Walker Crips Regulatory News (WCW)

7 Jun 2005 07:30

Walker,Crips,Weddle,Beck PLC07 June 2005 PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2005 Walker, Crips, Weddle, Beck plc (Code: WCW), the financial services group whoseactivities cover stockbroking, fund and pension management and corporatefinance, today announces preliminary results for the year ended 31 March 2005,the highlights of which are: • Profit before tax of £1,653,000 (2004: £1,071,000), an increase of 54.3% • Turnover of £13,132,000 (2004: £11,492,000), an increase of 14.3% • Non-broking revenue of £4.4m, or 33.5% of group revenue (2004: £3.4m, or 29.6% of group revenue) • Earnings per share of 11p (2004: 7.2p), an increase of 52.8% • Final dividend increased to 4p per share (2004: 3p per share), making 6.35p for the year (2004: 5.25p), an increase of 21.0% • Continued excellent performance from unit trust division with funds under management rising to £52.6m at 31 March 2005 from £18.6m a year before, an increase of 182.8% • Current year started strongly with unit trust funds under management currently totalling £77m, an increase of 46.4% since 31 March 2005 • Acquisition of the London York Group completed on 11 April 2005 Graham Kennedy, Chairman, said: "The current year has started strongly with unittrust funds under management currently totalling £77m, including £12m of LondonYork funds, an increase of 46.4% since 31 March 2005, and we are confident offurther growth during the year. Daily volumes for our stockbroking activitiesshow an improvement over last year and our corporate finance and financialservices activities also remain strong. The integration of London York is now proceeding and we look forward tobenefiting from its first contribution to the group. While it is still early inour year, we believe there are solid grounds for optimism." Michael Sunderland, Chief Executive, said: "The encouraging business levels inthe January to March quarter have continued into April and we have a number ofexciting initiatives to develop in the year ahead. In particular we look forwardto working with David Hetherton and his team at London York. Solid fundmanagement performances from London York and both our Walker Crips UK Growth andEquity Income Funds leave us well placed to introduce and develop further fundsunder management. The earnings mix for our business during the current yearshould prove far wider ranging with a continuing shift in emphasis towards feebased revenues." 7 June 2005 For further information, please contact: Walker, Crips, Weddle, Beck plc +44 (0)20 7253 7502Michael Sunderland, Chief ExecutiveRodney FitzGerald, Finance DirectorSteve Bailey, Investment Director Liz Vaughan-Adams (Perception Partners) +44 (0)20 72982220, +44 (0)7979 853802 Further information on Walker, Crips, Weddle, Beck plc is available on theCompany's website at www.wcwb.co.uk. CHAIRMAN'S STATEMENT Review of the Year I am delighted to report that your Company has recorded the second highestannual pre-tax profit in its history of £1,653,000 for the year ended 31 March2005 which also represents an increase of 54.3% over the previous year. This excellent result has been achieved in conjunction with our decision torestructure the business and refocus our strategy on building a broadly basedfinancial services group encompassing stockbroking, fund and pension managementand corporate finance. I am pleased to report that non-broking revenues haverisen to £4.4m, representing 33.5% of group revenue (2004: £3.4m, or 29.6% ofgroup revenue), demonstrating our move towards fee based revenues. The strong performances from all of the Group's trading activities that we sawin the first half of the year continued into the second half with anotherparticularly impressive contribution from our fund management operations. Progress Unit trust funds under management stood at £52.6m at the year end, an increaseof 75.3% from six months ago and an increase of 182.8% from the £18.6m recordeda year before. This far exceeded our internal expectations for the year and wasboosted by both retail and institutional interest. In recognition of the strongperformance from our fund management division, I am pleased to announce that thehighly rated CF Walker Crips UK Growth Fund has been nominated for this year'sInvestment Week Fund Manager of the Year award. The corporate finance division has also had an exceptional year and is nowbroker to 25 companies compared with 15 a year before. Our financial servicesarm continued to make a material contribution to group profitability while ourstockbroking activities also increased over the prior year. We have continued to keep a tight grip on costs while placing emphasis onmaintaining a strong balance sheet and cash position. This underpins thesecurity we offer our customers while maintaining a significant regulatorycapital surplus and enabling us to consider suitable acquisitions. Our remaining investment in the London Stock Exchange yielded a tax-free specialdividend of £165,000 which is included in net investment income. Dividend In view of these results and our confidence in the future, the board isrecommending a final dividend of 4p per share (2004 - 3p per share). Subject tothe dividend now proposed being approved at the Annual General Meeting, paymentwill be made on 11 July 2005 to shareholders on the register at the close ofbusiness on 24 June 2005. Acquisition On 11 April 2005, your Company strengthened its financial services operations bycompleting the acquisition of G & E Investment Services Limited, known as theLondon York Group, which offers a broad range of financial services includinginvestment and pension advisory services to both individuals and corporatecustomers. In addition to its core business, there is also a successful fund of fundsdivision which currently has total assets of £12m. These unit trusts complementour existing fund management operations and take total group funds currentlyunder management from £65m to £77m. One of the main reasons for this acquisition was the expected increase in boththe value and range of recurring revenue - in line with our stated aim ofbecoming less reliant on volume-sensitive income. Since the acquisition wascompleted in the current year, the financial impact is not reflected in this setof results. In the financial year to 30 September 2004, the London York Grouprecorded a pre-tax profit of £287,638 on turnover of approximately £2.134m. Board changes On completion of the acquisition of G&E Investment Services Ltd in April, wewelcomed David Hetherton and Robert Elliott to the board, respectively asexecutive and non-executive directors. Executive Directors, Associates and Staff On behalf of the board I thank all of our directors, associates and staff fortheir continued effort and commitment. We welcome all new associates and accountexecutives who have joined us in our quest for diversified growth. Ourcommitment to training has also never been higher, as we look to broaden ourexpertise in all areas of financial services and investment advice. Annual General Meeting The Annual General Meeting will take place at 12 noon on the 8th July 2005. Themeeting will be held at Armourers' Hall, 81 Coleman Street, London EC2R 5BJ. Outlook The current year has started strongly with unit trust funds under managementcurrently totalling £77m, including £12m of London York funds, an increase of46.4% since 31 March 2005, and we are confident of further growth during theyear. Daily volumes for our stockbroking activities show an improvement overlast year and our corporate finance and financial services activities alsoremain strong. The integration of London York is now proceeding and we look forward tobenefiting from its first contribution to the group. While it is still early inour year, we believe there are solid grounds for optimism. G.N. Kennedy CVOChairman CHIEF EXECUTIVE'S REPORT The year just ended has proved to be a landmark in terms of the Walker CripsGroup establishing itself as a broadly integrated financial services operation.We were particularly pleased to announce the completion of the London Yorkacquisition which significantly increases our presence in the pensions marketand extends our fund management activities in unit trusts and wealth management. Stockbroking Division The final three months of the year were particularly busy and contributed inlarge part to average annual daily bargain volumes increasing to 519 comparedwith 506 in 2004. Gross stockbroking commission totalled £9.1m for the year, auseful 10.9% increase on last year's £8.2m, this in spite of three trading dayslost to bank holidays, reflecting a strong contribution from our associates andbranches, all of whom have coped valiantly with the heavy burden of regulatorypaperwork now a feature of the financial services industry. I must extend ourwarmest gratitude to our account executives for their efforts and commitment. Gross profit (after shared commission paid) was 8.8% ahead at £8.7m against£8.0m previously. InvestorLink and our on-line dealing operation INVESTeLINK hadanother creditable year generating additional revenues outside purely brokerage.Our private clients department was expanded in preparation for client baseabsorption of certain of our long standing associates who have recently retired.Our more experienced customers made significantly greater use of our facilityfor trading Contracts for Difference, now a well-established derivative productin UK markets. We have maintained a close control of costs throughout the year reflected by thestability of the total value of our administrative overheads relative to netrevenues. We are continually successful in attracting new associates to theCompany and have the infrastructure in place to bring quality business that willtake advantage of the existing operational gearing. Unit Trust Division This division had an outstanding year under the stewardship of our InvestmentDirector, Stephen Bailey, ably supported by Jan Luthman, our Head of Researchand joint Investment Manager. Since my last report in June 2004, unit trustfunds under management have risen from just under £20m to the current impressive£77m, including £12m as a result of he London York acquisition and, at the timeof writing, the UK Growth Fund had reached £44m due to strong institutional andretail interest after the fund managers were awarded the prestigious CitywireAAA rating for consistently good performance in the year. Corporate Finance Division Our corporate finance department had an extremely busy year and returned recordgross fees of £1.3m last year, compared to £0.6m previously, driven by thecompletion of nineteen new issues and placings, including that of the IslamicBank of Britain plc, the first newly created bank to be floated on the Londonmarket for many years. The department now acts as corporate broker retained bytwenty five companies whose shares are traded on the Official List or the AIMmarket of the London Stock Exchange. Treasury Department Clients and advisers have thought it prudent to retain strong levels ofliquidity throughout the year and with interest rates running at a higher levelthan previously, the division gave a strong performance. Total client andinternal deposit balances at the year end stood at £86.2m. PEPs / ISAs / CTF Industry statistics indicated a significantly lower number of ISA subscribersnationally for 2004/2005 but our own experience was more satisfactory with afurther 1,080 accounts being opened during the year. Much work was put in toaccommodate the Government-launched Child Trust Fund ("CTF") scheme and to datewe have processed 547 vouchers and will be exploring further initiatives toattract the many parents who have not as yet started a CTF. Financial Services The division reported further creditable annual profitability and we are nowpleased to have four experienced advisers whose knowledge of the pensions marketwill be of increasing value. We will now be working closely with London Yorkmanagement to develop our position in the pensions market and are presently inthe process of making available our internally administered EBOR Self-Invested Personal Pension. Current Year The encouraging business levels in the January to March quarter have continuedinto April and we have a number of exciting initiatives to develop in the yearahead. In particular we look forward to working with David Hetherton and histeam at London York. Solid fund management performances from London York andboth our Walker Crips UK Growth and Equity Income Funds leave us well placed tointroduce and develop further funds under management. The earnings mix for yourbusiness during the current year should prove far wider ranging with acontinuing shift in emphasis towards fee based revenues. M.J. SunderlandChief Executive CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 MARCH 2005 2005 2004 £'000 £'000 (unaudited)TurnoverContinuing operations 13,132 11,492Commission payable (4,416) (3,501) -------- --------Gross profit 8,716 7,991--------------------- -------- --------Operating expenses (7,279) (7,031)Operating expenses - amortisation of goodwill (184) (156)Operating expenses - exceptional items - (52)--------------------- -------- --------Total operating expenses (7,463) (7,239) -------- --------Operating profitContinuing operations 1,253 752Net investment income 391 156Profit on disposal of fixed asset investments 9 163 -------- --------Profit on ordinary activities before taxation 1,653 1,071Tax charge on profit on ordinary activities (488) (328) -------- --------Profit on ordinary activities after taxation 1,165 743Dividends paid and proposed (705) (559) -------- --------Retained profit for the year 460 184Realised gain on sale of revalued investment 336 390Retained profit brought forward 2,802 2,228 -------- --------Retained profit carried forward 3,598 2,802 ======== ========Earnings per shareBasic 11.0p 7.2pDiluted 10.8p 6.9p ======== ======== The results above arise from continuing operations. CONSOLIDATED AND COMPANY BALANCE SHEETAT 31 MARCH 2005 Group Company Group Company 2005 2005 2004 2004 £'000 £'000 £'000 £'000 (unaudited)(unaudited)Fixed assetsIntangible 2,145 19 2,274 53Tangible 296 132 268 268Investments 619 7,886 1,126 3,973 -------- -------- -------- -------- 3,060 8,037 3,668 4,294Current assetsInvestments 276 - 168 168Debtors 76,928 367 52,360 52,305Cash at bank and in hand 5,126 1,307 3,207 1,764 -------- -------- -------- -------- 82,330 1,674 55,735 54,237Creditors: amounts falling due within one year (75,941) (872) (50,504) (50,224) -------- -------- -------- --------Net current assets 6,389 802 5,231 4,013 -------- -------- -------- --------Total assets less current liabilities 9,449 8,839 8,899 8,307Provision for liabilities and charges (350) - - - -------- -------- -------- --------Net assets 9,099 8,839 8,899 8,307 ======== ======== ======== ======== Capital and reservesCalled up share capital 2,153 2,153 2,141 2,141Share premium account 1,337 1,337 1,265 1,265Own shares held (173) (173) - -Profit and loss account 3,598 3,338 2,802 2,210Revaluation reserve 544 544 1,051 1,051Other reserves 1,640 1,640 1,640 1,640 -------- -------- -------- --------Equity shareholders' funds 9,099 8,839 8,899 8,307 ======== ======== ======== ======== CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 MARCH 2005 2005 2004 £'000 £'000 (unaudited) Net cash inflow/(outflow) from operating activities 2,570 (326)Returns on investments and servicing of finance 391 156Taxation (545) (141)Capital expenditure and financial investment 186 442Acquisition of business (55) -Equity dividends paid (569) (465) ------- -------Cash inflow/(outflow) before management of liquidresources and financing 1,978 (334)Management of liquid resources (2,261) 288Financing (89) 71 ------- -------(Decrease)/increase in cash in the year (372) 25 ======= ======= For the purposes of the cash flow statement in accordance with FRS 1, cashexcludes short term cash deposits held at bank, repayable on demand withpenalty. Notes 1. On 11 April 2005 the Group completed the acquisition of the entire sharecapital of G&E Investment Services Limited, the parent company of six tradingsubsidiaries comprising the London York group of companies, which provide arange of investment, fund management and pension advisory services, for aninitial consideration of £1,200,000 in cash and 800,000 ordinary shares in theCompany. Deferred consideration of a maximum of £1,600,000 may be satisfied by afurther issue of ordinary shares in the Company in April 2008 upon theachievement of certain profit levels. 2. As a result of a group corporate restructure on 6 April 2004 the stock andshare broking business of the Company was transferred to Walker CripsStockbrokers Limited, a new subsidiary of the Company. 3. The financial information set out in the announcement does not constitute theCompany's statutory accounts for the years ended 31 March 2005 or 31 March 2004.The financial information for the year ended 31 March 2004 is derived from thestatutory accounts for that year which have been delivered to the Registrar ofCompanies. The auditors reported on these accounts; their report was unqualifiedand did not contain a statement under s237(2) or (3) Companies Act 1985. Thestatutory accounts for the year ended 31 March 2005 will be finalised on thebasis of the financial information presented by the directors in thispreliminary announcement and will be delivered to the Registrar of Companiesfollowing the Company's Annual General Meeting. The preliminary announcement has been prepared using the same accountingpolicies as those applied in the accounts for the year ended 31 March 2004. ENDS This information is provided by RNS The company news service from the London Stock Exchange