G RO UP PLC
Annual Report and Accounts 2016History.Craftsmanship.Expertise. 2
Contents
Contents
Financial overview ...........................................................................................................................................................3
Chairman’s statement......................................................................................................................................................4
Chief Executive Officer’s report .......................................................................................................................................5
Strategic report ................................................................................................................................................................6
Board of Directors ..........................................................................................................................................................12
Advisers ...........................................................................................................................................................................14
Directors’ report .............................................................................................................................................................15
Corporate governance ...................................................................................................................................................18
Remuneration report .....................................................................................................................................................19
Statement of Directors’ responsibilities .......................................................................................................................23
Independent auditors’ report ........................................................................................................................................24
Consolidated statement of comprehensive income ....................................................................................................25
Consolidated and Company statement of financial position ......................................................................................26
Consolidated and Company statement of cash flows..................................................................................................27
Consolidated statement of changes in equity ..............................................................................................................28
Company statement of changes in equity ....................................................................................................................29
Notes to the financial statements .................................................................................................................................30
Notice of annual general meeting .................................................................................................................................68
Yo u can vie w our most rece nt Repor t an d A ccount s
and other Regulator y information ab out WH I re lan d
Group at ;
www.whirelandplc.com
1
Welcome to WHIreland
WHIRELAND IS A FINANCIAL SERVICES COMPANY OFFERING PRIVATE WEALTH MANAGEMENT, WEALTH PLANNING
AND CORPORATE BROKING SERVICES. THE PRIVATE WEALTH ARM PROVIDES DISCRETIONARY AND ADVISORY
SERVICES TO INDIVIDUALS, CORPORATES, TRUSTS AND FUNDS.
By offering a highly personal, bespoke service our Wealth Management division is able to provide timely advice and create long term
relationships based on trust.
Our Corporate Broking division provides Corporate Finance, Research, Market Making and fund raising capabilities to quoted small and
mid-cap companies. We offer a full NOMAD service to the majority of our corporate clients.
We firmly believe that by placing our client needs at the centre of everything we do, WHIreland is well placed to provide timely, bespoke
and helpful advice to a diverse range of clients.
2
Financial overview
G ROUP
TU RN OVER
£25.4m
Reflecting reduced transactional
revenues
OPERATI NG
LOSS
£1.3m
Before exceptional items
A SSE TS UNDER
M AN AG EM ENT & A DV ICE
£2,872m
(£2,520m in 2015)
R ECURRING R EVENUE
CASH
RESERV ES
C ET1 CA PITA L
RATI O
47%
Of total revenue
£6.7m
Including post year end proceeds
of property sale, cash reserves
approximately £11m
12.14%
Private Wealth Management
Corporate Broking
DI SC RETIONARY ASSE TS UND ER
MAN AGEM ENT
TOTAL AUMA
£1,016m
increased by 32% (2015: £767m)
2500
3000
MAN AGEM ENT FEE
2000
INCOME
1500
£7.6m
increased by 17% (2015: £6.5m)
500
1000
m
0
2
5
,
2
£
m
2
7
8
,
2
£
COMMISSION INCO ME
0
201 5
2016
£8.7m
(2015: £11.0m)
ASSE TS U NDER
MAN AGEM ENT
£2,872m
0
increased by 14% (2015: £2,520m)
6
5
4
3
2
1
ASSETS SERVICED
Discretionary
Advisory
Execution Only
43%
28%
29%
EXECUTION ONLY
DISCRETIONARY
ADVISORY
1000
800
600
400
200
0
m
6
0
5
£
m
2
2
7
£
m
7
6
7
£
m
9
4
9
£
2013
2014
2015
2016
CORPORATE
CLIENTS
85
RETAINER FEE
INCOME
£3.2m
(2015: £3.3m)
AIM NOMAD RANKING
3rd
Based on number of clients
3
Chairman’s statement
Chairman’s statement
2016 has been a transformational year for
WH Ireland: we reached a settlement with
the FCA, we bolstered our capital base, and
we welcomed a substantial new shareholder,
KEH, to our register after it acquired a 23%
stake in the Company.
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Tim Steel, Chairman
WH Ireland Group plc
Our revenues were lower overall, with the first six months
affected by a slowdown in corporate activity ahead of the
European referendum at the end of June. However, the second half has shown an encouraging trend, with rising stock markets, and a
strong rebound in corporate confidence which was reflected in the improved levels of activity in our Corporate Broking division. The
Corporate division finished the year positively with participation as a Co-Lead Manager in the Sirius Minerals equity placing.
The Private Wealth Management division increased overall funds under management to £2.9bn, with the discretionary element
increasing to over £1.0bn, thus continuing to improve our levels of fee income. The move to outsource our operational platform to SEI
Investments (Europe) Ltd has progressed, with the transfer on target to be effective during the second quarter of 2017: this will provide
both a quantum leap in our access to, and maintenance of, state of the art information technology, will help improve our regulatory
robustness and enhance the service levels to our clients immensely. All of the committed and quantifiable costs associated with this
project as of 30 November 2016 have been taken in the 2016 profit and loss account as an exceptional item. I would expect to witness
ongoing cost savings and lower planned spending activity as a result of this transfer to amount to an annualised saving of at least
£400k in a full year, beginning in the 2018 financial year.
BOARD CHANGES
I reported last year on the appointment as a Non-Executive Director of Jonathan Carey, after a distinguished career at Jupiter Asset
Management. In addition, we have strengthened the Board with two further appointments, which were announced after the year end.
First, following the 23% shareholding acquired by KEH Group in WH Ireland, their CEO, Humphrey Percy, agreed to join the Board of
WH Ireland as a Non-Executive Director. Humphrey was previously CEO of Bank of London and the Middle East plc and Head of Global
Financial Markets at WestLB.
Secondly, we announced the appointment of Victoria Raffé, Non-Executive Director, who has had an extensive career in the City, most
recently as Director of the Authorisations Division for the Financial Conduct Authority (‘FCA’).
SALE OF MANCHESTER OFFICE
In my statement last year, I stated that the Board was considering the potential sale of our freehold office in Manchester: we have
recently announced the sale of 11 St James’s Square for £5.27m, a premium to the book value of £4.75m. Manchester staff will be
moving to a new leased office during the summer of 2017.
The net cash from the property sale, coupled with existing cash balances, means that Group cash balances are now in excess of
£11.0m, and provides comfort to all as to the resilience of our balance sheet.
DIVIDEND
Last year the Board felt it prudent to omit paying a dividend. The Board continues regularly to assess this position but it is not the
intention of the Board to recommend a dividend payment to Shareholders for the year under review.
OUTLOOK
Despite the uncertainties regarding the UK’s progress towards Brexit and the unpredictability of newly elected President Trump,
markets are close to all-time highs, which is a positive environment both for the pipeline in our Corporate Broking division and for
the ad valorem fee paying discretionary mandates in our Private Wealth Management division. Against this background of renewed
investor confidence, the Board remains cautiously optimistic about the year ahead.
Finally, I would like to thank all our staff across all of our office locations for their individual hard work and efforts during the many
challenges of 2016.
4
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CEO’s report
Chief Executive Officer’s report
The past year has witnessed considerable
progress in the repositioning of WH Ireland
as an ambitious, focussed and modern
financial services company. Change does
not come easily within any company but
when you have a long history of legacy
issues to resolve, progress becomes even
more challenging.
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Richard Killingbeck, CEO
WH Ireland Group plc
I am pleased to be able to report that change at WH Ireland is not only successfully happening, but is gaining momentum as key
elements of the process fall into place. Whether it be the progression on moving our operational platform to an outsourced solution
with our partner, SEI Investments (Europe) Ltd, the successful sale of the freehold property in Manchester or whether it is our
increasing ability to attract senior industry professionals to the Company, the momentum of positive change is accelerating.
Within the Private Wealth Management division we have continued to focus our investment proposition upon the provision of fee
paying services, whether they be discretionary or advisory relationships. It is pleasing to be able to report continued growth in these
assets. During the year we merged our Lymington office into our Poole office which will give us greater credibility within the south
coast marketplace.
Our Corporate Broking division finished the year on a positive note. This marked the closing of a year which demonstrated the
resilience of our corporate client model, the loyalty of our corporate client base and the skill and dedication of our small, but very
focussed team. During the year, primarily due to de-listings, our total number of corporate clients declined. The majority of these
losses were smaller clients resulting in an increase in the average size of our client base as measured by market capitalisation. We
remain as one of the leading small and mid-cap corporate brokers in the City with a demonstrable commitment to enhance our
offering via the further recruitment of key individuals in the year ahead, including Adam Pollock who is joining us as Head of the
division in March.
PRIVATE WEALTH MANAGEMENT
The project to transfer assets to our new platform partner, SEI Investments (Europe) Ltd, has progressed significantly since we
communicated at the half year the Board’s decision to change our operating model. The benefits that this will bring to every facet
of our private wealth offering are significant whether they be regulatory, information technology or client driven. Once this move
has been completed it will allow for this division to compete across all distribution channels and will give us the ability better to
service clients across all communication media. In addition, once the first phase is completed, during the second quarter, the senior
management team will be able to focus more time upon growing this division by acquisition. If acquisitions are able to be achieved,
the scalability of the new business model will become evident very quickly.
CORPORATE BROKING
Markets during the first half of the year were not conducive to capital raisings but the second half witnessed a demonstrable change
in the market’s willingness to consider and participate in fundraisings. As a consequence, the second half of the year witnessed a
strong rebound in activity. Our corporate client list gives us a considerable revenue flow in the form of NOMAD fees and our model
remains focussed upon building this list both in number and in the size of new clients.
Other transactional revenue (secondary commissions and market making) was lower during the year but our low cost base meant
that even at these lower levels a positive contribution was made from these areas. Following a mid-year period of review, we are now
looking actively to expand our capabilities within this division and selective recruitment will be undertaken to help strengthen our
proposition.
OUTLOOK
The Company is in a strong position to concentrate upon growing both divisions in the year ahead. Our recurring revenue
(management fee income and corporate client’s retainer income) has risen to £12m, or 47% of total revenue. Opportunities for
acquisitive growth need to be identified and executed, but we will focus significantly more activity in this area than in previous years.
Our new shareholder also offers the potential for supplemental business growth for the Company both from, and to, the Middle East.
Taking a medium term view, this could be very exciting for the development and progression of both divisions.
Thus I look out to the next year in a pragmatic, yet positive manner. We still have a lot of work to undertake, a very competitive
commercial environment and a changing regulatory environment, but we have recognised and tried to anticipate these changes by
our actions and decisions of last year. As these get implemented, so WH Ireland will become comparatively stronger and this is one of
the key reasons for my and the Board’s continued optimistic outlook.
5
Strategic report
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.
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 213 staff (2015: 226) in the United Kingdom and 7 (2015: 5) 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 corporate 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 discretionary and advisory assets under
management in order to achieve the Group’s target of 50% recurring revenue through the generation of corporate retainer income
and wealth management fees.
FINANCIAL OVERVIEW
A SUMMARY OF THE STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR IS SET OUT BELOW:
30 November 2016
30 November 2015
Revenue
Administrative expenses
Operating loss
Operating (loss)/profit before exceptional items
Exceptional items
Operating loss after exceptional items
Other income and charges
Loss before tax
Tax
Loss after tax
£’000
25,421
(28,454)
(3,033)
(1,253)
(1,780)
(3,033)
(171)
(3,204)
460
(2,744)
£’000
30,884
(30,936)
(52)
1,148
(1,200)
(52)
(294)
(346)
(335)
(681)
A RECONCILIATION OF THE ADJUSTED OPERATING PROFIT IS SET OUT BELOW:
30 November 2016
30 November 2015
Operating loss
Add back of one off charges:
Project Discovery*
Restructuring**
Regulatory fine***
Regulatory fine related costs***
Adjusted operating (loss)/profit
Notes:
£’000
(3,033)
593
994
—
193
(1,253)
£’000
(52)
—
—
1,200
—
1,148
*As announced on 2 June 2016, the Group has entered into a seven year agreement with SEI Investments (Europe) Ltd, to outsource its Private Wealth Management
back office operations and move to a “Model B” arrangement. This function is currently performed out of the Group’s Manchester office. Significant investment
has been made in both internal and external resources which have been dedicated to this project (“Project Discovery”) and a provision has been made for the
resultant reduction in headcount, which together have had a negative impact on the Group’s results for the year.
**During the year ended 30 November 2016 there were a number of changes within the senior management team and several external hires were made. The
costs of these changes, in respect of both short term consultancy costs and fixed employment related costs, are considered by the Board to be non-trading and
exceptional in nature.
***As previously disclosed, the Group incurred a fine from its main regulator, the FCA, in February 2016. This was provided for in the year to 30 November 2015. In
the year to 30 November 2016, the Group has incurred additional costs which relate to the resolution of this matter and subsequent structural changes, both of
which the Board consider to be non-trading and exceptional in nature.
6
Strategic report
DIVISIONAL PERFORMANCE CAN BE SUMMARISED AS FOLLOWS:
Strategic report
Year ended 30 November 2016
Revenue
Direct costs
Contribution
Indirect costs
Segment result
Executive Board cost
Investment gains/(losses)
Fair value losses on investments
Finance income
Finance expense
Profit/(loss) before tax
Tax expense
Profit/(loss) for the year
Year ended 30 November 2015
Revenue
Direct costs
Contribution
Indirect costs
Segment result
Executive Board cost
Investment (losses)/gains
Fair value losses on investments
Finance income
Finance expense
Profit/(loss) before tax
Tax (expense)/income
Profit/(loss) for the year
Private Wealth
Corporate
Other Group
Management
Broking
Head Office
Companies
Group
£’000
17,091
(13,001)
4,090
(5,731)
(1,641)
300
29
—
8
(21)
(1,325)
218
(1,107)
£’000
7,581
(6,066)
1,515
(2,259)
(744)
300
(8)
(155)
—
(8)
(615)
122
(493)
£’000
—
(819)
(819)
—
(819)
(725)
—
—
—
—
(1,544)
109
(1,435)
£’000
£’000
749
25,421
(578)
(20,464)
171
4,957
— (7,990)
171
125
—
—
2
(18)
280
11
291
(3,033)
—
21
(155)
10
(47)
(3,204)
460
(2,744)
Private Wealth
Corporate
Other Group
Management
Broking
Head Office
Companies
Group
£’000
20,594
(14,642)
5,952
(5,507)
445
286
(8)
(12)
19
(13)
717
(175)
542
£’000
9,936
(7,467)
2,469
(2,055)
414
286
(82)
(173)
—
(6)
439
(107)
332
£’000
—
(1,200)
(1,200)
—
(1,200)
(786)
—
—
—
—
(1,986)
—
(1,986)
£’000
£’000
354
30,884
(65)
(23,374)
289
7,510
— (7,562)
289
214
1
—
2
(22)
484
(53)
431
(52)
—
(89)
(185)
21
(41)
(346)
(335)
(681)
7
Strategic report
Strategic report
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, Poole 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 in the process of enhancing our marketing
capability which will complement the sources of funds flow above.
CORPORATE BROKING
WH Ireland is one of the largest Nominated Advisers (NOMADs) and Brokers for AIM quoted companies in London and currently
represents 85 corporate companies. We specialise in providing corporate finance and broking services to smaller companies
across a wide range of industry sectors and geographies. We have a highly experienced team from a range of professional
backgrounds who are well placed to provide strategic, technical and regulatory advice to our clients. Areas of specialism include
pre-IPO fundraising, IPOs and secondary issues, mergers and acquisitions, disposals, restructuring and tender offers.
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.
13
11
Our corporate client base is spread across the
spectrum of industry sectors, including Technology,
Consumer, Support Services, Healthcare, Natural
Resources and Industrials. 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.
5
21
8
14
Consumer
Financial Services
Technology
Industrials
Natural Resources
Healthcare
Support Services
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 has demonstrated this strength despite this structural shift, challenging market conditions and the impact of the FCA
sanction during the period and we continue to focus on providing a first class service to all of our clients. We continue to exercise
a selective recruitment policy of hiring experienced individuals to ensure that these high levels of service are maintained as our
business grows. This has been demonstrated in the recent appointment of Adam Pollock as Head of the Division. We anticipate
attracting further quality individuals which will enhance our differentiated proposition relative to some of our larger competitors.
13
8
Strategic report
Strategic report
KEY PERFORMANCE INDICATORS (KPIS)
The Group uses a number of KPIs to monitor its performance against its financial objectives:
1. RATIO OF ADJUSTED OPERATING PROFIT BEFORE TAX TO TOTAL REVENUE
Ratio of adjusted operating (loss)/profit before tax to revenue
2. FUNDS UNDER MANAGEMENT AND ADVICE
Discretionary assets
Advisory assets
Execution only assets
Total
30 November 2016
30 November 2015
%
(5.60)
%
2.77
30 November 2016
30 November 2015
£m
1,016
783
1,073
2,872
£m
767
892
861
2,520
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
Value of Group recurring income
30 November 2016
30 November 2015
£m
12.0
£m
11.4
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 5.26% (2015: 14.01% increase), largely influenced
by 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
Number of transactions
Money raised
Retained corporate clients
30 November 2016
30 November 2015
51
£69m
85
53
£75m
98
9
Strategic report
Strategic report
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The Board is satisfied that the changes
which have continued to be made across
the business throughout 2016, and the
conclusion of the historic FCA investigation
in February 2016, will enable the Group
to focus on achieving our strategic goals.
These developments will enable the Group
to grow both organically, and through value
enhancing acquisitions from opportunities
which the Board hopes to identify in the coming year.
Dan Cowland
Finance Director
DIVIDEND
The Board does not propose to pay a dividend in respect of the financial year.
STATEMENT OF FINANCIAL POSITION AND CAPITAL STRUCTURE
Maintaining a strong and liquid statement of financial position remains a key business objective for the Board, alongside its
regulatory capital requirements. Net assets amounted to £11.7m (2015: £12.9m) and net current assets to £9.4m (2015: £7.3m).
The statement of financial position is underpinned by the holding of the substantial cash balances (£6.7m 2015: £8.2m) held to
facilitate both the day to day business and growth opportunities and this was further enhanced by the sale of the Group’s freehold
property in the Manchester city centre in January 2017 which raised in excess of £4m net of borrowings and sale expenses.
In addition, the Group raised £1.1m on 23 February 2016 and £1.6m on 6 December 2016 by way of two placings to existing
shareholders, for general corporate purposes.
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 Executive and Operations Committee, considers all of the relevant risk management issues
and advises 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 operates a dedicated Risk function. The Internal Audit and Risk
functions coordinate their programme of work with the Compliance department. The Internal Audit function reports directly to
the Group’s Audit Committee.
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. The delivery of the partnered solution with SEI Corporation is a
key continuation of this process.
In order to mitigate risk and absorb any volatility in its operating results, the Board has continued to ensure that the statement
of financial position 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.
10
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Strategic report
Strategic report
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 Group Head of Risk, who sits on the Operations Committee.
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 functions, 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 27 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.
11
Board of Directors
Board of Directors
NO N-EXECUTIV E CH AIRMAN - TIM STEEL
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.
CHIEF EX ECUTIVE OFFICER - RICHAR D KI LLI NGBECK
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 management roles at Close Brothers Asset Management and then more recently at Credit Suisse
Private Bank. Richard is also Chairman of Bankers Investment Trust plc
FINANCE D IRECTOR - DAN COWL AND
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.
NO N-EX ECUTIVE D IRE CTOR - RICHA RD LEE
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.
12
Board of Directors
Board of Directors
NO N-EXECUTIVE DIRECTOR - JONATHAN CAR EY
Jonathan is a Fellow of the ICAEW. He began his career at Price Waterhouse in 1970, qualifying as a Chartered
Accountant in 1975, before joining Cox & Kings in 1977 as Finance Director. After four years, Jonathan moved
to Gartmore as Group Financial Controller. In 1987 Jonathan joined Marathon Asset Management as Finance
Director, before joining Jupiter in 1988 where he spent twenty three years, first as Group Finance Director
and then as Joint Group Chief Executive in 2000. In 2007, Jonathan and his colleague led a successful MBO,
assuming the role of Executive Deputy Chairman.
Jonathan retired from all of his executive roles in 2010 but remains as Non-Executive Director for JP Morgan
Global Growth and Income plc and BNY Mellon Trust & Depository (UK) Ltd. Jonathan was appointed to the
Board of WH Ireland in February 2016.
NO N-EXECUTIV E DIRECTOR - HUM PHREY PERCY
Humphrey Percy is a highly experienced international banker having held senior management positions
at Barclays, West LB AG and most recently at Bank of London and the Middle East plc (BLME) as Founder,
Executive Director and CEO. During his nine year period there he established the bank as the leading Islamic
bank in Europe by assets, profitability, products and clients. In 2016 he joined KEH Group as Group Chief
Executive Officer.
Humphrey was appointed to the Board of WH Ireland in December 2016 as the nominated Director KEH
Group.
NO N-EXECUTIV E DIRECTOR - VICTORIA RAFFÉ
Victoria Raffé has had an extensive City career, latterly as a Regulator with positions as Director of the
Authorisations Division for the Financial Conduct Authority (‘FCA’), membership of both the eight strong
Executive Committee of the FCA and the Executive Regulatory Issues Committee. In addition Victoria Chaired
the Regulatory Transaction Committee. Previously she held various senior level roles with the Financial
Services Authority (‘FSA’). She currently holds two banking non-executive directorships – one with Reliance
Bank, and the other with Starling Bank.
Victoria was appointed to the Board of WH Ireland in February 2017.
The Board is supported by four internal executive committees, the Executive
Committee, the Corporate Broking Executive Committee, the Operations Committee
Committee and the Private Client Executive Committee.
13
Advisers
NOMINATED ADVISER
Spark Advisory Partners
5 St. John’s Lane
London, EC1M 4BH
BROKER
WH Ireland Limited
24 Martin Lane
London, EC4R 0DR
AUDITORS
BDO LLP
55 Baker Street
COMPANY NUMBER
03870190
Advisers
London, W1U 7EU
BANKERS
Bank of Scotland plc
2nd Floor,1 Lochrin Square
92-98 Fountainbridge
Edinburgh, EH3 9QA
COMPANY SECRETARY
Katy Mitchell
REGISTERED OFFICE
24 Martin Lane
London, EC4R 0DR
14
Directors’ report
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
2016.
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 6 to 11.
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 2019 which considers 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 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 most recently renewed the Group’s banking facilities in February 2015. As an evergreen facility there is no
requirement to update the agreement annually, although a formal review of facilities is undertaken at least annually.
Financial instruments and risk management
Details of risks and risk management arising from the Group’s financial instruments are set out in note 26 of the financial
statements.
DIVIDENDS
The Directors do not propose to pay a dividend for 2016 (note 10).
15
Directors’ report
Directors’ report
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
TM Steel
REM Lee
JHD Carey
HR Percy**
VG Raffé****
At
At
30 November
30 November
2016
—
910,000
10,000
—
30,267
—
6,525,079***
—
2015
1,074,856
910,000
10,000
—
30,267
—
—
—
* Rupert Lowe resigned from the Board on 1 December 2015.
** Humphrey Percy was appointed to the Board on 1 December 2016
*** Humphrey Percy is the nominated Director of KEH Group who hold 6,525,079 ordinary shares in the Company
**** Victoria Raffé was appointed to the Board on 1 February 2017
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 19 to 22.
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.
MAJOR SHAREHOLDINGS
At the date of 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:
Polygon Global Partners LLP
Integrated Financial Services for Buying and Selling Securities W.L.L. Co*
Oceanwood Capital Management LLP
* On behalf of KEH Group
Ordinary shares
6,555,626
6,525,079
4,344,214
%
23.3
23.1
15.4
In addition, the Company’s Employee Share Ownership Trust which is operated by Sanne Trust Company Limited holds 1,989,500
shares as trustees. All rights to vote in respect of these shares have been waived.
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 CONTRIBUTIONS
The Group and/or Company did not make any political donations or incur any political expenditure during the year.
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.
16
Directors’ report
Directors’ report
EMPLOYEES CONTINUED
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.
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 2016 1,989,500 shares were held in trust by the ESOT under Joint Ownership Arrangements. Further details are in
notes 28 and 29 of the Financial Statements.
EVENTS AFTER THE REPORTING PERIOD
For details of significant events after the reporting period 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.
CORPORATE CULTURE
Change at the Company extends to that of culture. Cultural change takes a long time to effect but has been reinforced by
management changes during the past few years. Cultural change and behaviour is driven and owned by the Board with the senior
executive management team communicating and reinforcing these changes across the business divisions. This is achieved by
regular communication, training and by their actions within the business, thus setting an example to all employees.
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 February 2017
17
Corporate governance
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 five 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 five Non-Executive Directors with Tim Steel 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 five 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.
Executive Committee
The committee is made up of the senior management of WH Ireland Ltd and is Chaired by the CEO. The committee are responsible
for oversight of all delegated functions by the Board and the day to day operational business of the Company. In addition, for
ensuring the strategy of the Board is implemented, and any issues that need to be communicated to the Board are recorded as
such. The committee are also responsible for ensuring timely identification and resolution of regulatory compliance issues and
ensuring senior management are aware of significant regulatory matters and to act as a forum to update the Head of Compliance
and Risk about organisational change and new business.
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, Risk Management functions and the Operations Committee of WH
Ireland Limited.
18
Remuneration report
Remuneration report
The Directors present the Directors’ Remuneration Report (the “Remuneration Report”) for
the financial year ended 30 November 2016.
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 five Non-Executive Directors, chaired by Tim Steel.
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
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.
Performance related contractual incentive scheme
These are designed to reward performance by employees across the Group.
Share options
As referred to in the Directors’ Report, the Group 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 1,989,500 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.
19
Remuneration report
Remuneration report
SHARE OPTIONS CONTINUED
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.
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.
20
Remuneration report
Remuneration report
SERVICE CONTRACTS AND NOTICE PERIODS CONTINUED
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.
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 Executive 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 (AUDITED)
The remuneration of each Director, excluding share options and awards, during the year ended 30 November 2016 is detailed in
the table below:
Compensation
for loss of office
£
—
—
—
—
—
—
—
Total for
year ended
30 Nov
2016
Total for
year ended
30 Nov 2015
Pension
contribution
for year ended
30 Nov 2016
Pension
contribution
for year ended
30 Nov 2015
£
£
£
£
216,591
297,473
188,190
302,268
385
110,000
30,000
60,000
22,500
30,000
30,000
—
17,600
—
—
—
—
—
16,683
—
24,000
—
—
—
626,949
660,458
17,600
40,683
Salary
Benefits
Bonus
£
£
£
Executive
DJ Cowland
160,000
RW Killingbeck
220,000
1,591
2,473
55,000
75,000
Non-Executive
RJG Lowe*
REM Lee
TM Steel
JHD Carey**
385
30,000
60,000
22,500
—
—
—
—
—
—
—
—
492,885
4,064
130,000
Notes:
* Resigned 1 December 2015.
** Appointed 29 February 2016
The highest paid Director for 2016 and 2015 was RW Killingbeck who received emoluments of £297,473 and £302,268 respectively.
No pension contributions were paid in respect of RW Killingbeck in either year.
21
Remuneration report
Remuneration report
DIRECTORS’ INTERESTS IN SHARE OPTIONS (AUDITED)
Full details of unexercised options over ordinary shares in the Company held by Executive and Non-Executive Directors at
30 November 2016 are shown below:
Number of options
over ordinary shares
Date of grant of
share option
Exercise price per
ordinary share
Exercise period
RW Killingbeck
DJ Cowland
DJ Cowland
1,000,000
100,000
150,000
28/10/13
23/07/14
13/04/16
74.50p
28/10/16 to 27/10/23
114.50p
23/07/17 to 22/07/20
0-92.50p
13/04/19 to 13/04/26
All of 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 29).
At 30 November 2016 the market price of the Company’s shares was 121.0p.
The highest daily closing price during the year was 129.0p and the lowest daily closing price was 84.5p.
22
Statement of Directors’ responsibilities
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.
23
Independent Auditors’ report
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 2016 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 the scope of an audit of financial statements is provided on the FRC’s website at www.frc.org.uk/
auditscopeukprivate
OPINION ON FINANCIAL STATEMENTS
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the Group’s (the Company’s) affairs as at 30 November
2016 and of the Group’s loss 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
24 February 2017
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
24
Consolidated statement of comprehensive income
Consolidated statement of comprehensive
income
For the year ended 30 November 2016
Year ended 30 Nov 2016
Year ended 30 Nov 2015
Revenue
Administrative expenses
Operating loss
Operating (loss)/profit before exceptional items:
Exceptional items
Operating loss after exceptional items
Realised investment gains
Fair value losses on investments
Finance income
Finance expense
Loss before tax
Tax expense
Loss for the year
Total other comprehensive income
Total comprehensive income
Earnings per share
Basic
Diluted
Note
3 & 5
6
6
8
8
9
11
The notes on pages 30 to 67 form part of these financial statements.
All results for the current and prior year relate to continuing operations.
There were no items of other comprehensive income for the current or prior year.
£’000
25,421
(28,454)
(3,033)
(1,253)
(1,780)
(3,033)
21
(155)
10
(47)
(3,204)
460
(2,744)
—
(2,744)
£’000
30,884
(30,936)
(52)
1,148
(1,200)
(52)
(89)
(185)
21
(41)
(346)
(335)
(681)
—
(681)
(10.72)p
(10.72)p
(2.81)p
(2.81)p
25
Consolidated and Company statement of financial position
Consolidated and Company statement of financial position
As at 30 November 2016
Group
Company
As at 30 Nov 2016
As at 30 Nov 2015
As at 30 Nov 2016
As at 30 Nov 2015
ASSETS
Non-current assets
Goodwill
Intangible assets
Investment in subsidiaries
Property, plant and equipment
Investments
Loan receivable
Subordinated Loan
Deferred tax asset
Current assets
Trade and other receivables
Other investments
Asset held for sale
Cash and cash equivalents
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Corporation tax payable
Borrowings
Finance Leases
Deferred Consideration
Provisions
Non-current liabilities
Borrowings
Finance Leases
Deferred tax liability
Accruals and deferred income
Deferred Consideration
Provisions
Total liabilities
Total net assets
EQUITY
Share capital
Share premium
Available-for-sale reserve
Other reserves
Retained earnings
Treasury shares
Total equity
Note
13
14
15
12
16
28
17
18
19
20
12
21
22
23
31
25
24
23
31
18
25
24
28
£’000
258
3,582
—
1,207
118
—
—
807
5,972
18,985
530
4,750
6,657
30,922
36,894
(19,848)
(52)
(187)
(282)
(1,130)
(28)
(21,527)
(807)
(352)
(92)
(282)
(2,101)
(21)
(3,655)
(25,182)
11,712
1,309
1,621
7
982
8,524
(731)
11,712
£’000
258
3,586
—
5,361
360
—
—
298
9,863
23,312
1,932
—
8,176
33,420
43,283
(24,059)
(262)
(179)
(119)
(262)
(1,200)
(26,081)
(994)
—
(126)
(330)
(2,863)
(21)
(4,334)
(30,415)
12,868
1,225
379
7
982
11,006
(731)
12,868
£’000
—
—
5,035
10
—
731
960
141
6,877
4,720
—
—
4,720
11,597
(1,936)
—
(187)
—
—
—
(2,123)
(807)
—
—
—
—
—
(807)
(2,930)
8,667
1,309
1,621
—
229
5,508
—
8,667
£’000
—
—
1,711
16
—
731
850
73
3,381
4,712
—
—
4,712
8,093
(1,040)
—
(179)
—
—
—
(1,219)
(994)
—
—
—
—
—
(994)
(2,213)
5,880
1,225
379
—
229
4,047
—
5,880
The notes on pages 30 to 67 are an integral part of these financial statements.
The Company has elected to take the exemption under Section 408 of the Companies Act 2006 not to present the Company Statement
of Comprehensive Income. The profit after tax of the Company for the year was £1,199k (2015: Loss £5k).
These financial statements were approved by the Board of Directors on 24 February 2017 and were signed on its behalf by:
Richard Killingbeck
Director
26
Dan Cowland
Director
Consolidated and Company statement of cash flows
Consolidated and Company statement of cash flows
For the year ended 30 November 2016
Group
Company
Year ended 30 Nov 2016
Year ended 30 Nov 2015
Year ended 30 Nov 2016
Year ended 30 Nov 2015
Operating activities:
(Loss)/profit for the year
Adjustments for:
Depreciation, amortisation and impairment
Note
12,13
& 14
8
8
9
7
20
8
15
14
12
16
23
25
31
8
Finance income
Finance expense
Tax
Losses/(gains) in investments
Non-cash adjustment for share option
charge
Decrease/(increase) in trade and other
receivables
(Decrease)/increase in trade and other
payables
(Decrease)/increase in provisions
Decrease/(increase) in current asset
investments
Net cash (used in)/generated from
operations
Income taxes paid
Net cash inflows from operating activities
Investing activities:
Proceeds from sale of investments
Interest received
Investment in subsidiary
Increase in intangible fixed asset
Acquisition of property, plant and equipment
Acquisition of investments
Net cash (used in)/generated from investing
activities
Financing activities:
Proceeds from issue of share capital
Repayment of borrowings
Increase in deferred consideration
Capital element of finance leases repaid
Issue of subordinated loan
Interest paid
Dividends paid
Net cash generated from/(used in)
financing activities
Net (decrease)/increase in cash and cash
equivalents
Cash and cash equivalents at beginning of
year
Cash and cash equivalents at end of year
£’000
(2,744)
475
(10)
47
(517)
187
262
4,327
(4,259)
(1,172)
1,402
(2,002)
(236)
(2,238)
581
10
—
(189)
(878)
(526)
(1,002)
1,326
(179)
106
515
—
(47)
—
1,721
(1,519)
8,176
6,657
£’000
(681)
310
(21)
41
335
96
211
15,033
(13,877)
1,011
(1,042)
1,416
(398)
1,018
904
21
—
—
(74)
(781)
70
360
(175)
—
(109)
—
(41)
(437)
(402)
686
7,490
8,176
£’000
1,199
6
—
18
—
—
262
(76)
896
—
—
2,305
—
2,305
—
—
(3,324)
—
—
—
(3,324)
1,326
(179)
—
—
(110)
(18)
—
1,019
—
—
—
The notes on pages 30 to 67 are an integral part of these financial statements.
£’000
(5)
7
—
22
(25)
—
211
(90)
536
—
—
656
—
656
—
—
—
—
—
—
328
(175)
—
—
(350)
(22)
(437)
(656)
—
—
—
27
Consolidated statement of changes in equity
Consolidated statement of changes in
Equity
For the year ended 30 November 2016
Share
capital
Share
premium
Group
Balance at 1 December 2014
Loss after tax
Total comprehensive income
Transaction with owners
Employee share option scheme
Shares options exercised
Dividends
£’000
1,193
—
—
—
32
—
Balance at 30 November 2015
1,225
Loss after tax
Total comprehensive income
Transaction with owners
Employee share option scheme
Deferred tax on employee share options
New share capital issued
Shares options exercised
Dividends
—
—
—
—
60
24
—
£’000
101
—
—
—
278
—
379
—
—
—
—
1,014
228
—
Balance at 30 November 2016
1,309
1,621
Retained earnings include £10k of ESOT reserve.
Available-
for-sale
reserve
£’000
7
—
—
—
—
—
7
—
—
—
—
—
—
—
7
Other
reserves
Retained
earnings
Treasury
shares
£’000
982
—
—
—
—
—
982
—
—
—
—
—
—
—
£’000
11,895
(681)
(681)
211
18
(437)
11,006
(2,744)
(2,744)
205
57
—
—
—
£’000
(763)
—
—
—
32
—
(731)
—
—
—
—
—
—
—
Total
equity
£’000
13,415
(681)
(681)
211
360
(437)
12,868
(2,744)
(2,744)
205
57
1,074
252
—
982
8,524
(731)
11,712
At 30 November 2016 the total number of authorised ordinary shares is 34.5million shares of 5p each (2015: 34.5 million shares
of 5p each). At 30 November 2016 the total number of issued ordinary shares is 26.2 million shares of 5p each (2015: 24.5 million
shares of 5p each). 1,673,551 shares were issued during the year (2015: 646,387), of which no shares (2015: nil) were held as
Treasury (note 28).
28
Company statement of changes in Equity
Company statement of changes in equity
For the year ended 30 November 2016
Company
Balance at 1 December 2014
Loss after tax
Total comprehensive income
Shares options exercised
Employee share option scheme
Dividends
Balance at 30 November 2015
1,225
Profit after tax
Total comprehensive income
Employee share option scheme
Deferred tax on employee share options
New share capital issued
Shares options exercised
Dividends
—
—
—
—
60
24
—
Balance at 30 November 2016
1,309
1,621
Share
capital
Share
premium
£’000
1,193
£’000
101
—
—
32
—
—
Available-
for-sale
reserve
£’000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Other
reserves
Retained
earnings
Treasury
shares
£’000
229
—
—
—
—
—
229
—
—
—
—
—
—
—
£’000
4,260
(5)
(5)
18
211
(437)
4,047
1,199
1,199
205
57
—
—
—
229
5,508
£’000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Total
equity
£’000
5,783
(5)
(5)
328
211
(437)
5,880
1,199
1,199
205
57
1,074
252
—
8,667
—
—
278
—
—
379
—
—
—
—
1,014
228
—
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 statement of comprehensive income. 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
statement of comprehensive income.
Other reserves
Other reserves comprise a (consolidated) merger reserve of £753k (2015: £753k) and a (consolidated) capital redemption reserve
of £229k (2015: £229k).
Retained earnings
Retained earnings reflect; accumulated income, expenses, gains and losses, recognised in the statement of comprehensive
income and the statement of recognised income and expense and is net of dividends paid to shareholders. It includes £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.
29
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
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 6 to 11
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 2015, 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:
Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38): The amendment
to IAS 16 clarifies that the use of revenue-based methods to calculate the depreciation and amortisation of an asset is not
appropriate.
Equity Method in Seperate Financial Statements (Amendments to IAS 27): The amendments introduce an option for an entity
to account for its investments in subsidiaries, joint ventures, and associates using the equity method in its separate financial
statements.
IFRS 15 Revenue from Contracts with Customers: IFRS 15 is intended to clarify the principles of revenue recognition and establish
a single framework for revenue recognition. IFRS 15 supersedes IAS 18 Revenue and IAS 11 Construction Contracts. Additionally,
the new requirements add specific guidance for multiple-element arrangements, contract costs and disclosures.
IFRS 9 Financial Instruments: IFRS 9 Financial instruments replaces IAS 39 Financial Instruments: Recognition and Measurement
in its entirety. The new standard brings in changes to the classification and measurement of financial assets, impairment of
financial assets and hedge accounting. IFRS 9 uses a single approach to determine whether a financial asset is measured at
amortised cost or fair value, replacing the many different rules in IAS 39. The approach in IFRS 9 is based on how an entity
manages its financial instruments (its business model) and the contractual cash flow characteristics of the financial assets
(payments that are Solely Payments of Principal and Interest (SPPI)). The standard is applicable for the period starting 1 December
2018.
IFRS 16 Leases: IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. The
impact of the new standard has not yet been determined. IFRS 16 is effective from 1 January 2019. A company can choose to apply
IFRS 16 before that date but only if it also applies IFRS 15 Revenue from Contracts with Customers. IFRS 16 replaces the previous
leases Standard, IAS 17 Leases, and related Interpretations. It is not yet endorsed for use in the EU, expected endorsement is not
yet determined.
Disclosure Initiative: Amendments to IAS 7: Statement of Cash Flows: The amendments to IAS 7 are intended to improve
information provided to users of financial statement about changes in liabilities arising from an entity’s financing activities. These
amendment have not yet been endorsed.
Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2): The amendments, provide
clarification on the accounting for:
•
•
•
The effects of vesting and non-vesting conditions on the measurement of cash-settled share-based payments
Share-based payment transactions with a net settlement feature for withholding tax obligations
A modification to the terms and conditions of a share-based payment that changes the classification of the transaction from
cash-settled to equity-settled
These amendments have not yet been endorsed.
The Group did not apply early adoption to any of these changes and, due to the number of unknowns because of the length of
time before potential compulsory adoption, has not yet ascertained their impact.
30
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
3. SIGNIFICANT ACCOUNTING POLICIES
Basis 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 2016.
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 15 to 17.
Basis of consolidation
Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the
investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that
there may be a change in any of these elements of control.
De-facto control exists in situations where the company has the practical ability to direct the relevant activities of the investee
without holding the majority of the voting rights. In determining whether de-facto control exists the company considers all
relevant facts and circumstances, including:
The size of the company’s voting rights relative to both the size and dispersion of other parties who hold voting rights
Substantive potential voting rights held by the company and by other parties
•
•
• Other contractual arrangements
• Historic patterns in voting attendance.
The consolidated financial statements present the results of the company and its subsidiaries (“the Group”) as if they formed
a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full. The
consolidated financial statements incorporate the results of business combinations using the acquisition method. In the
statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially recognised at their
fair values at the acquisition date. The results of acquired operations are included in the consolidated statement of comprehensive
income from the date on which control is obtained. They are deconsolidated from the date on which control ceases.
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 statement of comprehensive income in the period in which they are incurred.
Goodwill arising on a business combination represents the excess of cost over the fair value of the Group’s share of the identifiable
net assets acquired and is stated at cost less any accumulated impairment losses. Goodwill is tested annually for impairment.
Any impairment is recognised immediately in the statement of comprehensive income and is not subsequently reversed. Negative
goodwill arising on an acquisition is recognised immediately in the statement of comprehensive income. 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.
31
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
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, interest receivable in the course of ordinary investment management business
and rental income 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.
Rental income arises on the letting of property to third parties and is recognised on a straight line basis over the period of the
lease.
•
•
•
•
•
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 reporting period end date.
Exchange differences arising are included in the statement of comprehensive income.
Employee benefits
The Group contributes to employees’ individual money purchase personal pension schemes. The assets of the schemes are held
separately from those of the Group in independently administered funds. The amount charged to the statement of comprehensive
income represents the contributions payable to the schemes in respect of the period to which they relate.
Short term employee benefits are those that fall due for payment within 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 equitysettled transactions, at each reporting date until the vesting date, reflects
the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will
ultimately vest. The statement of comprehensive income charge or credit for a period represents the movement in cumulative
expense recognised at the beginning and end of that period.
32
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Where the terms of an equity-settled award are modified, an incremental value is calculated as the difference between the fair
value of the repriced option and the fair value of the original option at the date of re-pricing. This incremental value is then
recognised as an expense over the remaining vesting period in addition to the amount recognised in respect of the original option
grant.
Where an equity-settled award is cancelled or settled (that is, cancelled with some form of compensation) it is treated as if it had
vested on the date of cancellation and any expense not yet recognised for the award is recognised immediately. However, if a
new award is substituted for the cancelled award and is designated as a replacement award on the date that it is granted, the
cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.
Any compensation paid up to the fair value of the award is accounted for as a deduction from equity. Where an award is cancelled
by forfeiture, when the vesting conditions are not satisfied, any costs already recognised are reversed (subject to exceptions for
market conditions).
In all instances, the charge/credit is taken to the statement of comprehensive income of the Group Company by which the
individual concerned is employed.
Employee Benefit Trust (EBT)
The cost of purchasing own shares held by the EBT are shown as a deduction against equity. The proceeds from the sale of
own shares held increase equity. Neither the purchase nor sale of own shares leads to a gain or loss being recognised in the
consolidated statement of comprehensive income.
Employee Share Ownership Trust (ESOT)
The Company has established an ESOT. The assets and liabilities of this trust comprise shares in the Company and loan balances
due to the Company. The Group includes the ESOT within these consolidated Financial Statements and therefore recognises a
Treasury shares reserve in respect of the amounts loaned to the ESOT and used to purchase shares in the Company. Any cash
received by the ESOT on disposal of the shares it holds, will be used to repay the loan to the Company.
Treasury shares
The costs of purchasing Treasury shares are shown as a deduction against equity. The proceeds from the sale of own shares
held increase equity. Neither the purchase nor sale of own shares leads to a gain or loss being recognised in the consolidated
statement of comprehensive income.
Income taxes
Income tax on the profit or loss for the periods presented, comprising current tax and deferred tax, is recognised in the statement
of comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in
equity.
Current tax is the expected tax payable on the taxable income for the year, using rates enacted or substantively enacted at the
reporting period end date and any adjustment to tax payable in respect of previous years.
• Deferred tax is provided for temporary differences, at the reporting period end date, between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes. The following temporary differences are not provided
for:
goodwill which is not deductible for tax purposes;
the initial recognition of assets or liabilities that affect neither accounting nor taxable profit; and
temporary differences relating to investments in subsidiaries to the extent that they will probably not reverse in the
foreseeable future.
•
•
•
The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of
assets and liabilities, using tax rates enacted or substantively enacted at the reporting period end date.
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.
33
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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 statement of comprehensive income over the shorter of estimated useful
economic life and the period of the lease.
Lease payments are analysed between principal and interest components so that the interest element of the payment is
charged to the statement of comprehensive income over the period of the lease and is calculated so that it represents a constant
proportion of the balance of the principal payments outstanding. The principal part reduces the amounts payable to the lessor.
Rentals paid under leases which do not result in the transfer to the Company of substantially all the risks and rewards of
ownership (operating leases) are charged against income on a straight line basis over the lease term.
Freehold land and buildings
Freehold land and buildings are carried at fair values, based on periodic valuation by a professionally qualified surveyor. These
revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from that with would
be determined using the fair value at the end of the reporting period. Changes in fair value are recognised in other comprehensive
income and accumulated in the revaluation reserve, except to the extent that any decrease in value in excess of the credit balance
on the revaluation reserve, or reversal of such a transaction, is recognised in profit or loss.
Freehold land is not depreciated.
Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and impairment.
Depreciation is calculated, using the straight line method, to write down the cost or revalued amount of plant and equipment over
the assets’ expected useful lives, to their residual values, as follows:
Computers, fixtures and fittings
– 4 to 7 years
Non-financial assets (excluding investment properties and deferred tax assets)
Measurement
Intangible assets with finite useful lives that are acquired separately are measured, on initial recognition at cost. Following initial
recognition, they are carried at cost less accumulated amortisation and any accumulated impairment. The cost of intangible
assets acquired in a business combination is their fair value at the date of acquisition.
Intangible assets other than goodwill are amortised over the expected pattern of their consumption of future economic benefits,
to write down the cost of the intangible assets to their residual values as follows:.
Client relationships
- 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 or its residual value
are accounted for by changing the amortisation period or method and treated as changes in accounting.
Impairment
The carrying amounts of the Group’s intangible assets are reviewed when there is an indicator of impairment and the asset’s
recoverable amount is estimated.
The recoverable amount is the higher of the asset’s fair value less costs to sell (or net selling price) and its value-in-use. Value-
in-use is the discounted present value of estimated future cash inflows expected to arise from the continuing use of the asset
and from its disposal at the end of its useful life. Where the recoverable amount of an individual asset cannot be identified, it is
calculated for the smallest cash-generating unit (CGU) to which the asset belongs. A CGU is the smallest identifiable group of
assets that generates cash inflows independently.
34
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
When the carrying amount of an asset (or CGU) exceeds its recoverable amount, the asset (or CGU) is considered to be impaired
and is written down to its recoverable amount. An impairment loss is immediately recognised as an expense. Any subsequent
reversal of impairment credited to the statement of comprehensive income shall not cause the carrying amount of the intangible
asset to exceed the carrying amount that would have been determined had no impairment been recognised.
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 reporting period end date. The fair value of
unlisted investments is estimated by reference to similar 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 statement of comprehensive
income in profit on disposal of available-for-sale investments. Losses arising from impairment are recognised in the statement of
comprehensive income. Any profit or loss on sale is credited or charged to the statement of comprehensive income.
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 reporting period end date. Changes in the value of these other
investments are recognised directly in the statement of comprehensive income.
Impairment of financial assets
The Group assesses, at each reporting period end 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 statement of comprehensive income.
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 statement of comprehensive income. 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 statement of comprehensive income when there is objective evidence that the asset is impaired.
35
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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 statement of comprehensive income.
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 rate 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.
Deferred consideration
Deferred consideration is recognised at the discounted present value of amounts payable. Subsequent to initial recognition, it is
rebased over the period in which the consideration is payable, with the unwinding of the discount being taken to the statement of
comprehensive income as an interest expense.
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:
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 reporting period end
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 statement of comprehensive
income 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 statement of comprehensive income could be materially
affected should different assumptions be made to those applied by the Group. Details of these assumptions are set out in note 30.
36
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY CONTINUED
Amortisation and impairment of non-financial assets
As noted above, the Group estimates the useful economic lives of intangible assets, in order to calculate the appropriate
amortisation charge. This is done by the Directors using their knowledge of the markets and business conditions that generated
the asset, together with their judgement of how these will change in the foreseeable future.
Where an indicator of impairment exists, value in use calculations are performed to determine the appropriate carrying value of
the asset. The value in use calculation requires the Directors to estimate the future cash flows expected to arise for the CGU and
a suitable discount rate in order to calculate present value. Where the actual future cash flows are less than expected, a material
impairment loss may arise.
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
(Nomad) 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 Chief Executive Officer.
No customer represents more than ten percent of the Group’s revenue.
The following tables represent revenue and cost information for the Group’s business segments:
Year ended 30 November 2016
Revenue
Direct costs
Contribution
Indirect costs
Segment result
Executive Board cost
Investment gains/(losses)
Fair value losses on investments
Finance income
Finance expense
(Loss)/profit before tax
Tax
(Loss)/profit for the year
Private Wealth
Management
£’000
Corporate
Broking
£’000
17,091
(13,001)
4,090
(5,731)
(1,641)
300
29
—
8
(21)
(1,325)
218
(1,107)
7,581
(6,066)
1,515
(2,259)
(744)
300
(8)
(155)
—
(8)
(615)
122
(493)
Head Office
£’000
—
(819)
(819)
—
(819)
(725)
—
—
—
—
(1,544)
109
(1,435)
Other Group
Companies
£’000
Group
£’000
749
25,421
(578)
(20,464)
171
4,957
— (7,990)
171
125
—
—
2
(18)
280
11
291
(3,204)
—
21
(155)
10
(47)
(3,037)
460
(2,744)
37
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
5. SEGMENT INFORMATION CONTINUED
Year ended 30 November 2015
Revenue
Direct costs
Contribution
Indirect costs
Segment result
Executive Board cost
Investment (losses)/gains
Fair value losses on investments
Finance income
Finance expense
Profit/(loss) before tax
Tax
Profit/(loss) for the year
Private Wealth
Management
£’000
Corporate
Broking
£’000
20,594
(14,642)
5,952
(5,507)
445
286
(8)
(12)
19
(13)
717
(175)
542
9,936
(7,467)
2,469
(2,055)
414
286
(82)
(173)
—
(6)
439
(107)
332
Head Office
£’000
—
(1,200)
(1,200)
—
(1,200)
(786)
—
—
—
—
(1,986)
—
(1,986)
Other Group
Companies
£’000
Group
£’000
354
30,884
(65)
(23,374)
289
7,510
— (7,562)
289
214
1
—
2
(22)
484
(53)
431
(52)
—
(89)
(185)
21
(41)
(346)
(335)
(681)
Segment assets and segment liabilities are reviewed by the Chief Executive Officer in a consolidated statement of financial
position. Accordingly this information is replicated in the Group Consolidated Statement of Financial Position on page 26. As no
measure of assets or liabilities for individual segments is reviewed regularly by the Chief Executive Officer, no disclosure of total
assets or liabilities has been made.
The accounting policies of the operating segments are the same as those described in the summary of significant accounting
policies.
38
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
6. OPERATING (LOSS)/PROFIT
Group
Operating (loss)/profit is stated after charging/(crediting):
Depreciation of property, plant and equipment
Amortisation of intangibles
Operating lease rentals – property
Operating lease rentals – vehicles and equipment
Employee benefit expense (note 7)
Regulatory fine (note 24)
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 Nov
2016
Year ended 30 Nov
2015
£’000
282
193
419
—
17,803
—
1,780
7,881
18
47
31
£’000
308
2
472
45
19,805
1,200
—
9,011
18
47
28
28,454
30,936
Other administrative expenses are incurred in the ordinary course of the business and do not include any non-recurring items.
39
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
7. EMPLOYEE BENEFIT EXPENSE
Group
Wages and salaries
Bonuses
Social security costs
Other pension costs
Shared commission agents
Share options granted to employees (note 30)
Year ended 30 Nov
2016
Year ended 30 Nov
2015
£’000
11,317
2,422
1,579
402
15,720
1,878
17,598
205
17,803
£’000
11,172
2,999
1,735
574
16,480
3,114
19,594
211
19,805
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 Nov
2016
Year ended 30 Nov
2015
9
29
78
86
202
15
217
10
36
84
82
212
19
231
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 £0.6m (2015: £0.7m). Full details of Directors’
remuneration, including that of the highest paid Director, are disclosed in the Remuneration Report on page 21 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
40
Year ended 30 Nov
2016
Year ended 30 Nov
2015
£’000
£’000
10
—
10
18
28
1
47
21
—
21
22
18
1
41
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
9. TAX EXPENSE
Group
Current tax expense:
United Kingdom corporation tax at 20.00% (2015: 20.33%)
Adjustment in respect of prior years
Total current tax
Deferred tax expense (note 18):
Current year
Effect of change in tax rate
Adjustments in respect of prior years
Total deferred tax
Total tax in the statement of comprehensive income
Equity items:
Deferred tax current year credit
Total tax in the statement of equity
Year ended 30 Nov
2016
Year ended 30 Nov
2015
£’000
£’000
—
26
26
(553)
94
(27)
(486)
(460)
57
57
292
61
353
(57)
20
19
(18)
335
—
—
The tax expense for the year and the amount calculated by applying the standard United Kingdom corporation tax rate of 20.00%
(2015: 20.33%) to profit before tax can be reconciled as follows:
Year ended 30 Nov
2016
Year ended 30 Nov
2015
Group
(Loss)/profit before tax
Tax expense using the United Kingdom corporation tax rate of 20.00% (2015:
20.33%)
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
Total tax expense in the statement of comprehensive income
10. DIVIDENDS
No dividend is proposed in respect of 2016 (2015: none).
£’000
(3,204)
(641)
78
(1)
(17)
—
(1)
28
94
(460)
£’000
(346)
(70)
393
(90)
(34)
(26)
80
62
20
335
41
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
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
28).
Diluted EPS is the basic EPS, adjusted for the effect of the conversion into fully paid shares of the weighted average number of
all employee share options outstanding during the year. In a year when the company presents positive earnings attributable to
ordinary shareholders, 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
Year ended 30 Nov
2016
Year ended 30 Nov
2015
£’000
25,590
1,042
26,632
£’000
(2,744)
£’000
24,287
705
24,992
£’000
(681)
(10.72)p
(2.81)p
(10.72)p
(2.81)p
42
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
12. PROPERTY, PLANT AND EQUIPMENT
Freehold Property
Computers, fixtures
and fittings
Group
Cost
At 1 December 2014
Additions
At 30 November 2015
Additions
At 30 November 2016
Depreciation and impairment
At 1 December 2014
Charge for the year
At 30 November 2015
Charge for the year
At 30 November 2016
Net book values
At 30 November 2016
At 30 November 2015
At 30 November 2014
£’000
6,394
—
6,394
—
6,394
1,644
—
1,644
—
1,644
4,750
4,750
4,750
£’000
3,389
74
3,463
878
4,341
2,544
308
2,852
282
3,134
1,207
611
845
Total
£’000
9,783
74
9,857
878
10,735
4,188
308
4,496
282
4,778
5,957
5,361
5,595
At the year end, the freehold property was being actively marketed for sale and was subsequently sold on 23 January 2017 for
£5.27m (note 34). Accordingly, at 30 November 2016, it has been reclassified to current assets, as held for sale. At the year end,
bank borrowings were secured on freehold property for the value of £988,942 (2015: £1,167,926) (note 23).
43
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
12. PROPERTY, PLANT AND EQUIPMENT CONTINUED
The valuation of the property has been performed under the intrinsic method on the basis of rental returns. The freehold property
at 11 St James’s Square, Manchester was last 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. Due to the sale in
progress on the property, this valuation was not updated for 30 November 2016.
At 30 November 2016, the carrying value of the freehold property on a historical cost basis less accumulated depreciation
amounted to £5,431,016 (2015: £5,528,906).
At 30 November 2016, the carrying value of property, plant and equipment held under finance leases amounted to £844,560
(2015: £139,488).
Computers, fixtures and fittings
£’000
33
—
33
—
33
10
7
17
6
23
10
16
23
Company
Cost
At 1 December 2014
Additions
At 30 November 2015
Additions
At 30 November 2016
Depreciation and impairment
At 1 December 2014
Charge for the year
At 30 November 2015
Charge for the year
At 30 November 2016
Net book values
At 30 November 2016
At 30 November 2015
At 30 November 2014
44
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
13. GOODWILL
Group
Beginning of year
Impairment
End of year
Impairment tests for goodwill
Goodwill of the Group is allocated to the following CGU (Cash Generating Unit):
At 1 December 2014
Impairment
At 30 November 2015
Impairment
At 30 November 2016
Year ended 30 Nov
2016
Year ended 30 Nov
2015
£’000
258
—
258
£’000
258
—
258
Stockholm Investments Ltd
£’000
258
—
258
—
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 3% for revenue (2015: 2%) and 0% for costs (2015:0%). 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 5% (2015: 5%) in order to estimate their present value.
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 past experience 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 reporting period end
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 6% per annum, the recoverable amount after five years would be nil.
45
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
14. INTANGIBLE ASSETS
Group
Cost
At 1 December 2014
Additions
At 30 November 2015
Additions
At 30 November 2016
Amortisation
At 1 December 2014
Charge for the year
At 30 November 2015
Charge for the year
At 30 November 2016
Net book values
At 30 November 2016
At 30 November 2015
At 30 November 2014
Client relationships
£’000
1,161
3,125
4,286
189
4,475
698
2
700
193
893
3,582
3,586
463
The addition to client relationships relates to the purchase of client books within WH Ireland Limited and are valued at the estimated
discounted amount payable (note 25). There is no impairment charge in either year.
46
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
15. SUBSIDIARIES
Company
Beginning of year
Additions
Impairment
End of year
Year ended 30 Nov
2016
Year ended 30 Nov
2015
£’000
1,711
3,324
—
5,035
£’000
1,711
—
—
1,711
Investments in subsidiaries are stated at cost less impairment.
The Group raised £1.1m on 23 February 2016 by way of placings to existing shareholders, for general corporate purposes. The
additions in the year relate to additional subscriptions for shares in WH Ireland Limited, a wholly owned subsidiary, in February
and June 2016.
After the year end, the Group raised a further £1.6m by way of placings to existing shareholders and subscribed for an additional
£1.6m of shares in WH Ireland Limited (note 34).
The Company’s subsidiaries, all of which are included in the consolidated financial statements, are presented below:
Subsidiary
Country of
incorporation
Principal activity
Class of
shares
Proportion held
by Group
Proportion held
by Company
WH Ireland Limited
England & Wales
WH Ireland (IOM) Limited
Isle of Man
Wealth Management and
Corporate Broking
Wealth Management
Ordinary
100%
Ordinary
100%
WH Ireland (Financial Services)
Limited
England & Wales
Dormant
Ordinary
100%
Readycount Limited
England & Wales
Property
Ordinary
Stockholm Investments Limited England & Wales
Investment consultancy
Ordinary
100%
100%
ARE Business and Professional
Limited
SRS Business and Professional
Limited
England & Wales
Dormant
Ordinary
100%
England & Wales
Dormant
Ordinary
100%
WH Ireland Nominees Limited
England & Wales Nominee
WH Ireland Trustee Limited
England & Wales
Trustee
Fitel Nominees Limited
England & Wales Nominee
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
—
100%
100%
—
—
—
—
—
47
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
16. INVESTMENTS
Group
Available-for-sale investments
At 1 December 2014
Fair value loss
At 30 November 2015
Fair value loss
At 30 November 2016
Other investments
At 1 December 2014
Additions
Fair value loss
Disposals
At 30 November 2015
Additions
Fair value loss
Disposals
At 30 November 2016
Total investments at 30 November 2016
Total investments at 30 November 2015
Quoted
£’000
Unquoted
£’000
—
—
—
—
—
93
(53)
40
—
40
Quoted
£’000
Warrants
£’000
284
781
(137)
(788)
140
404
(33)
(507)
4
202
553
(459)
(116)
180
122
(154)
(74)
74
Total
£’000
93
(53)
40
—
40
Total
£’000
486
1,334
(596)
(904)
320
526
(187)
(581)
78
118
360
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 statement of comprehensive income.
Warrants may be received during the ordinary course of business and are designated as fair value through profit or loss. There
is no cash consideration associated with the acquisition.
Fair value, in the case of quoted investments, represents the bid price at the reporting period end date. In the case of unquoted
investments, the fair value is estimated by reference to recent arm’s length transactions. The fair value of warrants is estimated
using established valuation models.
48
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
17. SUBORDINATED LOAN
Company
Beginning of year
Additions
End of year
Year ended 30 Nov
2016
Year ended 30 Nov
2015
£’000
850
110
960
£’000
500
350
850
This interest free, subordinated loan was originally issued to WH Ireland (IOM) Limited on 31 March 2014 and has been increased
in line with the needs of the subsidiary. Whilst payment can be requested giving six months’ notice, there is no intention to do this
within the next twelve months; accordingly the loan has been classified as non-current.
18. DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax is provided for temporary differences, at the reporting period end date, between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes using a tax rate of 20.00% (2015: 20.33%). 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:
Group
Property, plant and equipment
Intangible assets
Share options
Losses
Available-for-sale investments
Provisions
Company
Share options
Deferred tax assets
Deferred tax liabilities
2016
£’000
75
165
140
411
—
16
807
2015
£’000
36
189
73
—
—
—
298
2016
£’000
(92)
—
—
—
—
—
(92)
Deferred tax assets
Deferred tax liabilities
2016
£’000
141
141
2015
£’000
73
73
2016
£’000
—
—
2015
£’000
(93)
—
—
—
(3)
(30)
(126)
2015
£’000
—
—
49
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
18. DEFERRED TAX ASSETS AND LIABILITIES CONTINUED
Movements in deferred tax are shown below:
Group
Property, plant and
equipment
Intangible assets
Share options
Available-for-sale investments
Provisions
Tax losses
At 1 Dec
2014
Recognised
income
statement
Recognised
in equity
At 30 Nov
2015
Recognised
income
statement
Recognised
in equity
At 30 Nov
2016
£’000
£’000
£’000
£’000
£’000
£’000
£’000
(10)
228
(81)
(29)
47
—
155
(47)
(37)
153
26
(78)
17
—
—
—
—
—
—
—
(57)
191
72
(3)
(31)
172
40
(26)
11
3
47
411
486
—
—
57
—
—
—
57
(17)
165
140
—
16
411
715
Company
Share options
Property, plant and
equipment
At 1 Dec
2014
Recognised
income
statement
Recognised
in equity
At 30 Nov
2015
Recognised
income
statement
Recognised
in equity
At 30 Nov
2016
£’000
£’000
£’000
£’000
£’000
£’000
47
1
48
26
(1)
25
—
—
—
73
—
73
11
—
11
57
—
57
£’000
141
—
141
50
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
19. TRADE AND OTHER RECEIVABLES
Trade receivables
Amounts due from Group companies
Other receivables
Prepayments and accrued income
Group
Company
30 Nov 2016
30 Nov 2015
30 Nov 2016
30 Nov 2015
£’000
15,690
—
418
2,877
18,985
£’000
20,197
—
340
2,775
23,312
£’000
—
4,710
10
—
4,720
£’000
—
4,661
12
39
4,712
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 2016, 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 Nov 2016
30 Nov 2015
30 Nov 2016
30 Nov 2015
£’000
14,527
51
1
331
258
522
£’000
19,278
88
11
262
65
493
15,690
20,197
£’000
£’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 2016,
£309k (2015: £180k) 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 reporting period end date was
£90.8m (2015: £24.2m).
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.
51
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
19. TRADE AND OTHER RECEIVABLES CONTINUED
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 statement of
comprehensive income
At 30 November
Group
Company
30 Nov 2016
30 Nov 2015
30 Nov 2016
30 Nov 2015
£’000
180
(312)
(94)
535
309
£’000
272
(229)
(215)
352
180
£’000
£’000
—
—
—
—
—
—
—
—
—
—
The carrying value of trade and other receivable balances are denominated in the following currencies:
Sterling
Euro
US Dollar
Other
20. OTHER INVESTMENTS
Current asset investment
Group
Company
30 Nov 2016
30 Nov 2015
30 Nov 2016
30 Nov 2015
£’000
18,515
110
130
230
£’000
23,085
95
74
58
£’000
4,720
—
—
—
£’000
4,712
—
—
—
18,985
23,312
4,720
4,712
Group
Company
30 Nov 2016
30 Nov 2015
30 Nov 2016
30 Nov 2015
2016
£’000
530
2015
£’000
1,932
2016
£’000
—
2015
£’000
—
These represent short-term principal positions and are held at market value. No tax was payable at that value.
52
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
21. CASH AND CASH EQUIVALENTS
Cash and cash equivalents
Group
Company
30 Nov 2016
30 Nov 2015
30 Nov 2016
30 Nov 2015
£’000
6,657
£’000
8,176
£’000
—
£’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 statement of financial position. Client money at 30 November 2016 for the
Group was £130,586k (2015: £97,579k). There is no client money held in the Company (2015: £nil).
22. TRADE AND OTHER PAYABLES
Trade payables
Amounts due to Group companies
Other payables
Tax and social security
Accruals and deferred income
Group
Company
30 Nov 2016
30 Nov 2015
30 Nov 2016
30 Nov 2015
£’000
14,844
—
1,483
554
2,967
19,848
£’000
19,976
—
928
549
2,606
24,059
£’000
—
1,879
25
—
32
1,936
£’000
—
968
32
—
40
1,040
The Directors consider that the carrying amounts of trade and other payables approximate their fair value.
53
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
23. BORROWINGS
Bank loans
Group
Company
30 Nov 2016
30 Nov 2015
30 Nov 2016
30 Nov 2015
£’000
994
£’000
1,173
£’000
994
£’000
1,173
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 26.
Bank loans are repayable as follows:
Group
Company
30 Nov 2016
30 Nov 2015
30 Nov 2016
30 Nov 2015
Within one year
Within two to five years
After five years
£’000
187
728
79
994
£’000
179
701
293
1,173
£’000
187
728
79
994
The Directors consider that the carrying amounts of bank loans approximate their fair value.
The loan was repaid in full on 24 January 2017, following the sale of the property on which it was secured (note 34).
24. PROVISIONS
Group
At 1 December 2015
Provided during the year
Utilised during the year
At 30 November 2016
IFA clawback
provision
£’000
21
—
—
21
Complaints
provision
Regulatory fine
£’000
—
142
(114)
28
£’000
1,200
—
(1,200)
—
£’000
179
701
293
1,173
Total
£’000
1,221
142
(1,314)
49
Provisions included in current liabilities
Provisions included in non-current liabilities
30 Nov 2016
30 Nov 2015
£’000
28
21
49
£’000
1,200
21
1,221
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.
The Regulatory fine relates to an FCA enforcement investigation which was instigated in April 2014 and concluded in February
2016.
54
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
25. DEFERRED CONSIDERATION
Deferred consideration represents the amounts payable over a three year period from September 2016 to October 2019, for certain
client relationships (note 14).
Group
At 1 December 2015
Additions during the year:
Intangible assets (note 14)
Charged to Statement of Comprehensive Income
Paid during the year
At 30 November 2016
Included in current liabilities
Included in non-current liabilities
Client relationships
£’000
3,125
189
203
(286)
3,231
30 Nov 2016
30 Nov 2015
£’000
1,130
2,101
3,231
£’000
262
2,863
3,125
55
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
26. 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
reporting period end 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 reporting period end date. The fair value of unlisted investments
is estimated by reference to recent arm’s length transactions.
Other investments
Other investments include warrants and equity investments, categorised as fair value through profit or loss. In the case of listed
investments, the fair value represents the quoted bid price at the reporting period end date. The fair value of unlisted investments
is estimated by reference to recent arm’s length transactions. In the case of warrants, the fair value is estimated using established
valuation models.
Trade receivables and payables
The carrying value less impairment provision of trade receivables and payables is assumed to approximate their fair values due to
their short-term nature.
Borrowings
Borrowings are measured at amortised cost using the effective interest rate method.
The tables below summarise the Group’s main financial instruments by financial asset type:
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
Deferred consideration
Provisions
Amortised cost
30 Nov 2016
Held at fair value
as available-for-
sale assets
Fair value through
profit or loss
£’000
£’000
£’000
—
—
17,812
6,657
16,327
634
994
2,939
3,231
49
40
530
—
—
—
—
—
—
—
—
—
78
—
—
—
—
—
—
—
—
Total
£’000
40
608
17,812
6,657
16,327
634
994
2,939
3,231
49
56
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
26. FINANCIAL RISK MANAGEMENT CONTINUED
Group
Financial assets
Available-for-sale investments
Other investments
Trade receivables
Cash and cash equivalents
Financial liabilities
Trade and other payables
Finance leases
Borrowings
Accruals
Deferred consideration
Provisions
Amortised cost
30 Nov 2015
Held at fair value
as available-for-
sale assets
Fair value through
profit or loss
£’000
—
—
23,394
8,176
20,903
119
1,173
2,561
3,125
1,221
£’000
40
1,932
—
—
—
—
—
—
—
—
£’000
—
320
—
—
—
—
—
—
—
—
The tables below summarise the Company’s main financial instruments by financial asset type:
Company
Financial assets
Subordinated Loan
Group balances
Financial liabilities
Trade and other payables
Accruals
Borrowings
Company
Financial assets
Subordinated Loan
Group balances
Financial liabilities
Trade and other payables
Accruals
Borrowings
30 Nov 2016
Held at fair value
as available-for-
sale assets
Fair value through
profit or loss
£’000
£’000
—
—
—
—
—
—
—
—
—
—
30 Nov 2015
Held at fair value
as available-for-
sale assets
Fair value through
profit or loss
£’000
£’000
—
—
—
—
—
—
—
—
—
—
Amortised cost
£’000
960
4,710
1,904
32
994
Amortised cost
£’000
850
4,6661
1,001
40
1,173
Total
£’000
40
2,252
23,394
8,176
20,903
119
1,173
2,561
3,125
1,221
Total
£’000
960
4,710
1,904
32
994
Total
£’000
850
4,661
1,001
40
1,173
57
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
26. 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 statement of financial position 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 most recently renewed the Group’s banking facilities in February 2015. As an evergreen facility there is no
requirement to update the agreement annually, although a formal review of facilities is undertaken at least annually.
58
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
26. FINANCIAL RISK MANAGEMENT CONTINUED
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:
Group
Trade and other payables
Finance leases
Borrowings
Accruals
Deferred consideration
Other financial liabilities
Group
Trade and other payables
Finance leases
Borrowings
Accruals
Deferred consideration
Other financial liabilities
At 30 Nov 2016
Payable within 1
year
Payable in 2 to 5
years
Payable after
more than 5
years
Total contractual
payments
£’000
16,327
299
202
2,657
1,181
28
20,694
£’000
£’000
—
373
790
282
2,361
21
3,827
—
—
85
—
—
—
85
£’000
16,327
672
1,077
2,939
3,542
49
24,606
At 30 Nov 2015
Payable within 1
year
Payable in 2 to 5
years
Payable after
more than 5 years
Total contractual
payments
£’000
20,903
136
202
2,231
273
1,200
24,945
£’000
£’000
—
—
790
330
3,295
21
4,436
—
—
331
—
—
—
331
£’000
20,903
136
1,323
2,561
3,568
1,221
29,712
59
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
26. FINANCIAL RISK MANAGEMENT CONTINUED
The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted
payments:
Company
Trade and other payables
Accruals
Borrowings
Company
Trade and other payables
Accruals
Borrowings
At 30 Nov 2016
Payable within 1
year
Payable in 2 to 5
years
£’000
1,936
32
202
2,170
£’000
—
—
790
790
Payable after
more than 5
years
£’000
—
—
85
85
Total contractual
payments
£’000
1,936
32
1,077
3,045
At 30 Nov 2015
Payable within 1
year
Payable in 2 to 5
years
Payable after
more than 5 years
Total contractual
payments
£’000
1,040
40
202
1,282
£’000
—
—
790
790
£’000
—
—
331
331
£’000
1,040
40
1,323
2,403
Market Risk
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. The Group’s maximum exposure to currency risks is not significant and therefore sensitivity analysis has not been
performed.
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 2016 if bank base rates had been 100 basis points higher, profit for the
year would have been approximately £11k (2015: £13k) lower. If bank base rates had been 100 basis points lower, profit for the year
would have been higher by the same amount.
Other price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices (other than those arising from interest rate risk 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 other 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 £118k (2015: £360k).
60
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
26. 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
Level 1
£’000
—
4
—
4
Level 1
£’000
—
140
—
140
At 30 Nov 2016
Level 2
£’000
Level 3
£’000
—
—
—
—
40
—
74
114
At 30 Nov 2015
Level 2
£’000
Level 3
£’000
—
—
—
—
40
—
180
220
There were no transfers between levels in either financial year.
Total
£’000
40
4
74
118
Total
£’000
40
140
180
360
61
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
26. FINANCIAL RISK MANAGEMENT CONTINUED
Balance at 1 December 2014
Total gains or losses in statement of comprehensive income
Purchases
Settlements
Transfer out
Transfer in
Balance at 30 November 2015
Total gains or losses in statement of comprehensive income
Purchases
Settlements
Transfer out
Transfer in
Balance at 30 November 2016
Unquoted equities
Other investments
£’000
93
(53)
—
—
—
—
40
—
—
—
—
—
40
£’000
202
(459)
553
(116)
—
—
180
(154)
122
(74)
—
—
74
27. CAPITAL MANAGEMENT
The capital of the Group comprises share capital, share premium, retained earnings and other reserves. The total capital at
30 November 2016 amounted to £11.7m for the Group (2015: £12.9m) and £8.7m for the Company (2015: £5.9m). 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. See note 34 for further detail.
28. TREASURY SHARES
Group
At 1 December
Disposals
At 30 November
Year ended 30 Nov
2016
Year ended 30 Nov
2015
£’000
731
—
731
£’000
763
(32)
731
At 30 November 2016 no shares in the Company were held in Treasury (2015: nil shares). At 30 November 2016 no shares in the
Company were held in the EBT (2015: nil shares) and the ESOT held 1,989,500 shares (2015: 1,989,500). This represents 8% of the
called up share capital (2015: 8%).
62
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
29. EMPLOYEE BENEFIT TRUSTS (EBT)
The WH Ireland EBT was established in October 1998 and the WH Ireland Group plc Employee Share Ownership Trust (ESOT)
was established in October 2011, both for the purpose of holding and distributing shares in the Company for the benefit of the
employees. All costs of the EBT and ESOT are borne by the Company or its subsidiary WH Ireland Limited.
Joint Ownership Arrangements (the ‘JOE Agreements’) are in place in relation to 1,989,500 shares between the trustees of the
ESOT and a number of employees including RW Killingbeck and DJ Cowland (the ‘Employees’). Under the JOE Agreements, the
option for the Employees to acquire the interest that the trustees of the ESOT has in the jointly owned shares, lapses when an
employee is deemed to be a Bad Leaver. If an Employee ceases to be an employee of the Group, other than in the event of critical
illness or death, the Employee is deemed to be a Bad Leaver.
The shares carry dividend and voting rights, although these have been waived by all parties to the JOE Agreements. Due to the
consolidation of the ESOT into the Group accounts, these shares are shown in Treasury (note 28). Due to the nature of these
arrangements, the options contained in the JOE Agreements are accounted for as share based payments (note 30).
30. SHARE-BASED PAYMENTS
The Group had three schemes for the granting of non-transferable options to employees during the reporting period; the approved
Company Share Ownership Plan (CSOP) and two Save as You Earn Schemes (SAYE 2 and SAYE 3). In addition, options are held in
the ESOT (note 29). Details of these schemes can be found in the Remuneration Report on pages 15 to 18. SAYE 2 matured during
the period.
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:
CSOP
ESOT
SAYE 2
SAYE 3
ESOT
30 Nov 2016
Outstanding at beginning
of year
Options
WAEP Options
WAEP Options
WAEP Options
WAEP Options WAEP
380,816
65.62p 1,650,000
78.14p*
371,831
49.20p
—
—
—
—
Granted
—
—
Expired/forfeited
(20,294)
84.50p
Exercised
(125,000)
61.40p
—
—
—
—
—
—
881,268
82.00p
339,500
92.50p
— (29,998)
49.20p
(53,778)
82.00p
(10,000)
92.50p
— (341,833)
49.20p
—
—
—
—
Outstanding at end of
year
Exercisable at end of
year
235,522
66.23p 1,650,000
78.14p
235,522
66.23p 1,500,000
78.14p
—
—
— 827,490
82.00p
329,500
92.50p
—
—
—
—
—
30 Nov 2015
CSOP
SAYE
ESOT
SAYE 2
Options
WAEP Options
WAEP Options
WAEP Options
WAEP
Outstanding at beginning of year
493,316
65.74p
606,352
46.00p 1,650,000
78.14p*
448,658
49.20p
Granted
Expired/forfeited
Exercised
—
—
—
—
(5,000)
84.50p
(391)
46.00p
(107,500)
65.31p (605,961)
46.00p
—
—
—
—
—
—
— (71,949)
49.20p
—
(4,878)
49.20p
Outstanding at end of year
Exercisable at end of year
380,816
65.62p
380,816
65.62p
—
—
— 1,650,000
78.14p*
371,831
49.20p
—
—
—
—
—
*The weighted average exercise price for the 1,500,000 share options may vary if certain performance conditions are met.
63
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
30. SHARE-BASED PAYMENTS CONTINUED
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)
30 Nov 2016
CSOP
ESOT
SAYE 2
SAYE 3
Black Scholes
Monte Carlo
Black Scholes
Black Scholes
02/11/11-24/05/12
28/10/13-13/04/16
01/05/13
18/05/16
56.5-83.0
57.0-84.5
74.5-114.5
0.0-114.5
60.0
49.2
Expected volatility (%)
32.6332-33.2130
40.0000-37.0000
41.6919
Expected life (years)
Risk-free rate (%)
5
5
3
1.2993-0.7999
0.8000-1.9300
0.3106
Expected dividend yield (%)
0.00
0.67-2.19
0.83
Pricing model
Date of grant
Share price at grant(p)
Exercise price (p)
30 Nov 2015
CSOP
ESOT
Black Scholes
Monte Carlo
02/11/11-24/05/12
56.5-83.0
57.0-84.5
28/10/13
74.5-114.5
0.0-114.5
Expected volatility (%)
32.6332-33.2130
40.0000-39.0000
Expected life (years)
Risk-free rate (%)
5
5
1.2993-0.7999
1.1900-1.9300
Expected dividend yield (%)
0.00
0.67-1.29
92.0
82.0
28.0000
3
0.5400
0.00
SAYE 2
Black Scholes
01/05/13
60.0
49.2
41.6919
3
0.3106
0.83
The weighted average share price at the date of exercise, of the options exercised during 2016 was 20.06p.
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 (2015: 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 a total net debit of £205k during the year (2015: £211k), relating to share-based payment transactions.
64
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
31. LEASING COMMITMENTS
FINANCE LEASES
The net carrying value of these assets at 30 November 2016 was £844,560 (2015: £139,488).
Group
Minimum Lease payments
The present value of future lease
payments are analysed as:
Within one year
Greater than one year but less than five
years
Total minimum lease payments
less finance charge
Present value of minimum lease payments
Group
Disclosed as:
Current finance lease payable
Non-current finance lease payable
Total finance lease payable
Capital
£’000
282
352
634
Interest
£’000
17
21
38
2016
£’000
299
373
672
(38)
634
2015
£’000
136
-
136
(17)
119
30 Nov 2016
30 Nov 2015
£’000
£’000
282
352
634
119
-
119
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
Company
30 Nov 2016
30 Nov 2015
30 Nov 2016
30 Nov 2015
£’000
420
1,418
714
2,552
£’000
443
1,499
1,054
2,996
£’000
£’000
—
—
—
—
—
—
—
—
Operating lease payments represent rentals payable for office premises and equipment. Leases are negotiated for an average of
six 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.
32. CAPITAL COMMITMENTS
There were no capital commitments for the Group or the Company as at 30 November 2016 (2015: £nil)
65
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
33. 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 (2015: £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.
Other related parties include services provided to a Group subsidiary, WH Ireland Limited, by a non-Group company in which RJG
Lowe was a director.
The following table sets out the transactions which have been entered into during the year together with any amounts
outstanding:
Key management personnel
Other related parties
2016
2015
2016
2015
Services rendered
to related parties
Purchases/
services from
related parties
Amounts owed to
related parties
£’000
£’000
£’000
5
3
—
—
—
—
—
2
35
46
—
—
The total compensation of key management personnel is shown below:
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payment
Year ended 30 Nov
2016
Year ended 30 Nov
2015
£’000
1,557
65
70
102
1,794
£’000
1,524
84
—
117
1,725
66
Notes to the financial statements
Notes to the financial statements
For the year ended 30 November 2016
33. RELATED PARTY TRANSACTIONS CONTINUED
Company
The Parent Company receives interest from subsidiaries in the normal course of business. Total interest received during the year
was £18k (2015: £22k). In addition, the Parent Company received a management charge of £406k (2015: £361k) from its subsidiary
WH Ireland Limited. WH Ireland Limited also charged the Parent Company £20k (2015: £15k) for broker services.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation. The
captions in the primary statements of the Parent Company include amounts attributable to subsidiaries. These amounts have
been disclosed in aggregate in the notes 19 and 22 and in detail in the following table:
Readycount Limited
WH Ireland (IOM) Limited
Stockholm Investments Limited
WH Ireland Limited
WH Ireland Trustee Limited
Amounts owed by related parties
Amounts owed to related parties
2016
£’000
4,234
67
409
—
—
4,710
2015
£’000
4,146
39
408
—
—
4,593
2016
£’000
—
—
—
1,862
17
1,879
2015
£’000
—
—
—
951
17
968
34. EVENTS AFTER THE REPORTING PERIOD
On 6 December 2016, WH Ireland Group plc placed 1,287,240 ordinary shares from its authorised share capital at an issue price of
£1.23.
On 21 December 2016 WH Ireland Group plc subscribed for 50,000 ordinary shares in WH Ireland Limited at an issue price of
£31.60.
On 23 January 2017, the Group sold its freehold property in Manchester for £5.27m and on 24 January 2017 repaid the loan that
had been secured upon it.
67
Notes to the financial statements
Notice of Annual General Meeting
THI S DOCU MENT IS IMPO RTANT AND R EQUIR ES YOUR IMM EDI ATE ATTENTION.
If you are in any doubt as to the action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or
other independent professional adviser authorised pursuant to the Financial Services and Markets Act 2000, as amended, if you are
resident in the United Kingdom or, if not, from another appropriately authorised independent professional adviser.
If you have sold or otherwise transferred all of your shares in WH Ireland Group plc, please forward this document and the
accompanying annual report and accounts (but not the personalised form of proxy) to the purchaser or transferee, or to the
stockbroker, bank or other agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee. If you
have received this document as a purchaser or transferee of shares in the Company, you should contact the Company's registrars,
Neville Registrars on 0121 585 1131 to request a form of proxy.
Company number: 03 870190
WH IREL AND GROUP PLC
N OTICE OF ANNUAL GENERAL ME E TI NG
NOTICE IS HEREBY GIVEN that the annual general meeting of WH Ireland Group plc (the ‘Company’) will be held at the offices of
the Company, 24 Martin Lane, London EC4R 0DR on Thursday 30 March 2017 at 9.30 a.m. to consider and, if thought fit, to pass the
following resolutions, of which resolutions 1 to 5 inclusive will be proposed as ordinary resolutions and resolutions 6 and 7 will be
proposed as special resolutions. Resolutions 6 and 7 are items of special business.
ORDINARY BUSINESS
1. To receive the Company's annual accounts for the financial year ended 30 November 2016 together with the directors' report, the
directors' remuneration report and the auditors' report on those accounts.
2. To re-appoint BDO LLP as auditors of the Company to hold office until the conclusion of the next annual general meeting of the
Company to be held in 2018 and to authorise the directors to fix their remuneration.
3. To re-elect H Percy, who was appointed as a director since the last annual general meeting 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.
4. To re-elect V Raffé, who was appointed as a director since the last annual general meeting and retires in accordance with article 28
of the articles of association of the Company and who, being eligible, offers herself for re-election as a director.
5. That, in substitution for any equivalent 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 of the 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"):-
(a) up to an aggregate nominal value of £458,124 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); and
(b) comprising equity securities (as defined in section 560(1) of the Act) up to an aggregate nominal amount of £916,249 (such
amount to be reduced by any allotments made under paragraph (a) above) in connection with a rights issue in favour of
ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings and the directors may make such
arrangements or exclusions as they consider necessary or appropriate to deal with fractional entitlements or any legal or practical
difficulties under the laws of any territory or the requirements of any recognised regulatory body or stock exchange in any territory,
provided that these authorities shall, unless previously renewed, varied or revoked by the Company in general meeting, expire
at 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 (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 such securities to be allotted after the expiry of such period and the directors of the
Company may allot such securities in pursuance of such offer or agreement as if the authority conferred hereby had not expired.
SPECIAL BUSINESS
6. That, subject to and conditional upon the passing of resolution 5 and in substitution for any equivalent existing and unexercised
authorities and powers, the directors of the Company be and are hereby empowered pursuant to sections 570 and 573 of the Act to
allot equity securities (as defined in section 560(1) of the Act) for cash pursuant to the authority conferred upon them by resolution 5
and/or where the allotment constitutes an allotment of equity securities by virtue of section 560(3) of the Act, as if section 561 of the
68
Notes to the financial statements
Notes to the financial statements
Notice of Annual General Meeting
SPECIAL BUSINESS CONTINUED
Act did not apply to any such allotment provided that this authority and power shall be limited to the allotment of equity securities
in connection with an offer of, or invitation to apply for, equity securities (but in the case of the authority granted under paragraph (b)
of resolution 5, by way of a rights issue only) in favour of ordinary shareholders in proportion (as nearly as may be practicable) to their
existing holdings and the directors may make such arrangements or exclusions as they consider necessary or appropriate to deal
with fractional entitlements or any legal or practical difficulties under the laws of any territory or the requirements of any recognised
regulatory body or stock exchange in any territory and 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 of the Company 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 such securities to be allotted after the expiry of
such period and the directors of the Company may allot such securities in pursuance of such offer or agreement as if the authority
conferred hereby had not expired.
7. THAT the Company be and is hereby generally and unconditionally authorised for the purpose of section 701 of the Act to make
market purchases (within the meaning of section 693(4) of the Act) of ordinary shares in the capital of the Company ("Ordinary
Shares") provided that:
(a) the maximum number of Ordinary Shares which may be purchased is 2,748,747 (representing approximately 10 per cent. of the
Company's issued share capital);
(b) the minimum price (exclusive of expenses) which may be paid for each Ordinary Share is its nominal value;
(c) the maximum price (exclusive of expenses) which may be paid for each Ordinary Share shall not be more than the higher of: (i) an
amount equal to 105 per cent. 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; and (ii) an amount equal to the higher price of the last independent trade of an Ordinary Share and the highest current
independent bid for an Ordinary Share as derived from the London Stock Exchange Trading System;
(d) unless previously renewed, 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 2018 or, if earlier, on the date which is 12 months after the date of the passing of this
resolution; and
(e) 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 may be 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 as if the authority conferred hereby had not
expired.
BY ORDER OF THE BOARD
Katy Mitchell
Secretary
Date: 24 February 2017
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. A proxy need not be a member of the
Company. Completion and return of a form of proxy (or any CREST Proxy Instruction, as described in paragraphs 8 to 10 below) will
not preclude a member from attending the meeting and voting in person, if they so wish.
2. If a member appoints more than one proxy, each proxy must be entitled to exercise the rights attached to different shares. If you
submit more than one valid proxy appointment in respect of the same shares, the appointment received last before the latest time for
the receipt of proxies will take precedence.
69
Notes to the financial statements
Notice of Annual General Meeting
NOTES CONTINUED
3. A proxy may only be appointed using the procedures set out in these notes and the notes to the form of proxy. To validly appoint
a proxy, a member must complete, sign and date the enclosed form of proxy and deposit it at the office of the Company's registrars,
Neville Registrars, at Neville House, 18 Laurel Lane, Halesowen, B63 3DA, by 9.30 a.m. on 28 March 2017 (or, in the event that the
meeting is adjourned, not less than 48 hours, excluding non-working days, before the time fixed for the holding of the adjourned
meeting). Any power of attorney or any other authority under which the form of proxy is signed (or a duly certified copy of such power
or authority) must be enclosed with the form of proxy.
4. 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,
B63 3DA prior to commencement of the meeting. If the revocation is received after the time specified, the original proxy appointment
will remain valid unless the member attends the meeting and votes in person.
5. 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, B63 3DA prior
to the commencement of the meeting. If the revocation is received after the time specified, the original corporate representative
appointment will remain valid unless the member attends the meeting and votes in person.
6. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy in respect of the same shares, only
the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of
the joint holders appear in the Company’s register of members in respect of the joint holding (the first named being the most senior).
7. The right to vote at the meeting shall be determined by reference to the register of members of the Company. Pursuant to
Regulation 41 of the Uncertificated Securities Regulations 2001 (as amended), only those persons whose names are entered on the
register of members of the Company at 6.00 p.m. on 28 March 2017 (or, in the event of any adjournment, at 6.00 p.m. on the date
which is two days prior to the adjourned meeting) 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.
8. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the
meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual (available via www.euroclear.com).
CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service
provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their
behalf.
9. In order for a proxy appointment or instruction made by means of the CREST service to be valid, the appropriate CREST message
(a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear UK & Ireland Limited's ("Euroclear")
specifications and must contain the information required for such instructions, as described in the CREST Manual. The message,
regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed
proxy must, in order to be valid, be transmitted so as to be received by the Company's agent (ID: 7RA11) by the latest time for proxy
appointments set out in paragraph 3 above. For this purpose, the time of receipt will be taken to be the time (as determined by the
timestamp applied to the message by the CREST Applications Host) from which the Company's agent is able to retrieve the message
by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through
CREST should be communicated to the appointee through other means.
10. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not
make available special procedures in CREST for any particular messages. Normal system timings and limitations will, therefore, apply
in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST
member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST
sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of
the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting
service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST
system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a)
of the Uncertificated Securities Regulations 2001 (as amended).
70
Notes to the financial statements
Notice of Annual General Meeting
NOTES CONTINUED
11. As at 24 February 2017, the latest practicable date prior to the date of this notice, the Company’s issued share capital consisted of
27,487,476 ordinary shares of 5 pence each, carrying one vote each and, therefore, the total number of voting rights in the Company
as at 24 February 2017 were 27,487,476.
12. You may not use any electronic address (within the meaning of section 333(4) of the Companies Act 2006) provided in this notice
or in any related documents (including the form of proxy and the annual report and accounts) to communicate with the Company for
any purposes other than those expressly stated.
13. Your personal data includes all data provided by you, or on your behalf, which related to you as a shareholder, including your
name and contact details, the votes you cast and your reference number (as attributed to you by the Company or its registrars). The
Company determines the purposes for which, and the manner in which, your personal data is to be processed. The Company and
any third party to which it discloses the data (including the Company's registrars) may process your personal data for the purposes of
compiling and updating the Company's records, fulfilling its legal obligations and processing the shareholder rights you exercise.
EXPLANATORY NOTES
Resolutions 1 to 5 are proposed as ordinary resolutions. For each of these to be passed, more than half of the votes cast must be in
favour of the relevant resolution. Resolutions 6 and 7 are proposed as special resolutions. For each of these resolutions to be passed,
at least three quarters of the votes cast must be in favour of the resolution.
An explanation of each of the resolutions is set out below:
Resolution 1 – Annual Report and Accounts
The Directors are required to present to the annual general meeting (the "AGM" or "Meeting") the audited accounts and the Directors’
and Auditors’ Reports for the financial year ended 30 November 2016.
Resolutions 2 – Auditors
The Company is required to appoint an auditor at every general meeting of the Company at which accounts are presented to
shareholders. The appointment of BDO LLP as auditors of the Company terminates at the conclusion of this Annual General Meeting.
This resolution proposes the re-appointment of BDO LLP as the auditors of the Company. It is normal practice for a company’s
directors to be authorised to agree how much the auditors should be paid and Resolution 2 grants this authority to the directors.
Resolutions 3 and 4 – Re-election of Directors
Article 28.1 of the Company’s articles of association requires any directors who have been appointed by the Board since the last
annual general meeting and any directors who were not appointed or reappointed at one of the preceding two annual general
meetings to retire from office. Any such director is entitled to offer himself for re-election.
Resolution 5 – Directors' power to allot relevant securities
Resolution 5 is proposed to renew the directors’ power to allot shares. Resolution 5(a) seeks to grant the directors authority to allot,
pursuant to section 551 of the Act, shares or grant rights to subscribe for or to convert any security into shares in the Company up an
aggregate nominal value of £458,124, which is equal to one third of the nominal value of the current issued ordinary share capital of
the Company as at 24 February 2017 (being the latest practicable date prior to the publication of this notice).
In accordance with The Investment Association’s Share Capital Management Guidelines (the "Guidelines"), Resolution 5(b) seeks
to grant the directors authority to allot ordinary shares in connection with a rights issue in favour of ordinary shareholders up to an
aggregate nominal value of £916,249 as reduced by the nominal amount of any shares issued under Resolution 5(a).
This amount (before any reduction) represents two thirds of the nominal value of the current issued ordinary share capital of the
Company as at 24 February 2017 (being the latest practicable date prior to the publication of this notice).
Unless previously renewed, revoked or varied, the authorities sought under paragraphs (a) and (b) of this resolution 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).
The Directors have no present intention of exercising either of the authorities under this resolution, but the Board wishes to ensure
that the Company has maximum flexibility in managing the financial resources of the Company.
As at the date of this notice, no shares are held by the Company in treasury.
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Notes to the financial statements
Notice of Annual General Meeting
NOTES CONTINUED
Resolution 6 – Partial disapplication of pre-emption rights on equity issues to ordinary shareholders for cash
Resolution 6 is to approve the partial disapplication of pre-emption rights in respect of the allotment of equity securities to ordinary
shareholders for cash. The passing of this resolution (together with resolution 6) would allow the directors to allot shares for cash
and/or sell treasury shares to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings. Such
allotments or sales would constitute pre-emptive offers, save for any arrangements or exclusions as may be necessary or appropriate
to deal with fractional entitlements, legal or practical difficulties under the laws of any territory or the requirements of any recognised
regulatory body or stock exchange in any territory.
Unless previously renewed, revoked or varied, the authority 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 7 – Authority for the market purchase by the Company of its own shares
The authority sought by resolution 7 limits the number of shares that could be purchased to a maximum of 2,748,747 ordinary shares
(equivalent to 10 per cent. of the Company’s issued ordinary share capital as at 24 February 2017 (being the latest practicable date
prior to the publication of this notice)) and sets a minimum and maximum price.
Unless previously renewed, revoked or varied, the authority will expire at the conclusion of the annual general meeting of the
Company to be held in 2018 or, if earlier, on the date which is 12 months after the date of the passing of the resolution.
The Directors have no present intention of exercising the authority to purchase the Company’s ordinary shares but will keep the
matter under review, taking into account the financial resources of the Company, the Company’s share price and future funding
opportunities. The Directors will exercise this authority only when to do so would be in the best interests of the Company and of
its shareholders generally, and could be expected to result in an increase in earnings per share of the Company. Any purchases of
ordinary shares would be by means of market purchase through the London Stock Exchange.
Any shares the Company buys under this authority may either be cancelled or held in treasury. Treasury shares can be re-sold for
cash, cancelled or used for the purposes of employee share schemes. No dividends are paid on shares whilst held in treasury and no
voting rights attach to treasury shares. The Directors believe that it is desirable for the Company to have this choice as holding the
purchased shares as treasury shares would give the Company the ability to re-sell or transfer them in the future and so provide the
Company with additional flexibility in the management of its capital base.
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WHIreland comprises WH Ireland Limited and WH Ireland (IOM) Limited which are wholly owned subsidiaries of WH Ireland Group plc. WH Ireland Limited is authorised and regulated in the UK by the Financial Conduct Authority, is registered in England and Wales with company number 02002044 and is a member of the London Stock Exchange. In the Isle of Man, WHIreland and WHIreland Wealth Management are registered trading names of WH Ireland (IOM) Limited which is licensed by the Isle of Man Financial Services Authority.G5069OCT16SWIf you would like this document in an alternative format such as Braille or large print, please contact us on 0800 877 8866. We are happy to consider any request for an accessible format.London24 Martin Lane, London EC4R 0DRT +44 (0)20 7220 1666E: enquiries@whirelandplc.comW: www.whirelandplc.com