WH Ireland Group plc
Annual report and accounts 2014
Financial overview
● Group turnover increased by 1.3% to £30.0m (2013: £29.7m)
●
●
●
●
●
Adjusted operating profit for the year of £1.45m
Full year profit before tax £0.5m (2013: profit before tax £1.7m)
Basic earnings per share of 1.42p (2013: 4.80p)
Recurring revenue increased by 12.4% to £10.0m (2013: £8.9m)
Proposed final dividend of 2.0p (2013: 1.5p)
Private Wealth Management
●
Assets under management increased by 8.4% to £2,692m (2013: £2,483m)
●
Discretionary assets under management increased by 42.7% to £722m (2013: £506m)
● Management fee income increased by 25.6% to £4.9m (2013: £3.9m)
●
Commission income increased by 1.8% to £11.3m (2013: £11.1m)
Corporate Broking
●
●
●
Number of retained corporate clients rose to 93 (2013: 87)
Retainer fee income rose by 6.7% to £3.2m (2013: £3.0m)
Transaction fees fell by 14.0% to £4.9m (2013: £5.7m)
WH Ireland Group plc annual report and accounts 2014
Contents
1
2
3
8
9
10
13
14
18
19
20
21
22
23
24
25
Chairman’s statement
Chief Executive Officer’s report
Strategic report
Board of Directors
Advisers
Directors’ report
Corporate governance
Remuneration report
Statement of Directors’ responsibilities
Independent auditors’ report
Consolidated statement of comprehensive income
Consolidated and Company statement of financial position
Consolidated and Company statement of cash flows
Consolidated statement of changes in equity
Company statement of changes in equity
Notes to the financial statements
WH Ireland Group plc annual report and accounts 2014
Chairman’s statement
In my statement last year I referred to the better, albeit very competitive, environment that we were working within and
also the greater costs, in particular regulatory, that a small company has to bear. These underlying themes have
remained evident throughout the year (as described in note 33 to the financial statements) but they have not deterred
the new management team from making significant structural change to the business. These changes have laid the
foundation for continued growth and efficiencies in both divisions in the years ahead. Reflecting this broader
confidence the Board is proposing a final dividend of 2.0p a share, a 33% increase on prior year, subject to
shareholder approval.
Management changes
During the year the Board has overseen a significant change of the senior management team. One of the key
changes was Dan Cowland joining the Board as Finance Director. These management changes have resulted in
shorter and more effective lines of communication between the team and has brought a greater focus to the
management of the business, the benefits of which are already beginning to be demonstrated.
Divisional update
The Corporate Broking division has continued to build out its corporate client list, a key strategic objective for this
division as it focuses upon generating recurring revenues. As of the date of this report, we are now advising 97
corporate clients across a diverse breadth of market sectors. This division has been able to continue the process of
selective recruitment throughout the year as senior individuals have acknowledged both the growth and stability to our
model. We have launched a number of initiatives in this division during the year including the establishment of an
International desk (incorporating the Australian team) and developing further our offering to our clients. Our Research
team received deserved recognition at the 2014 AIM awards with the “Best Research Award”. This is testament to the
significant effort of the analysts and the quality of their product.
The Private Wealth Management division has undergone significant restructuring during the year. A number of smaller
uneconomic offices have been closed and the assets transferred to larger offices; we have focused our offering by
ceasing to provide a number of peripheral services to non-core clients; and we have begun to witness a considerable
shift towards fee paying assets (both discretionary and advisory) as we look to improve the earnings quality of this
division. We have also made a number of significant investments in this division during the year, primarily in teams of
asset managers recruited from some of our larger competitors.
Board and Staff
There have been two Board appointments during the year. As stated above, Dan Cowland joined the Board in March
2014 as Finance Director having previously held a senior finance role at Shore Capital. In addition, Tim Steel joined
the Board as a non-executive director at last year’s AGM. Tim has had a long and distinguished career at Robert
Fleming and at Cazenove and Co.
Roger Lane-Smith has retired from the Board, after many years’ service as a Non-Executive Director. I would like to
thank Roger for his valuable contribution and insight towards the progression of the Company during his long tenure
as a Board member.
I would also like to take this opportunity to thank all the members of staff. There has been significant change in the
Company during the past 12 months and this has resulted in extra pressure across the Company to achieve our
objectives in a timely and orderly manner. Without the greater flexibility and willingness of the staff to rise to these
challenges the progress to date would not have been achieved.
Outlook
Markets are difficult at the moment as a number of factors are affecting sentiment, including the impending UK
election. Despite this, your Board believes that the Company is well positioned to continue to achieve the twin
strategic objectives of continuing to build the corporate client base alongside a growth in assets under management.
This growth, accompanied by continued focus on our cost base, should result in the benefits of the structural changes
of the past year beginning to impact positively on profitability in this, and future years.
The current financial year has begun satisfactorily with continued growth in our corporate client base, an improving
pipeline of corporate transactions and further asset growth in our Private Wealth Management business. We look
forward to the year ahead with cautious optimism.
Rupert Lowe
Chairman
WH Ireland Group plc annual report and accounts 2014
1
Chief Executive Officer’s report
Overview
The new management team referred to in the Chairman`s statement has had a busy year in bringing greater focus to
both divisions. This year of transition has resulted in some “one-off” charges which we identify later in the business
report and by their very definition will not be repeated. Adjusting for these “one-off” charges operating profitability
would have increased over the figures reported for 2013/14.
The following changes have either been implemented, or are in the process of being implemented, across the
Company: the closure of Private Wealth Management offices in Malvern, Saffron Walden, Norwich and Colchester,
and the withdrawal from our authorised representative arrangement in Colwyn Bay. In addition, we have sought to
bring greater clarity to the Private Client service offering and in so doing have ceased to offer a traded option service
and a corporate share dealing service. We have previously communicated that we are withdrawing from the provision
of third party administration and this exit is nearing completion. The resultant loss of assets as a result of the above
actions is approximately £220m, yet at a gross margin of approximately 0.1% these changes will have little impact on
either revenues or future profits.
Corporate Broking
The Corporate Broking division has had a mixed year. Growth was recorded in the number of corporate clients, and in
the recurring retainer income that these generate and in secondary commissions. Market making revenue was down
on the year as trading activity, in particular in the second half, witnessed a slowdown. Transaction income was
significantly below expectations reflecting a number of postponed or cancelled fund raisings and postponed M&A
activity. Despite this frustrating outcome much progress has been made in this division and our strategy of focusing
upon delivering a full broking service to a growing list of corporate clients remains at the core of our growth plans.
Private Wealth Management
This division has undergone significant change during the past year and has continued to grow assets against a
background of strong investment performance. During the year Assets Under Management and Advice (AUMA) rose
by 8.4%, compared with an index return of 1.3% (FTSE ALL Share, Capital only).
A significant amount of management time has been spent on restructuring this division from both an office location
and a client proposition perspective. There remains more work to be done this year in regard to the operating platform
and utilising IT better in order to achieve both cost efficiencies and to improve the overall client proposition. We have
recruited key investment professionals who can bring with them existing, and generate new, client relationships.
Individuals or teams have joined us from Charles Stanley, Canaccord Genuity and Barclays Wealth Management. In
addition Robert Race has joined us from Brewin Dolphin. Robert has assumed the role of Head of Manchester Private
Clients. We have also opened two new offices; Milton Keynes and our International office on the Isle of Man. A clear
objective of opening new offices is that over the medium term assets managed out of these offices need to have the
ability to reach at least £200m. After less than a year of being opened each of our new offices are on track to achieve
this figure. The full benefit of all of these new recruits will become evident as the year progresses, helping us to
achieve our asset growth targets and maintain the strong momentum in the growth of management fee income.
Outlook
Both divisions of the Company are well placed to continue to build upon the positive momentum achieved during the
past year. In the Corporate Broking division the focus will remain on the continued growth in the number of corporate
clients and the successful execution of corporate transactions whilst the Private Wealth Management division will
continue to focus upon the growth of fee paying discretionary and advisory assets.
As well as thanking existing loyal staff for their hard work during the year I would also like to welcome the significant
number of highly experienced and talented new colleagues who have joined us this year and who will also contribute
to the future growth and success of the firm.
Finally, but very importantly, in 2014 we grew our recurring revenue as a percentage of total revenue to 33%. Our
target remains 50% but this year’s performance marks the third year of improvement in this key measure of earnings
quality. Both divisions have contributed to this growth which encourages me immensely and reinforces my positive
outlook for WH Ireland in the year ahead.
Richard Killingbeck
Chief Executive Officer
WH Ireland Group plc annual report and accounts 2014
2
Strategic report
Overview
The WH Ireland Group has two principal operating subsidiaries, WH Ireland Limited and WH Ireland (IOM) Limited.
WH Ireland Limited consists of two business divisions: Private Wealth Management, which provides bespoke wealth
management solutions and independent financial advisory services to retail clients; and Corporate Broking which
provides corporate finance, advisory and broking services to small and mid-cap corporate clients, and stockbroking
and research services to its institutional client base. WH Ireland (IOM) Limited has been established to expand WH
Ireland's private wealth management business by way of an international offering and the entity received its regulatory
permissions in February 2014.
Although the Group’s income is predominantly derived from activities conducted in the UK and the Isle of Man, a
number of retail, institutional and corporate clients are situated worldwide.
At the year end, the Group had 241 staff (2013: 239) in the United Kingdom and 4 (2013: nil) in the Isle of Man.
Strategy
The Group’s strategic focus remains on continuing to grow our business across the two divisions, with the ultimate
objective of becoming the broker of choice in the small and mid-cap company segment and a leading wealth
management service provider to retail clients.
The strategy is focused on strengthening our corporate client list and increasing the assets under management in
order to achieve the Group’s target of 50% recurring revenue through the generation of wealth management fees and
corporate retainer income.
Private Wealth Management
The Private Wealth Management division of WH Ireland incorporates both investment management services and
advice on wealth planning. We offer these services from a number of offices across the UK, including; London,
Manchester, Cardiff, Bristol, Birmingham, Poole, Lymington and Milton Keynes. Our international clients are serviced
from our Isle of Man office.
We are strong advocates of a personal, bespoke service to all of our clients on the basis that no one private client has
exactly the same requirements as another. As the complexity of financial markets and advice increases we are also
able to offer specific wealth planning expertise in areas such as pensions and inheritance planning; we also work
closely with third party advisors in helping our mutual clients achieve their financial goals.
WH Ireland is one of the few wealth managers to offer three service investment propositions, namely discretionary,
advisory and execution only. Increasingly new clients are joining us under a discretionary mandate but we still have
substantial assets in both the advisory and the execution only propositions.
The strategy for the ongoing growth in this division is to focus our efforts on building our management fee based
assets. This will be achieved by continued personal referrals, selective recruitment of individuals and teams with
existing client relationships, and corporate acquisitions of Private Wealth Management businesses. In addition, we are
reviewing an investment in our own dedicated business development capability which will complement the sources of
funds flow above.
WH Ireland Group plc annual report and accounts 2014
3
Strategic report
Corporate Broking
WH Ireland is one of the largest Nominated Advisers (NOMADs) and Brokers for AIM quoted companies in London.
We provide corporate advisory and broking services to 97 Corporate companies, including capital raisings, all aspects
of market regulation, acquisition strategy, as well as numerous other general corporate activities. Importantly, the
team also benefits from many years of experience in bringing new companies to the public market.
WH Ireland’s award-winning Research team provides coverage of our corporate clients, ensuring the investment case
is clearly and accurately articulated to the wider investment community. We maintain close contact with both
institutional and private client fund managers via our Institutional Sales and Investor Relations teams and help to
ensure liquidity in the shares of our corporate clients by offering a market making service. In addition to our London
office, we also provide our corporate broking service from offices in Leeds and Bristol.
Our corporate client base is spread across the spectrum of industry sectors, including Technology, Consumer,
Support Services, Healthcare, Oil & Gas, Mining and Industrials to name a few. Whilst we have continued to focus
upon the development and growth of our client base, we have ensured that this is not to the detriment of client service
levels. Recurring retainer income is one of the key financial drivers of this division, which helps us mitigate the
volatility of transaction income and ensures that we have a stable team in place from which we can continue to build
over the coming years. Our success on this metric is demonstrated by the fact that retainer income has risen by 6.7%
over the past two years.
Percentage breakdown of clients by Sector
16
17
7
7
9
22
22
Consumer
Financial Services
Healthcare
Industrials
Natural Resources
Support services
Technology
Given the well-publicised structural changes taking place in the wider market, the division has developed a robust and
sustainable platform from which to build. The business is demonstrating strong momentum and we will continue to
focus on providing a first class service to all of our clients. As the business grows, we will maintain a selective
recruitment policy of hiring experienced individuals to ensure that these high levels of service are maintained. We
would anticipate our corporate client list continuing to grow as we attract further quality companies given our
differentiated proposition relative to some of our larger competitors.
WH Ireland Group plc annual report and accounts 2014
4
Strategic report
Key Performance Indicators (KPIs)
The Group uses a number of KPIs to monitor its performance against its financial objectives:
1. Ratio of profit before tax to total revenue
Ratio of profit before tax to revenue
1.52
5.57
30 November 2014
%
30 November 2013
%
2. Funds under management and advice
Discretionary assets
Advisory assets
Execution only assets
Total
Less assets relating to discontinued activities:
Third party client administration
Appointed Representative assets
Other assets
Total
30 November 2014
£m
30 November 2013
£m
722
952
1,018
2,692
(90)
(102)
(25)
2,475
506
931
1,046
2,483
(155)
(84)
-
2,244
This is used as a measure of the potential for revenue generation by type of client assets held in our nominee control.
3. Recurring income streams
30 November 2014
£m
30 November 2013
£m
Value of Group recurring income
10.0
8.9
This key indicator of business activity includes fee and other ongoing income from retail and corporate clients for the
management of their relationship with the Group. This represents an increase of 12.36%, largely influenced by an
increase in the number of clients in our Corporate Broking division and an increase in our Private Wealth Management
division of the number of clients and value of their assets who pay a fee for our services.
4. Corporate Broking performance
30 November 2014
30 November 2013
Number of transactions
Money raised
Retained corporate clients
29
£56m
93
21
£102m
87
WH Ireland Group plc annual report and accounts 2014
5
Strategic report
A reconciliation of the adjusted operating profit is set out below:
Operating profit
Add back of one off charges:
Restructuring costs
Non-recurring legal and regulatory costs
Adjusted operating profit
A summary of the income statement for the financial year is set out below:
Revenue
Administrative expenses
Operating profit
Other income and charges
Profit before tax
Tax expense
Profit after tax
30 November 2014
£’000
30,043
(29,353)
690
(234)
456
(119)
337
30 November 2014
£’000
690
620
138
1,448
30 November 2013
£’000
29,653
(28,734)
919
733
1,652
(516)
1,136
Future Outlook
The Board is pleased with the recent changes made across the business which are intended to provide the Group with
greater focus to achieve our strategic goals. The recent, and impending, closure of Private Wealth offices and the
cessation of peripheral non-core services will bring greater clarity to the service offering and the business will continue
to look to grow both organically and through value enhancing acquisition from a more solid foundation.
Dividend
The Board is pleased to announce the Company’s intention to pay a dividend of 2.0p per share at a cost of
approximately £477k. Subject to shareholder approval at the upcoming Annual General Meeting, the dividend will be
paid on or before 10 April 2015 to those shareholders on the register at the close of business on 13 March 2015. The
ex-dividend date will be 12 March 2015.
Balance Sheet and Capital Structure
Maintaining a strong and liquid balance sheet remains a key business objective for the Board, alongside its regulatory
capital requirements. Net assets amounted to £13.4m (2013: £13.1m) and net current assets to £8.0m (2013: £7.8m).
The balance sheet is underpinned by the holding of the Group’s freehold building in the Manchester city centre and by
the substantial cash balances held to facilitate both the day to day business and growth opportunities.
Risks and Uncertainties
Risk appetite is established by the Board and this is consistently reviewed and monitored by the Board and senior
management. The Group, through the operation of its Risk Committee, considers all of the relevant risk management
issues and advise the Board as necessary on such matters. The Group maintains a comprehensive risk register,
within its agreed risk management framework, which encourages a risk-based approach to the internal controls and
management of the Group. In addition to an independent Internal Audit function, the Group hired a new Head of Risk
during the year to lead a dedicated Risk function. The Internal Audit and Risk functions coordinate their programme of
work with both the Compliance department. The Internal Audit function reports directly to the Group’s Audit
Committee.
WH Ireland Group plc annual report and accounts 2014
6
Strategic report
Risks and Uncertainties continued
Liquidity and Capital Risk
Whilst a significant element of the Group’s revenue continues to be transaction driven, the Group’s focus, as outlined
above, remains on increasing the recurring element of client driven revenues. The Group continues to look to build its
discretionary fee paying client base to better fit the regulatory landscape in which the Group is operating and to reduce
the proportion of its income that is linked to transactions.
Whilst the Group has a predominantly fixed cost base, a significant element of which are employment costs that are
insensitive to business volumes, the Group has continued to focus on achieving operational efficiencies and reducing
the variable costs of the business to maximise profitability and provide operational gearing. A broad range of cost
savings have been initiated during the year, the full benefit of which will become evident in the 2014/15 financial year.
In order to mitigate risk and absorb any volatility in its operating results, the Board has continued to ensure that the
balance sheet remains robust and suitably liquid, and that sufficient regulatory capital is maintained to allow for a
healthy surplus over the regulatory minimum capital requirements. The Group calculates and monitors its regulatory
capital requirements 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 to the business as a result of a
breakdown or interruption, from either internal or external sources, in the operating infrastructure of the Group. This
risk is mitigated in part by the number of branches across the UK from which the Group operates, and the Group
having business continuity and disaster recovery arrangements. These arrangements include business interruption
insurance.
The Group seeks to ensure that its risk management framework and control environment is continuously evolving and
the Board delegates the day to day monitoring of this to the Risk Committee, chaired by the Head of Risk.
Credit Risk
The Board takes active steps to minimise the incidence of credit losses. This includes formal credit management
procedures and the close supervision of credit limits and exposures. Formal credit procedures include the approval of
significant client limits, approval of material trades, collateral requirements for trading clients and the proactive
management of any overdue accounts. Additionally, risk assessments are performed on an ongoing basis during the
year on all deposit taking banks and custodians.
Regulatory Risk
The Group operates in a highly regulated environment both in the UK and the Isle of Man. The Group has
independent Risk, Internal Audit and Compliance departments, resourced with appropriately qualified and experienced
individuals. The Directors monitor changes and developments in the regulatory environment and ensure that sufficient
resources are made 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 26 of the financial statements.
Resources and Relationships
The Group’s most valuable resource remains its staff and the Group remains committed to retaining and recruiting
quality staff that share our culture and vision. Staff at all levels of the business are heavily focused on delivering a
quality service to our clients. The Board continues to strive to deliver a service throughout the Group which is in
compliance with both the letter and the spirit of the principles of the Financial Conduct Authority.
The Board collates management information to assist in monitoring its non-financial objectives, which include items
such as risk appetite monitoring, staff turnover, thematic reviews and client complaints.
By order of the Board
Dan Cowland
Finance Director
WH Ireland Group plc annual report and accounts 2014
7
Board of Directors
Rupert Lowe
Non-Executive Chairman
Rupert worked for Phillips and Drew between 1981
and 1988, serving on the LIFFE Board between 1985
and 1988. He was a member of the Committee which
created the FTSE 100 Index before joining Baring
Securities in 1988, where he worked in Japanese
derivatives. He worked for Morgan Grenfell from 1990
to 1996, and was Chairman of Southampton Leisure
Holdings Plc between 1996 and 2006. He was
previously Chairman of the Prince’s Trust (South East)
and is currently a Director of Appleclaim Insurance
Holdings Limited (Lloyds Insurance) following the sale
of Jubilee Group Holdings Limited to Ryan Specialty
Group. He is also a Director of a number of family
related construction businesses specialising
in
Mechanical, Electrical and Data installation.
Richard Killingbeck
Chief Executive Officer
Richard joined the Group in September 2012 bringing
with him over 25 years of investment management and
private banking experience. Richard was appointed to
the Board in December 2012, and was appointed to
the role of Chief Executive Officer in January 2013.
During the past 25 years he has held senior fund
management positions in the management of both
institutional and private client accounts. In 2001, whilst
at Singer and Friedlander Investment Management, he
was appointed the CEO of the business, a position he
held until 2005. He then undertook a number of senior
roles at Close Brothers Asset
management
Management and then more recently at Credit Suisse
Private Bank. Richard is also Chairman of Bankers
Investment Trust PLC.
Dan Cowland
Finance Director
Dan is a Fellow of the ICAEW, having qualified as a
Chartered Accountant with Ernst & Young in 1997.
After five years within the Banking and Capital Markets
group, he moved to the WestLB owned Panmure
Gordon business where he spent seven years in
various finance roles, latterly as the Head of Finance.
Dan performed senior
finance roles at Lehman
Brothers and Macquarie Bank before joining Shore
Capital Stockbrokers as Finance Director in 2010.
Dan joined WH Ireland in March 2014 as Finance
Director.
Tim Steel
Non-Executive Director
Tim worked for Robert Fleming & Co between 1974
and 1979, firstly as an Investment Research Analyst
before becoming an Investment Manager. In 1980, he
moved to Cazenove & Co where he worked in a
variety of roles including Head of UK Institutional Sales
and latterly as vice-Chairman of Cazenove Capital
Management, before retiring in 2009. In 2008 he
became Non-Executive Chairman of Castle Alternative
Invest, a fund of hedge funds, listed on the Swiss
Stock Exchange. Since 2013, he has been Chairman
of a private equity boutique, Committed Capital,
financing small UK private companies. Tim was
appointed to the Board of WH Ireland in March 2014.
Richard Lee
Non-Executive Director
Richard is a strategy consultant with wide business
experience. In his early career he worked in two
stockbroking firms in the research and corporate
finance departments. He has been Chairman or Non-
Executive Director of eleven quoted companies and a
number of private companies in Banking, Finance,
Invoice Factoring, Recruitment Packaging, Healthcare
and a broad range of industrial areas. He was
previously a member of the Investment committee of
the Lazard North West Unit Trust. Prior to becoming a
Non-Executive Director he was Chairman of WH
Ireland Limited.
WH Ireland Group plc annual report and accounts 2014
8
Advisers
Nominated Adviser
Spark Advisory Partners
5 St. John's Lane
London, EC1M 4BH
Auditors
BDO LLP
55 Baker Street
London, W1U 7EU
Financial PR Advisors
MHP Communications
60 Great Portland Street
London, W1W 7RT
Company Secretary
Katy Mitchell
Registered Office
24 Martin Lane
London, EC4R 0DR
Broker
WH Ireland Limited
11 St James’s Square
Manchester, M2 6WH
Bankers
Bank of Scotland
2nd Floor,1 Lochrin Square
92-98 Fountainbridge
Edinburgh, EH3 9QA
Solicitors
DWF LLP
1 Scott Place, 2 Hardman Street
Manchester, M3 3AA
Company number
3870190
WH Ireland Group plc annual report and accounts 2014
9
Directors’ report
The Directors present their annual report on the affairs of the Group, together with the financial statements and
Independent Auditors’ Report, for the year ended 30 November 2014.
Principal activities
The principal activity of the Company during the year was that of a holding company.
The principal activities of the Group during the year were the provision of wealth management and corporate finance
advice, research, products and services to the private clients and small and medium sized companies.
Strategic report
A review of the strategy of the Group can be found in the Strategic Report on pages 3 to 7.
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 November 2017 which consider the funding and
capital position of the Group. Those forecasts make assumptions in respect of future trading conditions, notably the
economic environment and its impact on the Group’s revenues and costs. In addition to this, the nature of the Group’s
business is such that there can be considerable variation in the timing of cash inflows. The forecasts take into account
foreseeable downside risks, based on the information that is available to the Directors at the time of the approval of
these financial statements.
Certain activities of the Group are regulated by the Financial Conduct Authority (FCA) which is the statutory regulator
for financial services business in the UK and 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 daily basis and they have developed appropriate scenario tests and corrective management
plans which they are prepared to implement to address any potential deficit as required. These actions may include
cost reductions, regulatory capital optimisation programmes or further capital raising. The Directors consider that,
taking account of foreseeable downside risks, regulatory capital requirements will continue to be met.
The Directors have renewed the Group’s banking facilities, confirming that these will be available until 28 February
2016.
Financial instruments and risk management
Details of risks and risk management arising from the Group’s financial instruments are set out in note 25 of the
financial statements.
Dividends
A dividend of 1.5p per share for 2013 was paid in the year, and the Directors have proposed a final dividend of 2.0p
per share for 2014 (note 10).
Directors
The Directors who held office during the year and their interest in the shares of the Company were as follows:
RJG Lowe*
RW Killingbeck
DJ Cowland
T Steel
REM Lee
AM Kershaw
R Lane-Smith*
At
30 November
2014
1,074,856
890,000
10,000
-
30,267
-
-
At
30 November
2013
1,064,856
870,000
-
-
20,267
40,000
26,038
Timothy Steel was appointed to the Board on 12 March 2014 and Dan Cowland was appointed to the Board on 13
March 2014. Alan Kershaw resigned from the Board on 28 February 2014 and Roger Lane-Smith retired from the
Board on the 31 July 2014.
Further details of Directors’ service contracts, remuneration and share interests and Directors’ interests in options over
the Company’s shares can be found in the Remuneration Report on pages 14 to 17.
None of the Directors who held office at the end of the financial year had any disclosable interest in the shares of
other Group companies.
WH Ireland Group plc annual report and accounts 2014
10
Directors’ report
Major shareholdings
At 26 February 2015, the last practicable date prior to the publication of this report, the Company had been notified of
the following shareholdings (other than those of the Directors) of 3% or more of the share capital:
Oceanwood Capital Management LLP
Lord J Marland*
JP Morgan Securities**
Barclayshare Nominees Limited
D Ross*
T Agnew*
H Ansell
Ordinary shares
2,327,079
1,944,359
1,753,474
1,112,937
1,000,000
891,142
725,000
%
9.75
8.15
7.35
4.66
4.22
3.76
3.04
* Denotes members of a group of shareholders who are deemed to be a concert party under the Takeover Code and whose total combined
shareholding in the Company is 5,780,357. This represents 24.23% of the voting rights in the Company.
** These 1,753,474 shares, along with a further 373,720 shares held by Apollo Nominees Limited are believed to be subject to a contract for
difference arrangement giving Polygon Global Partners LLP an interest in these shares.
In addition, the Company's Employee Share Ownership Trust which is operated by Sanne Trust Company Limited
holds 2,077,000 shares as trustees. All rights to vote in respect of these shares have been waived
Policy and practice on payment of creditors
During the year no specific standard or code was followed with respect to the payment of suppliers but the Company
and Group’s policy for the payment of suppliers was as follows:
• payment terms were agreed at the start of the relationship with the supplier and were only changed by
•
agreement;
standard payment terms to suppliers of goods and services were within 30 days from receipt of a correct
invoice for satisfactory goods or services which had been ordered and received unless other terms were
agreed in a contract;
• payments were made in accordance with the agreed terms or in accordance with the law if no agreement had
•
been made; and
suppliers were advised when an invoice was contested without delay and any disputes were settled as quickly
as possible.
This will also be the policy for the forthcoming year.
The Company does not have significant trade creditors in the conventional sense, however at the year end for the
Group there were 38.63 days purchases (2013: 26.06 days) in creditors relating to operational expenses.
Environmental matters
The Group recognises its impact on the environment and takes steps to reduce it. Although the Group’s activities have
only a comparatively small impact, the Directors are aware that environmental risks and uncertainties impact to some
extent on all companies and affect investment decisions made.
Political and charitable contributions
The Company did not make any political or charitable donations or incur any political expenditure during the year.
Within the rest of the Group, WH Ireland Limited made charitable donations of £890 (2013: £1,190), but made no
political donations or incurred any political expenditure.
Qualifying third party indemnity provisions
The company has arranged qualifying third party indemnity for all of its directors.
Employees
Our employees are vital to the continued success of the Group. The Group and our employees are committed to
delivering a quality service which meets our own expectations, those of the FCA and those of our clients wherever
possible.
Employees are kept informed of, and consulted regularly on, key issues affecting them and the Group by the intranet
and through regular communication between management and staff.
The Company policy is to give full and fair consideration to all disabled people who apply for employment, seeks to
develop the skills and potential of disabled people, affords them access to training and promotion opportunities and
makes every effort to retain in suitable employment those staff who have the misfortune of becoming disabled whilst in
the employment of the Group.
WH Ireland Group plc annual report and accounts 2014
11
Directors’ report
Employees are encouraged to be involved in the Group’s performance through participation in a Save as You Earn
(SAYE) Scheme and by invitation to either the Unapproved Executive Share Option Plan (ESOP) or the Approved
Company Share Option Plan (CSOP). In addition, the WH Ireland Group plc Employee Share Ownership Trust
(ESOT), which is an Employee Benefit Trust, exists to facilitate the acquisition of shares by employees.
Purchase of own Shares
At 30 November 2014 2,077,000 shares were held in trust by the ESOT under Joint Ownership Arrangements.
Further details are in note 27 of the Financial Statements.
Events after the balance sheet date
For details of significant events after the balance sheet date see note 34.
Annual General Meeting (AGM)
The resolutions being proposed at the AGM include usual resolutions dealing with the ordinary business of the AGM
together with certain additional special business. A description of the resolutions relating to the special business is set
out at the end of the Notice of AGM.
Auditors
The Directors who held office at the date of approval of this Directors’ Report confirm that, so far as they are each
aware, there is no relevant audit information of which the Company’s auditors are unaware; and each Director has
taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit information
and to establish that the Company’s auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of Section 418 of the
Companies Act 2006.
In accordance with the Companies Act 2006, a resolution for the re-appointment of BDO LLP as auditors of the
Company is to be proposed at the forthcoming AGM.
By order of the Board
Katy Mitchell
Company Secretary
24 Martin Lane
London EC4R 0DR
27 February 2015
WH Ireland Group plc annual report and accounts 2014
12
Corporate governance
The Board has given consideration to the UK Corporate Governance Code (the Code) issued from time to time by the
Financial Reporting Council (FRC).
Although companies traded on AIM are not required to provide corporate governance disclosure, or follow guidelines
in its Code, the Directors have chosen to provide certain information on how the Company has adopted various
principles of the Code.
The Board and its committees
At the date of this report the Group Board consists of two Executive and three Non-executive Directors. The Board is
responsible for the overall direction and strategy of the Group and meets regularly throughout the year. Under the
Company’s Articles of Association at every AGM, any Directors:
• who have been appointed by the Directors since the last AGM; or
• who were not appointed or reappointed at one of the preceding two AGMs, must retire from office and may
offer themselves for reappointment by the members.
The Board has formally established a number of committees and agreed their terms of reference, these committees
are as follows:
Remuneration Committee
The principal function of this committee is to determine the policy on Executive appointments and remuneration. The
committee consists of the three Non-Executive Directors with Rupert Lowe as Chairman. It is the aim of the committee
to attract, retain and motivate high calibre individuals with a competitive remuneration package.
Remuneration for Executives normally comprises basic salary, bonus, benefits in kind and options. Details of the
current Directors’ remuneration are given in the Remuneration Report.
Other Executive Directors may be invited to attend the meetings.
Audit Committee
The committee is made up of the three Non-Executive Directors with Richard Lee as Chairman. It is responsible for
reviewing the Company’s arrangements with its external and internal auditors, including the cost effectiveness of the
audit and the independence and objectivity of the auditors. It also reviews the application and appropriateness of the
Company’s accounting policies, including any changes to financial reporting requirements brought about by both
external and internal requirements and it gives consideration to all major financial announcements made by the
Company including its interim and preliminary announcements and annual report and accounts.
The external auditors, internal auditors and other Executive Directors may be invited to attend the meetings.
Internal control
The Board has overall responsibility for the framework of internal control established by the Group and places
considerable importance on maintaining a strong control environment. This framework of internal control is designed
to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and
not absolute assurance against material misstatement or loss.
Detailed internal control procedures exist throughout the Group’s operations and compliance is monitored by
management and through the Group’s Compliance Department, Internal Audit Department, Risk Management
functions and the Risk Committee of WH Ireland Limited.
WH Ireland Group plc annual report and accounts 2014
13
Remuneration report
The Directors present the Directors’ Remuneration Report (the “Remuneration Report”) for the financial year ended
30 November 2014.
Composition and role of the Remuneration Committee
As detailed within the Corporate Governance report, the Board has established a Remuneration Committee which
currently consists of the three Non-Executive Directors, chaired by Rupert Lowe.
The committee determines and agrees with the Board the framework and policy of Executive remuneration and the
associated costs to the Group and is responsible for the implementation of that policy. The committee determines the
specific remuneration packages for each of the Executive Directors and no Director or Senior Executive is involved in
any decisions as to his own remuneration. The committee has access to information and advice provided by the Chief
Executive Officer and the Finance Director and has access to independent advice where it considers it appropriate.
This report explains how the Group has applied its policy on remuneration paid to Executive Directors.
Framework and policy on Executive Directors’ remuneration
The Group’s remuneration policy is designed to provide competitive rewards for its Executive Directors and other
Senior Executives, taking into account the performance of the Group and the individual Executives, together with
comparisons to pay conditions throughout the markets in which the Group operates. It is the aim of the committee to
attract, retain and motivate high calibre individuals with a competitive remuneration package. It is common practice in
the industry for total remuneration to be significantly influenced by bonuses.
The remuneration packages are constructed to provide a balance between fixed and variable rewards. Therefore
remuneration packages for Executive Directors and Senior Executives normally include basic salary, discretionary
bonuses, benefits in kind and options. In agreeing the level of basic salaries and annual bonuses the committee takes
into consideration the total remuneration that Executives could receive.
Basic salary
Basic salaries are reviewed on an annual basis or following a significant change in responsibilities. The committee
seeks to establish a basic salary for each Executive determined by individual responsibilities and performance, taking
into account comparable salaries for similar positions in companies of a similar size in the same market.
Incentive arrangements
1) Discretionary bonuses
These are designed to reflect the Group’s performance, taking into account the performance of its peers, the market in
which the Group operates and the Executive’s contribution to that performance.
2) Performance related contractual incentive scheme
These are designed to reward performance by employees across the Group.
3) Share options
As referred to in the Directors’ Report, the Group now has four different share ownership plans; the ESOT, ESOP,
CSOP and SAYE scheme.
ESOT
The WH Ireland Group plc Employee Share Ownership Trust (ESOT) was established on 19 October 2011, for the
purpose of holding and distributing shares in the Company for the benefit of the employees. All costs of the ESOT are
borne by the Company or its subsidiary WH Ireland Limited. Currently 2,077,000 shares are held by the ESOT. Joint
ownership arrangements have been put in place in relation to certain of these shares between the trustees of the
ESOT and a number of employees, including some Directors. The shares carry dividend and voting rights, although
these are normally waived by all parties to such arrangements. The joint ownership arrangements create options for
the employees to acquire the interest that the trustees of the ESOT has in the jointly owned shares, which lapses
when an employee is deemed to be a Bad Leaver. If an employee ceases to be an employee of the Group, otherwise
than in the event of critical illness or death, the employee is deemed to be a Bad Leaver.
ESOP
Under the terms of the ESOP, options over the Company’s shares may be issued on a discretionary basis to
Executives within the Group at not less than the prevailing market price. The maximum aggregate subscription price of
all options issued to an Executive in any ten year period may not exceed four times the annual remuneration of that
Executive. In addition options may not be granted in total in excess of 20% of the share capital of the Company (of all
classes) in issue at that time and no individual may have options representing more than 5% of the share capital of the
Company (of all classes) in issue at the time. These rules can be overridden by the Remuneration Committee if
considered appropriate.
WH Ireland Group plc annual report and accounts 2014
14
Remuneration report
3) Share options continued
CSOP
Under the terms of the CSOP, options over the Company’s shares may be granted on a discretionary basis to
employees of the Group (including Directors who are required to devote at least 25 hours per week to their duties, but
excluding any employee who has more than a 25% interest in the Company’s ordinary share capital or assets at the
time of grant or has done so in the twelve months prior to grant) at a price which is not less than the market value of
the shares at the date of grant. Performance conditions may be imposed in respect of options at the discretion of the
Board. The maximum aggregate exercise price for all unexercised CSOP options (granted under the CSOP or any
other CSOP operated by the Group) held by an individual at any one time must not exceed £30,000. In addition,
options may not be granted if such grant would result in the total number of shares which have been issued or
transferred out of treasury in satisfaction of options granted under any share plan operated by the Group in the ten
year period ending with the proposed grant date, plus the number of shares which remain capable of issue or transfer
out of treasury under existing options granted, to exceed 10% of the Company’s issued share capital. Any options
granted to or held under the ESOT are not taken into consideration for the purposes of this limit.
In the event of an option holder ceasing to be an employee of the Group, options granted under the CSOP shall lapse
(a) on the first anniversary of an option holder’s death, (b) on the expiry of 6 months from the date on which an option
holder ceases to be an employee of the Group due to injury, disability, retirement or redundancy or (c) immediately on
an option holder ceasing to be an employee of the Group for any reason other than those referred to in (a) and (b),
unless, and to the extent, the Board exercises its discretion to allow the options to be exercised for a period after the
option holder ceases to be an employee of the Group.
SAYE
Under the terms of the SAYE, employees of the Group (including directors who are required to devote at least 25
hours per week to their duties but excluding any employee who has more than a 25% interest in the Company’s
ordinary share capital or assets at the time of grant or has done so in the twelve months prior to grant) may be invited
to apply for an option to be granted to them at a price which is not less than 80% of the market value of the shares at
the date of grant. Invitations issued must be extended to all eligible employees. Employees enter into a savings
contract under which they agree to save a certain amount of salary each month for a specified period with a view to
using those savings to buy shares under the terms of the option. Options may not be granted if such grant would
result in the total number of shares which have been issued or transferred out of treasury in satisfaction of options
granted under any share plan operated by the Group in the ten year period ending with the proposed grant date, plus
the number of shares which remain capable of issue or transfer out of treasury under existing options granted, to
exceed 10% of the Company’s issued share capital. Any options granted to or held under the ESOT are not taken into
consideration for the purposes of this limit.
In the event of an employee leaving before the end of the 3 years contract because of redundancy, injury, disability or
retirement, the employee will be able to continue saving privately and buy a reduced number of shares (in line with the
amount saved) within 6 months of leaving using the savings accrued. If the employee leaves before the end of the 3
years due to resignation, dismissal on grounds of misconduct or not returning after maternity leave, they would not be
able to buy any shares and would have their funds returned to them. In the event of death prior to the scheme
maturing, the deceased’s personal representative(s) would be able to buy a reduced number of shares within 12
months of the death.
Other employee benefits
Depending on the terms of their contract certain Executive Directors and Senior Executives are entitled to a range of
benefits, including contributions to individual personal pension plans, private medical insurance and life assurance.
Service contracts and notice periods
The Executive Directors are employed on rolling contracts subject to six months’ notice from either the Executive or
the Group, given at any time. The service contracts of the current Executive Directors are available for inspection by
any person from the Human Resources department at the Group’s administrative office during normal office hours on
any day except weekends and bank holidays and at the AGM from 9am on the day of the Meeting until the conclusion
of the Meeting. Contracts of employment for Senior Executives are all on a rolling basis subject to notice periods
ranging from three to twelve months.
Service contracts do not provide explicitly for termination payments or damages but the Group may make payments in
lieu of notice. For this purpose pay in lieu of notice would consist of basic salary and other relevant emoluments for
the relevant notice period excluding any bonus.
WH Ireland Group plc annual report and accounts 2014
15
Remuneration report
External appointments undertaken by Executive Directors
In the committee’s opinion, experience of other companies’ practices and challenges is valuable for the personal
development of the Group’s Executive Directors and for the Company. It is therefore the Group’s policy to allow
Executive Directors to accept non-executive directorships at other companies, provided the time commitment does not
interfere with the Executive Directors’ responsibilities within the Group. Fees are retained by the individual Director.
Non-Executive Directors
All Non-Executive Directors have a remuneration agreement for an initial period of twelve months and thereafter on a
rolling basis subject to three months’ notice by either the Non-Executive Director or the Group, given at any time.
In the event of termination of their appointment they are not entitled to any compensation. The terms and conditions of
appointment of Non-Executive Directors are available for inspection by any person from the Human Resources
department at the Group’s administrative office during normal working hours on any day except weekends or bank
holidays and at the AGM from 9am on the day of the Meeting until the conclusion of the Meeting.
Non-Executive Directors’ fees are determined by the Executive Directors having regard to the need to attract high
calibre individuals with the right experience, the time and responsibilities entailed and comparative fees paid in the
market in which the Group operates. They are not eligible for pensions.
Directors’ emoluments
The remuneration of each Director, excluding share options and awards, during the year ended 30 November 2014 is
detailed in the table below:
Executive
CP Compton
JM Scott
AM Kershaw
DJ Cowland
RW Killingbeck
Non-Executive
RJG Lowe
R Lane-Smith
REM Lee
TM Steel
Salary
£
Benefits
£
Bonus
£
—
—
94,071
101,250
206,667
100,000
27,500
30,000
20,577
580,065
—
—
829
873
2,412
—
—
—
—
4,114
—
—
—
20,000
100,000
36,000
—
—
—
156,000
Compensation
Total
for year
ended
Pension
contribution
for year
for year
ended
ended
for loss 30 November 30 November 30 November 30 November
2013
2013
of office
£
£
£
Pension
Total contribution
for year
ended
2014
£
2014
£
—
—
64,870
—
—
—
—
—
—
64,870
—
—
159,770
122,123
309,079
136,000
27,500
30,000
20,577
805,049
186,629
92,446
112,205
—
176,658
112,800
30,000
30,000
—
740,738
—
—
27,333
9,788
4,375
—
—
—
—
41,496
—
14,000
29,000
—
18,333
—
—
—
—
61,333
The highest paid Director for 2014 and 2013 was RW Killingbeck who received total emoluments of £313,454 and
£194,991 respectively.
WH Ireland Group plc annual report and accounts 2014
16
Remuneration report
Directors’ interests in share options
Full details of options over ordinary shares in the Company held by Executive and Non-Executive Directors at
30 November 2014 are shown below:
RW Killingbeck1
RW Killingbeck2
DJ Cowland1
Notes:
Number of
options over
ordinary
shares
1,000,000
18,292
100,000
Date of
grant of
share
option
28.10.13
31.05.13
23.07.14
Exercise
price per
ordinary
share
74.50p
49.20p
114.50p
Exercise period
28.10.16 to 27.10.23
01.06.16 to 30.11.16
23.07.17 to 22.07.20
1. These ordinary shares are held by the ESOT under a Joint Ownership Arrangement between the Executive and the Trust, under which the
Executive has the ability to exercise an option during the exercise period stated (note 28).
2. These numbers relate to the maximum number of ordinary shares over which the holders are entitled to exercise options under the Group’s
SAYE scheme, if the individuals continue to contribute at the amount defined in their savings contract.
The options below were exercised by Directors during the year:
Number of
options over
ordinary
shares
Date of
grant of
share
option
20,000 17.03.04
30,000 25.05.04
REM Lee
REM Lee
Exercise
price per
ordinary
share
Date of
Exercise
75.00p 17.03.07 to 17.03.14 14.03.14
70.00p 25.05.07 to 25.05.14 22.04.14
Exercise period
Mid market
Price on date
Of exercise
122.50p
109.00p
Gain on
Exercise
9,500
11,700
At 28 November 2014 the market price of the Company’s shares was 94.5p.
The highest daily closing price during the year was 140.0p and the lowest daily closing price was 83.5p.
WH Ireland Group plc annual report and accounts 2014
17
Statement of directors’ responsibilities
In respect of the directors’ report and the financial statements
The Directors are responsible for preparing the annual report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the
Directors have elected to prepare the Group and Company financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must
not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs
of the Group and Company and of the profit or loss of the Group for that period. The Directors are also required to
prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading
securities on the Alternative Investment Market.
In preparing these financial statements, the Directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
•
state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject
to any material departures disclosed and explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They
are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a
website. Financial statements are published on the Company's website in accordance with legislation in the United
Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The
Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.
WH Ireland Group plc annual report and accounts 2014
18
Independent auditors’ report
To the members of WH Ireland Group plc
We have audited the financial statements of WH Ireland Group plc for the year ended 30 November 2014 which
comprise the consolidated statement of comprehensive income, the consolidated and company statement of financial
position, the consolidated and company statement of cash flows, the consolidated and company statement of changes
in equity and the related notes. The financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as
regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act
2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and auditors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and
express an opinion on the financial statements in accordance with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council’s (FRC’s) Ethical
Standards for Auditors.
Scope of the audit of the financial statements
A description of
www.frc.org.uk/auditscopeukprivate.
the scope of an audit of
Opinion on financial statements
In our opinion:
financial statements
is provided on
the FRC’s website at
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s and the Parent Company’s (the
Company) affairs as at 30 November 2014 and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the Company financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union and as applied in accordance with the provisions of the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to
you if, in our opinion:
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not
been received from branches not visited by us; or
•
•
the Company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Neil Griggs
(senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor, London United Kingdom
27 February 2015
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
WH Ireland Group plc annual report and accounts 2014
19
Consolidated statement of comprehensive income
For the year ended 30 November 2014
Revenue
Administrative expenses
Operating profit
Other income
Realised investment (losses)/gains
Fair value (losses)/gains on investments
Finance income
Finance expense
Profit before tax
Tax expense
Profit for the year
Note
3 & 5
6
8
8
9
Other comprehensive income:
Items that will or may be reclassified to profit and loss:
Valuation gains on available for sale investments
Transferred to profit or loss on sale of available for sale
investments
Tax relating to components of other comprehensive income
Total other comprehensive income
Total comprehensive income
Profit for the year attributable to:
Owners of the parent
Total comprehensive income attributable to:
Owners of the parent
Earnings per share for profit to the ordinary equity
holders of the parent during the period
Basic
Diluted
11
The notes on pages 25 to 51 form part of these financial statements.
All results for the current and prior year relate to continuing operations.
Year ended
30 November
2014
£’000
30,043
(29,353)
690
12
(2)
(221)
25
(48)
456
(119)
337
—
—
—
—
337
337
337
1.42p
1.34p
Year ended
30 November
2013
£’000
29,653
(28,734)
919
25
458
238
64
(52)
1,652
(516)
1,136
370
(581)
48
(163)
973
1,136
973
4.80p
4.47p
The Company has elected to take the exemption under Section 408 of the Companies Act 2006 not to present the
Company Income Statement. The loss after taxation of the Company for the year was £222k (2013: Loss £168k).
WH Ireland Group plc annual report and accounts 2014
20
Consolidated and Company statement of financial position
As at 30 November 2014
Group
Company
As at
30 November
2014
£’000
As at
30 November
2013
£’000
As at
30 November
2014
£’000
As at
30 November
2013
£’000
Note
ASSETS
Non-current assets
Property, plant and equipment
Goodwill
Intangible assets
Subsidiaries
Investments
Loan receivable
Subordinated Loan
Deferred tax asset
Current assets
Trade and other receivables
Other investments
Cash and cash equivalents
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Corporation tax payable
Borrowings
Finance Leases
Provisions
Non-current liabilities
Borrowings
Finance Leases
Deferred tax liability
Accruals and deferred income
Provisions
Total liabilities
Total net assets
EQUITY
Share capital
Share premium
Available-for-sale reserve
Other reserves
Retained earnings
Treasury shares
Total equity
12
13
14
15
16
27
17
18
19
20
21
22
23
30
24
23
30
18
24
27
5,595
258
463
—
579
—
—
360
7,255
38,345
890
7,490
46,725
53,980
(37,919)
(308)
(179)
(119)
(189)
(38,714)
(1,169)
(109)
(205)
(347)
(21)
(1,851)
(40,565)
13,415
1,193
101
7
982
11,895
(763)
13,415
5,640
400
489
—
447
—
—
378
7,354
36,692
847
6,046
43,585
50,939
(34,980)
(131)
(181)
(119)
(344)
(35,755)
(1,348)
(228)
(393)
(128)
(21)
(2,118)
(37,873)
13,066
1,185
6
7
982
11,668
(782)
13,066
23
—
—
1,711
—
763
500
48
3,045
4,590
—
—
4,590
7,635
(504)
—
(179)
—
—
(683)
(1,169)
—
—
—
—
(1,169)
(1,852)
5,783
1,193
101
—
229
4,260
—
5,783
31
—
—
1,828
—
782
—
24
2,665
5,065
—
—
5,065
7,730
(191)
—
(179)
—
—
(370)
(1,348)
—
—
—
—
(1,348)
(1,718)
6,012
1,185
6
—
229
4,592
—
6,012
The notes on pages 25 to 51 are an integral part of these financial statements.
These financial statements were approved by the Board of Directors on 27 February 2015 and were signed on its
behalf by:
Richard Killingbeck
Director
WH Ireland Group plc annual report and accounts 2014
Dan Cowland
Director
21
Consolidated and Company statement of cash flows
For the year ended 30 November 2014
Group
Company
Year ended
30 November
2014
£’000
Year ended
30 November
2013
£’000
Year ended
30 November
2014
£’000
Year ended
30 November
2013
£’000
Note
1,136
(222)
(168)
12,13 & 14
12
8
8
9
20
Operating activities:
Profit/(Loss) for the year
Adjustments for:
Depreciation, amortisation and impairment
Property Revaluation
Finance income
Finance expense
Taxation
(Gains)/losses in investments
Available for sale investment transfer to
employees as remuneration
Non-cash adjustment for share option charge 7
(Increase)/decrease in trade and other
receivables
Increase/(decrease) in trade and other
payables
(Decrease)/increase in provisions
Increase in current asset investments
Net cash (used in)/generated from
operations
Income taxes paid
Net cash in/(out) flows from operating
activities
Investing activities:
Proceeds from sale of investments
Interest received
8
Acquisition of property, plant and equipment 12
Acquisition of investments
16
Acquisition of Intangibles
14
Net cash (used in)/generated from
investing activities
Financing activities:
Proceeds from issue of share capital
Repayment of borrowings
Decrease in finance leases
Issue of subordinated loan
Interest paid
Interest Paid: Finance Leases
Dividends paid
Net cash used in financing activities
Net increase/(decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning of
year
Cash and cash equivalents at end of year
Clients’ settlement cash
Group cash
Cash and cash equivalents at end of year 21
23
30
8
337
474
—
(25)
48
119
(202)
—
205
394
(48)
(64)
52
516
(570)
170
(57)
(1,653)
(2,025)
3,158
(155)
(43)
2,263
(112)
(2,170)
45
(534)
(3,155)
(47)
2,151
(3,202)
70
25
(261)
—
—
(166)
132
(181)
(102)
—
(48)
(17)
(325)
(541)
1,444
6,046
7,490
172
7,318
7,490
695
64
(402)
(103)
84
338
7
(158)
(102)
—
(52)
(17)
(108)
(430)
(3,294)
9,340
6,046
2,188
3,858
6,046
151
—
—
25
(24)
—
—
205
469
313
—
—
917
—
917
—
—
(1)
—
—
(1)
113
(174)
—
(500)
(25)
—
(325)
(911)
5
(10)
(5)
—
(5)
(5)
142
—
—
26
47
—
—
(57)
(189)
108
—
—
(91)
—
(91)
—
—
(31)
—
—
(31)
7
(170)
—
—
(26)
—
—
(189)
(311)
301
(10)
—
(10)
(10)
The notes on pages 25 to 51 are an integral part of these financial statements.
Certain items for the previous year in the consolidated statement of cash flows have been restated to correctly classify
non-cash items and dividends paid. The reclassification does not impact the net cash position but has resulted in
increase in net cash used in operating activities by £592,000, increase in net cash generated from investing activities
by £700,000 and increase in net cash used in financing activities by £108,000. There was no impact on the income
statement or balance sheet.
WH Ireland Group plc annual report and accounts 2014
22
Consolidated statement of changes in equity
For the year ended 30 November 2014
Group
Balance at 1 December 2012
Net losses arising on available-for-
sale investments
Deferred taxation
Other comprehensive income
Profit after taxation
Total comprehensive income
Transaction with owners
Employee share option scheme
Shares options exercised
Dividends
Balance at 30 November 2013
Deferred taxation
Other comprehensive income
Profit after taxation
Total comprehensive income
Transaction with owners
Employee share option scheme
Shares options exercised
Dividends
Balance at 30 November 2014
Share
capital
£’000
1,184
Share
premium
£’000
—
Available-
for-sale
reserve
£’000
170
Other
reserves
£’000
982
Retained
earnings
£’000
10,697
Treasury
shares
£’000
(782)
Total
equity
£’000
12,251
—
—
—
—
—
—
1
—
1,185
—
—
—
—
—
8
—
1,193
—
—
—
—
—
—
6
—
6
—
—
—
—
—
95
—
101
(211)
48
(163)
—
—
—
—
—
7
—
—
—
—
—
—
—
7
—
—
—
—
—
—
—
—
982
—
—
—
—
—
—
—
982
—
—
—
1,136
1,136
(57)
—
(108)
11,668
—
337
337
205
10
(325)
11,895
—
—
—
—
—
—
—
—
(782)
—
—
—
—
—
19
—
(763)
(211)
48
(163)
1,136
1,136
(57)
7
(108)
13,066
—
—
337
337
205
132
(325)
13,415
Retained earnings include £10k of ESOT reserve.
The total number of authorised ordinary shares is 34.5million shares of 5p each (2013: 34.5 million shares of 5p
each). The total number of issued ordinary shares is 23.9 million shares of 5p each (2013: 23.7 million shares of 5p
each). 155,977 shares were issued during the year (2013: 14,930), of which no shares (2013: nil) were held as
Treasury (note 27).
WH Ireland Group plc annual report and accounts 2014
23
Company statement of changes in equity
For the year ended 30 November 2014
Company
Balance at 1 December 2012
Other comprehensive income
Loss after taxation
Total comprehensive income
Share options exercised
Employee share option scheme
Dividends
Balance at 30 November 2013
Loss after taxation
Total comprehensive income
Shares options exercised
Employee share option scheme
Dividends
Balance at 30 November 2014
Share
capital
£’000
1,184
—
—
—
1
—
—
1,185
—
—
8
—
—
1,193
Share
premium
£’000
—
—
—
—
6
—
—
6
—
—
95
—
—
101
Available-
for-sale
reserve
£’000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Other
reserves
£’000
229
—
—
—
—
—
—
229
—
—
—
—
—
229
Retained
earnings
£’000
4,925
—
(168)
(168)
—
(57)
(108)
4,592
(222)
(222)
10
205
(325)
4,260
Treasury
shares
£’000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Total
equity
£’000
6,338
—
(168)
(168)
7
(57)
(108)
6,012
(222)
(222)
113
205
(325)
5,783
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.
Available-for-sale reserve
The available-for-sale reserve reflects gains or losses arising from the change in fair value of available-for-sale
financial assets except for impairment losses which are recognised in the income statement. When an available-for-
sale asset is impaired or derecognised, the cumulative gain or loss previously recognised in the available-for-sale
reserve is transferred to the income statement.
Other reserves
Other reserves comprise a (consolidated) merger reserve of £754k (2013: £754k) and a (consolidated) capital
redemption reserve of £229k (2013: £229k).
Retained earnings
Retained earnings reflect; accumulated income, expenses, gains and losses, recognised in the income statement and
the statement of recognised income and expense and is net of dividends paid to shareholders. It includes £10k 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, treasury shares are shown as a separate class of shareholders’ equity with a debit
balance.
WH Ireland Group plc annual report and accounts 2014
24
Notes to the financial statements
For the year ended 30 November 2014
1. General information
WH Ireland Group plc is a public company incorporated in the United Kingdom. The shares of the Company are listed
on the Alternative Investment Market (AIM), a market operated by the London Stock Exchange Group plc. The
address of its registered office is 24 Martin Lane, London, EC4R 0DR. The Group’s principal activities are described in
the Strategic Report on pages 3 to 7 and in note 5.
2. Adoption of new and revised standards
No new standards, interpretations and amendments effective for the first time from 1 December 2013, have had a
material effect on the Group’s financial statements.
New standards, interpretations and amendments not yet effective
The following new standards, not having been applied in these financial statements, will or may have an effect on the
Group’s future financial statements:
•
•
IFRS 9 Financial Instruments: IFRS 9 will eventually replace IAS 39 in its entirety. However, the process has been
divided into three main components (classification and measurement, impairment and hedge accounting). This
standard becomes effective for accounting periods beginning on or after 1 January 2018. Its adoption may result
in changes to the classification and measurement of the Group’s financial instruments, including any impairment
thereof.
IFRS 12 Disclosure of Interests in Other Entities: IFRS 12 includes the disclosure requirements for all forms of
interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured
entities.
The standard will require the Group and Company to disclose information that helps users to assess the nature
and financial effects of its relationship with other entities. Specifically, the disclosures are intended to help users:
- understand the judgements and assumptions made when deciding how to classify its involvement with
another entity;
- understand the interest that non-controlling interests have in consolidated entities; and
- assess the nature of the risks associated with interests in other entities.
This standard becomes effective for accounting periods beginning on or after 1 January 2014.
• Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32): This Amendment to IAS 32 seeks to
clarify rather than to change the off-setting requirements previously set out in IAS 32.
The changes clarify:
-
-
the meaning of ‘currently has a legally enforceable right of set-off’; and
that some gross settlement systems may be considered equivalent to net settlement.
The Amendment is effective for periods beginning on or after 1 January 2014 and must be applied retrospectively.
Early adoption is permitted, however, if the Amendment is adopted for period beginning before 1 January 2013,
“Disclosures—Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7)” must also be adopted
early.
The following new standard has not been applied in these financial statements, and is not expected to have material
effect on the Group’s or Company’s future financial statements:
•
IFRS 10 Consolidated Financial Statements: IFRS 10 replaces the portion of IAS 27 Consolidated and Separate
Financial Statements that addresses the accounting for consolidated financial statements. It also addresses the
issues raised in SIC-12 Consolidation — Special Purpose Entities.
IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The
changes introduced by IFRS 10 will require management to exercise significant judgement to determine which
entities are controlled and therefore are required to be consolidated by a parent, compared with the requirements
that were in IAS 27. Based on the preliminary analyses performed, IFRS 10 is not expected to have any impact on
the currently held investments of the Group. This standard becomes effective for annual periods beginning on or
after 1 January 2014.
WH Ireland Group plc annual report and accounts 2014
25
Notes to the financial statements
For the year ended 30 November 2014
3. Significant accounting policiesBasis of preparation
The financial statements of the Group and the Company have been prepared in accordance with IFRS as adopted in
the European Union, and their interpretations adopted by the IASB or the IFRIC or their predecessors, which had
been approved by the European Commission at 30 November 2014.
The Group and the Company’s functional and presentational currency is sterling.
The accounts have been prepared on a Going Concern basis as in the opinion of the Directors, at the time of
approving the financial statements there is a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future. Further details can be found within the Directors’ Report
on pages 10 to 12.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of WH Ireland Group plc and all its
subsidiary undertakings. Subsidiaries are all entities in which the Group has a controlling interest, generally
accompanying a shareholding of more than one half of the voting rights. Subsidiaries are consolidated from the date
on which control is transferred to the Group and are deconsolidated from the date control ceases. Intragroup balances
and any unrealised gains or income and expenses arising from intragroup transactions are eliminated on
consolidation. Unrealised losses are eliminated in the same way as unrealised gains but only to the extent that there is
no evidence of impairment. For the purposes of the consolidated financial statements, uniform accounting policies
have been followed by the Group.
In the Company’s accounts, investments in subsidiary undertakings and associates 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 after this date are charged to the income statement 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. Goodwill is tested
annually for impairment. Any impairment is recognised immediately in the income statement and is not subsequently
reversed. Negative goodwill arising on an acquisition is recognised immediately in the income statement. On disposal
of a subsidiary the attributable amount of goodwill that has not been subject to impairment is included in the
determination of the profit or loss on disposal.
Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP
amounts subject to being tested for impairment at that date.
WH Ireland Group plc annual report and accounts 2014
26
Notes to the financial statements
For the year ended 30 November 2014
3. Significant accounting policies continued
Revenue
Revenue is recognised to the extent that it is probable that the economic benefits associated with the transaction will
flow into the Group.
Revenue comprises brokerage commission, investment management fees, corporate finance fees, commission and
fees earned from the provision of independent financial advice and interest receivable in the course of ordinary
investment management business and is stated net of VAT and foreign sales tax.
• Brokerage commission is recognised when receivable in accordance with the date of the underlying
transaction.
Investment management fees are recognised in the period in which the related service is provided.
•
• Corporate finance fees comprise the value of services supplied by the Group. 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.
• Advisory fees are recognised when the relevant transaction is completed and retainer fees are recognised
over the length of time of the agreement.
• Commission and fees earned from the provision of independent financial advice comprises commission and
fees relating to new business written and trail commission earned on existing client business managed by the
Group. New business commission and fees are recognised when the relevant transaction is completed and
trail commission is recognised over the length of time of the customer policy.
Interest income is accrued on a time basis by reference to the principal outstanding and at the effective
interest rate applicable.
•
• Fees contingent upon the outcome of a project are recognised on an accruals basis, when it is reasonably
certain that it will be received.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Executive Officer, who is responsible for allocating resources and assessing performance of the operating
segments, and who has been identified as the Board of Directors, comprising both Executive and Non-
Executive Directors.Foreign currencies
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are translated using the exchange rate ruling at the balance
sheet date. Exchange differences arising are included in the income statement.
Employee benefits
The Group contributes to employees’ individual money purchase personal pension schemes. The assets of the
schemes are held separately from those of the Group in independently administered funds. The amount charged to
the income statement represents the contributions payable to the schemes in respect of the period to which they
relate.
Short-term employee benefits are those that fall due for payment within twelve months of the end of the period in
which employees render the related service. The cost of short-term benefits is not discounted and is recognised in the
period in which the related service is rendered. Short-term employee benefits include cash-based incentive schemes
and annual bonuses.
Share-based payments
The share option programmes allows 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 income statement
charge or credit for a period represents the movement in cumulative expense recognised at the beginning and end of
that period.
Where the terms of an equity-settled award are modified, an incremental value is calculated as the difference between
the fair value of the re-priced option and the fair value of the original option at the date of re-pricing. This incremental
value is then recognised as an expense over the remaining vesting period in addition to the amount recognised in
respect of the original option grant.
WH Ireland Group plc annual report and accounts 2014
27
Notes to the financial statements
For the year ended 30 November 2014
3. Significant accounting policies continued
Share-based payments continued
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 income statement of the Group 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 income statement.
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 own shares leads to a gain or loss being recognised in
the consolidated income statement.
Income taxes
Income tax on the profit or loss for the periods presented, comprising current tax and deferred tax, is recognised in the
income statement except to the extent that it relates to items recognised directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using rates enacted or substantively
enacted at the balance sheet date and any adjustment to tax payable in respect of previous years.
Deferred tax is provided for temporary differences, at the balance sheet date, between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes. The following temporary differences are not
provided for:
• 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 balance sheet date.
A deferred tax asset is recognised for all deductible temporary differences and unused tax losses only to the extent
that it is probable that future taxable profits will be available against which the assets can be utilised. Deferred tax
assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Leases
Where assets are financed by leasing agreements that give rights approximating to ownership (finance leases), the
assets are treated as if they had been purchased outright. The amount capitalised is the present value of the minimum
lease payments payable over the term of the lease. The corresponding leasing commitments are shown as amounts
payable to the lessor. Depreciation on the relevant assets is charged to the income statement over the shorter of
estimated useful economic life and the period of the lease.
Lease payments are analysed between capital and interest components so that the interest element of the payment is
charged to the income statement over the period of the lease and is calculated so that it represents a constant
proportion of the balance of the capital payments outstanding. The capital part reduces the amounts payable to the
lessor.
WH Ireland Group plc annual report and accounts 2014
28
Notes to the financial statements
For the year ended 30 November 2014
3. Significant accounting policies continued
Property, plant and equipment
Property, plant and equipment is stated at the lower of cost less accumulated depreciation, or valuation.
Depreciation is calculated, using the straight line method, to write down the cost or revalued amount of property, plant
and equipment over the assets’ expected useful lives, to their residual values, as follows:
Buildings
– 50 years
Computers, fixtures and fittings
– 4 to 7 years
The Group’s freehold land is considered to have a residual value equal to or greater than its carrying amounts and
therefore the current depreciation charge in respect of freehold land is zero.
Intangible assets
Intangible assets acquired separately are measured, on initial recognition, at cost. Following initial recognition,
intangible assets acquired separately are carried at cost less accumulated amortisation and any accumulated
impairment. The cost of intangible assets acquired in a business combination is their fair value at the date of
acquisition.
Intangible assets are amortised over their useful economic lives estimated to be 20 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 are accounted for by
changing the amortisation period or method and treated as changes in accounting estimates. Amortisation
is calculated on a straight line basis to write down the cost of intangible assets to their residual values over this
assessed period.
Impairment of non-financial assets
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date when events or
circumstances indicate that the assets may be impaired. If any such indication exists or as in the case of goodwill,
when annual impairment testing is required, the asset’s recoverable amount is estimated.
The recoverable amount is the higher of the asset’s fair value less costs to sell (or net selling price) and its value-in-
use. Value-in-use is the discounted present value of estimated future cash inflows expected to arise from the
continuing use of the asset and from its disposal at the end of its useful life.
Impairment is identified at the individual asset level where possible. Where the recoverable amount of an individual
asset cannot be identified, it is calculated for the smallest cash-generating unit (CGU) to which the asset belongs. A
CGU is the smallest identifiable group of assets that generates cash inflows independently.
When the carrying amount of an asset (or CGU) exceeds its recoverable amount, the asset (or CGU) is considered to
be impaired and is written down to its recoverable amount. An impairment loss is immediately recognised as an
expense.
Financial assets
Initial recognition
The classification of financial assets at initial recognition depends upon the purpose for which they are acquired and
their characteristics. Financial assets are measured initially at their fair value. Financial assets not at fair value through
profit or loss include any directly attributable incremental costs of acquisition or issue.
Financial assets classified as available-for-sale
Available-for-sale financial assets are financial assets designated as such on initial recognition or those that do not
qualify to be classified in another category. They include equity investments, other than those in subsidiary
undertakings and may be in quoted or unquoted entities.
After initial measurement, available-for-sale financial assets are subsequently measured at fair value. In the case of
listed investments, the fair value represents the quoted bid price of the investment at the balance sheet date. The fair
value of unlisted investments is estimated by reference to recent arm’s length transactions.
Unrealised gains and losses are recognised directly in equity in the available-for-sale reserve. When an available-for-
sale financial asset is disposed of, the cumulative gain or loss previously recognised in equity is recognised in the
income statement in profit on disposal of available-for-sale investments. Losses arising from impairment are
recognised in the income statement.
The fair value of unquoted investments is determined based on recent arm’s length transactions. Any profit or loss on
sale is credited or charged to the income statement.
WH Ireland Group plc annual report and accounts 2014
29
Notes to the financial statements
For the year ended 30 November 2014
3. Significant accounting policies continued
Financial assets continued
Other investments
Other investments comprise financial assets designated as fair value through profit or loss and include warrants and
quoted investments obtained as a result of a corporate finance transaction. Warrants are valued by taking the mean
of the results from three different methods; Black Scholes with short-term volatility, Black Scholes with longer-term
volatility and an Empirical model. Quoted investments are valued at the quoted bid price at the balance sheet date.
Changes in the value of these other investments are recognised directly in the income statement.
Impairment of financial assets
The Group assesses, at each balance sheet date, whether there is objective evidence that a financial asset or a group
of financial assets is impaired. In the case of financial assets classified as available-for-sale, a significant or prolonged
decline in the fair value of the asset is considered in determining whether the assets are impaired. If any such
evidence exists for available-for-sale financial assets, the cumulative loss, less any impairment loss previously
recognised is removed from equity and recognised in the income statement.
If, in a subsequent period, the fair value of an asset classified as available-for-sale increases, the loss may not be
reversed through the income statement. Any increase after an impairment loss has been recognised is treated as a
revaluation and is recognised directly in equity.
Loan receivables
Loan receivables are initially recognised at fair value. Subsequent to initial recognition, loan notes are measured at
amortised cost using the effective interest rate method.
Trade receivables
Trade receivables are measured on initial recognition at fair value. Appropriate allowances for estimated irrecoverable
amounts are recognised in the income statement when there is objective evidence that the asset is impaired.
Other investments
Other investments, which relate to short-term principal positions taken on behalf of clients, are recognised and
derecognised on trade date. Other investments are measured at fair value which is determined directly by reference to
published prices in an active market where available. Gains or losses arising from changes in fair value or disposal of
other investments are recognised through the income statement.
Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise cash and bank balances and short-
term highly liquid investments with an original maturity of three months or less. Client settlement balances are
included in cash but are separately disclosed in the notes to the financial statements.
Financial liabilities
Bank loans and loan notes are initially recognised as financial liabilities at the fair value of the consideration received.
Subsequent to initial recognition, bank loans and loan notes are measured at amortised cost using the effective
interest method.
Trade payables
Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs. The Directors
consider that the carrying amount of trade payables approximates to their fair value.
Provisions
A provision is recognised when a present legal or constructive obligation has arisen as a result of a past event and it is
probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be
made of the amount of the obligation.
Borrowing costs
Borrowing costs are recognised as an expense in the period in which they are incurred.
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:
WH Ireland Group plc annual report and accounts 2014
30
Notes to the financial statements
For the year ended 30 November 2014
4. Critical accounting judgements and key sources of estimation and uncertainty continued
Investments
The fair values of investments that are not traded in an active market are determined by using valuation techniques.
The Group uses its judgement to select a variety of methods that are mainly based on market conditions existing at
the balance sheet date. In the case of warrants, the fair value is estimated using established valuation models.
Share-based payments
The calculation of the fair value of equity-settled share-based awards and the resulting charge to the income
statement require assumptions to be made regarding future events and market conditions. These assumptions
include the future volatility of the Company’s share price, future dividend yield and the rate at which awards will lapse
or be forfeited. These assumptions are then applied to a recognised valuation model in order to calculate the fair
value of the awards. The assumptions made are based on relevant historical data, where available, and take into
account any knowledge of future market expectations. The fair value attributed to the awards and hence the charge
made to the income statement could be materially affected should different assumptions be made to those applied by
the Group. Details of these assumptions are set out in note 29.
Impairment of non-financial assets
The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the budget
for the next three years and do not include restructuring activities that the Group is not yet committed to or significant
future investments that will enhance the asset’s performance of the CGU being tested. The recoverable amount is
most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-
inflows and the growth rate used for extrapolation purposes. The key assumptions used to determine the recoverable
amount for the different CGUs, including a sensitivity analysis, are disclosed and further explained in note 13.
5. Segment information
The Group has two operating segments, Private Wealth Management and Corporate Broking.
The Private Wealth Management 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 Corporate Broking division provides corporate finance and corporate broking advice and services to companies
and acts as Nominated Adviser to clients listed on the Alternative Investment Market (“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 or the Isle of Man. Each reportable segment has a segment manager who is directly
accountable to and maintains regular contact with the CEO.
No customer represents more than ten percent of the Group’s revenue.
The following tables represent revenue and profit information for the Group’s business segments
Year ended 30 November 2014
Revenue
Segment result
Executive Board cost
Other Income
Investment losses
Fair value losses on investments
Finance income
Finance expense
Profit/(loss) before tax
Tax (expense)/income
Profit/(loss) for the year
Private Wealth
Management
£’000
20,328
229
347
12
—
(24)
22
(17)
570
(31)
539
Corporate
Broking Head Office
£’000
—
—
(897)
—
—
—
—
—
(897)
—
(897)
£’000
9,538
616
347
—
(2)
(197)
1
(6)
759
(181)
578
Other Group
Companies
£’000
177
(155)
203
—
—
—
2
(25)
25
93
118
Group
£’000
30,043
690
—
12
(2)
(221)
25
(48)
456
(119)
337
WH Ireland Group plc annual report and accounts 2014
31
Notes to the financial statements
For the year ended 30 November 2014
5. Segment information continued
Year ended 30 November 2013
Revenue
Segment result
Executive Board cost
Other Income
Investment gains
Fair value gains on investments
Finance income
Finance expense
Profit/(loss) before tax
Tax (expense)/income
Profit/(loss) for the year
Private Wealth
Management
£’000
20,688
482
187
25
—
—
17
(19)
692
(185)
444
Corporate
Broking
£’000
8,820
64
187
—
458
—
47
(6)
750
(93)
657
Head Office
£’000
—
—
(547)
—
—
238
—
—
(309)
—
(309)
Other Group
Companies
£’000
145
373
173
—
—
—
—
(27)
520
(237)
283
Group
£’000
29,653
919
—
25
458
238
64
(52)
1,652
(516)
1,136
Segment assets and segment liabilities are reviewed by the CEO in a consolidated statement of financial position.
Accordingly this information is replicated in the Group Consolidated Statement of Financial Position on page 21. As
no measure of assets or liabilities for individual segments is reviewed regularly by the CEO, 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.
6. Operating profit
Group
Operating profit is stated after charging/(crediting):
Depreciation of property, plant and equipment
Revaluation of property, plant and equipment
Impairment of goodwill
Amortisation of intangibles
Operating lease rentals – property
Operating lease rentals – vehicles and equipment
Employee benefit expense (note 7)
Restructuring and non-recurring legal and regulatory costs
Other administrative expenses
Auditors’ remuneration:
Audit of these financial statements
Amounts payable to the principal auditors and their associates in respect of:
– audit of financial statements of subsidiaries pursuant to legislation
– audit related assurance services
Total
Year ended
30 November
2014
£’000
Year ended
30 November
2013
£’000
306
—
142
26
440
1
18,875
758
8,707
222
(48)
142
31
237
8
17,418
—
10,676
17
17
58
23
29,353
38
23
28,734
Other administrative expenses are incurred in the ordinary course of the business and do not include any non-
recurring items.
WH Ireland Group plc annual report and accounts 2014
32
Notes to the financial statements
For the year ended 30 November 2014
7. Employee benefit expense
Group
Wages and salaries
Bonuses
Social security costs
Other pension costs
Shared commission agents
Share options granted to employees (note 29)
The average number of persons (including Directors) employed during the year was:
Executive and senior management
Corporate Broking
Private Wealth Management
Support staff
Salaried staff
Shared commission agents
Total
Year ended
30 November
2014
£’000
10,123
3,112
1,582
450
15,267
3,403
18,670
205
18,875
Year ended
30 November
2014
9
34
79
78
200
32
232
Year ended
30 November
2013
£’000
9,275
2,825
1,447
390
13,937
3,480
17,417
(57)
17,360
Year ended
30 November
2013
6
30
77
79
193
36
229
Shared commission agents are commission-only brokers and therefore do not receive a salary.
The total amount paid to Directors in the year, including social security costs was £0.9m (2013: £0.9m). Full details of
Directors’ remuneration, including that of the highest paid Director, are disclosed in the Remuneration Report on
pages 14 to 17 of these financial statements.
8. Finance income and expense
Group
Bank interest receivable
Other interest
Finance income
Interest payable on bank loans
Interest payable on finance leases
Other interest
Finance expense
Year ended
30 November
2014
£’000
24
1
25
Year ended
30 November
2013
£’000
17
47
64
25
17
6
48
36
16
—
52
WH Ireland Group plc annual report and accounts 2014
33
Notes to the financial statements
For the year ended 30 November 2014
9. Tax expense
Group
Current tax expense:
United Kingdom corporation tax at 21.67% (2013: 23.33%)
Adjustment in respect of prior years
Deferred tax expense (note 18):
Current year
Effect of change in tax rate
Adjustments in respect of prior years
Total tax expense in the income statement
Year ended
30 November
2014
£’000
Year ended
30 November
2013
£’000
292
(4)
288
(182)
2
11
(169)
119
99
50
149
315
23
29
367
516
The tax expense for the year and the amount calculated by applying the standard United Kingdom corporation tax rate
of 21.67% (2013: 23.33%) to profit before tax can be reconciled as follows:
Group
Profit before taxation
Tax expense using the United Kingdom corporation tax rate of 21.67% (2013: 23.33%)
Other expenses not tax deductible
Income not chargeable to tax
Impact of share options
Revaluation of investments
Adjustments in respect of prior years
Difference in overseas tax rates
Effect of other tax rates/credits
Effect of marginal relief
Effect of change in tax rate
Total tax expense in the income statement
Changes in tax rates and factors affecting the future tax charge
Year ended
30 November
2014
£’000
456
99
126
(6)
(25)
(156)
7
75
2
(3)
—
119
Year ended
30 November
2013
£’000
1,652
386
101
(113)
44
—
79
—
(3)
—
22
516
Finance Act 2013 includes provision for the main rate of corporation tax to reduce from 23% to 21% on 1 April 2014,
and to 20% on 1 April 2015. This will reduce the Company’s future tax charge accordingly. The rates of 21 and 20%
were substantively enacted on the 17 July 2013. Accordingly, deferred tax balances have been recognised at 20%,
the rate of corporation tax enacted in Finance Act 2013 to apply from 1 April 2015.
10. Dividends
A final dividend of 1.5 per share was paid during the year in respect of 2013, and a final dividend of 2.0p per share is
proposed for 2014.
WH Ireland Group plc annual report and accounts 2014
34
Notes to the financial statements
For the year ended 30 November 2014
11. Earnings per share (EPS)
Basic 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 (note 27).
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 during the year. No options (2013: 89,801) over shares have been
excluded from the EPS calculation. Antidilutive 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:
Group
Weighted average number of shares in issue during the period
Effect of dilutive share options
Earnings attributable to ordinary shareholders
Basic EPS
Continuing operations
Diluted EPS
Continuing operations
12. Property, plant and equipment
Group
Cost or valuation
At 1 December 2012
Additions
Revaluation
At 30 November 2013
Additions
At 30 November 2014
Depreciation
At 1 December 2012
Charge for the year
At 30 November 2013
Charge for the year
At 30 November 2014
Net book values
At 30 November 2014
At 30 November 2013
At 30 November 2012
Year ended
30 November
2014
000’s
Year ended
30 November
2013
000’s
23,763
1,308
25,071
£’000
337
23,698
1,716
25,414
£’000
1,136
1.42p
4.80p
1.34p
4.47p
Freehold
Property
£’000
Computers,
fixtures
and fittings
£’000
6,344
2
48
6,394
—
6,394
1,644
—
1,644
—
1,644
4,750
4,750
4,700
2,728
400
—
3,128
261
3,389
2,016
222
2,238
306
2,544
845
890
712
Total
£’000
9,072
402
48
9,522
261
9,783
3,660
222
3,882
306
4,188
5,595
5,640
5,412
Bank borrowings are secured on freehold property for the value of £1,343,215 (2013: £1,514,471) (note 23).
The group is required to analyse non-financial assets carried at fair value by level of the fair value hierarchy within
which the recurring fair value measurements are categorised in their entirety (Level 1, 2 or 3). The freehold property is
carried at valuation derived from techniques that use unobservable inputs and therefore falls in Level 3 under the fair
value hierarchy.
The valuation of the property has been performed under the intrinsic method on the basis of rental returns. A
significant part of the property is occupied by the group itself with no material sensitivities affecting the fair value.
WH Ireland Group plc annual report and accounts 2014
35
Notes to the financial statements
For the year ended 30 November 2014
12. Property, plant and equipment continued
The freehold property at 11 St James’s Square, Manchester was valued by Lambert Smith Hampton as at 30
November 2013. They reported that its Market Value, as defined in the Valuation Standards of the Royal Institute of
Chartered Surveyors, was £4.75m. At 30 November 2014, the carrying value of property, plant and equipment held
under finance leases amounted to £258,118 (2013: £377,249).
At 30 November 2014, the historical cost carrying value of the freehold property amounted to £5,826,237
(2013: £5,826,237).
Company
Cost or valuation
At 1 December 2012
Additions
At 30 November 2013
Additions
At 30 November 2014
Depreciation
At 1 December 2012
At 30 November 2013
Charge for the year
At 30 November 2014
Net book values
At 30 November 2014
At 30 November 2013
At 30 November 2012
13. Goodwill
Group
Beginning of year
Impairment
End of year
Impairment tests for goodwill
Goodwill of the Group is allocated to the following CGUs (Cash Generating Unit):
At 1 December 2012
Impairment
At 30 November 2013
Impairment
At 30 November 2014
Computers,
fixtures and
fittings
£’000
Total
£’000
1
31
32
1
33
1
1
9
10
23
31
—
1
31
32
1
33
1
1
9
10
23
31
—
Year ended
30 November
2014
£’000
400
(142)
258
Year ended
30 November
2013
£’000
542
(142)
400
Stockholm
Investments Ltd
£’000
542
(142)
400
(142)
258
Total
£’000
542
(142)
400
(142)
258
The Group tests at least annually for goodwill impairment. The recoverable amount of a CGU is determined based on
value-in-use calculations as it is considered to be higher than its fair value less costs to sell. These calculations use
pre-tax cash flows based on financial budgets prepared by management covering a three year period and then
extrapolated for the remaining useful economic life based on relevant estimated growth rates of 2% for revenue (2013:
2%) and 0% for costs (2013:0%). This is then adjusted for the anticipated wind-down in the client books acquired at
5% per annum. This net cash flow is then discounted by an appropriate cost of capital of 10% (2013: 10%) in order to
estimate their present value.
WH Ireland Group plc annual report and accounts 2014
36
Notes to the financial statements
For the year ended 30 November 2014
13. Goodwill continued
The key assumptions for the value-in-use calculations are those regarding the discount rate, growth rates and
expected changes to revenues and costs in the period. Management has made these assumptions based on
pastexperience and future expectations in the light of anticipated market conditions, combined with the actions taken
during this and last year to streamline the Group’s operations whilst maximising revenue potential.
Where the value-in-use exceeds the carrying value of the goodwill asset, it has been concluded that no impairment is
necessary. However, where this is not the case, goodwill is written down to the net present value of cash flows at the
balance sheet date.
Sensitivity analysis shows that the client wind-down variable is now the key component of the outcome of the
recoverable amount of Stockholm Investments Limited, the remaining CGU. This has been set at 5% per annum
based on the historic movement in the client book. However, if this were to grow to a wind-down of 14% per annum,
the recoverable amount after five years would be £nil.
14. Intangible assets
Cost
At 1 December 2012
Additions
Other
At 30 November 2013
Additions
Other
At 30 November 2014
Amortisation
At 1 December 2012
Charge for the year
At 30 November 2013
Charge for the year
At 30 November 2014
Net book values
At 30 November 2014
At 30 November 2013
At 30 November 2012
15. Subsidiaries
Company
Beginning of year
Additions
Impairment
End of year
Client
relationships
£’000
1,245
36
(120)
1,161
—
—
1,161
641
31
672
26
698
463
489
604
Year ended
30 November
2014
£’000
1,828
25
(142)
1,711
Year ended
30 November
2013
£’000
1,970
—
(142)
1,828
Investments in subsidiaries are stated at cost less impairment.
WH Ireland Group plc annual report and accounts 2014
37
Notes to the financial statements
For the year ended 30 November 2014
15. Subsidiaries
The Company’s subsidiaries, all of which are included in the consolidated financial statements, are presented below:
Subsidiary
WH Ireland Limited
WH Ireland (IOM) Limited
WH Ireland (Financial Services)
Limited
Readycount Limited
Stockholm Investments Limited
ARE Business and Professional
Limited
SRS Business and Professional
Limited
WH Ireland Nominees Limited
WH Ireland Trustee Limited
Fitel Nominees Limited
Country of incorporation Principal activity
England & Wales Wealth Management and
Isle of Man
England & Wales Dormant
Corporate Broking
Wealth Management
Proportion Proportion
held by
Class of
shares
Group
Ordinary 100%
held by
Company
100%
Ordinary 100%
Ordinary 100% —
100%
England & Wales Property
England & Wales
England & Wales Dormant
Investment consultancy
Ordinary 100%
Ordinary 100%
Ordinary 100% —
100%
100%
England & Wales Dormant
Ordinary 100% —
England & Wales Nominee
England & Wales
England & Wales Nominee
Trustee
Ordinary 100% —
Ordinary 100% —
Ordinary 100% —
16. Investments
Group
Available-for-sale investments
At 1 December 2012
Additions
Fair value (loss)/gain
Reversal of impairment
Disposals
At 30 November 2013
Additions
Fair value loss
Net transfers out
Disposals
At 30 November 2014
Other investments
At 1 December 2012
Additions
Fair value loss
Disposals
At 30 November 2013
Additions
Fair value gain/(loss)
Net transfers in
Disposals
At 30 November 2014
Total investments at 30 November 2014
Total investments at 30 November 2013
Quoted
£’000
15
6
(14)
—
(7)
—
—
—
—
—
—
Quoted
£’000
405
458
(124)
(663)
76
75
52
149
(68)
284
284
76
Unquoted
£’000
746
59
287
370
(1,115)
347
—
(100)
(149)
(5)
93
Warrants
£’000
85
—
(36)
(25)
24
347
(167)
—
(2)
202
295
371
Total
£’000
761
65
273
370
(1,122)
347
—
(100)
(149)
(5)
93
Total
£’000
490
458
(160)
(688)
100
422
(115)
149
(70)
486
579
447
There was a transfer of £172k from unquoted investments to quoted investments and a transfer of £24k from quoted
investments to unquoted investments during the year.
Available-for-sale investments include equity investments other than those in subsidiary undertakings. Available-for-
sale investments are measured at fair value with fair value gains and losses recognised directly in equity in the
available-for-sale reserve.
Other investments, in the main, comprise financial assets designated as fair value through profit or loss and include
warrants and equity investments. Financial assets designated as ‘fair value through profit or loss’ are measured at fair
value with fair value gains and losses recognised directly in the income statement.
Warrants 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.
WH Ireland Group plc annual report and accounts 2014
38
Notes to the financial statements
For the year ended 30 November 2014
16. Investments continued
Fair value, in the case of quoted investments, represents the bid price at the balance sheet date. In the case of
unquoted investments, the fair value is estimated by reference to recent arm’s length transactions. The fair value of
warrants is estimated using established valuation models.
17. Subordinated Loan
Company
Beginning of year
Additions
End of year
Year ended
30 November
2014
£’000
—
500
500
Year ended
30 November
2013
£’000
—
—
—
A subordinated loan was issued to WH Ireland (IOM) Limited on the 31 March 2014. It is an interest free loan
repayable on demand.
18. Deferred tax assets and liabilities
Deferred tax is provided for temporary differences, at the balance sheet date, between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes using a tax rate of 21.67% (2013: 23.33%). 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.
Deferred tax assets and liabilities are attributable to the following:
Deferred tax assets
Deferred tax liabilities
Group
Property, plant and equipment
Intangible assets
Share options
Available-for-sale investments
Provisions, trade and other payables
Company
Share options
Property, plant and equipment
Movements in deferred tax are shown below:
2014
£’000
85
227
47
—
—
360
2013
£’000
107
243
24
—
4
378
2014
£’000
(95)
—
—
(29)
(81)
(205)
Deferred tax assets
Deferred tax liabilities
2014
£’000
47
1
48
2013
£’000
24
—
24
2014
£’000
—
—
—
2013
£’000
(86)
—
—
(186)
(121)
(393)
2013
£’000
—
—
—
Group
Property, plant and
equipment
Intangible assets
Share options
Available-for-sale
investments
Provisions, trade
and other payables
Tax losses
At
1 December
2012
£’000
Recognised
in income
statement
£’000
Recognised
in equity
£’000
At
30 November
2013
£’000
Recognised
in income
statement
£’000
Recognised
in equity
£’000
At
30 November
2014
£’000
79
298
71
(49)
(176)
82
305
(58)
(55)
(47)
(185)
59
(82)
(368)
—
—
—
48
—
—
48
21
243
24
(186)
(117)
—
(15)
(31)
(15)
23
157
36
—
170
—
—
—
—
—
—
—
(10)
228
47
(29)
(81)
—
155
Company
Share options
Property, plant and equipment
At
1 December
2012
£’000
71
—
71
Recognised
in income
statement
£’000
(47)
—
(47)
At
30 November
2013
£’000
24
—
24
Recognised
in income
statement
£’000
23
1
24
At
30 November
2014
£’000
47
1
48
WH Ireland Group plc annual report and accounts 2014
39
Notes to the financial statements
For the year ended 30 November 2014
19. Trade and other receivables
Trade receivables
Amounts due from Group companies
Other receivables
Prepayments and accrued income
Group
Company
30 November
2014
£’000
34,972
—
374
2,999
38,345
30 November
2013
£’000
33,473
—
1,344
1,875
36,692
30 November
2014
£’000
—
4,540
7
43
4,590
30 November
2013
£’000
—
5,056
7
2
5,065
Trade receivables that relate to market transactions are considered to be past due once the date for settlement has
passed. 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 30 November 2014, trade receivables (net of provisions for impairment
and doubtful debts) comprised the following:
Not past due
Up to 5 days past due
From 6 to 15 days past due
From 16 to 30 days past due
From 31 to 45 days past due
More than 45 days past due
Group
Company
30 November
2014
£’000
32,374
850
171
267
646
664
34,972
30 November
2013
£’000
30,938
1,011
655
106
147
616
33,473
30 November
2014
£’000
—
—
—
—
—
—
—
30 November
2013
£’000
—
—
—
—
—
—
—
Trade receivables that are not past due, or are past due but not impaired, principally relate to market transactions.
The date of settlement of market transactions is set at the time that the relevant sale or purchase order is placed with
the market. It is expected that, in the normal course of business, certain transactions may not have completed by the
settlement date. For example, a shortage of stock in the market may result in an extended settlement period, in which
case the order remains outstanding until the required quantity of stock has become available. Such balances that
remain outstanding after the settlement date are classified as past due, as appropriate, in the table above, but the
extended settlement period does not have an adverse effect on the credit quality of the balances, particularly as the
related cash or stock to which the balances relate are retained by the Group and/or the Company until settlement
occurs.
The Group has recognised an allowance for doubtful debts of 100% against all receivables over 365 days because
historical experience has been that receivables beyond 365 days are not recoverable. Allowances against doubtful
debts are recognised against trade receivables between 30 days and 365 days based on estimated irrecoverable
amounts determined by reference to past default experience of the counterparty and an analysis of the counterparty’s
current financial position. At 30 November 2014, £272k (2013: £964k) of the Group’s trade receivable balances were
impaired and provided for.
The maximum exposure to credit risk, before any collateral held as security, is the carrying value of each class of
receivable set out above. Collateral held against trade receivables comprises cash or marketable securities to which
the Group has an unconditional right to realise for the purposes of clients’ obligations. All such marketable securities
must be held in the Group’s nominee, Fitel Nominees Limited, and must be marked to market daily. The fair value of
collateral held at the balance sheet date was £8.9m (2013: £50.5m).
The Group did not need to exercise its right to realise any collateral during the year under review.
The Directors consider that the carrying amounts of trade and other receivables approximate their fair value.
Movements in impairment provisions were as follows:
At 1 December
Amount released from provision due to recovery
Amounts written off, previously fully provided
Amount charged to the income statement
At 30 November
Group
Company
30 November
2014
£’000
964
(276)
(760)
344
272
30 November
2013
£’000
705
(544)
(84)
887
964
30 November
2014
£’000
—
—
—
—
—
30 November
2013
£’000
—
—
—
—
—
WH Ireland Group plc annual report and accounts 2014
40
Notes to the financial statements
For the year ended 30 November 2014
19. Trade and other receivables continued
The carrying value of trade and other receivable balances are denominated in the following currencies:
Sterling
Australian dollar
Other
20. Other investments
Current asset investment
Group
30 November
2014
£’000
30,583
6,975
787
38,345
30 November
2013
£’000
28,427
7,272
993
36,692
Company
30 November
2014
£’000
4,590
—
—
4,590
30 November
2013
£’000
5,065
—
—
5,065
Group
30 November
2014
£’000
890
30 November
2013
£’000
847
Company
30 November
2014
£’000
—
30 November
2013
£’000
—
These represent short-term principal positions taken on behalf of clients as at 30 November 2014 and are held at
market value. No tax was payable at that value.
21. Cash and cash equivalents
Cash and cash equivalents
Group
30 November 30 November
2013
£’000
6,046
2014
£’000
7,490
Company
30 November
2014
£’000
—
30 November
2013
£’000
—
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 the balance sheet. Client money at 30 November 2014 for the Group
was £107,168k (2013: £90,611k). There is no client money held in the Company (2013: £nil).
22. Trade and other payables
Trade payables
Amounts due to Group companies
Other payables
Taxation and social security
Accruals and deferred income
Group
30 November 30 November
2013
£’000
30,470
—
1,085
702
2,723
34,980
2014
£’000
33,538
—
1,425
578
2,378
37,919
Company
30 November
2014
£’000
—
435
22
—
47
504
30 November
2013
£’000
—
141
27
—
23
191
The Directors consider that the carrying amounts of trade and other payables approximate their fair value.
23. Borrowings
Bank loans
Group
30 November 30 November
2013
£’000
1,529
2014
£’000
1,348
Company
30 November
2014
£’000
1,348
30 November
2013
£’000
1,527
The Company has a £3m property loan with the Bank of Scotland, repayable over twenty years at 1.25% above base
rate. The loan was drawn down on 4 February 2002. The Bank has a floating charge over the assets of the other
trading subsidiaries of the Group.
This bank loan, at floating interest rates, exposes the Group to interest rate risk which is the risk that future cash flows
may be adversely affected as a result of changes in interest rates. The management of interest rate risk is discussed
at note 25.
WH Ireland Group plc annual report and accounts 2014
41
Notes to the financial statements
For the year ended 30 November 2014
23. Borrowings
Bank loans are repayable as follows:
Within one year
Within two to five years
After five years
Group
30 November 30 November
2013
£’000
181
790
558
1,529
2014
£’000
179
789
380
1,348
Company
30 November
2014
£’000
179
789
380
1,348
30 November
2013
£’000
179
790
558
1,527
The Directors consider that the carrying amounts of bank loans approximate their fair value.
24. Provisions
Group
At 1 December 2013
Provided during the year
Utilised during the year
At 30 November 2014
Provisions included in current liabilities
Provisions included in non-current liabilities
IFA clawback
provision
£’000
21
—
—
21
Complaints
provision
£’000
344
69
(224)
189
Total
£’000
365
69
(224)
210
30 November
2014
£’000
189
21
210
30 November
2013
£’000
344
21
365
The IFA clawback provision relates to any policy cancellations and the resultant potential repayment of past
independent financial advisory commission earned, relating mainly to products such as pensions and insurance.
The complaints provision relates to any complaints which may result in cash outflows falling below the relevant
insurance excess. The expected period of settlement of the outstanding complaints provision is six months from the
year end.
25. Financial risk management
The fair value of all of the Group’s and the Company’s financial assets and liabilities approximated its carrying value at
the balance sheet date. The carrying amount of non-current financial instruments, including floating interest rate
borrowing, is 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:
Available-for-sale financial assets
Available-for-sale financial assets 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 balance sheet 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 balance sheet 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 their fair
values due to their short-term nature. Trade and other receivables exclude prepayments and accrued income and
accruals and deferred income represent liabilities due for settlement after more than one year.
WH Ireland Group plc annual report and accounts 2014
42
Notes to the financial statements
For the year ended 30 November 2014
25. Financial risk management continued
Borrowings
Borrowings are measured at amortised cost using the effective interest method.
The tables below summarise the Group’s main financial instruments by financial asset type:
Group
Financial assets
Available-for-sale investments
Other investments
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Trade and other payables
Finance leases
Borrowings
Accruals
Provisions
Group
Financial assets
Available-for-sale investments
Other investments
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Trade and other payables
Finance leases
Borrowings
Accruals
Provisions
Company
Financial assets
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Trade and other payables
Borrowings
Company
Financial assets
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Trade and other payables
Borrowings
WH Ireland Group plc annual report and accounts 2014
30 November 2014
Held at
fair value as
available-for-sale
assets
£’000
Fair value
through
profit or loss
£’000
93
—
—
—
—
—
—
—
—
—
486
—
—
—
—
—
—
—
30 November 2013
Held at
fair value as
available-for-sale
assets
£’000
Fair value
through
profit or loss
£’000
347
—
—
—
—
—
—
—
—
—
100
—
—
—
—
—
—
—
Amortised
cost
£’000
—
—
35,346
7,490
37,919
228
1,348
347
210
Amortised
cost
£’000
—
—
34,817
6,046
34,278
347
1,529
128
365
30 November 2014
Held at
fair value as
available-for-sale
assets
£’000
Amortised
cost
£’000
Fair value
through
profit or loss
£’000
4,547
—
504
1,348
Amortised
cost
£’000
5,063
—
191
1,527
—
—
—
—
—
—
—
—
30 November 2013
Held at
fair value as
available-for-sale
assets
£’000
Fair value
through
profit or loss
£’000
—
—
—
—
—
—
—
—
43
Total
£’000
93
486
35,346
7,490
37,919
228
1,348
347
210
Total
£’000
347
100
34,817
6,046
34,278
347
1,529
128
365
Total
£’000
4,547
—
504
1,348
Total
£’000
5,063
—
191
1,527
Notes to the financial statements
For the year ended 30 November 2014
25. Financial risk management continued
Risks
The main risks arising from the Group’s financial instruments are credit risk, liquidity risk and market risk. Market risk
comprises currency risk, 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. There are formal
rules around traded option business including management of margin. 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 balance sheet figure.
Impairment policy and information on collateral held against trade receivables can be found in note 19. 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 bonds, equity
and gilt trades quoted on a recognised exchange, are matched in the market, and are either traded on a cash against
documents basis or against a client’s portfolio.
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.
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 through the use of 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 Directors have received a renewed facility letter from the bank, confirming sufficient facilities will be
available to the Group until 28 February 2016.
Currency risk
Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily
to the Group’s long-term debt obligations with floating interest rates and amounts receivable on cash deposits. The
Group views such exposure to interest rate fluctuations as immaterial. At 30 November 2014 if bank base rates had
been 100 basis points higher, profit for the year would have been approximately £14k (2013: £16k) lower. If bank base
rates had been 100 basis points lower, profit for the year would have been higher by the same amount.
Equity price risk
Equity 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 or currency 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. The Group manages market price risk by monitoring the value of its financial
instruments on a monthly basis and reporting these to the Directors and Senior Management. The Group has
disposed of a number of its investments during the course of 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 £579k (2013: £447k).
WH Ireland Group plc annual report and accounts 2014
44
Notes to the financial statements
For the year ended 30 November 2014
25. Financial risk management continued
Equity price risk
The table below summarises the maturity profile of the Group’s financial liabilities at 30 November 2014 based on
contractual undiscounted payments:
Group
Trade and other payables
Borrowings
Finance leases
Other financial liabilities
Group
Trade and other payables
Borrowings
Finance leases
Other financial liabilities
Company
Trade and other payables
Borrowings
Company
Trade and other payables
Borrowings
Payable
within
1 year
£’000
37,919
197
119
189
38,424
Payable
within
1 year
£’000
34,278
199
119
344
34,940
Payable
within
1 year
£’000
504
197
701
Payable
within
1 year
£’000
191
197
388
At 30 November 2014
Payable in
2 to 5 years
£’000
—
790
109
21
920
Payable
after more
than 5 years
£’000
—
641
—
—
641
At 30 November 2013
Payable in
2 to 5 years
£’000
—
790
228
149
1,167
Payable
after more
than 5 years
£’000
—
838
—
—
838
At 30 November 2014
Payable in
2 to 5 years
£’000
—
790
790
Payable
after more
than 5 years
£’000
—
641
641
At 30 November 2013
Payable in
2 to 5 years
£’000
—
790
790
Payable
after more
than 5 years
£’000
—
838
838
Total
contractual
payments
£’000
37,919
1,628
228
210
39,985
Total
contractual
payments
£’000
34,278
1,827
347
493
36,945
Total
contractual
payments
£’000
504
1,628
2,132
Total
contractual
payments
£’000
191
1,825
2,016
WH Ireland Group plc annual report and accounts 2014
45
Notes to the financial statements
For the year ended 30 November 2014
25. Financial risk management continued
Fair value measurement recognised in the statement of financial position
The following table provides an analysis of financial instruments that are measured subsequent to 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 measurement 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 values 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).
Financial investments available for sale
Unquoted equities
Financial instruments designated at fair value through profit and loss
Quoted equities
Other investments
Total
Financial investments available for sale
Unquoted equities
Financial instruments designated at fair value through profit and loss
Quoted equities
Other investments
Total
At 30 November 2014
Level 1
£’000
Level 2
£’000
Level 3
£’000
—
284
—
284
—
—
—
—
93
—
202
295
At 30 November 2013
Level 1
£’000
Level 2
£’000
Level 3
£’000
—
76
—
76
—
—
—
—
347
—
24
371
Total
£’000
93
284
202
579
Total
£’000
347
76
24
447
There was a transfer of £172k from level 3 to level 1 and a transfer of £24k from level 1 to level 3 during the year.
Balance at 1 December 2012
Total gains or losses:
- In income statement
- In other comprehensive income
Purchases
Settlements
Balance at 30 November 2013
Total gains or losses:
- In income statement
- In other comprehensive income
Purchases
Settlements
Transfer out
Transfer in
Balance at 30 November 2014
Unquoted equities
£’000
746
Other investments
£’000
85
287
370
59
(1,115)
347
(100)
—
—
(178)
(172)
24
93
(36)
—
—
(25)
24
(167)
—
347
(2)
—
—
202
WH Ireland Group plc annual report and accounts 2014
46
Notes to the financial statements
For the year ended 30 November 2014
26. Capital management
The capital of the Group comprises share capital, share premium, retained earnings and other reserves. The total
capital at 30 November 2014 amounted to £14.1m for the Group (2013: £13.8m) and £5.9m for the Company (2013:
£6.0m). The primary objective of the Group’s capital management is to ensure that it maintains a strong capital
structure in order 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 Assessment Process (ICAAP). Compliance with FCA regulatory 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. Treasury shares
Group
At 1 December
Disposals (note 28)
At 30 November
Year ended
30 November
2014
£’000
782
(19)
763
Year ended
30 November
2013
£’000
782
—
782
At 30 November 2014 no shares in the Company were held in Treasury (2013: nil shares). At 30 November 2014 no
shares in the Company were held in the EBT (2013: nil shares) and the ESOT held 2,077,000 shares (2013:
2,128,000). This represents 9% of the called up share capital (2013: 9%).
28. Employee Benefit Trusts
The WH Ireland EBT was established in October 1998 and the WH Ireland Group plc Employee Share Ownership
Trust (ESOT) was established on 19 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.
During 2011, the Company made a loan of £782k to the ESOT. 2,128,000 shares were then issued by the Company
and purchased by the ESOT for £782k. These shares were then held in trust by the ESOT under a Joint Ownership
Arrangement (the “JOE Agreement”) between the trustees of the ESOT and a former employee (the “Former
Employee”). During the prior year, the JOE Agreement with the Former Employee was terminated.
During the prior year Joint Ownership Arrangements (the “New JOE Agreements”) were put in place in relation to
1,500,000 shares between the trustees and a number of employees including RW Killingbeck (the “Employees”).
During the year further Joint Ownership Arrangements were put in place in relation to 150,000 shares between the
trustees and a number of employees including DJ Cowland and 51,000 shares were issued to satisfy the exercise of
options.
A further 427,000 shares remain held by the ESOT. The shares carry dividend and voting rights, although these have
been waived by all parties to the New JOE Agreements. Due to the consolidation of the ESOT into the Group
accounts, these shares are shown in Treasury (note 27). Due to the nature of these arrangements, the options
contained in the New JOE Agreements are accounted for as share based payments (note 29).
Under the New JOE Agreements, the options 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, otherwise than in the event of critical illness or death, the Employee is deemed to be a
Bad Leaver.
WH Ireland Group plc annual report and accounts 2014
47
Notes to the financial statements
For the year ended 30 November 2014
29. Share-based payments
The Group now has four schemes for the granting of non-transferable options to employees; the unapproved
executive share option scheme (ESOP), the approved Company Share Ownership Plan (CSOP) and two Save as You
Earn Schemes (SAYE and SAYE 2). In addition, options are held in the ESOT (note 28). Details of these schemes
can be found in the Remuneration Report on pages 14 to 17.
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:
ESOP
Options WAEP
Options
CSOP
WAEP Options
SAYE
WAEP
ESOT
Options WAEP Options
SAYE 2
WAEP
125,000
71.20p
785,985
66.22p 736,263
46.00p
1,500,000 74.50p* 481,217
49.20p
30 November 2014
—
—
—
—
— (241,669)
—
—
69.14p (115,238)
(125,000)) 71.20p
—
—
(51,000)
493,316
57.00p
(14,673)
65.74p 606,392
—
46.00p
46.00p
46.00p
150,000 114.50p
—
—
(5,487)
(27,072)
—
—
1,650,000 78.14p* 448,658
—
49.20p
49.20p
—
49.20p
—
—
493,316
65.74p
—
—
—
—
—
—
ESOP
Options WAEP
Options
CSOP
WAEP
Options
SAYE
WAEP
ESOT
Options WAEP
Options
SAYE 2
WAEP
137,500
74.55p 986,781
52.72p 941,066
46.00p
2,128,000 36.75p
—
—
30 November 2013
—
(12,500)
—
—
74.55p (200,796)
—
—
65.33p (189,873)
—
46.00p
1,500,000 74.50p* 522,190
(40,973)
(2,128,000) 36.75p
—
125,000
—
—
71.20p 785,985
—
(14,930)
66.22p 736,263
46.00p
46.00p
—
—
1,500,000 74.50p* 481,217
—
49.20p
49.20p
—
49.20p
125,000
71.20p
—
—
—
—
—
—
—
—
Outstanding at
beginning of year
Granted
Expired/forfeited
Exercised
Outstanding at end
of year
Exercisable at end of
year
Outstanding at
beginning of year
Granted
Expired/forfeited
Exercised
Outstanding at end of
year
Exercisable at end of
year
*The weighted average exercise price for the 1,500,000 share options may vary if certain performance conditions are met.
The pricing models used to value these options and their inputs are as follows:
Pricing model
Date of grant
Share price at grant(p)
Exercise price (p)
Expected volatility (%)
CSOP
Black Scholes
ESOP
Binomial
17/03/04-16/04/08 02/11/11-24/05/12
70.5-102.5
70.0-108.0
35.9234-38.6057
56.5-83.0
57.0-84.5
32.6332-33.2130
30 November 2014
ESOT
Black Scholes
06/09/10
37.0
36.8
34.2086
SAYE
Black Scholes
24/11/11
49.5
46.0
35.1465
Expected life (years)
Risk-free rate (%)
Expected dividend yield (%) 3.31-4.41
5
4.166-5.135
5
1.2993-0.7999
0.00
3
1.2121
0.00
5
1.8875
0.00
SAYE 2
Black Scholes
01/05/13
60.0
49.2
41.6919
ESOT
Monte Carlo
28/10/13
74.5-114.50
0.0-114.5
40.0000-
39.0000
5
1.1900-1.9300 0.3106
0.67-1.29
0.83
3
ESOP
Binomial
CSOP
Black Scholes
Pricing model
Date of grant
Share price at grant(p)
Exercise price (p)
Expected volatility (%)
Expected life (years)
Risk-free rate (%)
Expected dividend yield (%) 3.31-4.41
17/03/04-16/04/08 02/11/11-24/05/12
70.5-102.5
70.0-108.0
35.9234-38.6057
5
4.166-5.135
56.5-83.0
57.0-84.5
32.6332-33.2130
5
1.2993-0.7999
0.00
30 November 2013
ESOT
Black Scholes
06/09/10
37.0
36.8
34.2086
5
1.8875
0.00
SAYE
Black Scholes
24/11/11
49.5
46.0
35.1465
3
1.2121
0.00
ESOT
Monte Carlo
28/10/13
74.5
0.0-114.5
40.0000
5
1.1900
0.67
SAYE 2
Black Scholes
01/05/13
60.0
49.2
41.6919
3
0.3106
0.83
WH Ireland Group plc annual report and accounts 2014
48
Notes to the financial statements
For the year ended 30 November 2014
29. Share-based payments continued
In the prior year a contractual right for RW Killingbeck to be granted options over 473,787 ordinary shares in the
Company was modified to create a joint ownership arrangement between RW Killingbeck and the trustees of the
ESOT, under which he has the ability to exercise an option over 1,000,000 ordinary shares in the Company. The
incremental fair value of this modification was accounted for under the Monte Carlo model referenced above, which
amounted to £215,000 over the vesting period and £6,000 for the prior year.
The weighted average share price at the date of exercise, of the options exercised during 2014 was 66.20p.
The volatility of the Company’s share price was estimated as the standard deviations of daily historical continuously
compounded returns over a period commensurate with the expected life of the option, back from the date of grant and
annualised by the factor of the square root of 252, assuming 252 trading days per year (2013: 252 trading days). For
options granted in 2004, volatilities were calculated back to the date of the Group’s flotation in July 2000.
The risk-free rate is the yield to maturity on the date of grant of a UK Gilt Strip, with term to maturity equal to the life of
the option.
The Group recognised during the year, a total net debit of £205k (2013: credit of £57k) relating to share-based
payment transactions.
30. Leasing commitments
Finance Leases
The net carrying value of these assets at 30 November 2014 was £228,341 (2013: £377,249).
Group
Minimum Lease payments
The present value of future lease payments are analysed as:
Within 1 Year
Greater than 1 year but less than 5 years
Total Minimum lease payments
less Finance Charge
Present Value of Minimum Lease Payments
Capital
£’000
119
109
228
Interest
£’000
17
16
33
Group
Disclosed as:
Current Finance Lease Payable
Non - Current Finance Lease Payable
Total Finance Lease Payable
2014
£’000
136
125
261
(33)
228
2013
£’000
136
261
397
(50)
347
30 November
2014
£’000
30 November
2013
£’000
119
109
228
119
228
347
Operating Lease Commitments
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
Not later than one year
Later than one year and not later than five years
Later than five years
Group
30 November
2014
£’000
445
1,450
1,394
3,289
30 November
2013
£’000
272
216
—
488
Company
30 November 30 November
2013
£’000
—
—
—
—
2014
£’000
—
—
—
—
Operating lease payments represent rentals payable for office premises and equipment. Leases are negotiated for an
average of seven years. The leases do not contain provisions for contingent rental payments, purchase options or
escalation charges and do not impose restrictions beyond the property or equipment to which they relate.
31. Capital commitments
Capital commitments of the Group at 30 November 2014 were £4k (2013: £71k) in relation to the refurbishment and
expansion of the Group’s office accommodation. Capital commitments of the Company at 30 November 2014 were
£nil (2013: £nil)
WH Ireland Group plc annual report and accounts 2014
49
Notes to the financial statements
For the year ended 30 November 2014
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 (2013: £nil) 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 are able to 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.
The following table sets out the transactions which have been entered into during the year together with any amounts
outstanding:
Associates
Key management personnel
Other related parties
2014
2013
2014
2013
2014
2013
The total compensation of key management personnel is shown below:
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payment
Services
rendered to
related parties
£’000
—
—
1
1
—
—
Purchases/
services from
related parties
£’000
—
—
1
—
—
—
Amounts
owed to
related parties
£’000
—
—
127
3
—
—
Year ended
30 November
2014
£’000
1,814
103
125
17
2,059
Year ended
30 November
2013
£’000
868
74
—
12
954
Company
The Parent Company receives interest from subsidiaries in the normal course of business. Total interest received
during the year was £25k (2013: £26k). In addition, the Parent Company received a management charge of £442k
(2013: £613k) from its subsidiary WH Ireland Limited.
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 19 and 22 and in detail in the following
table:
Readycount Limited
WH Ireland (IOM) Limited
Stockholm Investments Limited
WH Ireland Limited
WH Ireland (Financial Services) Limited
WH Ireland Trustee Limited
Amounts owed
by related parties
2013
£’000
4,093
—
405
486
72
—
5,056
2014
£’000
4,121
13
406
—
—
—
4,540
Amounts owed
to related parties
2013
£’000
—
124
—
—
—
17
141
2014
£’000
—
—
—
418
—
17
435
WH Ireland Group plc annual report and accounts 2014
50
Notes to the financial statements
For the year ended 30 November 2014
33. Contingent liabilities
In April 2014, the FCA instigated an investigation into WH Ireland Limited, the principal operating subsidiary of
WH Ireland Group plc, in respect of its control procedures required by Principle 3 of the FCA Rules of Business. The
investigation is in relation to the period between 1st January 2013 until 19th June 2013.
The Directors continue to cooperate fully with the FCA and are in ongoing dialogue in the hope of seeking clarity and
timely resolution of the matter. Notwithstanding that there has been no formal notification as to precisely what further
action the FCA intends to take in respect of the investigation, in the opinion of the Directors, it is likely that there will be
a fine by the FCA and there may be further associated costs but there is insufficient information at the date of these
financial statements to allow the Board to make a reliable estimate of the effect on the Group’s financial position. The
Directors have therefore made no provision in these financial statements in respect of this matter
34. Events after the balance sheet date
A final dividend of 2.0p (2013: 1.5p) was proposed by the Board, payable on or before 10 April 2015 to shareholders
on the Company’s register at the close of business on 13 March 2015.
WH Ireland Group plc annual report and accounts 2014
51
Company number: 03870100
WH IRELAND GROUP PLC
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the annual general meeting of the above named Company will be held
at the offices of the Company, 24 Martin Lane, London EC4R 0DR on 26 March 2015 at 10 a.m. for the
following purposes:
ORDINARY BUSINESS
1
2
3
4
5
6
7
To receive the Company's annual accounts for the financial year ended 30 November 2014 together
with the last directors' report, the last directors' remuneration report and the auditors' report on those
accounts.
To approve a final dividend of 2p per share.
To re-elect DJ Cowland, who retires in accordance with article 28 of the articles of association of the
Company and who, being eligible, offers himself for re-election as a director.
To re-elect TM Steel, who retires in accordance with article 28 of the articles of association of the
Company and who, being eligible, offers himself for re-election as a director.
To re-elect RJG Lowe, who was not appointed or reappointed at one of the preceding two annual
general meetings and retires in accordance with article 28 of the articles of association of the
Company and who, being eligible, offers himself for re-election as a director.
To re-appoint BDO LLP as auditors of the Company and to authorise the directors to fix their
remuneration.
SPECIAL BUSINESS
To consider and, if thought fit, pass the following resolution which will be proposed as an ordinary
resolution:
"THAT, in substitution for all existing and unexercised authorities and powers, the directors of the
Company be and they are hereby generally and unconditionally authorised for the purpose of section
551 Companies Act 2006 (the "Act") to exercise all or any of the powers of the Company to allot
shares of the Company or to grant rights to subscribe for, or to convert any security into, shares of
the Company (such shares and rights being together referred to as "Relevant Securities") up to an
aggregate nominal value of £397,671 to such persons at such times and generally on such terms and
conditions as the directors may determine (subject always to the articles of association of the
Company) PROVIDED THAT this authority shall, unless previously renewed, varied or revoked by
the Company in general meeting, expire at the conclusion of the next annual general meeting or on
the date which is 6 months after the next accounting reference date of the Company (if earlier) save
that the directors of the Company may, before the expiry of such period, make an offer or agreement
which would or might require relevant securities or equity securities (as the case may be) to be
allotted after the expiry of such period and the directors of the Company may allot relevant securities
or equity securities (as the case may be) in pursuance of such offer or agreement as if the authority
conferred hereby had not expired."
8
To consider and, if thought fit, pass the following resolution which will be proposed as a special
resolution:
"THAT, subject to and conditional upon the passing of the resolution numbered 7 in the notice
convening the meeting at which this resolution was proposed and in substitution for all existing and
unexercised authorities and powers, the directors of the Company be and are hereby empowered
pursuant to section 570 of the Act to allot equity securities (as defined in section 560 of the Act)
pursuant to the authority conferred upon them by resolution 7 as if section 561 of the Act did not
apply to any such allotment provided that this authority and power shall be limited to:
(a)
the allotment of equity securities in connection with a rights issue or similar offer in favour of
ordinary shareholders where the equity securities respectively attributable to the interest of all
ordinary shareholders are proportionate (as nearly as may be) to the respective numbers of
ordinary shares held by them subject only to such exclusions or other arrangements as the
directors of the Company may consider appropriate to deal with fractional entitlements or
legal and practical difficulties under the laws of, or the requirements of any recognised
regulatory body in any, territory; and
(b)
the allotment (otherwise than pursuant to sub-paragraph (a) above) of equity securities up to
an aggregate nominal amount of £59,650 representing approximately 5% of the current share
capital of the Company,
and shall expire at the conclusion of the next annual general meeting or on the date which is 6
months after the next accounting reference date of the Company (if earlier) save that the Company
may before such expiry make an offer or agreement which would or might require equity securities
to be allotted after such expiry and the directors may allot equity securities in pursuance of such offer
or agreement as if the power conferred hereby had not expired."
To consider and, if thought fit, pass the following resolution which will be proposed as a special
resolution:
9
(b)
(c)
"THAT, for the purposes of section 701 of the Act, the Company be and is hereby generally and
unconditionally authorised to make market purchases (within the meaning of section 693(4) of the
Act) of ordinary shares of 5p each in the capital of the Company ("Ordinary Shares") provided that:
the maximum number of Ordinary Shares which may be purchased is 2,386,029 (representing
(a)
approximately 10% of the Company's share capital);
the minimum price which may be paid for each Ordinary Share is 5p;
the maximum price which may be paid for each Ordinary Share is an amount equal to 105%
of the average of the middle market quotations for an Ordinary Share as derived from the
Daily Official List of London Stock Exchange plc for the 5 business days immediately
preceding the day on which the Ordinary Share in question is purchased;
unless previously revoked or varied, the authority hereby conferred shall expire at the
conclusion of the next annual general meeting of the Company to be held in 2015 or, if
earlier, on the date which is 12 months after the date of the passing of this resolution; and
the Company may make a contract or contracts to purchase Ordinary Shares under the
authority hereby conferred prior to the expiry of such authority which contract or contracts
will or maybe executed wholly or partly after the expiry of such authority, and may make a
purchase of Ordinary Shares in pursuance of any such contract or contracts."
(d)
(e)
BY ORDER OF THE BOARD
…………………………………..
Katy Mitchell
Company Secretary
Date: 27 February 2015
Registered office:
24 Martin Lane, London, EC4R 0DR
NOTES:
1
A member of the Company entitled to attend and vote at the meeting convened by this notice is
entitled to appoint one or more proxies to exercise any of his rights to attend, speak and vote at that
meeting on his behalf. If a member appoints more than one proxy, each proxy must be entitled to
exercise the rights attached to different shares. A proxy need not be a member of the Company.
2
3
4
5
A proxy may only be appointed using the procedures set out in these notes and the notes to the proxy
form. To appoint a proxy, a member may complete, sign and date the enclosed proxy form and
deposit it at the office of the Company's Registrars, Neville Registrars, at Neville House, 18 Laurel
Lane, Halesowen, West Midlands B63 3DA, by 10 am on 24 March 2015. Any power of attorney or
any other authority under which the proxy form is signed (or a duly certified copy of such power or
authority) must be enclosed with the proxy form.
In order to revoke a proxy appointment, a member must sign and date a notice clearly stating his
intention to revoke his proxy appointment and deposit it at the office of the Company's Registrars,
Neville Registrars, at Neville House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA prior to
commencement of the meeting.
Any corporation which is a member of the Company may authorise one or more persons (who need
not be a member of the Company) to attend, speak and vote at the meeting as the representative of
that corporation. A certified copy of the board resolution of the corporation appointing the relevant
person as the representative of that corporation in connection with the meeting must be deposited at
the office of the Company's Registrars, Neville Registrars, at Neville House, 18 Laurel Lane,
Halesowen, West Midlands B63 3DA prior to the commencement of the meeting.
The right to vote at the meeting shall be determined by reference to the register of members of the
company. Only those persons whose names are entered on the register of members of the Company
at 6.00pm on 24 March 2015 shall be entitled to attend and vote in respect of the number of shares
registered in their names at that time. Changes to entries on the register of members after that time
shall be disregarded in determining the rights of any person to attend and/or vote at the meeting.
EXPLANATORY NOTES:
Resolution 7 – Directors' power to allot relevant securities
Under section 551 of the Act, relevant securities may only be issued with the consent of the shareholders,
unless the shareholders pass a resolution generally authorising the directors to issue shares without further
reference to the shareholders. This resolution authorises the general issue of shares up to an aggregate
nominal value of £397,671, which is equal to one third of the nominal value of the current ordinary share
capital of the Company. Such authority will expire at the conclusion of the next annual general meeting of
the Company or the date which is 6 months after the next accounting reference date of the Company
(whichever is the earlier).
Resolution 8 – Disapplication of pre-emption rights on equity issues for cash
Section 561 of the Act requires that a company issuing shares for cash must first offer them to existing
shareholders following a statutory procedure which, in the case of a rights issue, may prove to be both costly
and cumbersome. This resolution excludes that statutory procedure as far as rights issues are concerned. It
also enables the directors to allot shares up to an aggregate nominal value of £59,650, which is equal to
approximately 5% of the nominal value of the current ordinary share capital of the Company, subject to
resolution 7 being passed. The directors believe that the limited powers provided by this resolution will
maintain a desirable degree of flexibility. Unless previously revoked or varied, the disapplication will
expire on the conclusion of the next annual general meeting of the Company or on the date which is 6
months after the next accounting reference date of the Company (whichever is the earlier).
Resolution 9 – Authority for the market purchase by the Company of its own shares
Section 701 of the Act requires the Company to obtain shareholders’ consent prior to making any market
purchase of the Company’s own shares. Resolution 9 sets out the conditions of the authority as required by
section 701 of the Act.