ended Year ended
31 Mar 2023 31 Mar 2022
Company GBP'000 GBP'000
------------ ------------
Beginning of year 26,448 26,448
End of year 26,448 26,448
------------------- ------------ ------------
Investments in subsidiaries are stated at cost less
impairment.
The Company's subsidiaries, all of which are included in the
consolidated financial statements, are presented below:
Proportion Proportion
Country Principal Class held by held by
Subsidiary of incorporation activity of shares Group Company
England &
WH Ireland Limited Wales WM and CIB Ordinary 100% 100%
Harpsden Wealth Management England &
Limited Wales WM Ordinary 100% 100%
WH Ireland (Financial England &
Services) Limited Wales Dormant Ordinary 100% -
England &
Readycount Limited Wales Dormant Ordinary 100% 100%
Stockholm Investments England &
Limited Wales Dormant Ordinary 100% 100%
ARE Business and Professional England &
Limited Wales Dormant Ordinary 100% -
SRS Business and Professional England &
Limited Wales Dormant Ordinary 100% -
WH Ireland Nominees England &
Limited Wales Nominee Ordinary 100% -
WH Ireland Trustee England &
Limited Wales Trustee Ordinary 100% -
England &
Fitel Nominees Limited Wales Nominee Ordinary 100% -
------------------------------- ------------------- ------------ ------------ ----------- -----------
The registered office of all companies listed above is 24 Martin
Lane, London, EC4R 0DR.
The following dormant subsidiaries are guaranteed by the Company
and therefore take advantage of the Companies Act (2006) in
obtaining exemption from an individual audit:
Company registration
Subsidiary Country of incorporation number
WH Ireland (Financial Services) Limited England & Wales 4279349
Readycount Limited England & Wales 3164863
Stockholm Investments Limited England & Wales 4215675
ARE Business and Professional Limited England & Wales 3681185
SRS Business and Professional Limited England & Wales 4238969
WH Ireland Nominees Limited England & Wales 2908691
WH Ireland Trustee Limited England & Wales 3559373
Fitel Nominees Limited England & Wales 1401140
----------------------------------------- -------------------------- ---------------------
17. Investments
Group
Quoted Unquoted Total
Financial assets at fair value through GBP'000 GBP'000 GBP'000
profit or loss
--------- ----------- ---------
At 31 March 2022 - 48 48
----------------------------------------
At 31 March 2023 - 48 48
---------------------------------------- --------- ----------- ---------
Quoted Warrants* Total
Other financial assets at fair value GBP'000 GBP'000 GBP'000
through profit or loss
--------- ----------- ---------
At 31 March 2021 1 1,050 1,051
Additions - 850 850
Fair value gain - 1,072 1,072
Disposals - (8) (8)
At 31 March 2022 1 2,964 2,965
Additions - 286 286
Fair value loss - (2,060) (2,060)
Disposals (1) (370) (371)
At 31 March 2023 - 820 820
---------------------------------------- --------- ----------- ---------
Total investments at 31 March 2023 - 820 820
Total investments at 31 March 2022 1 3,012 3,013
---------------------------------------- --------- ----------- ---------
Financial assets at fair value through profit or loss include
equity investments other than those in subsidiary undertakings.
These are measured at fair value with fair value gains and losses
recognised through profit and loss.
Other investments, in the main, comprise financial assets
designated as fair value through profit or loss and include
warrants and equity investments.
Warrants may be received during the ordinary course of business
and are 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 reporting year-end date. In the case of unquoted
investments, the fair value is estimated by reference to recent
arm's length transactions. The fair value of warrants is estimated
using established valuation models.
The fair value of the warrants was determined using the Black
Scholes model and grouped within level 3 with fair value
measurements derived from formal valuation techniques (see note
25). The key inputs into this calculation are the share price as at
31 March 2023, exercise price, risk free interest rate and
volatility which is based on the share price movements during the
same length as the remaining time of exercise.
Included in non-operational income is the fair value loss
totalling GBP2,060k (2022 gain: GBP1,072k).
Year ended Year ended
31 Mar 2023 31 Mar
2022
Net gains on investing activities GBP'000 GBP'000
----------------------------------------- ------------ -----------
Fair value (loss) / gain on warrants (2,060) 1,072
Fair value (loss) / gain on investments (623) 554
Total net gain on investing activities (2,683) 1,626
------------------------------------------ ------------ -----------
18. Right of use asset and lease liability
Leasehold Properties
GBP'000
Cost
At 31 March 2021 2,667
Additions -
At 31 March 2022 2,667
Additions 445
Disposals (1,185)
Deferred rent release 125
At 31 March 2023 2,052
----------------------------- ---------------------
Depreciation and impairment
At 31 March 2021 1,064
Charge for the year 435
At 31 March 2022 1,499
Charge for the year 366
Disposal (448)
At 31 March 2023 1,417
-----------------------------
Net book values
At 31 March 2023 635
At 31 March 2022 1,168
----------------------------- ---------------------
Maturity of discounted lease payments in relation to
non-cancellable leases
The table below represents the minimum lease payments in
relation to non-cancellable leases where the group is a lessee:
Group
Payable after
Payable within Payable in more than Total contractual
1 year 2 to 5 years 5 years payments
Group GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------------- -------------- ------------------
2023 319 281 12 612
--------------- -------------- -------------- ------------------
2022 376 956 43 1,375
------ --------------- -------------- -------------- ------------------
The following represents the lease expense in relation to leases
which is recognised in the statement of comprehensive income:
Year ended Year ended
31 Mar 2023 31 Mar 2022
Group GBP'000 GBP'000
------------ ------------
Depreciation of right of use asset 366 435
Deferred rent release (125) -
Interest charge 51 85
Total charge 417 520
------------------------------------ ------------ ------------
Nature of leases
The Group leases a number of properties in the jurisdictions it
operates.
These leases are usually for a fixed term although the Group
sometimes negotiates break clauses in its leases. On a case-by-case
basis, the Group will consider whether the absence of a break
clause would expose the group to excessive risk. Typically factors
considered in deciding to negotiate a break clause include:
-- the length of the lease term;
-- the economic stability of the environment in which the property is located; and
-- whether the location represents a new area of operations for the Group
As at 31 March 2023, the carrying amounts of the lease
liabilities are not reduced by the amounts that would not be paid
as a result of exercising the break clauses because the Group does
not anticipate exercising its rights to the break clauses.
The total cash outflow for leases, including short-term leases,
in the year ending 31 March 2023 was GBP540k (FY22: GBP827k)
Payments associated with short-term leases and all leases of
low-value assets are recognised on a straight-line basis in
administrative expenses. Short-term leases are leases with a lease
term of 12 months or less without a purchase option.
The Company did not have any right of use assets or lease
liabilities either at 31 March 2023 or 31 March 2022.
19. Deferred tax assets and liabilities
Deferred tax is provided for temporary differences, at the
reporting year-end date, between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes using a tax rate of 19% (FY22: 19%). A deferred tax asset
is recognised for all deductible temporary differences and
unutilised 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.
A net deferred tax liability has been recognised in the
year:
Year ended Year ended
31 Mar 2023 31 Mar 2022
Group GBP'000 GBP'000
------------ ---------------
Tax losses - 190
Intangible acquired on business combinations (663) (736)
Other - 4
Deferred tax liability (663) (542)
---------------------------------------------- ------------ ---------------
The change in deferred tax assets and liabilities during the
year was as follows:
Trading losses
carried forward Total
Group GBP'000 GBP'000
--------------------- ----------
Deferred tax asset
As at 31 March 2022 190 190
As at 31 March 2023 - -
------------------------------------------------ --------------------- ----------
The carrying amount of the deferred tax asset is reviewed at each reporting
date and is only recognised to the extent that it is probable that future
taxable profits of the Group will allow the asset to be recovered. Based
on budgets for FY24 it was determined that while there is an improved
chance of return to a break-even position, there is uncertainty on when
the deferred tax asset will be realised in the foreseeable future. Therefore
the deferred tax asset has been reduced to nil and a tax charge has
been recognised accordingly.
Intangible asset
amortisation Total
Group GBP'000 GBP'000
--------------------- ----------
Deferred tax liabilities
As at 1 April 2021 799 799
Credit to the Consolidated statement
of comprehensive income (67) (67)
------------------------------------------------ --------------------- ----------
As at 31 March 2022 732 732
Credit to the Consolidated statement
of comprehensive income (69) (69)
------------------------------------------------ --------------------- ----------
As at 31 March 2023 663 663
------------------------------------------------ --------------------- ----------
The unrecognised tax losses and fixed asset timing differences
amount to GBP16.0m (FY22: GBP13.4m). No deferred tax has been
recognised in respect of these losses due to the uncertainty over
the timing of future profits.
The Company had no deferred tax balances either at 31 March 2023
or 31 March 2022.
20. Trade and other receivables
Group Company
31 Mar 31 Mar 2022 31 Mar 31 Mar
2023 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
-------- ------------ -------- --------
Trade receivables 643 751 - -
Other receivables 528 893 14 95
Accrued income 3,008 3,079 - -
Prepayments 1,265 1,035 15 18
5,444 5,758 29 113
------------------- -------- ------------ -------- --------
The carrying value of trade and other receivable balances are
denominated fully in British pounds (FY22: 100%).
Accrued income relates to management fee accruals. Management
fees are accrued on a monthly basis and reconciled to fees
collected quarterly. Consideration to IFRS 9 has been made and it
has been determined that there is a low probability of default and
therefore the expected credit loss is not material.
The impact of applying IFRS 9 to intercompany balances for the
Company has been considered and probability of default was assessed
and consequently, it was determined that the expected credit loss
is not material.
Fees and charges owed by clients are generally considered to be
past due where they remain unpaid five working days after the
relevant billing date. At 31 March 2023, trade receivables (net of
provisions for impairment and doubtful debts) comprised of the
following:
Group Company
31 Mar 31 Mar 2022 31 Mar 31 Mar
2023 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- --------- ------------ --------- ---------
Not past due 17 194 - -
Up to 5 days due - 9 - -
from 6 to 15 days past due - 219 - -
From 16 to 30 days past due - 1 - -
From 31 to 45 days past due 467 113 - -
More than 45 days past due 159 215 - -
643 751 - -
----------------------------- --------- ------------ --------- ---------
Included in aged receivables more than 45 days past due is the
provisions for impairment of GBP254k (FY22: GBP502k).
Trade receivables are largely amounts due from retainer clients,
who are invoiced on a quarterly basis in advance. The Group's
policy is to allow 30 days for payment. Consequently, these
receivables have no significant financing component and the Group
have applied the simplified approach in line with IFRS 9.
Calculation of loss allowances are measured at an amount equal to
lifetime expected credit losses (ECLs). The approach taken by the
Group in arriving at the expected credit loss is as follows:
Step 1: The Group have determined the appropriate brackets by
grouping each trade receivables based on the ageing structure.
Step 2: Having determined the appropriate groupings, a
historical loss rate (adjusted for forward looking information) was
calculated for each age bracket by reviewing the pattern of payment
of trade receivables over the past 12 months.
Step 3: This historical loss rate (adjusted for forward looking
information) has been applied to each ageing bracket of trade
receivables as at the balance sheet date to arrive at an expected
credit loss for each grouping. All trade receivables over 365 days
have a 100% historical loss rate loss applied to them.
Based on the above, the group recognised an expected credit loss
of GBP239k (FY22: GBP81k expected credit loss).
The maximum exposure to credit risk, before any collateral held
as security, is the carrying value of each class of receivable set
out above.
The Directors consider that the carrying amounts of trade and
other receivables approximate their fair value.
Movements in impairment provisions were as follows:
Group Company
----------------------- --------------------
31 Mar 31 Mar 2022 31 Mar 31 Mar
2023 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- ------------ --------- ---------
Opening balance 502 421 - -
Amount released from provision
due to recovery (25) (57) - -
Amounts written off, previously (493) - - -
fully provided
Amount charged to the statement
of comprehensive income 264 138 - -
Closing balance 248 502 - -
--------------------------------- --------- ------------ --------- ---------
21. Other investments
Group Company
31 Mar 2023 31 Mar 31 Mar 31 Mar 2022
2022 2023
GBP'000 GBP'000 GBP'000 GBP'000
Current asset investment 922 1,490 - -
Restricted cash 1,127 422 - -
Total 2,049 1,912 - -
-------------------------- ------------ -------- -------- ------------
Current asset investments represent short-term principal
positions in the form of listed and unquoted investments which are
held at market value.
Included in current asset investments are unquoted investments
totalling a value of GBPnil (FY22: GBP701k).
Restricted cash represents monies held by the Group which have
some restrictions on their conversion to cash.
Included in non-operational income is the fair value gain and
the sale of investments. Further details can be found in note
17.
22. Cash and cash equivalents
Group Company
31 Mar 2023 31 Mar 2022 31 Mar 31 Mar 2022
2023
GBP'000 GBP'000 GBP'000 GBP'000
------------ ------------ -------- ------------
Cash and cash equivalents 4,234 6,446 - 1,246
--------------------------- ------------ ------------ -------- ------------
For the purposes of the cash flow statement, cash and cash
equivalents comprise cash in hand and deposits with banks and
financial institutions with a maturity of up to three months.
Cash and cash equivalents represent the Group's and the
Company's money and money held for settlement of outstanding
transactions.
Money held on behalf of clients is not included in cash and cash
equivalents on the statement of financial position. Client money at
31 March 2023 for the Group was GBP301k (FY22: GBP366k). There is
no client money held in the Company (FY22: GBPnil).
23. Trade and other payables
Group Company
31 Mar 2023 31 Mar 2022 31 Mar 31 Mar 2022
2023
GBP'000 GBP'000 GBP'000 GBP'000
------------ ------------ -------- ------------
Trade payables 1,148 2,963 12 84
Amounts due to Group companies - - 790 2,194
Other payables 89 319 - -
Tax and social security 588 886 - -
Deferred income 7 39 - 1
Accruals 2,181 2,474 334 78
4,013 6,681 1,136 2,357
-------------------------------- ------------ ------------ -------- ------------
The Directors consider that the carrying amounts of trade and
other payables approximate their fair value.
Deferred income relates to retainer fees invoiced in advance and
spread over the length of the period, typically quarterly. The
balance at year-end was fully recognised in the following financial
year.
Amounts due to Group companies are unsecured, interest free and
repayable on demand.
24. Deferred consideration
Group GBP'000
--------
At 31 March 2021 1,996
Additions during the year: -
Charged to Statement of Comprehensive Income 416
Paid during the year -
At 31 March 2022 2,412
Additions during the year: -
Charged to Statement of Comprehensive Income 173
Paid during the year (464)
At 31 March 2023 2,121
---------------------------------------------- --------
The increase in deferred consideration in the year ended 31
March 2023 represents the fair value adjustment and unwinding of
present value discount, offset by the payment made to the former
shareholders of Harpsden Wealth Management Limited.
31 Mar 2023 31 Mar 2022
GBP'000 GBP'000
------------
Included in current liabilities 2,121 2,412
Included in non-current liabilities - -
2,121 2,412
------------------------------------- ------------ ------------
Deferred consideration relates to the acquisition of Harpsden
and the maximum amounts payable over a two-year period. The
following assumptions were made: revenue growth of 2%, attrition
rate of 3% for larger clients and 10% for smaller clients, discount
rate of 13.5%.
During the year GBP464k was paid to former shareholders of
Harpsden Wealth Management Limited (Harpsden) in relation to the
deferred consideration due. After the year-end further settlement
to the former shareholders of Harpsden of GBP654k was made by way
of share issue, see note 33 for further details.
25. Financial risk management
The fair value of all the Group's and the Company's financial
assets and liabilities approximated to their carrying value at the
reporting year-end date. The carrying amount of non-current
financial instruments, including floating interest rate borrowing,
are not significantly different from the fair value of these
instruments based on discounted cash flows. The significant methods
and assumptions used in estimating fair values of financial
instruments are summarised below:
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include
equity investments, other than those in subsidiary undertakings. In
the case of listed investments, the fair value represents the
quoted bid price at the reporting period end date. The fair value
of unlisted investments is estimated by reference to recent arm's
length transactions.
Other investments
Other investments include warrants and equity investments,
categorised as fair value through profit or loss. In the case of
listed investments, the fair value represents the quoted bid price
at the reporting year-end date. The fair value of unlisted
investments is estimated by reference to recent arm's length
transactions. In the case of warrants, the fair value is estimated
using established valuation models.
Trade receivables and payables
The carrying value less impairment provision of trade
receivables and payables is assumed to approximate to their fair
values due to their short-term nature.
Borrowings
Borrowings are measured at amortised cost using the effective
interest rate method. The tables below summarise the Group's main
financial instruments by financial asset type:
31 March 2023
Fair value
Amortised through profit
cost or loss Total
Group GBP'000 GBP'000 GBP'000
-------------- ---------------- --------
Financial assets
Other investments - 2,869 2,869
Trade and other receivables 4,179 - 4,179
Cash and cash equivalents 4,234 - 4,234
Financial liabilities
Trade and other payables 3,418 - 3,418
Deferred consideration 2,121 - 2,121
Lease liability 612 - 612
----------------------------- -------------- ---------------- --------
31 March 2022
Fair value
Amortised through profit
cost or loss Total
Group GBP'000 GBP'000 GBP'000
-------------- ---------------- ----------
Financial assets
Investments - 48 48
Other investments - 4,877 4,877
Trade and other receivables 4,723 - 4,723
Cash and cash equivalents 6,446 - 6,446
Financial liabilities
Trade and other payables 5,756 - 5,756
Deferred consideration 2,412 - 2,412
Lease Liability 1,375 - 1,375
----------------------------- -------------- ---------------- ----------
The tables below summarise the Company's main financial
instruments by financial asset type:
31 March 2023
Fair value
Amortised through profit
cost or loss Total
Company GBP'000 GBP'000 GBP'000
---------- ---------------- --------
Financial assets
Trade and other receivables 14 - 14
Cash and cash equivalents - - -
Financial liabilities
Trade and other payables 346 - 346
Group balances 790 - 790
----------------------------- ---------- ---------------- --------
31 March 2022
Fair value
Amortised through profit
cost or loss Total
Company GBP'000 GBP'000 GBP'000
---------- ---------------- --------
Financial assets
Trade and other receivables 95 - 95
Cash and cash equivalents 1,246 - 1,246
Financial liabilities
Trade and other payables 162 - 162
Group balances 2,194 - 2,194
----------------------------- ---------- ---------------- --------
Risks
The main risks arising from the Group's financial instruments
are credit risk, liquidity risk and market risk. Market risk
comprises, interest rate risk and other price risk. The Directors
review and agree policies for managing each of these risks which
are summarised below:
Credit risk
Credit risk is the risk that clients or other counterparties to
a financial instrument will cause a financial loss by failing to
meet their obligations. Credit risk relates, in the main, to the
Group's trading and investment activities and is the risk that
third parties fail to pay amounts as they fall due. Formal credit
procedures include approval of client limits, approval of material
trades, collateral in place for trading clients and chasing of
overdue accounts. Additionally, risk assessments are performed on
banks and custodians.
The maximum exposure to credit risk at the end of the reporting
period is equal to the statement of financial position figure. The
impairment policy can be found in note 20. There were no other past
due, impaired or unsecured debtors.
Financial assets that are neither past due nor impaired in
respect of trade receivables relate mainly to accrued management
fees.
The credit risk on liquid funds, cash and cash equivalents is
limited due to deposits being held at the Group's main bank with a
credit rating of "A", assigned by Standard and Poor's.
There has been no change to the Group's exposure to credit risk
or the manner in which it manages and measures the risk during the
period.
The credit risk in the Company principally comes from
intercompany balances and subordinated loan. Since these are all
within the Group, the Directors can closely monitor the risk of
default on a regular basis to minimise any potential losses.
Liquidity risk
Liquidity risk is the risk that obligations associated with
financial liabilities will not be met. The Group monitors its risk
to a shortage of funds by considering the maturity of both its
financial investments and financial assets (for example, trade
receivables) and projected cash flows from operations.
The Group's objective is to maintain the continuity of funding
using bank facilities where necessary, which are reviewed annually
with the Group's Banker, the Bank of Scotland. Items considered are
limits in place with counterparties which the bank are required to
guarantee, payment facility limits, as well as the need for any
additional borrowings.
The table below summarises the maturity profile of the Group's
financial liabilities based on contractual undiscounted
payments:
31 March 2023
Payable Payable Payable
within 1 in 2 to after more Total contractual
year 5 years than 5 years payments
Group GBP'000 GBP'000 GBP'000 GBP'000
---------- --------- -------------- ------------------
Trade and other payables 3,418 - - 3,418
Lease liability 340 306 14 660
Deferred consideration 2,121 - - 2,121
5,879 306 14 6,199
-------------------------- ---------- --------- -------------- ------------------
31 March 2022
Payable Payable Payable
within 1 in 2 to after more Total contractual
year 5 years than 5 years payments
Group GBP'000 GBP'000 GBP'000 GBP'000
---------- --------- -------------- ------------------
Trade and other payables 5,756 - - 5,756
Lease liability 568 1,032 31 1,631
Deferred consideration 2,500 - - 2,500
8,824 1,032 31 9,887
-------------------------- ---------- --------- -------------- ------------------
The table below summarises the maturity profile of the Company's
financial liabilities based on contractual undiscounted
payments:
31 March 2023
Payable Payable Payable
within 1 in 2 to after more Total contractual
year 5 years than 5 years payments
Company GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---------- --------- -------------- ------------------
Trade and other payables 346 - - 346
-------------------------- ---------- --------- -------------- ------------------
31 March 2022
Payable Payable Payable
within 1 in 2 to after more Total contractual
year 5 years than 5 years payments
Company GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---------- --------- -------------- ------------------
Trade and other payables 162 - - 162
-------------------------- ---------- --------- -------------- ------------------
Market Risk
Interest rate risk
The Group's exposure to the risk of changes in market interest
rates relates to the Group's amount of interest receivable on cash
deposits. The maximum exposure for interest is not significant.
Other price risk
Other price risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of changes
in market prices (other than those arising from interest rate risk)
whether those changes are caused by factors specific to the
individual financial instrument or its issuer or factors affecting
all similar financial instruments traded in the market. Other
investments are recognised at fair value and subject to changes in
market prices.
The Group manages other price risk by monitoring the value of
its financial instruments monthly and reporting these to the
Directors and Senior Management. The Group has disposed of several
of its investments during the year, which has helped mitigate risk.
However, the risk of deterioration in prices remains high whilst
the market continues to be volatile.
The risk of future losses is limited to the fair value of
investments as at the year-end of GBP2,869k (FY22: GBP4,925k). See
note 17 and 21.
Fair value measurement recognised in the statement of financial
position
The following table provides an analysis of financial
instruments that are measured after initial recognition at fair
value, grouped into Levels 1 to 3 based on the degree to which the
fair value is observable:
-- Level 1 at fair value measurements are those derived from
quoted prices (unadjusted) in active markets for identical assets
and liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than the quoted price included within Level 1 that are
observable for the asset or a liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from formal
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable inputs).
The valuation technique used in determining the fair value is the
Black Scholes model. The key inputs into this calculation are the
share price as at 31 March 2022, exercise price, risk free interest
rate and volatility which is based on the share price movements
during the period 1 December 2021 to 31 March 2022.
31 March 2023
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- --------
Financial assets at fair value
through profit or loss
Unquoted equities - - - -
Financial instruments designated
at fair value through profit
or loss
Quoted equities - - - -
Other investments (note 17 &
21) 2,049 - 820 2,869
Deferred consideration - - (2,121) (2,121)
Total 2,049 - (1,301) 748
---------------------------------- -------- -------- -------- --------
31 March 2022
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- --------
Financial assets at fair value
through profit or loss
Unquoted equities 701 - 48 749
Financial instruments designated
at fair value through profit
or loss
Quoted equities - - 1 1
Other investments (note 17
& 21) 1,211 - 2,964 4,175
Deferred consideration - - (2,412) (2,412)
Total 1,912 - 601 2,513
---------------------------------- -------- -------- -------- --------
26. Capital management
The capital of the Group comprises share capital, share premium,
retained earnings and other reserves. The total capital at 31 March
2023 amounted to GBP13.8m for the Group (FY22: GBP15.4m) and
GBP24.3m for the Company (FY22: GBP23.9m). The primary objective of
the Group's capital management is to ensure that it maintains a
strong capital structure to support the development of its
business, to maximise shareholder value and to provide benefits for
its other stakeholders.
These objectives are met by managing the level of debt and
setting dividends paid to shareholders at a level appropriate to
the performance of the business.
Certain activities of the Group are regulated by the FCA which
is the statutory regulator for financial services business and has
responsibility for policy, monitoring and discipline for the
financial services industry. The FCA requires the Group's resources
to be adequate, that is, sufficient in terms of quantity, quality
and availability, in relation to its regulated activities.
The Group monitors capital on a daily basis by measuring
movements in the Group regulatory capital requirement and through
its Internal Capital Adequacy and Risk Assessment Process (ICARA),
which was formerly through its Internal Capital Adequacy Assessment
Process (ICAAP). Compliance with FCA minimum common equity tier 1
regulatory capital requirements was maintained during the year and
the Group is satisfied that there is and will be, sufficient
capital to meet these regulatory requirements for the foreseeable
future.
27. Share capital and share premium account
Number of Share Share
shares capital premium
GBP'000 GBP'000 GBP'000
-------------------------- ---------- -------- --------
As at 1 April 2021 62,022 3,101 18,983
Shares issued:
On placing 64 3 31
Balance at 31 March 2022 62,086 3,104 19,014
Shares issued:
On placing 225 12 -
Balance at 31 March 2023 62,311 3,116 19,014
-------------------------- ---------- -------- --------
At 31 March 2023 the total number of issued ordinary shares is
62.31 million shares of 5p each (FY22: 62.09 million shares of 5p
each). 0.23 million shares were issued during the period (FY22:
0.06 million) in respect of vested employee share options.
28. Treasury shares
Year ended 31 Year ended 31
March 2023 March 2022
Group GBP'000 GBP'000
-------------- --------------
At 31 March 900 644
Additions 193 256
At 31 March 1,093 900
------------- -------------- --------------
At 31 March 2023 no shares in the Company were held in the EBT
(FY22: nil shares) and the ESOT held 3,017,418 shares (FY22:
2,639,500), at a nominal value of 5p per share and represents the
full balance above. This represents 4.84% of the called up share
capital (FY22: 4.25%).
During the year the Company's Employee Share Option trust (ESOT)
purchased the following ordinary shares in the Company:
Number of shares Nominal value Total consideration
Date of issue GBP'000 GBP'000 GBP'000
----------------- -------------- --------------------
07-Apr-22 50,000 5p 22,500
04-May-22 50,000 5p 21,000
07-Jun-22 50,000 5p 19,425
06-Jul-22 50,000 5p 19,225
03-Aug-22 50,000 5p 18,250
07-Sep-22 50,000 5p 17,075
03-Oct-22 50,000 5p 14,925
25-Nov-22 50,000 5p 14,000
07-Dec-22 50,000 5p 14,500
17-Jan-23 50,000 5p 12,000
09-Feb-23 50,000 5p 11,000
13-Mar-23 50,000 5p 10,500
29. Employee Benefit Trusts (EBT)
The WH Ireland EBT was established in October 1998 and the WH
Ireland Group plc Employee Share Ownership Trust (ESOT) was
established in October 2011, both for the purpose of holding and
distributing shares in the Company for the benefit of the
employees. All costs of the EBT and ESOT are borne by the Company
or its subsidiary WH Ireland Limited.
Joint Ownership Arrangements (the 'JOE Agreements') are in place
in relation to 400,000 shares between the trustees of the ESOT and
a number of employees (the 'Employees'). Under the JOE Agreements,
the option for the Employees to acquire the interest that the
trustees of the ESOT has in the jointly owned shares, lapses when
an employee is deemed to be a Bad Leaver. If an Employee ceases to
be an employee of the Group, other than in the event of critical
illness or death, the Employee is deemed to be a Bad Leaver.
The shares carry dividend and voting rights though these have
been waived by all parties to the JOE Agreements. Due to the
consolidation of the ESOT into the Group accounts, these shares are
shown in Treasury (note 28). Due to the nature of these
arrangements, the options contained in the JOE Agreements are
accounted for as share-based payments (note 30).
30. Share-based payments
The Group had two schemes for the granting of non-transferable
options to employees during the reporting period; the approved
Company Share Ownership Plan (CSOP) and a Save as You Earn Schemes
(SAYE). In addition, options are held in the ESOT (note 29). SAYE
matures in July 2025.
Company Share Ownership Plan (CSOP)
Under the terms of the Unapproved Options, options over the
Company's shares may be granted on a discretionary basis to
employees and consultants of the Group (including Directors) at a
price to be agreed between the Company and the relevant option
holder. Under the terms of the options granted, such options vest
on the third anniversary of the award dates; are exercisable at the
market price at the time the option was issued and are exercisable
for ten years after the vesting date.
Movements in the number of share options outstanding that were
issued post 7 November 2002 and their related weighted average
exercise prices (WAEP) are as follows:
31 March 2023
---------------- ---------------------------------------------------------------------------------------------
CSOP ESOT ESOT 2019 LTIP 2020 EMI Option 2022 EMI Option
Plan Plan
Options WAEP Options WAEP Options WAEP Options WAEP Options WAEP Options WAEP
Outstanding
at
beginning
of year 35,502 84.50p 350,000 74.50p 50,000 92.5p 1,800,000 45.00p 3,644,170 37.34p - -
Granted - - - - - - - - - - 2,678,568 46.00p
Expired
/ forfeited (35,502) 84.50p (100,000) 74.50p - - (150,000) 45.00p (260,416) 48.00p -
Exercised - - - - - - - - (447,393) 48.00p - -
Outstanding
at end
of year - 0.00p 250,000 74.50p 50,000 92.50p 1,650,000 45.00p 2,936,361 44.45p 2,678,568 46.00p
Exercisable
at end
of year - 0.00p 250,000 74.50p 50,000 92.50p 1,650,000 45.00p 2,936,361 44.45p 2,678,568 46.00p
WA Life* - 0.50 yrs 3.01 yrs 7.10 yrs 10.68 yrs 9.32 yrs
* WA Life represents the weighted average contractual life in
years to the expiry date for options outstanding at the end of the
year.
31 March 2022
CSOP ESOT ESOT Unapproved 2020 EMI Option
Options Plan
Options WAEP Options WAEP Options WAEP Options WAEP Options WAEP
Outstanding
at beginning
of year 127,002 64.69p 350,000 74.50p 50,000 92.50p 1,800,000 45.00p 4,330,719 40.43p
Granted - - - - - - - - 387,929 25.78p
Expired
/ forfeited (91,500) 57.00p - - - - - - (1,074,478) 45.60p
Exercised - - - - - - - - - -
Outstanding
at end
of year 35,502 84.50p 350,000 74.50p 50,000 92.50p 1,800,000 45.00p 3,644,170 37.34p
Exercisable
at end
of year 35,502 84.50p 350,000 74.50p 50,000 92.50p - - - -
WA Life* 0.08 yrs 1.50 yrs 4.01 yrs 8.03 yrs 10.26 yrs
* WA Life represents the weighted average contractual life in
years to the expiry date for options outstanding at the end of the
year.
The pricing models used to value these options and their inputs
are as follows:
Pricing Models
2020 EMI Option 2022 EMI Option
CSOP ESOT ESOT 2019 LTIP Plan Plan
Pricing model Black Scholes Monte Carlo N/A N/A N/A N/A
Date of grant 02/11/11-24/05/12 28/10/13-13/4/16 30/05/17 28/06/19 & 01/11/20 - 01/04/22 -
28/12/19 01/09/21 01/11/22
Share price at 56.5-83.0 74.5-114.5 125 45.0 & 49.0 42.0-56.5 30.0-45.00
grant (p)
Exercise price 57.0-84.5 0.0-114.5 - 45.0 & 49.0 0.0-58.0 42.0-48.0
(p)
Expected
volatility (%) 32.6332-33.2130 43.0000-37.0000 N/A 50 50 21-22
Expected life
(years) 5 5 3 3 1-3 3
Risk-free rate
(%) 1.2993-.0.7999 0.8000-1.9300 N/A 2 5 1.38-3.22
Expected dividend - 0.67-2.19 N/A N/A N/A N/A
yield (%)
31. Capital commitments
There were no capital commitments for the Group or the Company
as at 31 March 2023 (FY22: GBPnil).
32. Related party transactions
Group
Services rendered to related parties were on the Group's normal
trading terms in an arms' length transaction. Amounts outstanding
are unsecured and will be settled in accordance with normal credit
terms. No guarantees have been given or received. No provision
(FY22: GBPnil) has been made for impaired receivables in respect of
the amounts owed by related parties.
Key management personnel include Executive and Non-Executive
Directors of WH Ireland Group plc and all its subsidiaries. They
can undertake transactions in stocks and shares in the ordinary
course of the Group's business, for their own account and are
charged for this service, as with any other client. The
transactions are not material to the Group in the context of its
operations, but may result in cash balances on the Directors'
client accounts owing to or from the Group at any one point in
time. The charges made to these individuals and the cash balances
owing from/due to them are disclosed in the table below. There are
no other material contracts between the Group and the
Directors.
No transactions occurred with key management personnel and other
relates parties during the year ended 31 March 2023 or 31 March
2022.
The total compensation of key management personnel is shown
below:
Year ended 31 March Year ended 31 March
2023 2022
GBP'000 GBP'000
Short-term employee benefits 2,528 3,784
Post-employment benefits - 15
Termination benefits - 443
Share-based payment - -
2,528 4,242
The highest paid Director for 2023 was P Wale receiving
emoluments of GBP470,868 (FY22: GBP468,325).
Company
The Parent Company receives interest from subsidiaries in the
normal course of business. Total interest received during the year
was GBPnil (FY22: GBPnil). In addition, the Parent Company received
a management charge of GBP879k (FY22: GBP651k) from its subsidiary
WH Ireland Limited. WH Ireland Limited also charged the Parent
Company GBPnil (FY22: GBPnil) for broker services.
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation. The
captions in the primary statements of the Parent Company include
amounts attributable to subsidiaries. These amounts have been
disclosed in aggregate in the notes 16, 20 and 23 and in detail in
the following table:
Amounts owed by related Amounts owed to related
parties parties
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
Readycount Limited - - - -
Stockholm Investments
Limited - - - -
WH Ireland Limited - - 478 1,882
Harpsden Wealth Management
Limited - - 295 295
WH Ireland Trustee Limited - - 17 17
- - 790 2,194
The net amount owed to related parties is GBP790k (FY22:
GBP2,194k owed by related parties) (see note 20 and 23).
33. Events after the reporting date
Placing
Following the year-end, as a result of the widely reported
multi-year low level of transactional activity in the financial
capital markets the Directors assessed it was unlikely there would
be an improvement in CM transactions activity or an uplift in AUM
within the WM division during the summer of 2023.
Discussions were held with the FCA and to ensure that, in the
absence of the injection of further capital pursuant to the
placing, the Company could deliver a solvent wind down for the
Group, if required, in line with the Group's solvent wind down plan
(SWDP). A solvent wind down plan is a plan drawn up in accordance
with regulatory requirements to facilitate an orderly wind down of
a regulated firm, as further described below. Due to adverse
current and forecast trading and resultant losses, without further
funding pursuant to the placing, the SWDP would have been required
to be implemented on 31 July 2023. In total the placing raised
gross proceeds of GBP5m by way of 166,666,667 ordinary shares at a
price of 3p. The placing took place on 28 July 2023 and funds were
received in August 2023.
To reduce costs, the Group has also commenced a collective
consultation regarding headcount reduction. In addition, it is
proposed that certain senior management team members would
sacrifice a proportion of their salary in consideration of being
awarded with options to subscribe, at nil cost, for such number of
new ordinary shares at the placing price, as is equal to the amount
of salary sacrificed. This programme is anticipated to reduce
annual costs in the range of GBP3.75m to GBP4m. The full extent of
the savings is anticipated to be realised during calendar year Q4
2023.
The Directors believe that the combination of the placing and
the cost reduction exercise gives the Group an improved chance of
returning to a break-even position and securing the future of the
Group. Accordingly, the placing was undertaken to provide working
capital, secure the current regulatory capital position and achieve
a more stable financial position for the Group against the current
market backdrop. Prior to the placing, the Board had actively
explored asset sales. The Directors will assess the benefit of
asset sales to shareholders should any future market opportunities
arise.
Given the financial position of the Group and the timeframe
within which funds needed to be raised (including for regulatory
reasons), the placing shares were issued at a deep discount to the
closing price on 27 July 2023. Since the placing price was lower
than the current nominal value of the ordinary shares, the Group
also proposed to carry out a sub-division of shares.
Settlement of deferred consideration
After the year-end further settlement to the former shareholders
of Harpsden of GBP654k was made pursuant to the original agreement.
The part settlement was made by way of share issue of 2,841,538
ordinary shares of 5p at an issue price of 23p per share on 19
April 2023.
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END
FR EAENKAFFDEAA
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September 27, 2023 02:00 ET (06:00 GMT)
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