REG - W.H. Ireland Group - Sale of Capital Markets Division & Trading Update

WH IrelandAnnouncement

03/06/2024 07:00

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RNS Number : 7519Q  W.H. Ireland Group PLC  03 June 2024

This announcement contains certain inside information for the purposes of
Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"),
and is disclosed in accordance with the Company's obligations under Article 17
of MAR.

 

WH Ireland Group Plc

 

("WH Ireland" or the "Company"

and with its subsidiaries the "Group")

Conditional Sale of the Capital Markets Division

Trading Update

Further to the Company's announcement of 20 May 2024, WH Ireland (AIM: WHI) is
pleased to confirm that its wholly owned subsidiary, WH Ireland Limited, has
conditionally agreed to sell the business and certain assets of its Capital
Markets Division to Zeus Capital Limited ("Zeus"), for a total consideration
of up to £5 million (the "Transaction"). Subject to the satisfaction of
certain conditions, as detailed below, it is anticipated that completion of
the Transaction will occur by mid-July 2024 at the latest.

Highlights

·      Sale of the Capital Markets Division, in line with the Company's
strategic objectives

 

·      Total consideration of up to £5 million

 

·      Continuing Wealth Management Division well positioned to take
advantage of a recovery in markets

Background to and reasons for the Transaction

As set out in the Company's interim results announcement on 27 December 2023,
the Board of WH Ireland has been focused on returning the business to
sustainable profitability, with an emphasis on restoring growth in revenue in
both the Capital Markets Division and its Wealth Management Division,
alongside continued cost discipline.  The Directors had also committed to
assess all strategic opportunities for WH Ireland, as they arose. The
Directors believe that the sale of the Capital Markets Division will help to
satisfy these objectives by immediately reducing the liabilities, as well as
the working and regulatory capital requirements of the Group, while also
increasing potential cash inflows if and when the deferred consideration is
paid, shortly following the first anniversary of completion of the
Transaction.

The Directors are encouraged by the opportunities that the Transaction will
provide to the existing employees and clients of the Capital Markets Division.
Following completion of the Transaction, the combined business of Zeus Capital
Limited and the WH Ireland Capital Markets Division (which will be known as
Zeus Capital Limited), is anticipated to have over 125 retained corporate
clients, a significantly enlarged trading platform, making markets in up to
200 stocks with broad institutional reach and approximately 90 employees. This
is expected to make it the second largest Nominated Adviser and Broker for AIM
companies with offices in London, Manchester, Leeds, Bristol and Edinburgh.

Trading Update

As set out in the Company's interim results announcement of 27 December 2023,
market conditions have continued to be challenging, especially for brokers
specialising in AIM companies, although the Directors remain focused on
operational efficiencies to ensure that the Group is well positioned for a
recovery in the markets. The Directors believe that the combination of
improving market conditions, the benefits of the cost reduction programme and
the sale of the Capital Markets Division announced today will, should the
recent market improvements continue, enhance the prospects for the WH Ireland
Wealth Management Division.  The Directors will also continue to assess
strategic opportunities for the Group if, and when, they arise.

Assets under management in the Wealth Management Division at the 31 March 2024
was £1.2 billion (30 September 2023: £1.2 billion; 31 March 2023: £1.4
billion).

Cash at the end of April 2024 was £5.8 million. (30 September 2023: £6.9
million; 31 March 2023: £4.2 million).

Details of the Transaction

As set out above, WH Ireland has conditionally agreed to the sale of its
Capital Markets Division to Zeus Capital Limited for a total consideration of
up to £5 million. The key assets being acquired include the corporate client
contracts of the Capital Markets Division, the employees, the key supplier
contracts, the Leeds and Bristol leasehold premises, and the transfer of High
Net Worth clients together with their Execution Only Custody Accounts valued
at approximately £600m.

Completion of the Transaction is conditional on certain limited conditions
precedent that are typical of a transaction of this nature, including the
novation of certain key supplier agreements and obtaining certain landlord
consents. It is currently anticipated that Completion will occur by mid-July
2024 at the latest ("Completion").

The consideration comprises an initial cash payment of £1 payable on
Completion; and up to £4,999,999 of deferred consideration. The deferred
consideration is to be paid in cash within 30 days of the first anniversary of
Completion and is to be calculated by reference to the retainer and
transaction revenue generated by the Capital Markets Division within the 12
months after Completion.

Information for Clients of WH Ireland Capital Markets

Clients of WH Ireland Capital Markets can be reassured that there should be no
change to the client service teams or the existing terms and conditions
(including fees) following the transfer to Zeus. Corporate clients who have
appointed WH Ireland as its Nominated Adviser should also note that as WH
Ireland's Capital Markets Division is being integrated into Zeus, the transfer
process for those clients appointing Zeus is expected to be simple and
straightforward for all clients. A representative from WH Ireland will be in
contact to explain the transfer process shortly.

Information for Employees and Clients of WH Ireland Wealth Management Division

There will be no change to the ongoing operations of the Wealth Management
Division, which the Directors believe will be well positioned to take
advantage of improving market conditions, as a result of the Group's cost
reduction programme and the sale of the Capital Markets Division announced
today.

Additional Disclosures

As at 30 September 2023, the Capital Markets Division had gross assets of
£4.96 million (unaudited); and for the year ended 31 March 2023 the Capital
Markets Division generated revenues of £12.25 million and a loss before tax
of £2.48 million (audited).

It is intended that the proceeds from the forthcoming sale of the Capital
Markets Division will be applied to general working capital for the Group.

Phillip Wale, Chief Executive of WH Ireland commenting on the transaction,
said:

"We are delighted to have agreed this transaction, which secures a good
outcome for the Group and the Capital Markets Division, and is in line with
our strategy to review strategic opportunities as they arise. We believe the
combined business of Zeus Capital Limited and the WHI Capital Markets Division
will represent a significantly enhanced platform for clients and employees,
enabling them to manage the current market challenges and take advantage of a
recovery in corporate activity from a position of strength as a leading
independent investment bank in the UK."

For further information please contact:

 WH Ireland Group plc                                     www.whirelandplc.com (http://www.whirelandplc.com)
 Phillip Wale, Chief Executive Officer                    +44(0) 20 7220 1666

 Canaccord Genuity Limited                                www.canaccordgenuity.com (http://www.canaccordgenuity.com)
 Emma Gabriel / Harry Rees                                +44(0) 20 7523 8000

 MHP                                                      whireland@mhpgroup.com (mailto:whireland@mhpgroup.com)
 Reg Hoare / Charles Hirst                                +44 (0) 7831 406117

 

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