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WH Ireland Group

WH Ireland Group Plc Continues to progress its transformation programme

WH Ireland Group Plc (LON: WHI) today announced its interim results for six month period ended 30 September 2018.

Chairman’s statement

This interim report covers the six month period to September 2018 and is the first since our decision to move our year-end to 31 March. The firm has continued to progress its transformation programme during this period in order to provide a more robust platform and enhance our offering to clients for the years ahead. As I have stated before, the scale of this process has not been without additional cost and labour, but is now closer to fulfilment.

The last two months of this period saw a number of important changes, building on the work undertaken in recent years.

Phillip Wale joined us as CEO (elect) from August 2018, with the FCA approving his appointment last month. Phillip has brought 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, including senior positions at Goldman Sachs in both New York and London, and Chief Executive roles at Seymour Pierce and Panmure Gordon & Co.

The Group has also seen a strengthening of our core shareholder base during the period, with Polygon and Oceanwood agreeing to increase their stakes in the firm, alongside the welcome addition of M&G joining the key shareholder list.

Private Wealth Management

We have previously described to shareholders the initiatives being undertaken across our Private Wealth Management business, including the focus on increasing discretionary assets under management and the outsourcing of our custody and operational functions.

The period under review saw further progress on both counts and whilst more needs to be done to improve the profitability of the division, I am encouraged by what has been achieved to date.

Corporate & Institutional Broking

As has been widely reported, the Corporate & Institutional Broking division is operating in a market that has seen a high degree of uncertainty in recent months but importantly, the division has remained profitable for the period.

Notwithstanding this backdrop, we have undertaken a number of notable capital raisings and advisory roles in the period and I believe that we have established a business model which is positioned well to take advantage of the structural changes being brought about in our industry by the introduction of MiFID ii legislation.

The division is already benefiting from Phillip Wale’s considerable experience in the short time since his appointment and will continue to provide a high quality of service to both our corporate and institutional clients as we grow, whether it be through advice, access to capital or trading capabilities.

Looking forward

The Board continues to progress its transformation strategy and, following his appointment as CEO, Phillip has been tasked with delivering an accelerated path to growth and profitability of the Group, for the benefit of all of the Company’s stakeholders. Fee income (CIB retainers, Private Wealth management and advice fees) is now running at approximately £1.3 million a month, representing nearly 55% of our total monthly revenue and provides a strong platform from which to continue to build. Whilst there remains much to be achieved, I believe that the foundations are being put in place to deliver growth across both divisions.

Finally, I would like to acknowledge on behalf of the Board and Senior Management team, the continued hard work and focus of all of our employees during the past six months.

Chief Executive Officer’s report

This is my first CEO’s interim report, having joined the firm in August. The firm continues to undergo transformation to create a capable and robust platform that will enable the financial performance of the Group to grow significantly. These changes, started by my predecessor over the past two years, have covered all aspects of both the Private Wealth Management and Corporate & Institutional Broking businesses. Although close to conclusion, they have been expensive and not without challenge to implement.

Private Wealth Management

The Private Wealth Management division increased total assets under management by 3% to £2.6bn as at 30 September 2018, compared to 31 March 2018. Following the strategic focus previously set out, it was pleasing to note that Discretionary AUM increased by almost 8% since the beginning of the financial year and accounted for nearly 44% of total AUM.

The division continued its transformation programme during the period under review, which has been both costly and challenging for the business but I am pleased to see the progress that has been achieved to date. One of the key initiatives being undertaken has been outsourcing our custody and operational functions and, as previously reported, this complex project has run over budget and taken longer to implement. However, looking forward, it has resulted in a more robust and scalable operating platform from which to build the division.

We have seen a number of successes in the period across the division.

Wealth Management: In addition to both growing the total AUM and proportion of Discretionary portfolios as referred to above, the business has also increased AUM for its ‘Navigator’ product for our clients with smaller portfolios.

Wealth Planning: has continued to attract new funds under management and is benefiting from cross-referrals from the wider Wealth Management business.

Isle of Man: has increased AUM through a number of new mandates.

We were delighted that a number of our investment people from across the division were included in the 2018 Citywire Wealth Manager Top 100 last month, a testament to the strength of the team.

Outlook for Private Wealth Management

Following the significant investment made in the division in recent years, the key now is to ensure that we build on the platform in place to grow the business towards profitability. We will continue to look to increase the proportion of discretionary assets under management and attract high quality teams into the business in order to take advantage of the scalable platform which we now have in place.

Corporate & Institutional Broking

The Corporate & Institutional Broking division (CIB) has continued to build on its solid foundations against the widely reported headwinds being seen across the sector. The division benefits from an experienced team, headed by Adam Pollock, with an attractive level of recurring revenue from its corporate retainer base and a proven track record in raising capital.

CIB has positively embraced the fundamental changes brought about by the introduction of MiFID ii at the beginning of the year and is seeing an increasing number of opportunities as a result of both our business model and approach to this new legislation. We have further invested in our platform for raising growth capital for private companies, whilst continuing to utilise resource from across the wider CIB division to complement the dedicated team when required.

Public markets

Retainer income increased by 14% in the period. This was driven not only through a number of new quoted corporate clients moving to WH Ireland from our competition but also as a result of an increase in our average NOMAD/broker fees. The division secured five new corporate NOMAD/broker clients during the period under review and remained the third largest NOMAD to AIM companies by total number of clients.

A number of notable capital raises were undertaken in the period for our corporate clients and we were delighted to win the ‘IPO of the year’ category at the recent Insider Media North West Dealmakers awards.

A decline in institutional secondary volumes was seen in the period, although compared to other activities, this is a relatively small element of revenue across the division.

The business is benefiting from the fundamental changes brought about by MiFID II legislation due to the nature of our business model, a tight control of costs and ability to distribute research across the wider base of investment firms. This complementary approach, including working alongside larger firms to the benefit of corporate clients, is beginning to provide an increasing number of opportunities for the division.

Private markets

In addition to our traditional public markets business within the Corporate & Institutional Broking division, our platform for raising growth capital for private companies from VCT and EIS funds, as well as through the ‘Investor Forum’, whose clients include High Net Worth Individuals and Family Offices, continues to make good progress. We believe that this platform has significant long-term potential for both the division and the Company.

Outlook for Corporate & Institutional Broking

Against an uncertain market backdrop, the division is building an encouraging pipeline for 2019, the delivery of which, as always will be dependent upon market conditions. However, reflecting the opportunities we are beginning to see, and to ensure we take full advantage of structural changes being seen in the market, we are actively looking to recruit further high quality people into the division to grow the business over the coming years.

Events after the reporting period

On 20 September 2018 WH Ireland Group Plc proposed a placing of 2,000,000 ordinary shares from its authorised share capital at an issue price of £1.00. This was approved at a General Meeting of the Company held on 9 October 2018.