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Annual Report and Accounts 2018History.Craftsmanship.Expertise. 2
Contents
Contents
Financial overview ...........................................................................................................................................................3
Chairman’s statement......................................................................................................................................................4
Chief Executive Officer’s report .......................................................................................................................................6
Strategic report ................................................................................................................................................................8
Board of Directors ..........................................................................................................................................................14
Advisers ...........................................................................................................................................................................16
Directors’ report .............................................................................................................................................................17
Corporate governance ...................................................................................................................................................19
Remuneration report .....................................................................................................................................................20
Statement of Directors’ responsibilities .......................................................................................................................25
Independent auditors’ report ........................................................................................................................................26
Consolidated statement of comprehensive income ....................................................................................................29
Consolidated and Company statement of financial position ......................................................................................30
Consolidated and Company statement of cash flows..................................................................................................31
Consolidated statement of changes in equity ..............................................................................................................32
Company statement of changes in equity ....................................................................................................................33
Corporate Social Responsibility (CSR) and Sponsorship..............................................................................................34
Notes to the financial statements .................................................................................................................................36
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 WEALTH MANAGEMENT, WEALTH PLANNING AND
CORPORATE AND INSTITUTIONAL BROKING SERVICES. THE 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
£36.4m
OPERATI NG
LOSS
£1.6m
Before exceptional items
A SSE TS UNDER
M AN AG EM ENT & A DV ICE
£2.6bn
R ECURRING R EVENUE
CASH
RESERV ES
CO MM ON EQ UITY TI ER 1
C A PITAL RATIO
49%
Against stated target of 50%
£7.3m
Of liquid available resources
11.28%
30 November 2016 12.14%
(Maximum requirement 8%)
Wealth Management
Corporate & Institutional Broking
®
DI SC RETIONARY ASS ETS UN DE R
MAN AGEM ENT
£1,081m
increased by 1%
(30 November 2016: £1,016m)
2500
3000
2000
MAN AGEM ENT FEE
INCOM E
1500
£12.2m
increased by 60%
(12 months 2016: £7.6m)
1000
500
0
COM MISSION
INCOM E
£12.0m
(12 months 2016: £8.7m)
ASSE TS U NDER
MAN AGEM ENT
£2,564m
(30 November 2016: £2,872m)
6
5
4
3
2
1
0
TOTAL AUM A
m
0
2
5
,
2
£
m
2
7
8
,
2
£
m
4
6
5
,
2
£
2018
2015
2016
ASSETS SERVICED
Discretionary
Advisory
Execution Only
42%
25%
33%
CORPORATE
TRANSACTIONS
37
FUNDRAISES
PARTICIPATED IN
£261m
AIM NOMAD RANKING
3rd
Based on number of clients
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
3
Chairman’s statement
Chairman’s statement
Chairman’s Statement
This year’s Annual Report covers the extend-
ed 16 month period that resulted from the
decision to change our year end to the more
conventional one of 31 March, from 30 No-
vember. I am pleased to report that consider-
able progress has been made to continue the
transformation of WH Ireland over the period
as a whole and that change has continued
following the end of the period under review.
However, as we identified in my second
interim report in January (for the 12 months to 30 November), this has not been without its
challenges, given market conditions and the scale of change that we have been implementing.
This has resulted in losses being incurred for the year – but a much clearer path to profitability
is now ahead of us in the new financial year and beyond.
Tim Steel, Chairman
WH Ireland Group plc
TRADING OVERVIEW
Market activity was subdued in the extra four months from November 2017 to March 2018 impacting the Corporate and Institutional
Broking (CIB) division; the Wealth Management (WM) division has benefited from higher market levels but it has borne higher costs
than anticipated. These costs primarily relate to the outsourcing of our custody and operational functions and legacy issues which
have taken longer to resolve than anticipated. This represents the final element of the investment in transformational change within
the WM division and will result in a significant decline in these costs as of July this year.
I concentrated part of my last report to shareholders on the actions taken and implemented by the senior management team in order
to help achieve the Board’s aim of achieving consistent profitability across both divisions. These changes have included structural
remuneration changes, continued focus upon fee income in the WM division, and in CIB a focus upon advising larger corporate
clients, whilst maintaining our existing strong corporate client list. These efforts continue and while the competitive landscape does
not get any easier, it is encouraging that both divisions have made significant progress during the past year and momentum has
continued into the current year.
CHANGE IN LEADERSHIP
The Company announced earlier today that Richard Killingbeck, the Chief Executive Officer of the Group, is not seeking re-election
as a Director of the Company at the forthcoming Annual General Meeting of the Company in order to pursue other opportunities.
Accordingly, Richard will step down as CEO with effect from 31 July 2018, and will step down as a director at the Annual General
Meeting on 27 September 2018. A further announcement will be made at that time. Richard joined the Company in September 2012
as Head of Private Wealth Management before being appointed Chief Executive in January 2013. The Board would like to express
its thanks to Richard for his significant contribution to the Group over the past six years. During this time, he has overseen the key
transformational changes that have positioned WH Ireland as a modern and more efficient organisation. We wish him well in the
future.
The Board is delighted to announce that Phillip Wale has been appointed as Chief Executive Officer elect of the Company, with effect
from 1 August 2018, with his appointment to Chief Executive Officer being subject to approval by the Financial Conduct Authority.
Phillip brings considerable experience to the Board of WH Ireland having held a number of senior positions in similar financial
services businesses which span both Wealth Management and Corporate and Institutional Broking and we believe that we can draw
upon this experience to take the Group forward in the next stage of its development. This includes senior positions at Goldman Sachs
in New York and London, and Chief Executive roles at Seymour Pierce and Panmure Gordon & Co.
This change in leadership comes at a time of transition for the Company, as it builds upon all the changes that have taken place in
the last few years. Phillip is being tasked with delivering an accelerated path to growth and profitability, for the benefit of all of the
Company’s stakeholders.
4
Chairman’s statement
Chairman’s statement
Chairman’s Statement
LOOKING FORWARD
In the new financial year that started on 1 April 2018, both divisions have witnessed better trading conditions and are beginning
to see the benefits of all the changes that have been made to the business in the last few years. The CIB division has undertaken a
number of transactions for corporate clients and we have begun to see the positive impact of the wider cost reduction and revenue
enhancement programmes within the WM division. The latter will accelerate as the current year progresses and we expect to achieve
at least £2 million of cost savings and revenue enhancements this year, with the full annual impact expected to crystallise in the
financial year to March 2020.
Fee income (CIB retainers, WM management and advice fees) is now running at approximately £1.3 million a month, representing
nearly 55% of our total monthly revenue. This is the highest ratio of fees to total revenue ever achieved by the business and is most
encouraging for the progression of WH Ireland in the future.
I would like to thank all of those employees who have played a significant part in helping the Company evolve and who have worked
extremely hard in bringing about change. In addition, I want to express my specific thanks to Richard Killingbeck for his commitment
and dedication to the firm during his tenure as CEO; I have very much enjoyed working with Richard and wish him well in the future.
Finally, I would like to welcome Phillip to the Company, and look forward to working with him over the coming months. As a result
of all these efforts and changes, I believe that the Company has never been better positioned for the next stage in its exciting growth
strategy.
Tim Steel
July 2018
5
CEO’s report
Chief Executive Officer’s report
The past five financial years has witnessed
considerable change at the Group, change
which during the past two years has
accelerated significantly. Unsurprisingly,
given the sheer complexity and scale of the
transformation being undertaken, covering
operational, remuneration, commercial
and regulatory matters, it has taken longer
and cost more to deliver. It has also been
delivered against a background of competitive
and volatile market conditions, which has made growth hard to come by for most market
participants.
Richard Killingbeck, CEO
WH Ireland Group plc
Overall, as a result of these changes we have significantly reduced headcount without reducing
our capabilities or capacity. This has provided a concomitant reduction in staff costs which is
expected to continue in the current financial year. This gives us confidence that the Group’s
financial performance will begin to improve significantly from here on.
KEY PERFORMANCE INDICATORS
Five years ago the Board set out several key performance indicators by which we would judge the transformation of the business.
The most important measures have arguably been those of increasing recurring revenues in both divisions and discretionary funds
in the Private Wealth Management business, as these will ultimately deliver both profitability and shareholder value. In both cases
these measures have made strong progress; recurring revenues now represent 49% as against 30% in 2013, and discretionary funds
represent 42.1% of the total compared to just 20% in 2013. Whilst there is much work still to be done in terms of delivering good
operating margins, overall there has been steady progress to date in our key measures.
WEALTH MANAGEMENT (WM)
The changes referred to above have primarily been implemented within the Private Wealth Management division. They include
consolidating our regional office footprint, discontinuing unprofitable non-core services, recruiting high quality new staff, focusing on
higher margin discretionary fund management, and investing in marketing.
The single biggest and costliest task has been outsourcing our custody and operational functions. As previously reported,
this complex project has run over budget and time but we remain confident that it has resulted in a more robust and scalable
operating platform (which services our clients’ assets) and an advice driven fee based model which provides for a more stable and
valuable recurring revenue stream. The benefits are expected to flow in the current financial year as the various cost and revenue
enhancement programmes positively impact results. We therefore expect that the Private Wealth Management division will return to
profit in the current financial year and the full impact of the programmes undertaken will be demonstrable in the year to March 2020.
A gross return of 15% on assets is our near term goal for this division.
Analysis of AUMA
Discretionary
Advisory
Execution only
Total AUMA
Discretionary as a % of total
2017/2018
£1,081m
639
844
£2,564m
42.1%
2016
£1,016m
783
1,073
£2,872m
35.4%
2015
£767m
892
861
£2,520m
30.4%
2014
£722m
952
1,018
£2,692m
26.8%
2013
£506m
931
1,046
£2,483m
20.3%
6
CEO’s report
Chief Executive Officer’s report
CORPORATE AND INSTITUTIONAL BROKING (CIB)
The Corporate and Institutional Broking division has a low fixed cost model with a solid corporate client base. The focus remains
upon increasing this client list both in number and in market capitalisation. This will allow for a greater number and value of
transactions to be undertaken for these clients. Transaction volumes remain highly unpredictable and subject to market sentiment
which is outside of our immediate control.
Given the above, in order to help diversify our revenue and earnings streams in CIB, we established our platform for raising growth
capital for private companies, including through the ‘Investor Forum’, whose clients include HNWIs and Family Offices. A number of
successful fund raises were undertaken towards the end of the reporting period and further transactions have been closed in the new
financial year. We believe that this platform has significant long term potential for both the division and the Company.
An analysis of the last five years, shows the CIB division has reported a remarkably resilient performance in a very challenging market,
whilst the average deal size undertaken last year was significantly ahead of prior periods. It has maintained critical mass in terms of
numbers of clients and has been able to complete a decent number of transactions in most periods. This puts the team in a good
position to make progress and undertake a more regular flow of deals in each quarter, rather than the somewhat sporadic corporate
activity of the last few years.
Analysis of Corporate Activity
2017/2018
Number of transactions
Money raised
Number of clients
37
£69m
84
2016
51
£69m
85
2015
53
£75m
98
2014
29
£56m
93
2013
21
£102m
87
RECURRING INCOME
One of our core targets for the Group has been to achieve recurring revenues of 50% of total revenues (measured as the aggregate of
our corporate retainer fees and our discretionary fund management fees) – we have achieved this goal during this reporting period,
and have exceeded it in the early months of the new financial year. We remain confident that a recurring fee target approaching 65%
should be achievable in the next few years, with the majority of this change being driven by the continued shift to management fees in
the Private Wealth Management division. This level of recurring revenue provides both confidence in the sustainability of the business
and in planning for the future.
Analysis of recurring revenues
Total revenues
Recurring revenues
% of total revenues
2017/2018
£36.4m
£18.0m
49.0%
2016
£25.4m
£12.0m
47.0%
2015
£30.9m
£11.4m
36.9%
2014
£30.0m
£10.0m
33.3%
2013
£29.7m
£8.9m
30.0%
SUMMARY AND OUTLOOK
Consistent with the Chairman’s report, I would like to thank all of our loyal and dedicated members of staff who have worked
extremely hard during the past 16 months to deliver change. This also includes cultural change, an imperative element of the
foundation for the future success of the Company.
Overall, I believe that the significant investment we have made to transform the business will result in positive future benefit for
clients, shareholders and staff alike. As a result, the WH Ireland Group is now at an inflection point - a much stronger business has
been created capable of growing faster and more profitably.
We have had a good start to the new financial year, with good progress in our core KPIs; recurring revenues are through the 50%
barrier. We have completed a number of public and private transactions and discretionary funds under management have continued
to increase. This gives us considerable confidence that we will report an improved financial performance and be profitable in the
current year, with further strong progress anticipated in the following financial year as we benefit from the full cost savings from our
various projects already implemented.
RWKillingbeck
July 2018
7
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: Wealth Management, which provides bespoke wealth management solutions and
independent financial advisory services to retail clients; and Corporate and Institutional 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 184 staff (2016: 213) in the United Kingdom and 8 (2016: 7) 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 advice-driven 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 16 MONTH PERIOD IS SET OUT BELOW:
16 Months ended 31 Mar 2018
12 Months ended 30 Nov 2016
Revenue
Administrative expenses
Operating loss
Operating loss before exceptional items
Exceptional items
Operating loss after exceptional items
Other income and charges
Loss before tax
Tax
Loss after tax
£’000
36,416
(40,517)
(4,101)
(1,595)
(2,506)
(4,101)
387
(3,714)
769
(2,945)
£’000
25,421
(28,454)
(3,033)
(1,253)
(1,780)
(3,033)
(171)
(3,204)
460
(2,744)
A RECONCILIATION OF THE ADJUSTED OPERATING LOSS IS SET OUT BELOW:
16 Months ended 31 Mar 2018
12 Months ended 30 Nov 2016
Operating loss
Add back of one off charges:
Project Discovery*
Restructuring**
MiFIDii***
Regulatory fine related costs****
Adjusted operating loss
£’000
(4,101)
1,527
718
261
-
(1,595)
£’000
(3,033)
593
994
-
193
(1,253)
Notes:
*As announced on 2 June 2016, the Group has entered into a seven year agreement with SEI Investments (Europe) Ltd, to outsource its Wealth Management back
office operations and move to a “Model B” arrangement. This function was previously 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 period ended 31 March 2018 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.
***During the period to 31 March 2018 the Group incurred various costs in preparation for compliance with MiFIDii.
****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.
8
Strategic report
Strategic report
DIVISIONAL PERFORMANCE CAN BE SUMMARISED AS FOLLOWS:
16 Months ended 31 March 2018
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/income
Profit/(loss) for the year
WM
£’000
23,529
(19,650)
3,879
(8,079)
(4,200)
328
-
-
-
(17)
(3,889)
877
(3,012)
CIB
Head Office
Other Group
Companies
£’000
11,779
(8,554)
3,225
(3,189)
36
328
16
31
-
(6)
405
(16)
389
£’000
-
(370)
(370)
-
(370)
(872)
-
-
2
-
(1,240)
78
(1,162)
£’000
1,108
(675)
433
-
433
216
343
-
19
(1)
1,010
(170)
840
WM
CIB
Head Office
Other Group
Companies
12 months 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
£’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
749
(578)
171
-
171
125
-
-
2
(18)
280
11
291
Group
£’000
36,416
(29,249)
7,167
(11,268)
(4,101)
-
359
31
21
(24)
(3,714)
769
(2,945)
Group
£’000
25,421
(20,464)
4,957
(7,990)
(3,033)
-
21
(155)
10
(47)
(3,204)
460
(2,744)
9
Strategic report
Strategic report
WEALTH MANAGEMENT
The 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 Wealth Management businesses. In addition, we are in the process of enhancing our business
development capability, including the introduction of a model portfolio solution, which will complement the sources of funds flow
above.
CORPORATE AND INSTITUTIONAL BROKING
WH Ireland is one of the largest Nominated Advisers (NOMADs) and Brokers for AIM quoted companies in London and currently
represents 84 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.
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.
Health Care
Consumer
11
8
8
Financial Services
5
Consumer
17
Given the continuing structural changes taking place in
the wider market, the division has developed a robust and
sustainable platform from which to build. 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. We anticipate
attracting further quality individuals which will enhance
our differentiated proposition relative to some of our
larger competitors. The division’s focus remains upon providing leading advice to all of our corporate clients and enhancing our
retained client list. We have long sought to build a greater presence in the private company space and during 2017 we successfully
launched an Investor Forum aimed at the ultra-high net worth and family office market, whereby we introduce interesting private
investment opportunities to this market segment. A number of successful deals have been completed already.
Support Services
Oil and Gas
Industrials
Mining
11
14
10
In response to the inevitable regulatory change, the Corporate and Institutional Broking division has received many plaudits from
our current clients for their clear and concise interpretation of the research distribution rules. It is still too early to evaluate the
impact of MiFID ii upon the division but we have been alert to the potential opportunities that have presented themselves as a
result of this change and this has led to an encouraging number of corporate client inquiries to understand how the division can
benefit their reach in the market.
10
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 LOSS BEFORE TAX TO TOTAL REVENUE
Ratio of adjusted loss before tax to revenue
2. FUNDS UNDER MANAGEMENT AND ADVICE
Discretionary assets
Advisory assets
Execution only assets
Total
31 March 2018
30 November 2016
%
(3.30)
%
(5.60)
31 March 2018
30 November 2016
£m
1,081
639
844
2,564
£m
1,016
783
1,073
2,872
This is used as a measure of the potential for revenue generation by type of client assets held in our custody.
3. RECURRING INCOME STREAMS
Value of Group recurring income
31 March 2018
30 November 2016
£m
18.0
£m
12.0
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 50.0% in the 16 month period (12 months 2016:
5.26% increase), largely influenced by an increase in our 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
31 March 2018
30 November 2016
37
£261m
84
51
£69m
85
11
Strategic report
Strategic report
Following the Board’s decision in June
2016 to partner with SEI, the new custody
platform which went live in May 2017
has already demonstrated better quality
servicing and greater protection for our
clients’ assets. The strategic partnership
with SEI will enable the delivery of an
enhanced service to our clients whilst
ensuring that our regulatory obligations,
such as MiFID II, can be more easily
accomplished. As well as benefiting from future enhancements, the platform will enable the
Group to support both current organic growth and maximise acquisition opportunities which
the Board seeks to identify.
Dan Cowland
Finance Director
In spite of the volume of change achieved throughout the reporting period, both business
divisions had the confidence to agree upon new remuneration structures which ensure
better alignment of their rewards with clients, shareholders and stakeholders alike.
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 £12.9m (November 2016: £11.7m) and net current assets to £8.1m
(November 2016: £9.4m). The statement of financial position is underpinned by the holding of the substantial cash balances
(£7.3m; November 2016: £6.7m) held to enable growth opportunities and support the Group’s regulatory position.
In addition, the Group raised £1.6m on 6 December 2016 and £2.4m on 9 February 2018 by way of a placing to existing
shareholders, for general corporate purpose and to ensure that the Company maintains its prudent stance in regard to its
regulatory capital position.
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 Committees, considers all of the relevant risk management issues and advises
the Board as necessary on such matters. The Group maintains a Risk Management Framework which is updated annually and
approved by the Board. As required by the Framework, a comprehensive risk register is maintained and reviewed regularly by the
Executive Risk Committee to determine appropriate management actions to preserve the strong control environment. In addition
to an independent Internal Audit function, which is provided by Mazars, the Group operates a dedicated Risk function. Both the
Internal Audit and Risk functions coordinate their programme of work with the Compliance department through the Executive Risk
Committee. 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 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. The extent to which this has succeeded is reflected in the recurring revenues for the period of 49%.
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 SEI platform is a key continuation of
this process and places the Group well positioned for growth. 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 liquid, and that sufficient
regulatory capital is maintained to allow for a surplus over the regulatory minimum capital requirements. The Group calculates
and monitors its regulatory capital requirements on a daily basis.
12
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. This has reduced significantly following the commencement of the SEI partnership.
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 offices 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 Director of Compliance and Risk, who sits on the Executive Committee.
The appointment of Paul Jones into the role of Chief Operating Officer further demonstrates the Board’s commitment to providing
a robust and stable operating platform from which both business divisions can benefit.
Credit Risk
The Board takes active steps to minimise the incidence of, and mitigate the impact of, credit losses. This includes formal credit
management procedures and the close supervision of credit limits and exposures. As a result of the partnership with SEI and the
relationship with Pershing, the majority of trading activity undertaken by both business divisions is under “Model B” arrangements.
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 all of 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 in the UK and the Financial Services Authority in the Isle of Man.
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.
13
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 - RICHA RD KILLINGBECK
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.
14
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 RAFFE
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
and the Private Client Executive Committee.
15
Advisors
Advisors
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, 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
COMPANY NUMBER
03870190
16
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 16 months ended 31 March 2018
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 8 to 13.
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 March 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 2018 (2016: £Nil) (note 10).
17
Directors’ report
DIRECTORS
The Directors who held office during the year and their interest in the shares of the Company were as follows:
Directors’ report
RW Killingbeck
DJ Cowland
TM Steel
REM Lee
JHD Carey
HR Percy*
VG Raffé***
16 Months ended
31 Mar 2018
12 Months ended 30
Nov 2016
910,000
10,000
-
30,267
-
6,525,079**
-
910,000
10,000
-
30,267
-
6,525,079
-
* 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
8,324,626
6,525,079
5,344,214
%
27.87
21.8
17.9
In addition, the Company’s Employee Share Ownership Trust which is operated by Sanne Trust Company Limited holds 2,139,500
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.
18
Corporate Governance
Corporate Governance
EMPLOYEES
Our employees are vital to the continued success of the Group. The Group and our employees are committed to delivering a quality
service which meets our own expectations, those of the FCA and those of our clients wherever possible.
Employees are kept informed of, and consulted regularly on, key issues affecting them and the Group by the intranet and through
regular communication between management and staff.
The Company policy is to give full and fair consideration to all disabled people who apply for employment, seeks to develop the
skills and potential of disabled people, affords them access to training and promotion opportunities and makes every effort to retain
in suitable employment those staff who have the misfortune of becoming disabled whilst in the employment of the Group.
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 31 March 2018 2,289,500 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
There are no significant events after the reporting period.
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
July 2018
19
Remuneration report
Remuneration report
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 Chair. 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 and Risk Committee members may be invited to attend the meetings.
Audit Committee
The committee is made up of the five Non-Executive Directors with Jonathan Carey as Chair. 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.
Risk Committee
The committee is made up of the five Non-Executive Directors with Victoria Raffe as Chair. It is responsible for advising
the Board on risk appetite, tolerance and strategy taking into account of the current and prospective regulatory and market
environment.
The Committee maintains a constant review of both the Group’s overall risk assessment processes and the effectiveness of the
Group’s internal controls and risk management systems, and advises the Board on proposed strategic transactions which may
impact upon the risk appetite and tolerance of the Group.
The Head of Compliance and Risk, the Risk Manager and the 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. The Corporate and Institutional Broking Executive
Committee and the Wealth Management Executive Committee escalates issues and actions to the committee as appropriate.
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 functions and the Executive Committees of both business
divisions.
20
Remuneration report
Remuneration report
The Directors present the Directors’ Remuneration Report (the “Remuneration Report”) for the financial period ended 31 March
2018.
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.
21
Remuneration report
Remuneration report
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.
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.
22
Remuneration report
Remuneration report
EXTERNAL APPOINTMENTS UNDERTAKEN BY EXECUTIVE DIRECTORS
In the committee’s opinion, experience of other companies’ practices and challenges is valuable for the personal development
of the Group’s Executive Directors and for the Company. It is therefore the Group’s policy to allow Executive Directors to accept
Non-Executive Directorships at other companies, provided the time commitment does not interfere with the Executive Directors’
responsibilities within the Group. Fees are retained by the individual 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 period ended 31 March 2018 is detailed in the
table below:
Total
16 Months
ended
31 Mar
2018
Total
12 Months
ended
30 Nov
2016
Pension
Contribution
16 Months
ended
31 Mar 2018
Pension
Contribution
12 Months
ended
30 Nov 2016
£
£
£
£
276,654
398,304
216,591
297,473
-
40,000
80,000
40,000
40,000
35,000
385
30,000
60,000
22,500
-
-
25,117
17,600
-
-
-
-
-
-
-
-
-
-
-
-
-
-
909,958
626,949
25,117
17,600
Compensation
for loss of
office
£
-
-
-
-
-
-
-
-
-
Salary
Benefits
Bonus
£
£
£
Executive
DJ Cowland
228,333
RW Killingbeck
328,146
3,321
5,158
45,000
65,000
Non-Executive
RJG Lowe*
REM Lee
TM Steel
JHD Carey**
HR Percy***
VG Raffé****
-
40,000
80,000
40,000
40,000
35,000
-
-
-
-
-
-
-
-
-
-
-
-
791,479
8,479
110,000
Notes:
* Resigned 1 December 2015
** Appointed 29 February 2016
*** Appointed 1 December 2016
**** Appointed 1 February 2017
The highest paid Director for 2018 and 2016 was RW Killingbeck who received emoluments of £398,304 and £297,473 respectively.
No pension contributions were paid in respect of RW Killingbeck in either year.
23
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 31 March
2018 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
65.30p
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 31 March 2018 the market price of the Company’s shares was 131.50p.
The highest daily closing price during the year was 152.50p and the lowest daily closing price was 119.00p.
24
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.
25
Independent Auditors’ report
Independent Auditors’ report
To the members of WH Ireland Group PLC
OPINION
We have audited the financial statements of WH Ireland Group plc (the ‘parent company’) and its subsidiaries (the ‘group’) for
the period ended 31 March 2018 which comprise of the consolidated statement of comprehensive income, consolidated and
company statement of financial position, consolidated and company statement of cash flows, consolidated statement of changes
in equity, company statement of changes in equity and notes to the financial statements, including a summary of significant
accounting policies.
The financial reporting framework that has been applied in the preparation of the financial statements 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.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 March
2018 and of the group’s loss for the period then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the parent 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.
SEPARATE OPINION IN RELATION TO IFRSS AS ISSUED BY THE IASB
As explained in note 3 to the group financial statements, the group in addition to complying with its legal obligation to apply IFRSs
as adopted by the European Union, has also applied IFRSs as issued by the International Accounting Standards Board (IASB).
In our opinion the group financial statements give a true and fair view of the consolidated financial position of the group as
at 31 March 2018 and of its consolidated financial performance and its consolidated cash flows for the period then ended in
accordance with IFRSs as issued by the IASB.
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant
to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
CONCLUSIONS RELATING TO GOING CONCERN
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant
doubt about the group’s or the parent company’s ability to continue to adopt the going concern basis of accounting for a
period of at least twelve months from the date when the financial statements are authorised for issue.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Acquisition and impairment of intangibles
The Group has recognised an intangible asset on the acquisition of client lists through the hiring of certain employees / teams.
Based on management’s experience these investment management contracts are deemed to have an estimated useful life of 20
years. Management assess the impairment of intangible assets on an annual basis as described in the accounting policies. There
is a risk that any necessary impairment has not been appropriately recognised.
Our audit procedures focused on whether there was any impairment necessary to the carrying value of intangibles. We
considered and challenged management’s assessment of impairment by reviewing the current client list against the acquired
client list considering attrition rates and projections of associated assets under management and fee arrangements.
26
Independent Auditors’ report
Independent Auditors’ report
OUR APPLICATION OF MATERIALITY
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
For planning, we consider materiality to be the magnitude by which misstatements, including omissions, could influence the
economic decisions of reasonable users that are taken on the basis of the financial statements. Importantly, misstatements below
this level will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and
the particular circumstances of their occurrence, when evaluating their effect on the financial statements.
Based on our professional judgement, we determined materiality for the Group financial statements as a whole to be £552,000
(2016: £381,000), which represents 1.5% of the Group revenue for the period. We used revenue as the most important benchmark
as the Group is loss-making and given the importance of revenue as a measure for shareholders in assessing the performance of
the Group.
Our audit work on each component of the group was executed at levels of materiality applicable to the individual entity, all of
which were lower than Group materiality.
Performance materiality is the application of materiality at the individual account or balance level set at an amount to reduce to
an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessment together with our assessment of the Group’s overall control environment, our judgment was
that overall performance materiality for the Group should be 75% (2016: 75%) of materiality, namely £414,000 (2016: £285,000).
We agreed with the Audit Committee that we would report to them all audit differences in excess of £27,000 (2016: £19,000), as well
as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
There were no misstatements identified during the course of our audit that were individually, or in aggregate, considered to be
material in terms of their absolute monetary value or on qualitative grounds.
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
The Group manages its operations through subsidiaries of the Parent Company, the main trading entity, WH Ireland Limited, as
well as other components.
The Group audit engagement team carried out full scope audits for the Parent Company and the significant components based in
the UK and Isle of Man. Other transactions and balances within the financial statements, arising in insignificant components, were
audited directly by the Group audit engagement team.
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information included in the annual
report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial period for which the financial
statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course
of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
the parent 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.
27
Independent Auditors’ report
Independent Auditors’ report
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement set out on page 23, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as
the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
USE OF OUR REPORT
This report is made solely to the parent 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 parent 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 parent company and the parent company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Neil Griggs
(Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
28
Consolidated and Company statement of cash flows
Consolidated statement of comprehensive income
For 16 months ended 31 March 2018
16 Months ended
31 Mar 2018
12 Months ended
30 Nov 2016
Revenue
Administrative expenses
Operating loss
Operating loss before exceptional items:
Exceptional items
Operating loss after exceptional items
Gain on sale of property, plant and equipment
Realised investment gains
Fair value profit/(losses) on investments
Finance income
Finance expense
Loss before tax
Tax income
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 36 to 73 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
36,416
(40,517)
(4,101)
(1,595)
(2,506)
(4,101)
343
16
31
21
(24)
(3,714)
769
(2,945)
-
(2,945)
£’000
25,421
(28,454)
(3,033)
(1,253)
(1,780)
(3,033)
-
21
(155)
10
(47)
(3,204)
460
(2,744)
-
(2,744)
(10.08)p
(10.08)p
(10.72)p
(10.72)p
29
Consolidated and Company statement of financial position
Consolidated and Company statement of financial position
For 16 months ended 31 March 2018
Group
Company
16 Months ended
31 Mar 2018
12 Months ended
30 Nov 2016
16 Months ended
31 Mar 2018
12 Months ended
30 Nov 2016
Note
£’000
£’000
£’000
£’000
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
13
14
15
12
16
28
17
18
19
20
12
21
22
23
31
25
24
23
31
18
25
24
28
258
3,425
-
1,274
245
-
-
1,197
6,399
17,339
692
-
7,277
25,308
31,707
(15,744)
-
-
(282)
(1,179)
(33)
(17,238)
-
-
-
(439)
(1,123)
(35)
(1,597)
(18,835)
12,872
1,493
5,503
7
982
5,633
(746)
12,872
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
-
-
9,550
2
-
746
985
81
11,364
2,358
-
-
-
2,358
13,722
(194)
-
(5)
-
-
-
(199)
-
-
-
-
-
-
-
(199)
13,523
1,493
5,503
-
229
6,298
-
13,523
-
-
5,035
10
-
731
960
14
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
The notes on pages 36 to 73 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 £735k (2016: Profit £1,199k).
These financial statements were approved by the Board of Directors on 18 July 2018 and were signed on its behalf by:
Tim Steel
Director
30
Consolidated and Company statement of cash flows
Consolidated and Company statement of cash flows
For 16 months ended 31 March 2018
Group
Company
16 Months ended
12 Months ended
16 Months ended
12 Months ended
31 Mar 2018
30 Nov 2016
31 Mar 2018
30 Nov 2016
Note
Operating activities:
(Loss)/profit for the year
Adjustments for:
Depreciation, amortisation and impairment
12,13 & 14
Finance income
Finance expense
Tax
Gain on sale of property
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
8
8
9
7
Decrease/(increase) in current asset investments
20
Net cash (used in)/generated from operations
Income taxes paid
Net cash inflows from operating activities
Investing activities:
Proceeds from sale of property
Proceeds from sale of investments
Interest received
Investment in subsidiary
Repayment of deferred consideration
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
12
8
15
25
14
12
16
23
25
31
8
£’000
(2,945)
785
(21)
24
(766)
(343)
(47)
55
1,256
(3,855)
19
(162)
(6,000)
(52)
(6,052)
5,093
596
21
-
(1,216)
(106)
(589)
(752)
3,047
4,066
(994)
929
(352)
-
(24)
-
3,625
620
6,657
7,277
£’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
735
8
-
(15)
-
-
-
55
2,422
(1,742)
-
-
1,463
-
1,463
-
-
-
£’000
1,199
6
-
18
-
-
-
262
(76)
896
-
-
2,305
-
2,305
-
-
-
(4,515)
(3,324)
-
-
-
-
-
-
(4,515)
(3,324)
4,066
(994)
-
-
(25)
-
-
3,047
(5)
-
(5)
1,326
(179)
-
-
(110)
(18)
-
1,019
-
-
-
The notes on pages 36 to 73 are an integral part of these financial statements.
31
Consolidated statement of changes in Equity
Consolidated statement of changes in Equity
For 16 months ended 31 March 2018
Group
Balance at 30 November 2015
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
Share
capital
Share
premium
£’000
1,225
£’000
379
-
-
-
-
60
24
-
-
-
-
-
1,014
228
-
Balance at 30 November 2016
1,309
1,621
Loss after tax
Total comprehensive income
Transaction with owners
Employee share option scheme
Deferred tax on employee share options
New share capital issued
Other movements
Shares options exercised
Dividends
-
-
-
-
-
-
-
-
184
3,882
-
-
-
-
-
-
Balance at 31 March 2018
1,493
5,503
Retained earnings include £10k of ESOT reserve.
Available-
for-sale
reserve
£’000
7
-
-
-
-
-
-
-
7
-
-
-
-
-
-
-
-
7
Other
reserves
Retained
earnings
Treasury
shares
Total
equity
£’000
982
-
-
-
-
-
-
-
982
-
-
-
-
-
-
-
-
£’000
11,006
(2,744)
(2,744)
205
57
-
-
-
8,524
(2,945)
(2,945)
-
(36)
-
90
-
-
£’000
(731)
-
-
-
-
-
-
-
(731)
-
-
-
-
(15)
-
-
-
£’000
12,868
(2,744)
(2,744)
205
57
1,074
252
-
11,712
(2,945)
(2,945)
-
(36)
4,051
90
-
-
982
5,633
(746)
12,872
At 31 March 2018 the total number of authorised ordinary shares is 34.5million shares of 5p each (2016: 34.5 million shares of 5p
each). At 31 March 2018 the total number of issued ordinary shares is 29.9 million shares of 5p each (2016: 26.2 million shares of 5p
each). 3,684,943 shares were issued during the period (2016: 1,673,551).
32
Company statement of changes in Equity
Company statement of changes in Equity
For 16 months ended 31 March 2018
Company
Balance at 30 November 2015
Profit after tax
Total comprehensive income
Employee share option scheme
Deferred tax on employee share options
New share capital issued
Shares options exercised
Dividends
Share
capital
Share
premium
£’000
1,225
£’000
379
-
-
-
-
60
24
-
-
-
-
-
1,014
228
-
Balance at 30 November 2016
1,309
1,621
Profit after tax
Total comprehensive income
Employee share option scheme
Deferred tax on employee share options
New share capital issued
Other movements
Shares options exercised
Dividends
-
-
-
-
-
-
-
-
184
3,882
-
-
-
-
-
-
Balance at 31 March 2018
1,493
5,503
Available-
for-sale
reserve
£’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other
reserves
Retained
earnings
Treasury
shares
Total
equity
£’000
229
-
-
-
-
-
-
-
£’000
4,047
1,199
1,199
205
57
-
-
-
229
5,508
-
-
-
-
-
-
-
-
735
735
-
(36)
-
91
-
-
229
6,298
£’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
£’000
5,880
1,119
1,199
205
57
1,074
252
-
8,667
735
735
-
(36)
4,066
91
-
-
13,523
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 (2016: £753k) and a (consolidated) capital redemption reserve
of £229k (2016: £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.
33
CSR and Sponsorships
Our support of cultural activities
We are proud to support a number of cultural initiatives across the country and
internationally in the Isle of Man, as we firmly believe in the benefits of high quality
cultural programmes, particularly those which are for the benefit of young people.
At WH Ireland, we want to forge partnerships with organisations that share our beliefs
and it is important that we play our part in the communities in which we live and work.
By doing so, we have a unique opportunity to focus our corporate social responsibilities
on projects that benefit our society, heritage and culture.
HIGH SHERIFF OF BR ISTOL CO NC ERT
On Friday 8 June 2018, Bristol Cathedral hosted the annual High
Sheriff of Bristol’s Concert, which raises funds for the High Sheriff’s
Fund and Bristol Cathedral Trust. This year’s concert, Celtic
Connections, featured evocative music of Cornwall and Wales,
reflecting the family roots and heritage of current High Sheriff,
Roger Opie and his wife Mary.
Roger Opie, High Sheriff of Bristol commented: “Mary and I hope
that this imaginative selection of music from Bristol’s nearest
‘Celtic neighbours’ will appeal to a wide audience.”
Head of WH Ireland in Bristol, Nick Lamb, commented: “We are
extremely proud and thrilled to have supported the High Sheriff’s
Concert which is an annual highlight in the city’s entertainment
calendar. The concerts are a fantastic way of supporting the
wonderful work of Bristol Youth and Community Action (BYCA)
and Bristol Cathedral Trust.”
Pictured: The Oardinary Boys (Oliver Glanville and George Randell).
34
Pictured: Roger Opie, High Sheriff of Bristol (L), with Nick Lamb,
Head of WH Ireland’s Bristol office (R).
THE OARDINARY BOYS - ATL ANTIC ROWI NG
CHALLENGE
We were delighted to sponsor the Oardinary Boys (Oliver
Glanville and George Randell) on their world record attempt
at rowing the atlantic, completing this challenge in 37 days, 9
hours and 46 minutes, and set the record as the second fastest
pairs team to have rowed the Atlantic.
The Oardinary Boys have managed to raise a total of over
£60,000 for Alzheimer’s Research UK and The Against Malaria
Foundation, and plan on giving a number of lectures about the
campaign, in aid of these charities, over the next few months.
Our support of cultural activities
CSR and Sponsorships
THE B OU RN EMO UTH SYMPHON Y O R C HE STRA
For the second year in a row, we were delighted to support the
Bournemouth Symphony Orchestra’s Celebration 1-2-5 Schools’
Concerts held in Poole on Tuesday 22 May 2018. These concerts
are in a series of schools’ concerts that are being performed
across the South West by the full Orchestra.
Craig Allison, Investment Manager and Head of Office at WH
Ireland Wealth Management in Poole commented: “We were
thrilled to have had the opportunity to work with and support
the BSO again, particularly in their anniversary year. These
concerts are a fantastic way for young people to experience
the excitement and emotion of live classical music – often
for the first time – and for many, this was a once-in-a-lifetime
opportunity to experience a concert performance. At WHIreland,
we are keen supporters of a number of high-quality arts and
cultural initiatives across the country, particularly those which are
for the benefit of young people and we and our guests thoroughly
enjoyed the concert.”
Pictured L-R: Dougie Scarfe, CEO Bournemouth Symphony Orchestra,
Craig Allison, Head of WH Ireland’s Poole office
and Lisa Tregale, Head of BSO Participate.
“ At WH Ireland we have a unique opportunity to
focus our corporate social responsibilities on
projects that benefit our society, heritage and
culture. “
THE B RAINWAVE MAN CHESTER D UC K RACE
We were proud to have been a sponsor of the annual 2018 Brainwave Manchester Duck
Race. Brainwave is a charity that exists to help children with disabilities and additional
needs to achieve greater independence by aiming to improve mobility, communication
skills and learning potential through a range of educational and physical therapies. They
do this by providing therapists to work with children who have a range of conditions
including autism, brain injuries such as cerebral palsy and genetic disorders such as Down’s
syndrome; and have three centres in Somerset, Essex and Cheshire.
Our support included sponsoring a ‘corporate duck’ which was entered into the duck
race on the River Irwell, along with around 5,000 other ducks, outside our New Bailey
Manchester offices on 30 March 2018.
Pictured: Our WH Ireland golden duck board out-
side our New Bailey Manchester offices.
35
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
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.
BASIS OF PREPARATION
The principal accounting policies adopted in the preparation of the consolidated financial statements are set out in note 31. The
policies have been consistently applied to all the years presented, unless otherwise stated.
The consolidated financial statements are presented in GBP, which is also the Group’s functional currency. Amounts are rounded
to the nearest thousand, unless otherwise stated. These financial statements have been prepared in accordance with International
Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs).
The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates.
It also requires Group management to exercise judgment in applying the Group’s accounting policies. The areas where significant
judgments and estimates have been made in preparing the financial statements and their effect are disclosed in note 4.
Basis of measurement
The consolidated financial statements have been prepared on a historical cost basis, except for the following items (refer to
individual accounting policies for details):
Financial instruments – fair value through profit or loss
Financial instruments – available for sale
•
•
• Contingent consideration
•
Equity settled share-based payment liabilities
2. ADOPTION OF NEW AND REVISED STANDARDS
New standards, amendments and interpretations adopted
There were no new standards or interpretations effective for the first time from for periods beginning on or after 1 January 2017
that had a significant effect on the Group’s financial statements.
Standards, amendments and interpretations in issue but not yet effective
There are a number of standards and interpretations which have been issued by the International Accounting Standards Board
that are effective in future accounting periods that the Group has decided not to adopt early. The most significant of these are:
•
•
IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers (both mandatorily effective for periods
beginning on or after 1 January 2018); and
IFRS 16 Leases (mandatorily effective for periods beginning on or after 1 January 2019).
The Group is able to provide the following information regarding the likely impact of these key new accounting standards:
IFRS 9 Financial Instruments
The Group has identified that the adoption of IFRS 9, which replaces IAS 39 Financial Instruments: Recognition and Measurement
from 1 January 2018, will not materially impact its consolidated financial statements. In coming to this judgment the Group has
considered two key areas:
Classification and measurement of financial assets
The Group’s financial assets consist of trading assets from its Corporate and Institutional Broking division are currently measured
at fair value through profit and loss either held for trading or designated at fair value. This treatment will therefore not change
under IFRS 9. However, at year end the Group held £692k in current asset investments and £245k of investments as available-for-
sale and other investments, which will be classified as being at fair value through profit or loss under IFRS9. This will mean that all
changes in the fair value up to the point of disposal will be recorded in the consolidated statement of comprehensive income.
36
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
2. ADOPTION OF NEW AND REVISED STANDARDS CONTINUED
Impairment
The Group will need to apply an expected credit loss model when calculating impairment losses on its trade and other receivables
(both current and non-current). In applying IFRS 9 the Group must consider the probability of a default occurring over the
contractual life of its trade receivables and contract asset balances on initial recognition of those assets. The Group does not
consider that this will result in increased impairment provisions.
Transitions
The standard will be adopted from 1 April 2018 and applied retrospectively by adjusting where necessary, the statement of
financial position at the date of initial application, with no requirement to restate comparative periods.
IFRS 15 Revenue from Contracts with Customers
This standard will be adopted on its mandatorily effective date, and the standard will be applied on a retrospective basis,
recognising the cumulative effect, if, any, of initially applying the standard as an adjustment to the opening balance of retained
earnings. The Group will continue to assess individual customer contracts for separate performance obligations to allocate
the correct transaction price where necessary and therefore has assessed the impact of the new revenue standard to have no
significant effect on the consolidated results.
IFRS 16 Leases
Adoption of IFRS 16 will result in the group recognising right of use assets and lease liabilities for all contracts that are, or contain,
a lease. For leases currently classified as operating leases, under current accounting requirements the Group does not recognise
related assets or liabilities, and instead spreads the lease payments on a straight-line basis over the lease term, disclosing in its
annual financial statements the total commitment.
At 31 March 2018 operating lease commitments amounted to £3.9m. Further work will be carried out in the course of 2018 to
determine the right-of-use assets and lease liabilities to be recognised on 1 April 2019, during which the Group’s lease profile is
likely to change. Instead of recognising an operating expense for its operating lease payments, the Group will instead recognise
interest on its lease liabilities and amortisation on its right-of-use assets.
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.
3. SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation
Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the
investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that
there may be a change in any of these elements of control.
37
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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.
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.
•
•
•
•
•
38
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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 equity settled transactions, at each reporting date until the vesting date, reflects
the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will
ultimately vest. The statement of comprehensive income charge or credit for a period represents the movement in cumulative
expense recognised at the beginning and end of that period.
Where the terms of an equity-settled award are modified, an incremental value is calculated as the difference between the fair
value of the repriced option and the fair value of the original option at the date of re-pricing. This incremental value is then
recognised as an expense over the remaining vesting period in addition to the amount recognised in respect of the original option
grant.
Where an equity-settled award is cancelled or settled (that is, cancelled with some form of compensation) it is treated as if it had
vested on the date of cancellation and any expense not yet recognised for the award is recognised immediately. However, if a
new award is substituted for the cancelled award and is designated as a replacement award on the date that it is granted, the
cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.
Any compensation paid up to the fair value of the award is accounted for as a deduction from equity. Where an award is cancelled
by forfeiture, when the vesting conditions are not satisfied, any costs already recognised are reversed (subject to exceptions for
market conditions).
In all instances, the charge/credit is taken to the statement of comprehensive income of the Group or Company by which the
individual concerned is employed.
Employee Benefit Trust (EBT)
The cost of purchasing own shares held by the EBT are shown as a deduction against equity. The proceeds from the sale of
own shares held increase equity. Neither the purchase nor sale of own shares leads to a gain or loss being recognised in the
consolidated statement of comprehensive income.
Employee Share Ownership Trust (ESOT)
The Company has established an ESOT. The assets and liabilities of this trust comprise shares in the Company and loan balances
due to the Company. The Group includes the ESOT within these consolidated Financial Statements and therefore recognises a
Treasury shares reserve in respect of the amounts loaned to the ESOT and used to purchase shares in the Company. Any cash
received by the ESOT on disposal of the shares it holds, will be used to repay the loan to the Company.
39
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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 (note 18).
A deferred tax asset is recognised for all deductible temporary differences and unused tax losses only to the extent that it is
probable that future taxable profits will be available against which the assets can be utilised. Deferred tax assets are reduced to the
extent that it is no longer probable that the related tax benefit will be realised.
Leases
Where assets are financed by leasing agreements that give rights approximating to ownership (finance leases), the assets are
treated as if they had been purchased outright. The amount capitalised is the present value of the minimum lease payments
payable over the term of the lease. The corresponding leasing commitments are shown as amounts payable to the lessor.
Depreciation on the relevant assets is charged to the 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 the lower of cost and periodic valuation by a professionally qualified surveyor.
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
40
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Non-financial assets (excluding 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.
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.
41
Notes to the financial statements
Notes to the financial statements
For 16 month ended 31 March 2018
3. SIGNIFICANT ACCOUNTING POLICIES CONTINUED
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.
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.
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.
42
Notes to the financial statements
Notes to the financial statements
For 16 month ended 31 March 2018
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.
There are no significant accounting judgements relevant to the application of these policies.
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.
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.
43
Notes to the financial statements
Notes to the financial statements
For 16 month ended 31 March 2018
5. SEGMENT INFORMATION
The Group has two operating segments, Wealth Management and Corporate and Institutional Broking.
The 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.
Most of the Group’s revenue originates within the UK with a non-material element originating overseas.
The following tables represent revenue and cost information for the Group’s business segments:
WM
CIB
Head Office
Other Group
Companies*
16 months ended 31 March 2018
Revenue
Direct costs
Contribution
Indirect costs
Segment result
Executive Board cost
Investment gains
Fair value gains on investments
Finance income
Finance expense
(Loss)/profit before tax
Tax
(Loss)/profit for the year
* Other Group Companies are referenced in note 15.
£’000
23,529
(19,650)
3,879
(8,079)
(4,200)
328
-
-
-
(17)
(3,889)
877
(3,012)
£’000
11,779
(8,554)
3,225
(3,189)
36
328
16
31
-
(6)
405
(16)
389
£’000
-
(370)
(370)
-
(370)
(872)
-
-
2
-
(1,240)
78
(1,162)
£’000
1,108
(675)
433
-
433
216
343
-
19
(1)
1,010
(170)
840
Group
£’000
36,416
(29,249)
7,167
(11,268)
(4,101)
-
359
31
21
(24)
(3,714)
769
(2,945)
44
Notes to the financial statements
Notes to the financial statements
For 16 month ended 31 March 2018
5. SEGMENT INFORMATION CONTINUED
12 Months 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
WM
£’000
17,091
(13,001)
4,090
(5,731)
(1,641)
300
29
-
8
(21)
(1,325)
218
(1,107)
CIB
Head Office
Other Group
Companies
£’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
749
(578)
171
-
171
125
-
-
2
(18)
280
11
291
Group
£’000
25,421
(20,464)
4,957
(7,990)
(3,033)
-
21
(155)
10
(47)
(3,204)
460
(2,744)
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 30. 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.
45
Notes to the financial statements
Notes to the financial statements
For 16 month ended 31 March 2018
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
Employee benefit expense (note 7)
Restructuring and non-recurring legal and regulatory costs
Other administrative expenses
Auditors’ remuneration:
Audit of these financial statements
Amounts payable to the principal auditors and their associates in respect of:
– audit of financial statements of subsidiaries pursuant to legislation
– audit related assurance services
Total
16 Months ended
31 Mar 2018
12 Months ended
30 Nov 2016
£’000
218
263
851
23,741
2,506
12,798
25
70
45
£’000
282
193
419
17,803
1,780
7,881
18
47
31
40,517
28,454
Other administrative expenses are incurred in the ordinary course of the business and do not include any non-recurring items.
46
Notes to the financial statements
Notes to the financial statements
For 16 month ended 31 March 2018
7. EMPLOYEE BENEFIT EXPENSE
Group
Wages and salaries
Bonuses
Social security costs
Other pension costs
Non salaried staff
Share options granted to employees (note 30)
16 months ended
31 Mar 2018
12 months ended
30 Nov 2016
£’000
13,961
4,161
2,520
552
21,194
2,492
23,686
55
23,741
£’000
11,317
2,422
1,579
402
15,720
1,878
17,598
205
17,803
The average number of persons (including Directors) employed during the year was:
Executive and senior management
Corporate Broking
Wealth Management
Support staff
Salaried staff
Non salaried staff
Total
16 months ended
31 Mar 2018
12 months ended
30 Nov 2016
12
28
76
74
190
11
201
9
29
78
86
202
15
217
Non salaried staff are commission-only brokers and therefore do not receive a salary.
The total amount paid to Directors in the period, including social security costs was £1.0m (2016: £0.6m). Full details of Directors’
remuneration, including that of the highest paid Director, are disclosed in the Remuneration Report on pages 20-24 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
16 months ended
31 Mar 2018
12 months ended
30 Nov 2016
£’000
£’000
21
-
21
-
22
2
24
10
-
10
18
28
1
47
47
Notes to the financial statements
For 16 month ended 31 March 2018
Notes to the financial statements
9. TAX EXPENSE
Group
Current tax expense:
United Kingdom corporation tax at 19.25% (2016: 20.00%)
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
16 months ended
31 Mar 2018
12 months ended
30 Nov 2016
£’000
£’000
-
-
-
(27)
3
-
(24)
(24)
(36)
(36)
-
26
26
(553)
94
(27)
(486)
(460)
57
57
The tax expense for the year and the amount calculated by applying the standard United Kingdom corporation tax rate of 19.25%
(2016: 20.00%) to profit before tax can be reconciled as follows:
Group
(Loss) before tax
Tax expense using the United Kingdom corporation tax rate of 19.25% (2016: 20.00%)
Other expenses not tax deductible
Income not chargeable to tax
Impact of share options
Group relief
Adjustments in respect of prior years
Difference in overseas tax rates
Effect of other tax rates/credits
Total tax credit in the statement of comprehensive income
10. DIVIDENDS
No dividend is proposed in respect of 2018 (2016: none).
16 months ended
31 Mar 2018
12 months ended
30 Nov 2016
£’000
(2,946)
(567)
97
(324)
26
-
(73)
(20)
92
(769)
£’000
(3,204)
(641)
78
(1)
(17)
-
(1)
28
94
(460)
48
Notes to the financial statements
Notes to the financial statements
For 16 month ended 31 March 2018
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
Diluted EPS
Share options are anti dilutive as they reduce the stated loss per share.
16 months ended
31 Mar 2018
12 months ended
30 Nov 2016
£’000
27,874
1,356
29,230
£’000
(2,945)
£’000
25,590
1,042
26,632
£’000
(2,744)
(10.08)p
(10.72)p
(10.08)p
(10.72)p
49
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
12. PROPERTY, PLANT AND EQUIPMENT
Freehold Property
Computers, fixtures and fittings
Group
Cost
At 30 November 2015
Additions
At 30 November 2016
Additions
Disposals
At 31 March 2018
Depreciation and impairment
At 30 November 2015
Charge for the year
At 30 November 2016
Charge for the year
Adjustment on disposal
At 31 March 2018
Net book values
At 31 March 2018
At 30 November 2016
At 30 November 2015
£’000
6,394
-
6,394
-
(6,394)
-
1,644
-
1,644
-
(1,644)
-
-
4,750
4,750
£’000
3,463
878
4,341
589
-
4,930
2,852
282
3,134
522
-
3,656
1,274
1,207
611
Total
£’000
9,857
878
10,735
589
(6,394)
4,930
4,496
282
4,778
522
(1,644)
3,656
1,274
5,957
5,361
The freehold property was being actively marketed for sale and was subsequently sold on 23 January 2017 for £5.27m.
Accordingly, at 30 November 2016, it had been reclassified to current assets, as held for sale. The proceeds of the sale were used
to fully repay the loan secured on it. Bank borrowings secured on freehold property were £0.994m as at 30 November 2016 (note
23).
50
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
12. PROPERTY, PLANT AND EQUIPMENT CONTINUED
At 31 March 2018, the carrying value of the freehold property on a historical cost basis less accumulated depreciation amounted to
£Nil (2016: £5,431,016).
At 31 March 2018, the carrying value of property, plant and equipment held under finance leases amounted to £563,040
(2016: £844,560).
Company
Cost
At 30 November 2015
Additions
At 30 November 2016
Additions
At 31 March 2018
Depreciation and impairment
At 30 November 2015
Charge for the year
At 30 November 2016
Charge for the period
At 31 March 2018
Net book values
At 31 March 2018
At 30 November 2016
At 30 November 2015
Computers, fixtures and fittings
£’000
33
-
33
-
33
17
6
23
8
31
2
10
16
51
Notes to the financial statements
For 16 months ended 31 March 2018
Notes to the financial statements
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 30 November 2015
Impairment
At 30 November 2016
Impairment
At 31 March 2018
16 months ended
31 Mar 2018
12 months ended
30 Nov 2016
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 (2016: 3%) and 0% for costs (2016:0%). 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% (2016: 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.
52
Notes to the financial statements
For 16 months ended 31 March 2018
Notes to the financial statements
14. INTANGIBLE ASSETS
Group
Cost
At 30 November 2015
Additions
At 30 November 2016
Additions
At 31 March 2018
Amortisation
At 30 November 2015
Charge for the year
At 30 November 2016
Charge for the period
At 31 March 2018
Net book values
At 31 March 2018
At 30 November 2016
At 30 November 2015
Client relationships
£’000
4,286
189
4,475
106
4,581
700
193
893
263
1,156
3,425
3,582
3,586
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 reporting period.
53
Notes to the financial statements
For 16 months ended 31 March 2018
Notes to the financial statements
15. SUBSIDIARIES
Company
Beginning of year/period
Additions
Impairment
End of year/period
16 months ended
31 Mar 2018
12 months ended
30 Nov 2016
£’000
5,035
4,515
-
9,550
£’000
1,711
3,324
-
5,035
Investments in subsidiaries are stated at cost less impairment.
The Group raised £1.6m on 6 December 2016 and £2.4m on 14 February 2018 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 December 2016, March and September 2017 and February 2018.
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
WM and CIB
Ordinary
WH Ireland (IOM) Limited
Isle of Man
WM
Ordinary
WH Ireland (Financial Services) Limited
England & Wales
Readycount Limited
England & Wales
Dormant
Property
Stockholm Investments Limited
England & Wales
Investment consultancy
ARE Business and Professional Limited
England & Wales
SRS Business and Professional Limited
England & Wales
WH Ireland Nominees Limited
WH Ireland Trustee Limited
Fitel Nominees Limited
England & Wales
England & Wales
England & Wales
Dormant
Dormant
Nominee
Trustee
Nominee
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
-
-
-
-
-
The registered office address of WH Ireland (IOM) Limited is St George’s Tower, Hope Street, Douglas, Isle of Man, IM1 1HR.
The registered office of all other of the companies listed above is 24 Martin Lane, London, EC4R 0DR.
54
Notes to the financial statements
For 16 months ended 31 March 2018
Notes to the financial statements
16. INVESTMENTS
Group
Available-for-sale investments
At 30 November 2015
Fair value loss
At 30 November 2016
Fair value (loss)/gain
At 31 March 2018
Other investments
At 30 November 2015
Additions
Fair value loss
Disposals
At 30 November 2016
Additions
Fair value loss
Disposals
At 31 March 2018
Total investments at 31 March 2018
Total investments at 30 November 2016
Quoted
£’000
Unquoted
£’000
-
-
-
-
-
Quoted
£’000
140
404
(33)
(507)
4
-
(2)
(1)
1
1
4
40
-
40
8
48
Warrants
£’000
180
122
(154)
(74)
74
171
(14)
(35)
196
244
114
Total
£’000
40
-
40
8
48
Total
£’000
320
526
(187)
(581)
78
171
(16)
(36)
197
245
118
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 in the statement of comprehensive income.
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.
55
Notes to the financial statements
For 16 months ended 31 March 2018
Notes to the financial statements
17. SUBORDINATED LOAN
Company
Beginning of year
Additions
End of year
16 months ended
31 Mar 2018
Year ended 30 Nov
2016
£’000
960
25
985
£’000
850
110
960
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 19.25% (2016: 20.00%). A deferred tax asset is
recognised for all deductible temporary differences and unutilised tax losses only to the extent that it is probable that future
taxable profits will be available against which the assets can be utilised. Deferred tax assets are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
Deferred tax assets and liabilities are attributable to the following:
Deferred tax assets
Deferred tax liabilities
Group
Property, plant and equipment
Intangible assets
Share Options
Losses
Available-for-sale investments
Provisions
Company
Share options
2018
£’000
110
147
81
824
-
35
1,197
Deferred tax assets
2018
£’000
81
81
2016
£’000
75
165
140
411
-
16
807
2016
£’000
141
141
2018
£’000
-
-
-
-
-
-
-
Deferred tax liabilities
2018
£’000
-
-
2016
£’000
(92)
-
-
-
-
-
(92)
2016
£’000
-
-
56
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
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 30 Nov
2015
Recognised
income
statement
Recognised
in equity
At 30 Nov
2016
Recognised
income
statement
Recognised
in equity
At 31 Mar
2018
£’000
£’000
£’000
£’000
£’000
£’000
(57)
191
73
(3)
(31)
-
173
40
(26)
11
3
47
411
486
-
-
57
-
-
-
57
(17)
165
141
-
16
411
716
127
(18)
(24)
-
19
413
517
-
-
(36)
-
-
-
(36)
£’000
110
147
81
-
35
824
1,197
Company
Share options
Property, plant and equipment
At 30 Nov
2015
Recognised
income
statement
Recognised
in equity
At 30 Nov
2016
Recognised
income
statement
Recognised
in equity
At 31 Mar
2018
£’000
£’000
£’000
£’000
73
-
73
11
-
11
57
-
57
141
-
141
£’000
(24)
-
(24)
£’000
(36)
-
(36)
£’000
81
-
81
57
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
19. TRADE AND OTHER RECEIVABLES
Trade receivables
Amounts due from Group companies
Other receivables
Prepayments and accrued income
Group
Company
31 Mar 2018
30 Nov 2016
31 Mar 2018
30 Nov 2016
£’000
12,991
-
3,077
1,271
17,339
£’000
15,690
-
418
2,877
18,985
£’000
-
2,298
53
7
2,358
£’000
-
4,710
10
-
4,720
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 31 March 2018, 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
31 Mar 2018
30 Nov 2016
31 Mar 2018
30 Nov 2016
£’000
11,672
-
-
259
53
1,007
12,991
£’000
14,527
51
1
331
258
522
15,690
£’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 31 March 2018,
£436k (30 November 2016: £309k) 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
£34.5m (30 November 2016: £90.8m).
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.
58
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
19. TRADE AND OTHER RECEIVABLES CONTINUED
Movements in impairment provisions were as follows:
At 30 November 2016
Amount released from provision due to
recovery
Amounts written off, previously fully
provided
Amount charged to the statement of
comprehensive income
At 31 March 2018
Group
Company
31 Mar 2018
30 Nov 2016
31 Mar 2018
30 Nov 2016
£’000
309
(72)
-
199
436
£’000
180
(312)
(94)
535
309
£’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
31 Mar 2018
30 Nov 2016
31 Mar 2018
30 Nov 2016
£’000
17,339
-
-
-
17,339
£’000
18,515
110
130
230
18,985
£’000
2,358
-
-
-
£’000
4,720
-
-
-
2.358
4,720
Group
Company
31 Mar 2018
30 Nov 2016
31 Mar 2018
30 Nov 2016
£’000
692
£’000
530
£’000
-
£’000
-
These represent short-term principal positions and are held at market value. No tax was payable at that value.
59
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
21. CASH AND CASH EQUIVALENTS
Cash and cash equivalents
Group
Company
31 Mar 2018
30 Nov 2016
31 Mar 2018
30 Nov 2016
£’000
7,277
£’000
6,657
£’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 31 March 2018 for the Group
was £Nil (2016: £131k). There is no client money held in the Company (2016: £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
31 Mar 2018
30 Nov 2016
31 Mar 2018
30 Nov 2016
£’000
11,615
-
339
771
3,019
15,744
£’000
14,844
-
1,483
554
2,967
19,848
£’000
155
-
-
-
39
194
£’000
-
1,879
25
-
32
1,936
The Directors consider that the carrying amounts of trade and other payables approximate their fair value.
60
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
23. BORROWINGS
Bank loans
Group
Company
31 Mar 2018
30 Nov 2016
31 Mar 2018
30 Nov 2016
£’000
-
£’000
994
£’000
-
£’000
994
The Company had 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 had a floating charge over the assets of the other trading subsidiaries of the Group.
The loan was repaid in full on 24 January 2017, following the sale of the property on which it was secured.
Bank loans are repayable as follows:
Within one year
Within two to five years
After five years
24. PROVISIONS
Group
At 1 December 2016
Provided during the year
Utilised during the year
At 31 Mar 2018
Provisions included in current liabilities
Provisions included in non-current liabilities
Group
Company
31 Mar 2018
30 Nov 2016
31 Mar 2018
30 Nov 2016
£’000
-
-
-
-
£’000
187
728
79
994
£’000
-
-
-
-
IFA clawback
provision
£’000
Complaints
provision
£’000
21
14
-
35
28
5
-
33
£’000
187
728
79
994
Total
£’000
49
19
-
68
31 Mar 2018
30 Nov 2016
£’000
33
35
68
£’000
28
21
49
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.
61
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
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 30 November 2016
Additions during the year:
Intangible assets (note 14)
Charged to Statement of Comprehensive Income
Paid during the year
At 31 March 2018
Included in current liabilities
Included in non-current liabilities
Client relationships
£’000
3,231
106
181
(1,216)
2,302
31 Mar 2018
30 Nov 2016
£’000
1,179
1,123
2,302
£’000
1,130
2,101
3,231
62
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
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:
Loans
and other
receivables
Amortised
cost
31 March 2018
Held at fair
value as avail-
able-for-sale
assets
Fair value
through profit
or loss
Total
£’000
£’000
£’000
£’000
£’000
-
-
17,339
-
-
-
-
-
-
-
7,277
11,994
282
2,302
48
692
-
-
-
-
-
-
198
-
-
-
-
-
48
890
17,339
7,277
11,994
282
2,302
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
Deferred consideration
63
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
26. FINANCIAL RISK MANAGEMENT CONTINUED
Group
Financial assets
Available-for-sale investments
Other investments
Trade receivables
Cash and cash equivalents
Financial assets
Trade and other payables
Finance leases
Borrowings
Deferred consideration
Amortised cost
30 November 2016
Held at fair value
as available-for-
sale assets
Fair value through
profit or loss
£’000
-
-
17,812
6,657
16,327
634
994
3,231
£’000
40
530
-
-
-
-
-
-
£’000
-
78
-
-
-
-
-
-
The tables below summarise the Company’s main financial instruments by financial asset type:
Amortised cost
£’000
985
2,298
155
-
Amortised cost
£’000
960
4,710
1,904
994
31 March 2018
Held at fair value
as available-for-
sale assets
Fair value through
profit or loss
£’000
£’000
-
-
-
-
-
-
-
-
30 November 2016
Held at fair value
as available-for-
sale assets
Fair value through
profit or loss
£’000
£’000
-
-
-
-
-
-
-
-
Company
Financial assets
Subordinated Loan
Group balances
Financial liabilities
Trade and other payables
Borrowings
Company
Financial assets
Subordinated Loan
Group balances
Financial liabilities
Trade and other payables
Borrowings
64
Total
£’000
40
608
17,812
6,657
16,327
634
994
3,231
Total
£’000
985
2,298
155
-
Total
£’000
960
4,710
1,904
994
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
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. 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 main 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.
65
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
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 31 March 2018
Payable within
1 year
Payable in
2 to 5 years
Payable after more
than 5 years
Total contractual
payments
£’000
11,954
299
-
3,019
1,216
27
16,515
£’000
-
-
-
439
1,216
21
1,676
£’000
-
-
-
-
-
£’000
11,954
299
-
3,458
2,432
48
18,191
At 30 November 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
-
373
790
282
2,361
21
3,827
£’000
-
-
85
-
-
-
85
£’000
16,327
672
1,077
2,939
3,542
49
24,606
66
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
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 31 March 2018
Payable within
1 year
Payable in
2 to 5 years
Payable after more
than 5 years
Total contractual
payments
£’000
155
39
-
194
£’000
£’000
-
-
-
-
-
-
-
-
£’000
155
39
-
194
At 30 November 2016
Payable within
1 year
Payable in
2 to 5 years
Payable after more
than 5 years
Total contractual
payments
£’000
1,936
32
202
2,170
£’000
-
-
790
790
£’000
-
-
85
85
£’000
1,936
32
1,077
3,045
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
The Group’s exposure to the risk of changes in market interest rates relates to the Group’s amount of interest receivable on cash
deposits. The maximum exposure for interest is not significant.
Other price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices (other than those arising from interest rate risk 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 £245k (2016: £118k).
67
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
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 measurements are those derived from quoted prices (unadjusted) in active markets for identical assets
and liabilities;
Level 2 fair value measurements are those derived from inputs other than the quoted price included within Level 1 that are
observable for the asset or a liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 fair value measurements are those derived from formal valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
•
•
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
-
1
-
1
At 31 March 2018
Level 2
£’000
Level 3
£’000
-
-
-
-
48
-
196
244
At 30 November 2016
Level 1
£’000
Level 2
£’000
Level 3
£’000
-
4
-
4
-
-
-
-
40
-
74
114
Total
£’000
48
1
196
245
Total
£’000
40
4
74
118
There were no transfers between levels in either financial year.
68
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
26. FINANCIAL RISK MANAGEMENT CONTINUED
Unquoted equities
Other investments
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
Total gains or losses in statement of comprehensive income
Purchases
Settlements
Transfer out
Transfer in
Balance at 31 March 2018
£’000
40
-
-
-
-
-
40
8
-
-
-
-
48
£’000
180
(154)
122
(74)
-
-
74
(14)
172
-
(34)
-
198
27. CAPITAL MANAGEMENT
The capital of the Group comprises share capital, share premium, retained earnings and other reserves. The total capital at 31
March 2018 amounted to £12.9m for the Group (2016: £11.8m) and £13.5m for the Company (2016: £8.7m). 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.
28. TREASURY SHARES
Group
At 30 November
Additions
At 31 March
Period ended
31 Mar 2018
Year ended
30 Nov 2016
£’000
731
15
746
£’000
731
-
731
At 31 March 2018 no shares in the Company were held in Treasury (2016: nil shares). At 31 March 2018 no shares in the Company
were held in the EBT (2016: nil shares) and the ESOT held 2,289,500 shares (2016: 1,989,500), reflecting the issue of 300,000 shares
at a nominal value of 5p per share. This represents 6.66% of the called up share capital (2016: 8%).
69
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
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 20 to 23. 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
Options WAEP
Options WAEP
Options WAEP
Options WAEP
Options WAEP
31 March 2018
Outstanding at beginning
of year
Granted
Expired/forfeited
235,522
66.23p 1,650,000
78.14p
-
-
-
-
-
-
-
-
-
-
Exercised
(71,933)
105.00p
Outstanding at end of
year
Exercisable at end of
year
163,589
66.23p 1,650,000
78.14p
163,589
66.23p 1,500,000
78.14p
-
-
-
-
-
-
-
-
-
-
-
-
827,490
82.00p
329,500
92.50p
-
-
300,000
92.50p
(32,926)
82.00p
-
-
-
-
-
-
794,564
82.00p
629,500
92.50p
-
-
-
-
30 November 2016
CSOP
ESOT
SAYE 2
SAYE 3
ESOT
Options WAEP
Options
WAEP
Options WAEP
Options WAEP
Options WAEP
380,816
65.62p
1,650,000
78.14p*
371,831
49.20p
-
-
-
-
Outstanding at
beginning of year
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
-
-
-
-
*The weighted average exercise price for the 1,500,000 share options may vary if certain performance conditions are met.
70
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
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)
31 March 2018
CSOP
ESOT
SAYE 2
SAYE 3
ESOT
Black Scholes
Monte Carlo
Black Scholes
Black Scholes
N/A
02/11/11-
24/05/12
56.5-83.0
57.0-84.5
28/10/13-
13/04/16
74.5-114.5
0.0-114.5
0/05/13
18/05/16
30/05/17
60.0
49.2
92.0
82.00
Expected volatility (%)
32.6332-33.2130
43.0000-37.0000
41.6919
28.0000
Expected life (years)
5
5
Risk-free rate (%)
1.2993-0.7999
0.8000-1.9300
Expected dividend yield (%)
0.00
0.67-2.19
3
0.3106
0.83
3
0.5400
2.00
125.0
0.0
N/A
3
N/A
N/A
Pricing model
Date of grant
Share price at grant(p)
Exercise price (p)
Expected volatility (%)
Expected life (years)
Risk-free rate (%)
30 November 2016
CSOP
ESOT
SAYE 2
SAYE 3
Black Scholes
Monte Carlo
Black Scholes
Black Scholes
02/11/11-
24/05/12
56.5-83.0
57.0-84.5
28/10/13-
13/04/16
74.5-114.5
0.0-114.5
01/05/13
18/05/16
60.0
49.2
92.0
82.0
32.6332-33.2130
40.0000-37.0000
41.6919
28.0000
5
5
1.2993-0.7999
0.8000-1.9300
3
0.3106
0.83
3
0.5400
0.00
Expected dividend yield (%)
0.00
0.67-2.19
The weighted average share price, at the date of exercise, of the options exercised during the period to 31 March 2018 was 125p.
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 (2016: 252 trading days). For options granted in 2004, volatilities were
calculated back to the date of the Group’s flotation in July 2000.
Awards granted on 30 May 2017 are economically equivalent to shares with dividend rights. Therefore the fair value has been taken
as the closing share price on the date of grant £1.25
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 £55k during the year (2016: £205k), relating to share-based payment transactions.
71
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
31. LEASING COMMITMENTS
FINANCE LEASES
The net carrying value of these assets at 31 March 2018 was £563,040 (2016: £844,560).
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
-
282
Interest
£’000
17
-
17
2018
£’000
299
-
299
(17)
282
2016
£’000
299
373
672
(38)
634
31 Mar 2018
30 Nov 2016
£’000
£’000
282
-
282
282
352
634
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
31 Mar 2018
30 Nov 2016
31 Mar 2018
30 Nov 2016
£’000
611
2,253
993
3,857
£’000
420
1,418
714
2,552
£’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 31 March 2018 (2016: £nil)
72
Notes to the financial statements
Notes to the financial statements
For 16 months ended 31 March 2018
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 (2016: £nil) has been made for impaired receivables in respect of the amounts owed by related parties.
Key management personnel include Executive and Non-Executive Directors of WH Ireland Group plc and all its subsidiaries. They
are able to undertake transactions in stocks and shares in the ordinary course of the Group’s business, for their own account and
are charged for this service, as with any other client. The transactions are not material to the Group in the context of its operations,
but may result in cash balances on the Directors’ client accounts owing to or from the Group at any one point in time. The charges
made to these individuals and the cash balances owing from/due to them are disclosed in the table below. There are no other
material contracts between the Group and the Directors.
The following table sets out the transactions which have been entered into during the year together with any amounts
outstanding:
Key management personnel
Other related parties
2018
2016
2018
2016
Services rendered to
related parties
Purchases/services from
related parties
Amounts owed to relat-
ed parties
£’000
7
5
-
-
£’000
-
-
27
-
£’000
-
35
5
-
The total compensation of key management personnel is shown below:
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payment
16 months ended
31 Mar 2018
Year ended
30 Nov 2016
£’000
1,946
82
41
19
2,088
£’000
1,557
65
70
102
1,794
Company
The Parent Company receives interest from subsidiaries in the normal course of business. Total interest received during the year
was £2k (2016: £18k). In addition, the Parent Company received a management charge of £575k (2016: £406k) from its subsidiary
WH Ireland Limited. WH Ireland Limited also charged the Parent Company £25k (2016: £20k) 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:
Amounts owed by related parties
Amounts owed to related parties
Readycount Limited
WH Ireland (IOM) Limited
Stockholm Investments Limited
WH Ireland Limited
WH Ireland Trustee Limited
2018
£’000
4,157
106
410
-
-
4,673
2016
£’000
4,234
67
409
-
-
4,710
2018
£’000
-
-
-
2,473
17
2,490
2016
£’000
-
-
-
1,862
17
1,879
73
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