WH Ireland LON:WHI, the AIM-listed small-cap broker has been promising jam tomorrow for a while, but on the strength of its final results this week is still serving up dry bread.
The broker’s poor performance is something that newly-installed chairman Simon Moore has to address quickly to start turning the ship around.
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The sale of the company’s capital markets division to Zeus Capital for GBP5m last month will help by reducing the firm’s immediate liabilities and pare back WH Ireland’s working and regulatory capital requirements.
However, the sale isn’t going to see a sudden influx of capital for the troubled AIM broker, with initial consideration being for one pound, with the remaining GBP4,999,999 expected one year and one month from the initial transaction.
Worryingly, in WH Ireland’s press release appertaining to the transaction, management left “if and when” on the table when commenting on the final consideration.
AIM market weakness
The weakness of the AIM market, especially post-Covid, has been the biggest issue for WH Ireland, which acted as Nominated Adviser (Nomad) for AIM companies. The reconstituted group will now concentrate on its core competencies of investment management and financial planning.
Philip Wale, CEO said: “The market backdrop has been extremely challenging. While the FTSE100 has been relatively resilient, the AIM All Share Index fell 9% over the period. These market conditions severely impacted transactional business (and particularly fundraisings) in the Capital Markets Division, which, together with significant restructuring costs, were the principal reason for the group reporting losses for the year.”
WH Ireland revenue down, losses up
In the year to end-March WH Ireland saw its revenue fall from GBP26.7m to GBP21.5m year-on-year which led to an underlying loss before tax of GBP2.5m, up 25% y-o-y and a statutory loss before tax of GBP5.9m, up from a loss before tax of GBP1.2m a year previously, something that the company attributed to its restructuring costs of GBP2.9m, a loss on investment of GBP0.6m and no benefit from other income, a thing that the broker could call in to the tune of GBP2.2m in 2023. Loss per share widened from 3.08p to 3.38p.
Further redundancies and potential corporate sales at WHI
Before the sale, WH Ireland did manage to raise GBP5m from a placement in August 2023. Management promised more cost-cutting, mainly through redundancy, the company was open to selling off more of itself to raise funds and Wale promised that post-sale the company was moving back towards break-even.
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WH Ireland opened trading on 13th August at 3.4p, down 51% over the year and down 38% year-to-date with its shares ranging between 2.5p and 7.89p over a 52-week period. WH Ireland has a market capitalization of GBP8m.
WH Ireland is at a crossroads. The sale of its capital markets division is a step in the right direction, but the company still faces significant challenges. With a new chairman at the helm, investors will be hoping for a swift turnaround to restore confidence in the business and its share price.
