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W.H.Ireland Group reports 301% EBITDA decline and 17.7% Revenue decline

27 Feb 2017 • About W.H.Ireland Group ($WHI) • By InTwits

W.H.Ireland Group reported FY2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • W.H.Ireland Group doesn't have a profitable business model yet: FY2016 ROIC is -22.8%
  • EBITDA Margin is declining: -10.1% in FY2016 vs. 4.1% in FY2015 vs. 2.4% in FY2012
  • EBITDA Margin is quite volatile: -10.1% in FY2016, 4.1% in FY2015, 4.3% in FY2014, 4.4% in FY2013, 2.4% in FY2012
  • W.H.Ireland Group has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.7%. At the same time it's a lot of higher than industry average of 5.1%.
  • CAPEX is quite volatile: 0.88 in FY2016, 0.074 in FY2015, 0.26 in FY2014, 0.40 in FY2013, 0.69 in FY2012
  • The company has unprofitable business model: ROIC is at -22.8%
  • It operates with high leverage: Net Debt/EBITDA is -2.2x while industry average is -4.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

W.H.Ireland Group ($WHI) key annual financial indicators

mln. £201220132014201520162016/2015
P&L
Revenue25.07929.65330.04330.88425.421-17.7%
SG&A28.73429.35330.93628.454-8.0%
EBITDA0.6031.3131.3061.273-2.558-300.9%
Net Income-0.2101.1360.337-0.681-2.744302.9%
Balance Sheet
Cash9.3406.0467.4908.1766.657-18.6%
Short Term Debt0.2870.3000.2980.2980.46957.4%
Long Term Debt1.8661.5761.2780.9941.15916.6%
Cash flow
Capex0.6860.4020.2610.0740.8781,086.5%
Ratios
Revenue growth8.4%18.2%1.3%2.8%-17.7%
EBITDA growth-78.4%117.7%-0.5%-2.5%-300.9%
EBITDA Margin2.4%4.4%4.3%4.1%-10.1%-14.2%
Net Income Margin-0.8%3.8%1.1%-2.2%-10.8%-8.6%
SG&A, % of revenue96.9%97.7%100.2%111.9%11.8%
CAPEX, % of revenue2.7%1.4%0.9%0.2%3.5%3.2%
ROIC1.7%6.3%5.6%6.7%-22.8%-29.5%
ROE-1.7%9.0%2.5%-5.2%-22.3%-17.1%
Net Debt/EBITDA-11.9x-3.2x-4.5x-5.4x5.4x

Revenue and profitability


The company's Revenue dropped on 17.7% in FY2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.88 pp from 7.2% to 8.1% in FY2016.

SG&A as a % of Revenue jumped on 11.8 pp from 100% to 112% in FY2016.

Net Income marign decreased on 8.6 pp from -2.2% to -10.8% in FY2016.

Capital expenditures (CAPEX) and working capital investments


W.H.Ireland Group's CAPEX/Revenue was 3.5% in FY2016. CAPEX/Revenue increased on 2.1 pp from 1.4% in FY2013 to 3.5% in FY2016. For the last three years the average CAPEX/Revenue was 1.5%.

Return on investment


The company operates at negative ROIC (-22.79%) and ROE (-22.33%). ROIC dropped on 29.5 pp from 6.7% to -22.8% in FY2016. ROE dropped on 17.1 pp from -5.2% to -22.3% in FY2016.

Leverage (Debt)


Debt level is -2.2x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA jumped on 5.4x from -5.4x to in FY2016. Debt surged on 26.0% in FY2016 while cash dropped on 18.6% in FY2016.

Appendix 1: Peers in Financial Services


Below you can find W.H.Ireland Group benchmarking vs. other companies in Financial Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Volvere ($VLE)-47.1%149.8%-23.2%124.9%
Real Estate Credit Investments Pcc ($RECP)335.8%-59.6%47.3%-29.8%
Fairpoint Group ($FRP)32.7%-17.5%35.1%41.2%
Afh Financial Group ($AFHP)49.9%39.3%39.5%15.0%
Manx Financial Group ($MFX)5.6%33.3%22.0%28.2%
 
Median (30 companies)5.6%12.6%6.8%2.8%2.0%
W.H.Ireland Group ($WHI)18.2%1.3%2.8%-17.7%


Top companies by Gross margin, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Record ($REC)98.8%98.8%99.6%99.3%99.0%
Panmure Gordon & Co ($PMR)95.2%95.0%95.3%95.2%
First Property Group ($FPO)86.0%69.5%67.9%83.0%80.6%
Schroders ($SDRC)76.9%76.2%77.7%78.3%
London Capital Group Hldgs ($LCG)64.2%70.5%73.6%67.9%
 
Median (16 companies)54.3%52.7%52.2%52.5%47.1%


Top companies by EBITDA margin, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Livermore Investments Group Ltd ($LIV)84.9%64.8%78.8%83.5%
Real Estate Credit Investments Pcc ($RECP)58.6%89.3%77.0%80.3%79.3%
Manx Financial Group ($MFX)39.8%49.2%56.5%58.8%
Hargreaves Lansdown ($HL.)64.1%66.4%58.7%51.2%57.5%
Daishin Securities Co ($DSS)53.8%51.5%38.8%49.2%38.9%
 
Median (28 companies)14.9%17.0%16.8%16.9%16.6%
W.H.Ireland Group ($WHI)2.4%4.4%4.3%4.1%-10.1%


Top companies by CAPEX/Revenue, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
London Capital Group Hldgs ($LCG)1.8%0.2%3.4%7.7%
Daishin Securities Co ($DSS)6.0%24.7%15.0%6.5%15.1%
Commercial Bank Of Qatar(The) ($CBQS)6.0%3.8%2.8%3.9%3.3%
Nmbz Hldgs ($NMB)6.1%3.0%2.1%3.8%
Afh Financial Group ($AFHP)1.6%1.5%0.7%3.8%1.8%
 
Median (29 companies)1.3%1.3%1.3%1.2%1.3%
W.H.Ireland Group ($WHI)2.7%1.4%0.9%0.2%3.5%


Top companies by ROIC, %

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Hargreaves Lansdown ($HL.)108.7%111.7%101.0%87.5%90.0%
Manx Financial Group ($MFX)8.0%19.7%29.7%40.2%
Record ($REC)23.8%19.6%20.2%20.2%18.5%
Impax Asset Management Group ($IPX)-13.7%17.2%18.7%16.1%15.0%
Lighthouse Group ($LGT)7.2%-3.9%8.6%14.6%25.7%
 
Median (30 companies)5.5%6.0%9.2%7.7%11.3%
W.H.Ireland Group ($WHI)1.7%6.3%5.6%6.7%-22.8%


Top companies by Net Debt / EBITDA

Top 5 FY2012 FY2013 FY2014 FY2015 FY2016
Private & Commercial Finance Group ($PCF)12.8x14.3x13.9x12.9x10.6x
First Property Group ($FPO)3.6x3.0x5.6x12.3x9.4x
Canaccord Genuity Group Inc ($CF.)10.2x
Daishin Securities Co ($DSS)1.5x2.4x10.7x8.0x13.4x
S & U ($46IE)1.4x1.3x1.7x3.1x0.5x
 
Median (25 companies)-1.0x-1.0x-1.9x-0.5x-0.5x
W.H.Ireland Group ($WHI)-11.9x-3.2x-4.5x-5.4x


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