Latest Results
Interim Results
Westhouse Holdings plc (LSE: WHL), the corporate and institutional broking group, today announces its interim results for the six months ended 30 June 2012.
Highlights
- Acquisition and integration of Arbuthnot Securities successfully completed
- Operating revenues of £5.1 million (2011 £5.2 million) reflect the structural revenue shift with a £1.9 million decrease in primary commissions offset by increases on other revenue lines:
- Secondary commissions up 93% against the same period last year
- Retainer income up 114%
- Advisory income up 262%
- Profitable market making activities,
- Increase in costs due to the acquisition and subsequent increase in headcount
- Loss before redundancy, restructuring and other non-recurring charges of £1.4 million
- Growth in corporate client numbers from 38 to 79
Commenting on the results, Christopher Getley, Chief Executive said:
"As an early sector consolidator we have materially increased the size of our business while delivering £10 million of annualised cost efficiencies. Westhouse now has one of the lowest cost bases in our industry. Our determination to capture strategic advantage during a time of considerable change in the financial markets has ensured that we continue to attract high quality talent to the firm, particularly amongst our research teams. Our approach is working as evidenced by the growth in our secondary commissions and retainer income. This is reducing our reliance on primary income during a prolonged period in which new equity issues have been a rare feature of the markets.
Westhouse continues to deliver a first class service to our corporate and institutional clients and is creating a good platform for sustainable profitability and value for our investors."
Chairman and Chief Executive's statement
Against a continuing backdrop of difficult markets and wider economic uncertainty, Westhouse Holdings plc has continued to grow its underlying business during the first half of 2012, in line with its Board strategy. The acquisition and integration of Arbuthnot Securities has been successfully completed which has significantly added to the firm's recurring revenue streams. The Board remains confident in the group's strategy of growing these revenue lines and of returning the group to sustainable profitability.
Results
Operating revenues of £5.1 million were broadly in line with the same period last year. Retainers (up 114%) and secondary commissions (up 93%) have together more than doubled and accounted for 50% of overall revenues compared to just 24% for the same period last year. Advisory fees have increased significantly (up 262%) and market making continues to be profitable. However, these increases were offset by a £1.9 million decrease in primary commissions reflecting the low level of activity in the market during the second quarter.
Administrative expenses have increased as a result of the larger size of the business following the acquisition of Arbuthnot Securities. However, £10 million of annualised cost savings have been implemented and cost control continues to be a key priority for the business.
Implementing these cost savings has resulted in a charge of £2 million, and it is anticipated that a further £0.7 million will be incurred in the second half. These measures will result in Westhouse having one of the lowest cost bases in the industry.
Against this background, the business continues to hire talented individuals with proven track records, most notably in the research area of the business. This reflects our ongoing commitment to provide our institutional clients with top quality analysis, ideas and insight.
The business has also won a number of new corporate clients and at the end of June had 79 corporate clients with a total market capitalisation of £3.4 billion.
In addition, since June, the group's balance sheet has been strengthened by the agreement to convert £3.3 million of the existing Perpetual Convertible Loan into equity and raising an additional £1.25 million of share capital. On a pro forma basis, these actions increase the equity of the group at 30 June 2012 to £5.4 million.
Outlook
The loss for the period is disappointing. However, the structural shift towards recurring revenues, the decisive action on reducing costs, a growing pipeline of corporate transactions and the continuing support of our shareholders, give the Board encouragement that the platform to return to sustainable profitability is in place.
| Garth Milne | Christopher Getley | |
| Chairman | Chief Executive |
6 September 2012
Consolidated income statement
| Note | Unaudited Six months ended 30 June 2012 £ |
Unaudited Six months ended 30 June 2011 £ |
Audited Year ended 31 December 2011 £ |
|
| Revenue | 4 | 5,097,183 | 5,175,371 | 7,969,897 |
| (Loss) / gains on sale of investments | (1,467) | 80,745 | 83,179 | |
| Losses in fair value of assets held at fair value through profit or loss | (4,370) | (58,372) | (50,248) | |
| Losses on available for sale assets - impairments | (116,347) | (244,594) | (438,906) | |
| Finance revenue | 966 | 3,024 | 5,103 | |
| Total income | 4,975,965 | 4,956,174 | 7,569,025 | |
| Administration expenses | (6,418,378) | (5,040,332) | (10,612,227) | |
| Finance costs | (95,051) | (87,906) | (175,691) | |
| Embedded derivative finance charge | 82,260 | (68,867) | 219,800 | |
| Gain on acquisition | 102,830 | - | - | |
| Operating loss before redundancy, restructuring and other non-recurring charges | (1,352,374) | (240,931) | (2,999,093) | |
| Redundancy, restructuring and other non-recurring charges | (2,013,932) | - | - | |
| Operating loss before tax | (3,366,306) | (240,931) | (2,999,093) | |
| Tax | 42,188 | - | (21,185) | |
| Net result for the period | (3,324,118) | (240,931) | (3,020,278) | |
| Attributable to owners of the parent | (3,324,118) | (240,931) | (3,020,278) | |
| Loss per share - basic and diluted | 2 | (0.18) | (0.02) | (0.25) |
All activities relate to continuing operations.
Consolidated statement of comprehensive income
| Unaudited Six months ended 30 June 2012 £ |
Unaudited Six months ended 30 June 2011 £ |
Audited Year ended 31 December 2011 £ |
|
| Loss for the period | (3,324,118) | (240,931) | (3,020,278) |
| Other comprehensive income: | |||
| Current year (losses) / gains | (13,924) | (80,745) | 8,163 |
| Available for sale securities reclassification to profit and loss | - | 32,695 | (45,591) |
| Total comprehensive loss for the period attributable to owners of the parent | (3,338,042) | (288,981) | (3,057,706) |
Consolidated statement of financial position
| Note | Unaudited 30 June 2012 £ |
Unaudited 30 June 2011 £ |
Audited 31 December 2011 £ |
|
| Assets Non current assets |
||||
| Goodwill | 718,015 | 718,015 | 718,015 | |
| Intangible assets | 180,366 | 77,593 | 68,972 | |
| Property plant and equipment | 487,627 | 351,918 | 326,800 | |
| 1,386,008 | 1,147,526 | 1,113,787 | ||
| Current assets | ||||
| Available for sale assets | 3.1 | 553,985 | 695,616 | 528,117 |
| Financial assets held at fair value | 3.2 | 528,477 | 380,798 | 388,922 |
| Financial assets held for trading | 3.2 | 1,119,273 | 1,656,741 | 649,502 |
| Market counterparties | 3.2 | 2,969,763 | 3,452,771 | 647,750 |
| Trade and other receivables | 1,727,640 | 270,324 | 838,457 | |
| Prepaid expenses | 834,364 | 1,471,952 | 435,360 | |
| Deferred tax | 2,239,195 | - | - | |
| Cash and cash equivalents | 502,978 | 3,795,529 | 2,017,550 | |
| Total current assets | 10,475,675 | 11,723,731 | 5,505,658 | |
| Total assets | 11,861,683 | 12,871,257 | 6,619,445 | |
| Equity | ||||
| Share capital | 7 | 973 | 607 | 607 |
| Share premium account | 6,999,538 | 3,993,744 | 3,993,744 | |
| Merger reserve | 2,025,707 | 2,025,707 | 2,025,707 | |
| Reserve in respect of share based payments | 370,376 | 370,376 | 370,376 | |
| Reverse acquisition reserve | (1,686,801) | (1,686,801) | (1,686,801) | |
| Revaluation reserve | 23,680 | 26,982 | 37,604 | |
| Profit and loss account | (6,885,889) | (782,424) | (3,561,771) | |
| Equity attributable to owners of the parent | 847,584 | 3,948,191 | 1,179,466 | |
| Liabilities Current liabilities |
||||
| Accounts payable and accrued liabilities | 2,030,564 | 1,234,521 | 1,370,738 | |
| Financial liabilities held for trading | 782,066 | 3,628,004 | 285,090 | |
| Market counterparties | 2,223,682 | 474,051 | 454,565 | |
| Borrowings | 1,000,000 | - | - | |
| Tax | - | 7,869 | 42,188 | |
| Total current liabilities | 6,036,312 | 5,344,445 | 2,152,581 | |
| Non-current liabilities | ||||
| Finance lease | 4,847 | 9,754 | 7,198 | |
| Contingent consideration | 1,425,000 | - | - | |
| Perpetual convertible loan | 6 | 3,123,200 | 2,773,200 | 2,773,200 |
| Embedded derivative | 6 | 424,740 | 795,667 | 507,000 |
| Total non-current liabilities | 4,977,787 | 3,578,621 | 3,287,398 | |
| Total liabilities | 11,014,099 | 8,923,066 | 5,439,979 | |
| Total equity and liabilities | 11,861,683 | 12,871,257 | 6,619,445 |
Consolidated statement of cash flows
| Unaudited Six months ended 30 June 2012 £ |
Unaudited Six months ended 30 June 2011 £ |
Audited Year ended 31 December 2011 £ |
|
| Cash flows from operating activities | |||
| Operating loss | (3,366,306) | (240,931) | (2,999,093) |
| Adjustments for: | |||
| Losses / (gains) on investments | 1,467 | (80,745) | (83,179) |
| Losses in fair value assets held at fair value | 4,370 | 58,372 | 50,248 |
| Losses on investments - impairments | 116,347 | 244,594 | 438,906 |
| Finance revenue | (966) | (3,024) | (5,103) |
| Finance cost | 95,051 | 87,906 | 175,691 |
| Embedded derivative finance charge | (82,260) | 68,867 | (219,800) |
| Gain on acquisition | (102,830) | - | - |
| Depreciation and amortisation | 179,993 | 81,516 | 182,151 |
| Loss on disposal of assets | - | 45,885 | 45,886 |
| Shares received in kind | (381,373) | - | - |
| Dividends received | (7,787) | (15,151) | (31,343) |
| Share based expense | - | 10,282 | 10,282 |
| (Increase) / decrease in receivables | (3,372,521) | (2,248,377) | 2,015,146 |
| Increase / (decrease) in payables | 2,929,904 | 2,684,296 | (564,720) |
| Tax refund in period | - | 11,167 | 24,305 |
| Net cash flows from operating activities | (3,986,911) | 704,657 | (960,623) |
| Cash flows from investing activities | |||
| Purchase of equipment | (258,491) | (77,540) | (107,328) |
| Proceeds from sale of investments | 173,533 | 167,156 | 167,156 |
| Purchase of investments | - | (681,681) | (681,681) |
| Cash paid on acquisition net of cash acquired | (745,749) | (134,866) | (134,866) |
| Interest received | 966 | 3,024 | 5,103 |
| Net cash flows from investing activities | (829,741) | (723,907) | (751,616) |
| Cash flows from financing activities | |||
| Issue of ordinary share capital | 2,431,160 | - | - |
| Loan received | 1,000,000 | - | - |
| Capital element of finance lease | (5,014) | (2,485) | (5,014) |
| Interest paid | (124,066) | (85,603) | (168,064) |
| Net cash flows from financing activities | 3,302,080 | (88,088) | (173,078) |
| Net increase / (decrease) in cash and cash equivalents | (1,514,572) | (107,338) | (1,885,317) |
| Cash and cash equivalents at beginning of period | 2,017,550 | 3,902,867 | 3,902,867 |
| Cash and cash equivalents at end of period | 502,978 | 3,795,529 | 2,017,550 |
Consolidated statement of changes in equity
| Share capital £ |
Other reserves £ |
Merger reserve £ |
Share based payments £ |
Reverse acquisition reserve £ |
Revaluation reserve £ |
Retained earnings £ |
Total equity £ |
|
| Balance at 1 January 2012 | 607 | 3,993,744 | 2,025,707 | 370,376 | (1,686,801) | 37,604 | (3,561,771) | 1,179,466 |
| Issued share capital | 366 | 3,005,794 | - | - | - | - | - | 3,006,160 |
| Transactions with owners | 973 | 6,999,538 | 2,025,707 | 370,376 | (1,686,801) | 37,604 | (3,561,771) | 4,185,626 |
| Loss for the period | - | - | - | - | - | - | (3,324,118) | (3,324,118) |
| Other comprehensive income | ||||||||
| Movements on disposals of available for sale financial instruments | - | - | - | - | - | (13,924) | - | (13,924) |
| Total comprehensive loss for the period | - | - | - | - | - | (13,924) | (3,324,118) | (3,338,042) |
| Balance at 30 June 2012 | 973 | 6,999,538 | 2,025,707 | 370,376 | (1,686,801) | 23,680 | (6,885,889) | 847,584 |
Consolidated statement of changes in equity, continued
| Share capital £ |
Other reserves £ |
Merger reserve £ |
Share based payments £ |
Reverse acquisition reserve £ |
Revaluation reserve £ |
Retained earnings £ |
Total equity £ |
|
| Balance at 1 January 2011 | 607 | 3,993,744 | 2,025,707 | 360,094 | (1,686,801) | 75,032 | (541,493) | 4,226,890 |
| Share option expense | - | - | - | 10,282 | - | - | - | 10,282 |
| Transactions with owners | 607 | 3,993,744 | 2,025,707 | 370,376 | (1,686,801) | 75,032 | (541,493) | 4,237,172 |
| Loss for the period | - | - | - | - | - | - | (240,931) | (240,931) |
| Other comprehensive income | ||||||||
| Movements on disposals of available for sale financial instruments | - | - | - | - | - | (80,745) | - | (80,745) |
| Change in value of available for sale financial instruments | - | - | - | - | - | 32,695 | - | 32,695 |
| Total comprehensive loss for the period | - | - | - | - | - | (48,050) | (240,931) | (288,981) |
| Balance at 30 June 2011 | 607 | 3,993,744 | 2,025,707 | 370,376 | (1,686,801) | 26,982 | (782,424) | 3,948,191 |
Consolidated statement of changes in equity, continued
| Share capital £ |
Other reserves £ |
Merger reserve £ |
Share based payments £ |
Reverse acquisition reserve £ |
Revaluation reserve £ |
Retained earnings £ |
Total equity £ |
|
| Balance at 1 January 2011 | 607 | 3,993,744 | 2,025,707 | 360,094 | (1,686,801) | 75,032 | (541,493) | 4,226,890 |
| Share option expense | - | - | - | 10,282 | - | - | - | 10,282 |
| Transactions with owners | 607 | 3,993,744 | 2,025,707 | 370,376 | (1,686,801) | 75,032 | (541,493) | 4,237,172 |
| Loss for the period | - | - | - | - | - | - | (3,020,278) | (3,020,278) |
| Other comprehensive income: | ||||||||
| Current year gains | - | - | - | - | - | 8,163 | - | 8,163 |
| Available for sale financial instruments reclassification to profit and loss | - | - | - | - | - | (45,591) | - | (45,591) |
| Total comprehensive income for the period | - | - | - | - | - | (37,428) | (3,020,278) | (3,057,706) |
| Balance at 31 December 2011 | 607 | 3,993,744 | 2,025,707 | 370,376 | (1,686,801) | 37,604 | (3,561,771) | 1,179,466 |
Notes:
The notes are available in the printable pdf of the results. To download it, please click here