TIDMWHI

RNS Number : 7518U

W.H. Ireland Group PLC

07 December 2021

WH Ireland Group plc

("WH Ireland" or the "Company")

Interim Results for the Six Months ended 30 September 2021

"Good strategic progress, maintaining our return to profit and investing significantly in both divisions"

Financial Highlights

-- Revenue increased 38% to GBP17.5m (H12020: GBP12.7m(*) )

o Wealth Management division revenue GBP7.8m (H12020: GBP6.1m)

o Capital Markets division revenue GBP9.7m (H12020: GBP6.5m)

-- Significant increase in underlying profit before tax to GBP1.1m (H12020: GBP0.6m)(+)

-- Statutory profit before tax unchanged at GBP0.3m (H12020: GBP0.5m)

-- Underlying basic earnings per share 1.87p (H12020: 1.32p)(+)

-- Group regulatory capital solvency ratio (CET1): 18.4% (H12020: 15.1%)

-- Cash balances at GBP8.4m (H12020: GBP5.8m; FY2021 GBP8.2m)

Divisional Highlights

-- Wealth Management (including Harpsden):

o Total group AUM up 41% to GBP2.4bn (H12020 (excluding IOM sold Oct 2020): GBP1.7bn)

o WM AUM held on SEI (UK) platform of GBP1.6bn (H12020: GBP1.2bn)

o Discretionary assets under management rose 67% to GBP1.2bn (H12020: GBP0.7bn)

o Encouraging discretionary net inflows (excluding market performance) of GBP43m representing 4.1% of opening assets

o Largely completed the transfer of the Harpsden assets to our SEI (UK) platform with minimal attrition, and developed a more focussed approach to our WM acquisition pipeline

-- Capital Markets:

o Increase in number of corporate clients to 86 (H12020: 80)

o 20 transactions completed in H1 raising GBP193m (H12020: GBP104m) including four IPOs

o Reinforced our ability to distribute to not only institutional clients but also to high net worth (HNW) clients, a key point of differentiation

o Re-launched our Investor Forum in September 2021:

-- Enables our HNW clients to participate in our public and private offerings

-- Over 300 HNWs have already signed up to date

Board strengthened

-- New CFO, Simon Jackson appointed in October 2021 bringing significant experience in growing a wealth management business

-- Helen Sinclair and Tom Wood appointed as non-executive directors, both of whom bring recent current experience and valuable expertise in key areas

Current trading and outlook

-- Trading in line with our expectations of a sustainable return to profitability

-- Good second half pipeline in Capital Markets but market dependent

-- Momentum in Wealth Management supported by investment and the recent acquisition of Harpsden

Commenting, Phillip Wale, Chief Executive Officer said:

"WH Ireland has continued to make progress in the first half, maintaining our return to profit and further improving our financial position, despite the overhang of the Covid pandemic. We have made a cautious return to our offices, whilst further enhancing our control framework and investing in growth opportunities to increase the customer base of both sides of our business.

"Following the good start reported today, we expect to see continued momentum in the business albeit in somewhat more challenging markets."

WH Ireland is hosting a webcast for analysts and investors at 9.30am today.

Please contact whireland@mhpc.com for further details.

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 
Andrew Potts / Tom Diehl        +44(0) 20 7523 8000 
 
MHP Communications              whireland@mhpc.com 
Reg Hoare / James Bavister      +44 (0) 20 3128 8793 
 

*The comparative information for the period end 30 September 2020 has been reclassified to reflect the correct loss on discontinued operations, together with a reclassification of investment gains to revenue as laid out in the report and accounts year ending 31 March 2021. See note 1 for further information.

(+) A reconciliation from underlying profits to statutory profits is shown within the Chief Executive's statement below

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 and effective choices about their money and how it can support their lifestyle ambitions. We can trace our history of helping individuals and their families as well as entrepreneurs, charities and trustees back to 1872. By building a financial plan and investment strategy with us, our clients are free to focus on the important things, like life.

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. In our latest financial period, we successfully completed the IPOs of ITIM, Northcoders, Mailbox REIT and Orcadian Energy, we raised capital for companies such as Jubilee Metals and i3 Energy; while welcoming nine new quoted companies to our corporate client roster.

Chairman's Statement

Review and Outlook

The first half of the financial year has seen WH Ireland continue to grow, improve the quality of its business and invest to ensure that momentum continues. A year on year increase in underlying profitability has been achieved despite the costs of the continuing integration of Harpsden and further investment in people. The 23% organic growth in Discretionary Funds Under Management is also pleasing. Net inflows (excluding market performance) were GBP43.4m, which is encouraging, especially as we believe the continued integration of Harpsden will allow Wealth Management to further develop and improve its proposition to its customers into the future.

We have now largely completed the transfer of the Harpsden assets to our wealth management platform (SEI) with minimal attrition. The expertise we have gained from this complex process prepares us well for further acquisitions. We have also established a systematic approach to our wealth management acquisition pipeline, with support from our Capital Markets division, to ensure we are well placed for our target market. Whilst larger acquisitions have continued to attract significant interest from a range of market participants, the smaller opportunities remain attractive, particularly for us given the potential for synergies as we transfer assets onto our platform. However, we remain patient to ensure we generate significant value from each acquisition.

Our Capital Markets division has shown real progress across a number of fronts, all of which point to the improvement in quality we are seeking. The number of companies who rely on us for advice and distribution has continued to grow and has now reached 86 from just 80 a year ago. We successfully completed four IPOs making us one of the leading AIM IPO advisers and we completed one of our largest ever placings in September 2021. We re-launched our Investor Forum in September 2021 which allows our high net worth clients ("HNW") to participate in our Public and Private offerings, and over 300 HNWs have already signed up. This further reinforces, what we believe is a key point of differentiation, namely our ability to distribute to HNW and Ultra HNW individuals.

I am also delighted that we have attracted significant talent in the first half. This has included two new Board members, Helen Sinclair and Tom Wood, both of whom bring experience and valuable expertise in areas very important to WH Ireland. Our new CFO, Simon Jackson, is already making good progress in a number of areas as we continue to drive efficiencies as we grow. His experience, gained as Brooks Macdonald grew to its current size, is already very evident. The arrival of a new Head of Wealth Planning, Steve Pennington, will allow us to pursue our stated aim of greater penetration of financial planning through the whole business as we strive to lead our proposition with the very best wealth planning capability whilst providing independent financial advice and product selection.

There remains much work to do in order for us to achieve our collective ambitions for both businesses, but we have made progress towards the GBP3bn Discretionary Funds under Management target. We are now very focused on seeing the benefits of this increased scale fall through to the margin. We have also made good progress towards the GBP20m revenue target from our Capital Markets division while improving the overall quality of that revenue.

Phil Shelley

6 December 2021

Chief Executive Officer's Report

Overview

WH Ireland has continued to make progress in the first half of this financial year despite the ongoing issues of the Covid pandemic. We have made a cautious return to our offices and again I thank all our employees, clients, customers, and business partners for their support. During this period we have invested in the business and enhanced our control framework, while maintaining a return to profitability. Investment in our Capital Markets division has been made in Healthcare, Climate Aligned Capital, HNW & Family Office distribution and Private Growth Capital segments as well as in Wealth Planning. We remain focused to ensure that we retain the benefits of last year's first profitable year in five years, especially the retention of our people; and pursuing opportunities to grow both sides of our business and grow our customer base.

Six Months to 30 September 2021

The start of the financial year was very different from that faced in 2020. Given our hybrid working model, a market still in turmoil created by the Covid-19 pandemic and UK markets that have underperformed those of the US and Asia in recovery terms, I still believe we are performing well. Our employees once again showed great flexibility and maintained a seamless service to all our clients. The investment in new people and teams within Capital Markets, has continued, despite tougher market conditions than the second half of last year. Wealth Management continued its successful drive to improve quality of earnings with an increase in the proportion of its assets under discretionary management, and by fully integrating its first acquisition, Harpsden Wealth Management Limited. Overall revenue for the Group rose 38% to GBP17.5m (2020 H1 restated: GBP12.7m) and our underlying profit before tax increased to GBP1.1m (2020: GBP0.6m) whilst our statutory profit for the period was GBP0.3m (2020 H1 restated: GBP0.5m).

Underlying profit before tax is considered by the Board to be a more 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 a non-cash operating item. Reporting at an underlying basis is also considered more appropriate for external analyst coverage and peer group benchmarking, allowing a more accurate like-for-like comparison. A reconciliation between underlying and statutory profit before tax for the six months ended 30 September 2021, with comparatives is shown in the following table:

 
                                             6m to   6m to    12m to 
   GBPm                                         30      30    31 Mar 
                                              Sept     Sep      2021 
                                              2021    2020 
 Underlying profit before tax                 1.10    0.65      1.68 
                                           -------  ------  -------- 
 Acquisition related items 
                                           -------  ------  -------- 
 Deal restructuring and integration 
  costs                                       0.40       -      0.46 
                                           -------  ------  -------- 
 Amortisation of acquired brand and 
  client relationships                        0.22    0.06      0.22 
 Changes in fair value and finance            0.31       -         - 
  cost of deferred consideration 
 Other items 
 Dual running platform costs                     -    0.01      0.04 
 Restructuring costs                          0.30    0.11      0.13 
 Net changes in the value of non-current 
  investment assets                         (0.46)       -    (0.22) 
                                           -------  ------  -------- 
 Statutory profit before tax                  0.33    0.47      1.05 
                                           -------  ------  -------- 
 

Clients

Our clients are at the heart of everything that we do. Our central mission is to provide excellent service to our corporate, institutional, and private clients, and this remains our priority. I would like to take the opportunity to thank all our clients for their loyalty and patience as we have worked through the inevitable disruption from the scale and pace of change we have instigated this year.

It was pleasing to see from our annual client satisfaction survey that our discretionary managed clients have awarded us higher ratings this year, with marked progress amongst our wealthiest clients, brand perception and the transparency of our services and costs.

Further efficiencies within our infrastructure has given WH Ireland a platform that we believe is able to provide the quality of service that will differentiate us in the future, and which has shown it is sufficiently robust to successfully navigate challenges and embrace growth within the business.

Staff

We continue to encourage excellence within the Group, and we continue to attract new individuals and teams across both divisions. I thank all our members of staff for their commitment and hard work in the past year as they managed the uncertainty and challenges of the ever-changing working model while maintaining client service as a priority. Group headcount, excluding non-executive directors is now 142, increased from 124 in September 2020, which includes the 17 additional staff that joined with the Harpsden acquisition.

We have also strengthened our Wealth Management division with the appointment of Steve Pennington. Steve joined WH Ireland in November 2021 as Director, Head of Wealth Planning. His previous role was at Arbuthnot Latham & Co. Limited where he led the transformation and integration of their Wealth Planning proposition. He is a Chartered Financial Planner, Fellow of the Personal Finance Society and Chartered FCSI.

Shareholders

I am delighted with the support, both in terms of capital investment and guidance, received from our major shareholders and thank them and the new investors who have joined and supported WH Ireland in this period.

Capital

The first half of this year has seen total equity increase to GBP15.7m (H1 2020: GBP8.6m). Cash at the period end was GBP8.4m which has increased 45% over the year (H1 2020: GBP5.8m). The Group has no debt.

Wealth Management (WM)

This has been a pivotal year for the Wealth Management division. Following a year of cost reduction, legacy system elimination and control framework improvement, coupled with the rationalisation of non-optimal teams and offices and the repricing of the WM offerings, the division was able to grow AUM with the acquisition of Harpsden Wealth Management Limited ("Harpsden"). The team at Harpsden has developed, what we believe is an excellent business with professionalism and care. It brought both GBP250m of discretionary assets and a profitable business that, once the integration is complete, we believe will provide clients with even better value products and pricing.

Total Group assets under management have increased to GBP2.4bn (H1 2020: GBP1.7bn) including GBP1.6bn in WM. Discretionary managed assets increased by GBP460m including GBP250m from the Harpsden acquisition, a rise over the year of 67% to GBP1.2bn (H1 2020: GBP0.7bn).

Total revenue has increased to GBP7.8m (H1 2020: GBP6.2m) with management fees of GBP6.7m (H1 2020: GBP4.6m) representing 86% of revenue (H1 2020: 75%)

Capital Markets (CM)

The Capital Markets division strengthened its position as a top five broker and top three Nominated Adviser to AIM companies, by client numbers. Good progress in client numbers reflects the focus placed on our target of advising 100 corporate clients by March 2024. This will be an important step in delivering a business that can consistently deliver revenue of over GBP20m a year. During the first half of the year this division welcomed 9 new clients, increasing its number of retained corporate clients to 86 (H1 2020: 80) increasing retained revenue to GBP1.8m (H12020: GBP1.6m). Gross transaction fees grew to GBP6.7m (H1 2020: GBP3.5m) as the team completed 20 transactions raising GBP193m for clients (H1 2020: 32 and GBP104m respectively). This included four successful IPO transactions in the period. Commission income fell slightly over the period to GBP1.2m (H1 2020: GBP1.4m)

Looking forward

The year has started well with the final stages of the Harpsden integration proceeding better than we had expected and with the Capital Markets division continuing the progress it made last year despite a more challenging trading environment.

Following the good start reported today, we expect to see continued momentum in the business albeit in somewhat more challenging markets.

Phillip Wale

6 December 2021

Consolidated Statement of Comprehensive Income

UNAUDITED FOR THE 6 MONTHSED 30 SEPTEMBER 2021

 
 
 
                                                                6 months       6 months     12 months 
                                                                   ended          ended         ended 
                                                             30 Sep 2021   30 Sep 2020*        31 Mar 
                                                                                                 2021 
                                        Note                 (unaudited)    (unaudited)     (audited) 
                                                                 GBP'000        GBP'000       GBP'000 
 Continuing operations 
 
 Revenue                                 2                        17,502         12,717        29,559 
 Administrative expenses                                        (16,823)       (12,188)      (28,418) 
-------------------------------------  -----                              -------------  ------------ 
 Operating profit                                                    679            529         1,141 
 
 
 Operating profit before exceptional 
  items:                                                           1,021            757         1,757 
 Exceptional items                                                 (342)          (228)         (616) 
-------------------------------------  -----  --------------------------  -------------  ------------ 
 
 Operating profit after exceptional 
  items                                                              679            529         1,141 
 
 
 Finance income                                                        -              2             2 
 Finance expense                         5                         (354)           (63)          (96) 
-------------------------------------  -----                              -------------  ------------ 
 Profit before tax                                                   325            468         1,047 
 Tax income                                                            -              -           192 
-------------------------------------  -----                              -------------  ------------ 
 Profit from continuing operations                                   325            468         1,239 
 Loss from discontinued operations                                     -           (86)          (86) 
 Profit and total comprehensive 
  income for the year                                                325            382         1,153 
-------------------------------------  -----  --------------------------  -------------  ------------ 
 
 
 Earnings per share              7 
------------------------------      ------  --------  -------- 
 From continuing operations 
 Basic                               0.55p     0.96p     2.47p 
 Diluted                             0.49p     0.96p     2.07p 
------------------------------      ------  --------  -------- 
 From discontinued operations 
 Basic                                   -   (0.18p)   (0.17p) 
------------------------------      ------  --------  -------- 
 Total 
 Basic                               0.55p     0.78p     2.30p 
 Diluted                             0.49p     0.78p     1.93p 
------------------------------      ------  --------  -------- 
 

Consolidated Statement of Financial Position

UNAUDITED AS AT 30 SEPTEMBER 2021

 
                                         30 Sep 2021   30 Sep 2020      31 Mar 
                                                                          2021 
                                  Note   (unaudited)   (unaudited)   (audited) 
                                             GBP'000       GBP'000     GBP'000 
-------------------------------  -----  ------------  ------------  ---------- 
 ASSETS 
 Non-current assets 
 Intangible assets                             4,512           696       4,764 
 Goodwill                                      3,539             -       3,539 
 Property, plant and equipment                   376           618         511 
 Investments                       3           1,783         1,986       1,099 
 Right of use asset                            1,377         2,203       1,603 
 Deferred tax asset                              190             -         190 
                                              11,777         5,503      11,706 
-------------------------------  -----  ------------  ------------  ---------- 
 Current assets 
 Trade and other receivables                   5,652         4,355       5,156 
 Other investments                 3           1,675         1,726       2,490 
 Cash and cash equivalents         4           8,377         5,849       8,211 
                                              15,704        11,930      15,857 
-------------------------------  -----  ------------  ------------  ---------- 
 Total assets                                 27,481        17,433      27,563 
-------------------------------  -----  ------------  ------------  ---------- 
 LIABILITIES 
 Current liabilities 
 Trade and other payables                    (7,001)       (6,054)     (7,623) 
 Lease liability                               (516)         (765)       (552) 
 Deferred consideration            5         (1,291)             -     (1,087) 
                                             (8,808)       (6.819)     (9,262) 
-------------------------------  -----  ------------  ------------  ---------- 
 Non-current liabilities 
 Lease liability                             (1,224)       (1,981)     (1,506) 
 Deferred tax liability                        (772)             -       (799) 
 Deferred consideration            5         (1,011)             -       (909) 
                                             (3,007)       (1,981)     (3,214) 
-------------------------------  -----  ------------  ------------  ---------- 
 Total liabilities                          (11,815)       (8,800)    (12,476) 
-------------------------------  -----  ------------  ------------  ---------- 
 Total net assets                             15,666         8,633      15,087 
-------------------------------  -----  ------------  ------------  ---------- 
 
 Capital and reserves 
 Share capital                     6           3,001         2,335       3,001 
 Share premium                                19,083        14,414      19,083 
 Other reserves                                  981           981         981 
 Retained earnings                           (6,755)       (8,453)     (7,334) 
 Treasury shares                               (644)         (644)       (644) 
-------------------------------  -----  ------------  ------------  ---------- 
 Shareholders' funds                          15,666         8,633      15,087 
-------------------------------  -----  ------------  ------------  ---------- 
 

Signed on behalf of the board

P A Wale

6 December 2021

Consolidated Statement of Cash Flows

UNAUDITED FOR THE 6 MONTHSED 30 SEPTEMBER 2021

 
                                                          6 months      6 months   12 months 
                                                             ended         ended       ended 
                                                            30 Sep        30 Sep      31 Mar 
                                                              2021         2020*        2021 
                                                       (unaudited)   (unaudited)   (audited) 
                                                Note       GBP'000       GBP'000     GBP'000 
 Operating activities: 
 Profit/(loss) for the period: 
 Continuing operations                                         325           468       1,239 
 Discontinuing operations                                        -          (86)        (86) 
                                                               325           382       1,153 
 Adjustments for: 
 Depreciation, amortisation and impairment                     611           647       1,242 
 Finance income                                                  -           (2)         (2) 
 Finance expense                                               354            63          96 
 Tax                                                             -             -       (196) 
 Non-cash adjustment for share option 
  charge                                                       254             -          90 
 (Increase)/ decrease in trade and other 
  receivables                                                (951)         2,056       1,815 
 (Decrease)/ increase in trade and other 
  payables                                                    (55)         1,536       2,602 
 Decrease/(increase) in current asset 
  investments                                   3              815         (869)     (1,706) 
 (Increase) in non-current asset investments    3            (839)       (1,303)           - 
 Net cash generated from operations                            514         2,510       5,094 
 Income taxes received/(paid)                                    -             -           - 
 Net cash inflows from operating activities                    514         2,510       5,094 
---------------------------------------------  -----  ------------  ------------  ---------- 
 Investing activities: 
 Cost on disposal of subsidiary undertaking                      -          (90)        (90) 
 Interest received                                               -             2           3 
 Investment in subsidiary                                        -             -     (4,765) 
 Acquisition of property, plant and 
  equipment                                                    (4)          (75)       (201) 
 Net cash used in investing activities                         (4)         (163)     (5,053) 
---------------------------------------------  -----  ------------  ------------  ---------- 
 Finance activities: 
 Proceeds from issue of share capital                            -             -       5,335 
 Lease liability payments                                    (344)         (232)       (898) 
 Interest paid                                                   -             -         (1) 
 Net cash (used)/gained in financing 
  activities                                                 (344)         (232)       4,436 
---------------------------------------------  -----  ------------  ------------  ---------- 
 Net increase in cash and cash equivalents                     166         2,115       4,477 
 Cash and cash equivalents at beginning 
  of period                                                  8,211         3,734       3,734 
 Cash and cash equivalents at end of 
  period                                                     8,377         5,849       8,211 
---------------------------------------------  -----  ------------  ------------  ---------- 
 

*Comparative figures have been reclassified to reflect the correct loss on discontinued operations and to reflect the reclassification of realised gains to revenue for the six months to 30 September 2020.

Consolidated Statement of Changes in Equity

UNAUDITED FOR THE 6 MONTHSED 30 SEPTEMBER 2021

 
                                      Share     Share      Other   Retained   Treasury     Total 
                                    capital   premium   reserves   earnings     shares    equity 
                                    GBP'000   GBP'000    GBP'000    GBP'000    GBP'000   GBP'000 
--------------------------------   --------  --------  ---------  ---------  ---------  -------- 
 Balance at 1 April 2020              2,335    14,414        981    (8,580)      (644)     8,506 
 Profit and total comprehensive 
  income for the period                   -         -          -        382          -       382 
---------------------------------  --------  --------  ---------  ---------  ---------  -------- 
 Employee share option                    -         -          -          -          -         - 
  scheme 
 Other movements                          -         -          -      (255)          -     (255) 
---------------------------------  --------  --------  ---------  ---------  ---------  -------- 
 Balance at 30 September 
  2020                                2,335    14,414        981    (8,453)      (644)     8,633 
 Profit and total comprehensive 
  income for the period                   -         -          -        771          -       771 
 Employee share option 
  scheme                                  -         -          -         90          -        90 
 New share capital issued               666     4,669          -          -          -     5,335 
 Other movements                          -         -          -        258          -       258 
 Balance at 31 March 2021             3,001    19,083        981    (7,334)      (644)    15,087 
 
 
 
 Balance at 1 April 2021              3,001    19,083        981    (7,334)      (644)    15,087 
 Profit and total comprehensive 
  income for the year                     -         -          -        325          -       325 
---------------------------------  --------  --------  ---------  ---------  ---------  -------- 
 Employee share option 
  scheme                                  -         -          -        254          -       254 
 Other movements                          -         -          -          -          -         - 
--------------------------------   --------  --------  ---------  ---------  ---------  -------- 
 Balance at 30 September 
  2021                                3,001    19,083        981    (6,755)      (644)    15,666 
---------------------------------  --------  --------  ---------  ---------  ---------  -------- 
 

Notes to the Consolidated Statements

(UNAUDITED)

1. General information

WH Ireland Group plc is a public company incorporated in the United Kingdom. The shares of the Company are traded on AIM, a market operated by the London Stock Exchange Group plc. The address of its registered office is 24 Martin Lane, London, EC4R 0DR.

Basis of preparation

The condensed financial statements in this interim report for the six months to 30 September 2021 has been prepared in accordance with IAS 34 Interim Financial Reporting. This report has been prepared on a going concern basis and should be read together with the Group's annual consolidated financial statements as at and prepared to 31 March 2021 in accordance with International Accounting Standards in accordance with the requirements of the Companies Act 2006.

The accounting policies, presentation and methods of computation adopted by the Group in the preparation of its 2021 interim report are those which the Group currently expects to adopt in its annual financial statements for the year ending 31 March 2022 which will be prepared in accordance with United Kingdom Adopted International Financial Reporting Standards and are consistent with those adopted in the audited annual Report and Accounts for the period ended 31 March 2021.

The financial information in this report does not constitute the Company's statutory accounts. The statutory accounts for the period ended 31 March 2021 have been delivered to the Registrar of Companies in England and Wales. The auditor has reported on those accounts. Its report was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under Section 498(2) or 498(3) of the Companies Act 2006. The financial information for the six months to 30 September 2021 are unaudited (six months to 30 September 2020: unaudited).

At the time of approving this interim report, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Therefore the directors continue to adopt the going concern basis of accounting in preparing this report.

Exceptional costs

These are considered by the Board to be non-trading and exceptional in nature. This includes costs relating to the transfer of assets from Harpsden and other one-off costs

Finance expense

Included within finance expenses is the fair value measurement arising on deferred consideration payments from the acquisition of Harpsden together with the associated net finance costs.

Comparative period reclassification

As reported in the Annual Report and Accounts for the year ended 31 March 2021 the loss from discontinued operations relating to the sale of WH Ireland (IOM) Limited was GBP86k. Therefore the profit of GBP51k from discontinued operations included in the six months to 30 September 2020 has been reclassified. As a result continued operations were understated by GBP137k for the six months ended 30 September 2020. The consolidated statement of comprehensive income has been reclassified to reflect the correct treatment. There was no impact to total comprehensive income and retained earnings. The reclassification has impacted the consolidated statement of comprehensive income, the consolidated statement of cash flow, the segment table for the six months to 30 September 2020 in note 2 and the earnings per share on continuing and discontinued operations for the six months to 30 September 2020 in note 7. As also reported in the Annual Report and Accounts for the year ended 31 March 2021 realised investment gains were included in revenue. The realised investment gains of GBP366k have therefore been moved to revenue for the six months to 30 September 2020. There was no impact to total comprehensive income and retained earnings. The reclassification has impacted the consolidated statement of comprehensive income, the consolidated statement of cash flow, the segment table for the six months to 30 September 2020 in note 2 and the earnings per share on continuing and discontinued operations for the six months to 30 September 2020 in note 7.

2. Segment information

The Group has two principal operating segments, Wealth Management (WM) and Capital Markets (CM). The WM division 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. The CM division provides corporate finance and corporate broking advice and services to companies and acts as Nominated Adviser (Nomad) to clients traded on 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.

All 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.

The majority of the Group's revenue originates within the UK.

The following tables represent revenue and cost information for the Group's business segments:

 
                                            Wealth Management    Capital        Group and      Group 
                                                                 Markets    consolidation 
 6 months ended 30 Sep 2021                                                   adjustments 
 (unaudited)                                          GBP'000    GBP'000          GBP'000    GBP'000 
-----------------------------------------  ------------------  ---------  ---------------  --------- 
 Revenue                                                7,800      9,702                -     17,502 
 Direct costs                                         (6,352)    (7,269)                -   (13,621) 
                                           ------------------  ---------  ---------------  --------- 
 Contribution                                           1,448      2,433                -      3,881 
 Indirect costs                                       (1,614)      (795)            (374)    (2,783) 
 Underlying profit/(loss) before 
  tax                                                   (166)      1,638            (374)      1,098 
 Acquisition related costs                              (405)          -                -      (405) 
 Amortisation of acquired brand and 
  client relationships                                  (218)          -                -      (218) 
 Changes in fair value and finance 
  cost of deferred consideration                        (306)          -                -      (306) 
 Restructuring costs                                    (194)      (102)                -      (296) 
 Net changes in the value of non-current 
  investment assets                                         -        452                -        452 
 Profit/(loss) before tax                             (1,289)      1,988            (374)        325 
 Tax                                                        -          -                -          - 
 Profit/(loss) for the year                           (1,289)      1,988            (374)        325 
-----------------------------------------  ------------------  ---------  ---------------  --------- 
 
 
                                    Wealth Management    Capital        Group and   Less Discontinued          Group 
                                                         Markets    consolidation        Operations**    (continuing 
 6 months ended 30 Sep 2020*                                          adjustments                        operations) 
 (unaudited)                                  GBP'000    GBP'000          GBP'000             GBP'000        GBP'000 
---------------------------------  ------------------  ---------  ---------------  ------------------  ------------- 
 Revenue                                        6,151      6,460              590               (484)         12,717 
 Direct costs                                 (5,222)    (4,857)            (432)                 570        (9,941) 
                                   ------------------  ---------  ---------------  ------------------ 
 Contribution                                     929      1,603              158                  86          2,776 
 Indirect costs                               (1,385)      (513)            (233)                   -        (2,131) 
 Underlying profit/(loss) 
  before tax                                    (456)      1,090             (75)                  86            645 
 Amortisation of acquired 
  client relationships                           (61)          -                -                   -           (61) 
 Dual running operating platform 
  costs                                          (10)          -                -                   -           (10) 
 Restructuring costs                             (75)       (31)                -                   -          (106) 
 Profit/(loss) before tax                       (602)      1,059             (75)                  86            468 
 Tax                                                -          -                -                   -              - 
 Profit/(loss) for the year                     (602)      1,059             (75)                  86            468 
---------------------------------  ------------------  ---------  ---------------  ------------------  ------------- 
 

* These figures have been reclassified to reflect the correct loss on discontinued operations and to reflect the

reclassification of realised gains to revenue for the six     months to 30 September 2020. 

** Discontinued operations relate to WH Ireland (IOM) Limited

 
                                    Wealth Management    Capital        Group and   Less Discontinued          Group 
                                                         Markets    consolidation          Operations    (continuing 
 12 months ended 31 Mar 2021                                          adjustments                        operations) 
 (audited)                                    GBP'000    GBP'000          GBP'000             GBP'000        GBP'000 
---------------------------------  ------------------  ---------  ---------------  ------------------  ------------- 
 Revenue                                       13,291     16,285              467               (484)         29,559 
 Direct costs                                (10,272)   (11,736)            (569)                 570       (22,007) 
                                   ------------------  ---------  ---------------  ------------------ 
 Contribution                                   3,019      4,549            (102)                  86          7,552 
 Indirect costs                               (3,099)    (1,312)          (1,459)                   -        (5,870) 
 Underlying profit/(loss) 
  before tax                                     (80)      3,237          (1,561)                  86          1,682 
 Acquisition related costs                      (465)          -                -                   -          (465) 
 Amortisation of acquired 
  client relationships                          (218)          -                -                   -          (218) 
 Dual running operating platform 
  costs                                          (35)          -                -                   -           (35) 
 Restructuring costs                             (91)       (38)                -                   -          (129) 
 Net changes in the value 
  of non-current investment 
  assets                                            -        212                -                   -            212 
 Profit/(loss) before tax                       (889)      3,411          (1,561)                  86          1,047 
 Tax                                                2          -              190                   -            192 
 Profit/(loss) for the year                     (887)      3,411          (1,371)                  86          1,239 
---------------------------------  ------------------  ---------  ---------------  ------------------  ------------- 
 

3. Investments

 
                           As at     As at     As at 
                          30 Sep    30 Sep    31 Mar 
                            2021      2020      2021 
 Investments             GBP'000   GBP'000   GBP'000 
                        --------  --------  -------- 
 Fair value: unquoted         48        48        48 
 Fair value: quoted            1         1         1 
 Fair value: warrants      1,734     1,937     1,050 
 Total investments         1,783     1,986     1,099 
----------------------  --------  --------  -------- 
 

Quoted and unquoted investments include equity investments other than those in subsidiary undertakings. Warrants may be received during the ordinary course of business; there is no cash consideration associated with the acquisition.

Fair value, in the case of quoted investments, represents the bid price at the reporting 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. These investments are included in non-current assets.

 
                           As at     As at     As at 
                          30 Sep    30 Sep    31 Mar 
                            2021      2020      2021 
  Trading investments    GBP'000   GBP'000   GBP'000 
----------------------  --------  --------  -------- 
 Listed investments        1,675     1,726     2,490 
 

Investments are measured at fair value, which is determined directly by reference to published prices in an active market where available. Trading investments are included in current assets.

4. Cash, cash equivalents and bank overdrafts

For the purposes of the statement of cash flows, 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 money and money held for settlement of outstanding transactions.

Money held on behalf of clients is not included in the statement of financial position. Client money at 30 September 2021 was GBP0.4m (30 September 2020: GBP0.4m; 31 March 2021: GBP0.4m).

5. Deferred Consideration

 
                                                    As at         As at         As at 
                                              30 Sep 2021   30 Sep 2020   31 Mar 2021 
                                             ------------  ------------  ------------ 
 At beginning of period                             1,996             -             - 
 Additions                                              -             -         1,996 
 Finance expense of deferred consideration            208             -             - 
 Change in fair value                                  98             -             - 
-------------------------------------------  ------------  ------------  ------------ 
 Balance at end of period                           2,302                       1,996 
-------------------------------------------  ------------  ------------  ------------ 
 Analysed as: 
 Included in current liabilities                    1,291             -         1,087 
 Included in non-current liabilities                1,011             -           909 
 Balance at end of period                           2,302             -         1,996 
-------------------------------------------  ------------  ------------  ------------ 
 

Deferred consideration relates to the acquisition of Harpsden Wealth Management Limited 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%. The total cash consideration of GBP2.5m was recognised at its fair value of GBP2m on acquisition.

During the six months ended 30 September 2021, the fair value of the estimated deferred consideration for Harpsden Wealth Management Limited was revalued by GBP98k due to the estimated timing of when the consideration will fall due. During the six months ended 30 September 2021 the Group also recognised a finance expense of GBP208k on the deferred consideration. The fair value of the Harpsden deferred consideration at 30 September 2021 was GBP2.3m. The two deferred consideration payments of GBP1.25m each are payable in December 2021 and December 2022 respectively.

6. Share capital

The total number of ordinary shares in issue is 62.05 million (30 September 2020: 48.70 million; 31 March 2021: 62.02 million).

7. Earnings per share

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

Diluted EPS is the basic EPS, adjusted for the effect of conversion into fully paid shares of the weighted average number of all dilutive employee share options outstanding during the period. At 30 September 2021: 6.48m (30 September 2020: nil; 31 March 2021: 6.48m) options were excluded from the EPS calculation as they were anti-dilutive. In a period 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.

Reconciliation of the earnings and weighted average number of shares used in the calculations are set out below.

 
                                                       As at          As at         As at 
                                                 30 Sep 2021   30 Sep 2020*   31 Mar 2021 
----------------------------------------------  ------------  -------------  ------------ 
 Weighted average number of shares in 
  issue during the period ('000)                      58,690         48,704        50,249 
 Effect of dilutive share options (thousands)          7,162              -         9,614 
                                                      65,852         48,704        59,862 
----------------------------------------------  ------------  -------------  ------------ 
 
 Profit from continuing operations                       325            468         1,239 
 Basic EPS                                             0.55p          0.96p         2,47p 
 Diluted EPS                                           0.49p          0.96p         2.07p 
----------------------------------------------  ------------  -------------  ------------ 
 
 
 Loss from discontinuing operations                        -           (86)          (86) 
----------------------------------------------  ------------  -------------  ------------ 
 Basic EPS                                                 -        (0.18p)       (0.17p) 
----------------------------------------------  ------------  -------------  ------------ 
 
 
 Total profit                                            325            382         1,153 
----------------------------------------------  ------------  -------------  ------------ 
 Basic EPS                                             0.55p          0.78p         2.30p 
----------------------------------------------  ------------  -------------  ------------ 
 Diluted EPS                                           0.49p          0.78p         1.93p 
----------------------------------------------  ------------  -------------  ------------ 
 

*Comparative figures have been reworked as a result of the reclassification of the loss on discontinued operations for the six months to 30 September 2020.

8. Dividends

No interim dividend has been paid or proposed in respect of the current financial period (30 September 2020: nil; 31 March 2021: nil).

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END

IR FSIEFMEFSESE

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December 07, 2021 02:00 ET (07:00 GMT)

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