W.H. Ireland Group Plc (LON:WHI) today announced its interim results for the Six Months ended 31 May 2017.
· Group revenue increased by 24% to £14.9m.
· Operating profit before exceptional items: £0.4m.
· Private Wealth Management AUMA increased to £3.1billion.
· Corporate and Institutional Broking transaction revenue increased by 239% to £2.8m.
· Private Wealth Management fee income rose by 23% to £5.4m; and
· Total Group recurring revenue increased to £6.5m (45% of total revenue).
Chairman’s statement
It is encouraging to be able to report a substantial rebound in operating performance at WHIreland for the first six months of the current financial year, compared with a difficult period for the first half of 2016.
The recovery in profitability has been driven by revenue growth in both divisions (Private Wealth Management and Corporate and Institutional Broking), the detail of which is outlined in the Chief Executive’s statement. In addition to restoring profitability, we have bolstered our balance sheet through the previously announced sale of our Manchester office which has increased our cash balance substantially.
We have announced our intention to change our accounting reference date from November to March, effective as of March 2018. This brings us into line with many of our competitors and will also reduce the duplication of reporting requirements in regard to our wider regulatory responsibilities.
Recurring revenues are now at 45% of total revenues. With a strong pipeline of business in our Corporate and Institutional Broking division and continued growth in our discretionary assets under management in our Private Wealth division, I am optimistic about the outlook for the second half of 2017 and the foundations for future growth into 2018.
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.
Tim Steel
21 July 2017
Chief Executive Officer’s report
The past eighteen months has witnessed a period of significant change across every aspect of the Company, helping to establish the foundations of a leading advice driven and client focussed business.
We welcomed Adam Pollock as Head of the Corporate and Institutional Broking division in March and he, along with the senior team in the division has not only maintained the momentum of the second half of last year but has accelerated it. Our pipeline of new business continues to grow and this bodes well for the current reporting period.
The Private Wealth Management division has undergone significant change as a result of the transfer of our custody and operational functions to SEI (Europe) Limited. This new platform will provide us with the capabilities that we require in order to continue to grow our discretionary offering both in the UK and internationally.
The interim figures to 31 May 2017 are being compared against a difficult period last year but this should not detract from the excellent progress which has been reported. Contributing to the total WH Ireland Group Plc revenue increase of 24% to £14.9million has been the following:
| Private Wealth Management fees (including Wealth Planning) | + 23 % to £5.4million |
| Corporate and Institutional Broking transaction revenue | + 239 % to £2.8 million |
| Commission | + 5 % to £4.5 million |
| Market Making and principal turn | + 62 % to £0.5million |
When our corporate retainer fees are aggregated with the management fees shown above, our recurring revenue across the Group is approaching the target of 50% which I communicated three years ago. This helps create the confidence within the Company to continue the investment in change which remains a key focus of the recent progression of WHIreland. Due to the nature of our business revenue lines, I believe that a recurring fee target approaching 65% should be achievable within the next three years, with the majority of this change being driven by the continued shift to management fees in the Private Wealth Management division.
It should also be noted that whilst we continue to expense a number of items in relation to the changes in the Private Wealth Management division we have and we will continue to maintain a tight control of overall costs (this is despite a number of specific cost lines overlapping during a short transitional period this year). Our single largest line of expense is fixed employment costs and I am pleased to be able to report that compared with last year direct employment costs have fallen by 0.5% and I expect to report a further decline for the period as a whole despite our investment in new people to help achieve our growth ambitions.
Private Wealth Management
The division continues to focus upon its core strategic objective of increasing recurring fee income from the growth in clients and their advisers selecting our discretionary or advisory Wealth Management offering, and/or our Wealth Planning advice. This focus will accelerate over the next eighteen months as we look to supplement the internal momentum with a stronger profile externally. Total AUMA have grown to £3.1 billion as at 31 May 2017, of which discretionary fee paying and advisory represents over 60%. Our growth ambitions and targets for this division are high and will only be achieved in the medium term by a combination of organic and acquisitive growth.
Corporate and Institutional Broking
The division has regained significant positive momentum during the period under review. The emphasis remains upon providing leading advice to all of our clients, enhancing our corporate client list, and building a greater presence in the private company arena. To this end, we have recently launched an Investor Forum aimed at the ultra-high net worth/family office market in the UK and Internationally, whereby we introduce interesting private investment opportunities to this market.
Outlook
There is still much to do in order to achieve the goal of being recognised as a leading advice driven financial service company but significant progress has been made. With continued support from better financial market sentiment we believe WHIreland is well placed to grow both divisions and to achieve recognition for the successful development of the advice driven business model. I view the future of our Company with increasing confidence and optimism.
Richard Killingbeck
21 July 2017
