WH Ireland has posted an operating loss of £1.6 million after being hit by rising costs on Mifid II and its new operational platform, which has pushed back development plans in its wealth division.
In its unaudited results for the year ending 30 November 2017, the firm reported an operating profit of £423,000 before exceptional items, which included £196,000 on Mifid II, £643,000 in restructuring costs and £1.2 million on ‘Project Discovery’.
WH Ireland’s ‘project discovery’ relates to the outsourcing of its wealth back office to SEI and the sale of its freehold premises in Manchester.
The firm admitted the integration to the new operating platform has ‘created some delays (and extra cost) in our development plans’ for the wealth management division.
It comes after WH Ireland issued a profit warning in December saying costs associated with managing Mifid II requirements were higher than earlier anticipated, adding that it had booked further exceptional costs related to its long-term strategic shift toward regulated wealth management.
The £1.6 million operating loss was down from £3 million for the previous 12 months to 30 November 2016.
The firm said the ‘major issues’ in its private wealth management division are now behind it, and revealed it is launching a ‘Navigator’ range of model portfolios focused on its smaller clients, which is designed to complement its bespoke discretionary and advisory portfolio service.
In his statement, WH Ireland chairman Tim Steel said the firm expects a ‘considerable reduction in overall costs in 2018 due to the number and quantum of non-recurring and exceptional costs borne in 2017.’
Steel also revealed a change in the remuneration structure of the senior management team in both its corporate broking and wealth management divisions.
He said: ‘Moving to a consistently profitable company is the key focus of the senior management team for 2018.
‘To aid this move, members of both business divisions have agreed to contractual changes in their remuneration structure which focusses upon profitability, compliance and culture rather than purely revenue.’
Group revenue at WH Ireland increased 12.3% to £28.6 million as discretionary assets in its wealth management division jumped by 10.7% to £1.1 billion.
Its corporate and institutional revenue rose by 32% to £10 million, while the group’s recurring revenue – 46% of its total revenue – increased to £13.2 million, closing in on the 50% target the firm set around three years ago.
Looking ahead, WH Ireland chief executive Richard Killingbeck (pictured) said: ‘As a result of the elimination of duplication of costs, the identification of further specific cost reductions and margin improvement within the private wealth management division we expect to be able to report a significant improvement in profitability for the year to March 2019.’