WH Ireland

www.wh-ireland.co.uk TICKER: WHI     EXCHANGE: AIM

WH Ireland is a stockbroker and asset manager with a substantial wealth management division which provides financial planning services. It covers the full range of stockbroking activities including private client investment management, execution-only dealing, research, institutional dealing, corporate finance, corporate broking and market-making. It is based in Manchester with branches in London, Birmingham, Bristol, Cardiff, Colwyn Bay, Craigie by Kilmarnock, Leeds and Malvern. The corporate finance division is particularly active in advising and raising money for Mining and AIM-listed companies. It has over £1bn of Assets Under Management and Control and private client investment management generates around half of group revenue and a majority of group profit.


Light at the end of the tunnel
Published: Mar 01 2018

WH Ireland is a financial services company offering private wealth management, wealth planning, and corporate and institutional broking services.
It has nearly completed a major transformation process at significant cost, £4m of which has been quantified in the accounts, but much of which, such as double-running costs while switching systems, has not. So we have eschewed profit forecasts in this period as they would be meaningless as a guide to the value of the company. 2018/9 will still be affected by last phase of the transformation process, but should be far less so than the previous few years.
The transformation had to start with creating a modern management structure with risk management and compliance embedded in it. Allied with this is the continuing strategy of improving the “quality” of revenue, making it more reliable and less subject to the vagaries of the market, so that it can provide the high level of service that its clients expect with less risk of falling into loss in a market downturn like 2007/8.
Forecasting is always difficult, especially about the future, so we tentatively offer a range of profit estimates of £1.5m to £1.75m for 2018/9 and £2.25m to £2.75m for 2019/20. The ‘sensibly cautious’ end of our ranges imply EPS of 4.36p and 6.5p in each financial year.
An earnings-based valuation of 172p (using the mean of Rathbone’s and Brewin’s PERs) is lower than our ‘sum of the parts’ valuation, although above the current price, because WHI has not yet exhausted the costs of the transformation process and the benefits are still in the process of accruing. Therefore we continue to advocate a “sum of the parts” valuation giving £72.4m or 243p per share.
Overcoming distractions
Published: Jan 29 2018

WH Ireland is a stockbroker and asset manager with a substantial wealth management division which provides financial planning services.
The true performance of WHIreland (“WHI”) is obscured by a raft of exceptional costs, some of which have been quantified and some of which, particularly double-running costs during the changeover of their back office systems, are just included under “administrative expenses”. So we consider the £0.4m operating profit before exceptionals to be very conservative.
The past twelve months or so have involved a long, hard slog to complete “Project Discovery” to transfer the Private Client back office administration to the SEI platform and restructure the front office while preparing for the well-intentioned but controversial MiFID II.
These costs have (unsurprisingly) pushed WHI’s statutory results into loss despite its achieving “pre-exceptional“ profits in the last 12 months, and swallowed £3m< of its cash. Last week WHI announced that it had agreed, subject to shareholder approval, to raise £2.4m through a placing of 2m new shares at 120p, the “market bid price” on Friday. This will add to the £10.5m cash in its interim balance sheet.
It is difficult to gauge what its profits would be in a “normal” year, since we need to add back not only the identified exceptionals but also the unquantified ones, the more than £1m of cost savings anticipated, and the opportunity cost of the time spent on preparations for MiFID. 
So we continue to use a “sum of the parts” valuation giving £70m or 252p per share ahead of the proposed placing, £72.4m or 243p per share diluted.
From recovery to growth
Published: Jul 24 2017

WHIreland (WHI) is a financial services company offering services in Private Wealth Management (PWM), Wealth Planning and Corporate & Institutional Broking (CIB). The Private Wealth arm provides discretionary and advisory services to individuals, corporates, trusts and funds.
WHI has reported a dramatic improvement in first half profits with a turn-round from pre-tax losses of £1.52m to profits of £360k thanks to a 24% rise in revenue to £14.9m and a major reduction in one-off charges. 
Both divisions generated significant growth in revenues and profits. First half revenue increased by 24%, thanks to an improvement in each division, with the major driver in the improvement, compared to either half of last year, being the more-than-trebling of transactional fees in WHI’s Corporate & Institutional Broking division, returning them to significance in the Group total. 
Recurring revenue, the base for future profits, grew encouragingly by nearly 20% and is now 45% of the total - mostly due to a £1m (23%) increase in fees in the Private Wealth Management Division, partly due to growth in AUM, and partly to some clients switching to a fee-only basis. This has encouraged management to move the target for recurring income from 50% to 65% of revenue. 
Following a profitable half-year, the sale of the Head Office and repayment of the attached loan, cash is now c. £10m. Using a rule of thumb for Private Client assets under management and administration plus excess balance sheet cash, gives a value of £72m or 259p/share, i.e. taking no account at all of the value of the resurgent corporate and institutional broking division.  
Building on strong foundations
Published: Feb 27 2017

A strengthened balance sheet and the growth in funds managed for clients are the foundations for a recovery in WHI’s fortunes after a traumatic period for Small Cap stockbrokers. During 2015/6 the Private Wealth Management division increased AUM by 14% to £2,872m, well ahead of the 8% rise in the WMA Balanced index with a significant 32% increase in the more valuable Discretionary funds to just over £1 billion. The rise in markets since end-November suggests that AUM may well now be over £3 billion. Fee income has continued to grow to £12m or 47% of total revenue. Since the year-end WHI has sold its Manchester Head Office for £5.27m, £0.52m above valuation, repaid associated debt and thereby increased its cash reserves to more than £11m.

The arrival of KEH Group as a major shareholder, purchasing 23% of the share capital from a group of shareholders at 140p, a substantial premium to the then market price, is viewed positively. KEH Group’s CEO, Humphrey Percy, has joined the board as a non-executive director. Other recent appointments include Victoria Raffe joining WHI as a non-executive director, and last week’s news that Adam Pollock is joining  as Head of Corporate Advisory and Broking.

Mattioli Woods recently paid 5.5% of AUM for a 49.9% stake in Amati which would imply a value of £56m, or 204p/share for WHI’s Discretionary AUM alone, i.e. ignoring its advisory and execution-only AUM, its corporate broking business, and the £11m of cash. 

Our usual sum-of-the-parts valuation uses a more conservative 4% for Discretionary AUM, 2% for Advisory and 0.5% for execution-only giving £61.7m (ignoring the rise since 30/11/16) plus the excess of its £11m cash over regulatory requirements, so roughly double the current share price (a little more if you adjust for the rise in AUM since the year-end, a bit less if you don’t). That’s putting no value on its corporate broking division which ranks 3rd among NomAds. The FTSE rise since end-November would add more than 10p/share to a valuation, so trying to quote one to the nearest p would be spurious precision.


Strategic Investor buys 23% of WHI
Published: Sep 20 2016

W.H. Ireland ("WHI") has gained a new and powerful strategic investor in Kuwaiti European Holdings ("KEH"), the vehicle of the highly respected Al-Humaidi  family, which has purchased 23% of the shares at 140p per share, a 39% premium to Friday's closing price. KEH owns substantial businesses in leisure, property, financial services and healthcare, including an investment management company in Kuwait and a FCA-regulated firm in the UK. The FCA has approved a "change of control" allowing KEH to buy up to 29.9% of W.H. Ireland.
We can visualise significant benefits: firstly synergies between WHI and the Kuwaiti investment manager (many Kuwaitis wish to invest in the UK), secondly KEH will use WHI's expertise when making other investments in the UK, thirdly KEH's access to capital can fund any attractive acquisition opportunities that come WHI's way.
The price KEH paid for the shares is a substantial 42% discount to our estimate of a sum-of-the-parts valuation for WHI (of 240p per share), but an almost equal 39% premium to the market price on Friday evening (pre announcement). Paying £8m+ at a significant premium to the market price looks like a strong vote of confidence in the strategies that WHI CEO Richard Killingbeck and his team have been pursuing.
Strategic progress in choppy waters
Published: Jul 21 2016

WH Ireland (WHI) is a financial services company offering Private Wealth Management, Wealth Planning and Corporate Broking services. 
Results today show that , helped by winning a number of significant mandates, AUM grew 6% in the half-year, despite a 2% fall in the FTSE All-Share index, with a particularly strong 24% rise to £949m in the more valuable discretionary FUM. This actually exceeded the rise in total AUM as the move to a fee-based system has led, in those clients' interests, to the closure of some inactive accounts.
In the light of market conditions we cannot be surprised at the decline of one-quarter in WH Ireland's total revenue in H1 2015/6. This has been one of the worst periods for AIM brokers with falls in companies listed, trading activity and money raised. Pre-referendum uncertainty, on top of worries about China, hit trading activity and money-raising (the main source of income for AIM brokers and NomAds); the latter slumped by more than 30% compared to H1 of WHI's 2014/5 year. 
However, WHI's balanced group of activities in wealth management, corporate broking and market-making enables it to survive a slowdown in any one division. It is one of the leaders in AIM corporate broking with 95 clients and yet again increased its market share of over 9%; its reliable retainer income covers all of its corporate broking division's employment costs. So, if conditions improve, then profitability will rebound. 
Using any version of the rule-of-thumb valuation gives a value far in excess of WHI's market capitalisation for its wealth management division alone; on 4% for Discretionary FM, 2% for Advisory and 0.5% for Execution-only, one gets £57.1m or 221p/share - applying the 6% that was paid for Towry's AUM would give over £6/share! 
Our sum-of-the-parts valuation including the Wealth Management division, equity in the Head Office and cash surplus to regulatory requirements (but ascribing no value to Corporate Broking) is £62m or 240p/share, nearly treble the current price. 
Achieving growth in falling markets
Published: Feb 29 2016

The preliminary results announced today by WH Ireland ("WHI"), for the year to 30 November 2015, show strong growth of 40% in headline earnings per share, resulting from useful, but more modest, increases in both absolute numbers and market share for AUM and corporate clients, allied to effective cost control. These have been achieved despite the well-publicised travails of the SmallCap sector and, in particular, the AIM market, where WHI is one of the leading corporate brokers and NomAds with a 9% market share.
Within the Private Wealth Management division management fee income increased by an impressive 32% to £6.5m, thanks to a rise in discretionary funds during the year. Likewise in Corporate Broking retainer income rose 5.75%, and transaction fees rose to £5.6m, but net revenue from market-making declined, as the whole AIM market suffered declining secondary share volumes.
Updating our sum-of-the-parts valuation: 4% for discretionary AUM, 2% for advisory and 0.5% for execution-only, plus surplus cash and the equity in the Manchester Office property (at 2013 valuation), comes to £57m or 223p/share, even without attributing any value to the corporate broking division. A pessimistic valuation, using 3% and 1.5% in a non-take-over situation and applying a 10% conglomerate discount, still gives 158p, two-thirds higher than WHI's current share price.


Share Placing and FCA settlement
Published: Feb 23 2016

WH Ireland has this morning announced the terms of a settlement with the FCA relating to deficiencies in the systems and controls for the protection against risk of "market abuse" during a period 3 years ago. The sanctions comprise a fine and a temporary restriction on its investment banking division.
In a separate announcement WHI has also announced that it has placed 1,193,000 new ordinary shares to raise approx. £1,070,000, at a price of 90p per share, (a premium to last night's close). This placing has been supported by its 2 biggest institutional shareholders, Oceanwood Capital and Polygon, who between them will now own over 30% of WHI. 
The group's top management, including compliance, has been completely replaced and strengthened since Richard Killingbeck's appointment as CEO in 2013: Dan Cowland joined as Finance Director in March 2014, Jamie Baptiste was recruited for a new role as Head of Group Risk in December 2014, and a new compliance officer, Graeme Pollok was appointed in December 2015. Tim Steel, formerly with Cazenove Capital Management, joined the board as a non-executive director in March 2014 and was elected Chairman in December 2015. 
The completion of this long-drawn-out discussion which has absorbed a lot of top management's time and energy frees them to return to their "day job" of running the company. WHI is due to report its Final results (for the year to 30 November 2015) on the 29th of February. 
Resilient performance in tough markets
Published: Dec 18 2015

WH Ireland today issued a trading update for its financial year ended 30 November 2015. In it, WHI said that total revenue for the year will see a marginal increase on that reported a year earlier, and that it also expects to report an increase in operating profit for the year.  
Increasingly difficult market conditions have prevailed during its second six months (the FTSE100 peaked at over 7,000 in May, and has traded at a 3 year low, below 6,000 in recent days) resulting in the London IPO and secondary fundraising markets seeing sharp falls in activity levels, compounded by lower day to day stock exchange share trading (and commissions). 
Nevertheless, WH Ireland's performance has been impressive, achieving 35% growth in management fee income from its Private Wealth Management division, and a 6% rise in retainer income in the Corporate Broking division (partly as a result of an increase in the number of its AIM listed corporate clients to 98). Discretionary assets under management rose by 6% to £770m, enabling the group to show a modest overall increase in assets under Management and Administration to £2.5 billion. 
Our "sum of the parts" valuation (of approaching £60m) remains well over twice WHI's current market capitalisation. WHI will release its preliminary results on the 29th of February. 
Progress towards profit target becoming visible
Published: Jul 20 2015

Despite continuing adverse market conditions in the first few months of 2015, with the number of companies on AIM falling, money raised on AIM 18% lower and the value of trades 31% lower than in H1 2013/4, WH Ireland has made good progress in the first half of its current financial year (6 months to 31 May). It achieved growth in revenue, Pre Tax Profit, Assets under Management, and its Corporate Client list. Profits were well over double the comparable half-year, on either a Headline Earnings or IFRS basis, and EPS  more than trebled to 1.86p. 
The Private Wealth Management increased Assets under Management and Advise from £2.69bn to £2.76bn on a statutory basis, and the mix has improved with continued growth, to £834m, in the more valuable discretionary Assets under Management.
Within Corporate Broking  WHI grew its client list to 98, (11.3% of all companies on AIM), took part in 15 transactions (v 9 in H1 2013/4), grew retainers by 7% to £1.68m and grew transaction fees by 30% to £2.73m.
We continue to believe that WHI is undervalued: A standard sum of parts valuation (using 4% of Discretionary, 2% of Advisory and 0.5% of Execution Only AUM plus surplus cash and equity in the Head Office building) comes to £61m, equivalent to 249p/share, over double the current price. Using a more conservative basis and applying a 10% conglomerate discount could reduce that to 177p, still 50% above the current share price. 
Never mind the width, feel the quality
Published: Mar 02 2015

In the year to November 2014 WH Ireland increased the higher quality Discretionary assets under management by 43% to £723 million, and also increased its Advisory assets under management to £952 million.
It has also announced a dividend of 2p, up 33% from the 1.5p declared in 2012/13. Recurring revenue rose 13%, and the cash position improved from £6m to £7.5m.
A read across from the very recent takeover of Ashcourt Rowan by Towry suggests a valuation way in excess of the current market cap. of £22.3m. A sum-of-the-parts valuation: 4% for discretionary AUM, 2% for advisory and 0.5% for execution-only, one times pre-tax for corporate broking, plus surplus cash and the equity in the Head Office Property comes to £60m or 251p/share; using 3% and 1.5% in a non-take-over situation and applying a 10% conglomerate discount still gives 185p, virtually double the current share price.
Increasing Quality of Earnings
Published: Dec 02 2014

WH Ireland's trading statement this morning confirms that the tough trading conditions in recent months on AIM means it will not meet the market's earlier profit expectations for the year to 30 November 2014.

Despite this it has been a year of progress for the group. The Corporate Broking division has grown their client list from 85 to 93, and the Private Wealth Management division increased AUMA by c.10% in the year, with most of the growth in the higher-margin discretionary category. In addition the group has made a number of important hires in recent months, strengthening senior management, bringing in several private client fund managers and opening new offices on the Isle of Man and in Milton Keynes.

Our provisional forecast for 2014/5, which we may revisit after seeing the full results for 2013/4, is for pre-tax profits of £2.5m, earnings per share of 7.86p and a dividend of 2.5p.  

The shares continue to look undervalued. Using our "rule-of-thumb" valuation of 2% of AUM plus surplus capital, would give a valuation of around £50m, more than twice WHI's current market capitalisation. Meanwhile the PFER is only 12.0x, which is barely two-thirds the sector's (historic) PER, so too low for a growing company.


Focused on growth in both divisions
Published: Jul 20 2014

WH Ireland's H1 results show a big improvement over the comparable period last year: both divisions made good progress, with adjusted profits growing by 620%.
The wealth management side grew funds under management by 9% to £2.65 billion (at 31 May), boosted, in part, by the successful integration of the two client list acquisitions made in 2013. More helpful AIM market conditions helped the Corporate Broking division grow H1 success fees by 20%. 
There have been numerous changes in senior personnel (including changes to the PLC Board) announced in 2014, as CEO Richard Killingbeck adds new management,  new client facing teams and new locations to strengthen and broaden the WHI offering.
On any assessment of value based on Funds under Management, WHI shares, despite doubling in the last 12 months, still look very modestly rated relative to their quoted peer group.
Significantly improved performance all round
Published: Feb 26 2014

Stockbroker WH Ireland has produced a sparkling set of results for its full year (to end November 2013): Pre Tax Profits rose by over 1000% and the Board has announced that the dividend has trebled to 1.5p.
Funds under Management or Administration rose an impressive 43% to £2.48 bn, boosted by the extremely successful acquisition of the former Seymour Pierce client list.
We expect further good progress in Profit before Tax and dividends in the current financial year (to 30 November 2014): WHI has enjoyed a strong first quarter.
Despite a 20% increase in recent days, the shares are still comfortably below our conservative sum of the parts valuation, of £34.6m (or 146p / share). Indeed we can easily arrive at a value of £53.8m, or 227p a share, as being a more realistic figure.
Survival, recovery, now growth
Published: Jul 23 2013

WH Ireland's (WHI) recent Interim results showed that its Assets under Management (AuM) had grown by 32% to £2.3bn compared to the same period 12 months ago, through a combination of successful acquisitions, positive market movements and organic growth.
The group has grown its corporate client list consistently in recent years, and has climbed to number 3 in the "NOMAD league table", with 88 corporate clients.  The continuing carnage among small cap brokers suggests there is plenty of scope for WHI to grow this list further.
WHI shares look very modestly valued (at just 0.4% of implied value AuM) relative to the peer group, (which includes Brewin Dolphin, Rathbones and Charles Stanley), all of which trade on considerably higher valuations (ranging between 1.0% - 3.4% of implied value AuM).
Growing the client base
Published: Mar 27 2013

WH Ireland's results for the year to November 2012, and its more recent newsflow, confirm the progress it has been making on both sides of its business. The corporate client list has grown by 40% in the year to reach 87 clients, as a result of WHI upgrading the number, and quality, of its corporate broking team.
Two deals in the last thirteen months have significantly boosted WHI's Private Client business: the Pritchard deal in early 2012, and more recently the Seymour Pierce acquisition, have boosted Group Funds under Management and Administration to over £2 billion.
We believe that WHI is currently valued at an unreasonable discount to the rule of thumb valuation of £30m for its private client Wealth Management division, £9m net cash and £3m net property value. This valuation  ignores its Corporate Broking operation, now ranked no 3 among AIM NomAds. With the results, WHI has also announced a dividend of 0.5p, a sign of the Board's confidence for the future.
W H Ireland bid for Blue Oar
Published: Mar 03 2009

In our view this is a reasonably sensible merger it just looks like the Pacman defence.
W H Ireland; exceptional growth and turnover
Published: Aug 03 2006

  • Strong corporate finance revenues
  • Good contribution from DJ Carmichael
  • Reinvestment into the business for the future
W H Ireland delivering record results
Published: Feb 24 2006

  • All divisions showing impressive growth
  • At least 50% discount to comps with PER(Est) at 10x '06 earnings
  • Confident dividend increase of 67%
W H Ireland; Corporate Finance dictating growth
Published: Aug 05 2005

  • Acquired 51% of Australian broker, providing further long term growth prospects
  • Fair price of 175p
  • First half turnover greater than any full year before 03/04
W H Ireland; past investment bears fruit
Published: May 09 2005

  • Record profits as corporate finance focus on AIM reaps rewards
  • 80% rise in divided to 2.25p plus special 2p dividend
  • 2005/6 has a forecast p/e ratio of 7.5x
  • Cautious market outlook lowers forecast for group profits, but PFER still at 36% discount to sector average
  • Fair price of 168p
W H Ireland; Delivering the goods
Published: Feb 22 2005

W H Ireland reported record turnover and profits for 2003/4, with pretax profits on a Headline Earnings basis up 772% to £2.66m and eps up 911% to 12.4p on an 82% increase in turnover. Net cash more than doubled from £4.66m to £10.58m and annual dividends are increased by 80% to 2.25p, in addition to which the special dividend received from the LSE is being passed on to shareholders as a 2p special dividend.


W H Ireland - Bid Approach
Published: Oct 14 2004

W H Ireland has disclosed an approach from a third party which may lead to a bid for the company. It is emphasised that the talks are at a preliminary stage and there is no certainty that an offer for the group will result from them. The share price has jumped by nearly 20% from 74.5p prior to the disclosure to the current 88.5p, but is still below the 94.5p reached at the end of February 2004.

Two points should be made.

  • The current price is still a few pence below our previous estimate of fair value of 95p, which was calculated on a conservative basis taking no account of any bid premium (for details see our August report). In view of market movements since August (see below) we have revised our estimate of fair value from 95p to 106p.
  • Any bid would obviously need to be agreed since the MBO team, together with their families and Mr Marafie, a former director own a majority of the issued share capital.
W H Ireland; expansion paying off
Published: Aug 20 2004

W H Ireland continues the strong growth achieved over the last seven years, which has seen its market share more than trebling.

With turnover up 30%, interim 2003/04 profits are more than double any previous full year, with the exception of 1999/2000.

The shares stand on PERs of 5.3 and 4.8 on our current year and next year estimates.

Our calculated fair value is 95p against the present share price of 69.5p.