Achieving growth in falling markets
​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.
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