Sale of Capital Markets Division & Trading Update

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: