Walker Crips Regulatory News (WCW)

18 Nov 2005 07:30

Walker,Crips,Weddle,Beck PLC18 November 2005 Interim Results for the six months to 30 September 2005 Walker, Crips, Weddle, Beck Plc (Code: WCW), the financial services firm whoseactivities cover stockbroking, fund management, corporate finance and personalfinancial services, today announces interim results for the six months ended 30September 2005, the highlights of which are: • Pre-tax profit before exceptional items of £1,566,000 (2004: £698,000), an increase of 124.4% • Turnover of £7,815,000 (2004: £5,536,000), an increase of 41.2% • Interim dividend increased to 2.45p per share (2004: 2.35p per share) • Continued excellent performance from unit trust funds with funds under management rising to over £96.8m from £52.6m at 31 March 2005, an increase of 84%. • Second half started strongly with unit trust funds under management currently totalling £119m, an increase of 22.9% since 30 September • Newly-acquired London York group makes material contribution of £103,000 operating profit • Exceptional provision as previously announced remains unchanged - legal proceedings being progressed. Commenting on the results, Graham Kennedy, Chairman of Walker, Crips, Weddle,Beck, said: "The second half of the current year has started strongly with unittrust funds under management currently totalling £119m, including £14m of LondonYork funds, an increase of 22.9% since 30 September 2005, and we anticipatefurther strong growth during the year. In addition, a further product launch iscurrently planned for the second half of 2006. Although stockbroking volumes remain excellent, we expect our non-brokingrevenue to continue to rise as a percentage of group revenue as our financialservices and corporate finance activities continue to grow. The second half of our year has, historically, outperformed the first half andwe anticipate this trend to continue in the current financial year. We will alsohave the benefit of the synergies from the acquisition of the London York groupfor the entire six month period." For further information, please contact: Walker, Crips, Weddle, Beck PLC Tel: +44 (0)20 72537502Michael Sunderland, Chief Executive.Rodney FitzGerald, Finance Director.Stephen Bailey, Investment Director. Liz Vaughan-Adams, Perception Partners Limited Tel: +44 (0)20 72982220 +44 (0)7979 853802 Further information on Walker, Crips, Weddle, Beck plc: Further information on Walker, Crips, Weddle, Beck is available on the Company'swebsite: www.wcwb.co.uk. Chairman's statement Once again, I am delighted to announce another improvement in the performance ofthe business with a pre-tax profit before exceptional items of £1,566,000, anincrease of 124.4% over the same period last year. Turnover improved 41.2% to£7,815,000, reflecting an increase in stockbroking activity across global equitymarkets. The results also include an initial contribution from newly-acquired G& E Investment Services Limited, a financial services company known as theLondon York Group. London York reported an operating profit of £103,000 onturnover of £1,038,000. The results for the first six months of the year have been prepared under theInternational Financial Reporting Standards ('IFRS') regime as have comparativesfor 2004 and the full year to 31 March 2005, which have been re-stated. Adetailed analysis is included in the attached Notes but the most significantchanges are that we no longer treat the amortisation of goodwill as an expense,we now include a charge to income determined by the fair value of share optionsgranted to employees and account executives under the Company's share optionschemes and, thirdly, we have to provide for the potential tax liability on theunrealised appreciation in value of our investment in the London StockExchangeIn addition, cumulative gains or losses on previously revaluedinvestments are now included in the income statement of the period whenrealised, previously reported directly in equity reserves. As previously announced, the six month results also contain an exceptional costof £2,460,000 relating to a specific bad debt provision. After accounting forthis cost, the Group recorded a loss before tax of £894,000 for the six monthperiod compared with a profit of £698,000 a year before. We announced in Julythat we would be commencing legal proceedings against two clients for settlementof certain unauthorised and partially collateralised securities transactions. Iam able to report today that litigation is now well under way and that we aremaking every effort to recover the outstanding amounts. It has, however, beennecessary to extend our legal action to overseas jurisdictions which hasresulted in slower than expected progress due to the additional steps needed inthe legal process abroad. We have also carried out a review of our internalprocedures and are confident that we have taken all appropriate steps to preventa repitition. Despite the provision referred to above, I am pleased to announce that thecontinued growth in pre-tax profit before exceptional items has enabled yourBoard to increase the interim dividend to 2.45p per share (2004: 2.35p pershare) reflecting our confidence in the future of the group. This dividend willbe paid on 19 December 2005 to those shareholders on the register at the closeof business on 2 December 2005. Performance of business The performance of our boutique fund management operation has been stellar inthe six month period with funds under management growing to over £96.8m,excluding £14m of London York funds acquired, from £52.6m at 31 March 2005, anincrease of 84% from six months ago and an increase of 222% from a year ago. The CF Walker Crips UK Growth fund has continued its impressive performance withthe fund ranked first in its sector on both a one-year view and in the currentyear to date. The CF Walker Crips Equity Income Fund, meanwhile, has been rankedsecond in its sector since its launch two years ago and fifth in the year todate. The funds continue to attract significant institutional and retail interest andwe intend to recruit further sales and support staff, particularly in the Northof England and the Midlands, to meet this continued demand and to exploit thisopportunity. As previously announced, our AAA-rated fund management team will also bemanaging the Collins Stewart UK Growth Fund. The team will manage this fund,which launches at the end of November, as a mirror fund of the CF Walker CripsUK Growth fund. Stockbroking volumes have also remained buoyant. We are pleased to report anincrease in volumes of private client transactions of 8.7% which, together withan increase in the average value of transactions, has resulted in 34.4% highercommission revenues of £5,037,000 compared to the previous half year period. The corporate finance division has enjoyed a solid half year and we remainexcited by the prospects for our financial services division. The anticipatedsynergies from operating an enlarged financial services group after theacquisition of the London York group are emerging and we are optimistic aboutincreasing our pension management fee base from both our own "Ebor" SIPP productand from the run-up to 'A-day' in April 2006. As ever, we remain committed to building up our fee-based revenue. Non-brokingrevenue as a proportion of turnover increased again in the six month period to£2,900,000 to stand at 37.2%, compared to 32.8% for the full year 2005. Outlook The second half of the current year has started strongly with unit trust fundsunder management currently totalling £119m, including £14m of London York funds,an increase of 22.9% since 30 September 2005, and we anticipate further stronggrowth during the year. In addition, a further product launch is currentlyplanned for the second half of 2006. Although stockbroking volumes remain excellent, we expect our non-brokingrevenue to continue to rise as a percentage of group revenue as our financialservices and corporate finance activities continue to grow. The second half of our year has, historically, outperformed the first half andwe expect this trend to continue in the current financial year. We will alsohave the benefit of the synergies from the acquisition of the London York groupfor the entire six month period. G.N. Kennedy CVOChairman18 November 2005 Walker Crips Weddle Beck plcConsolidated income statementFor the six months ended 30 September 2005 Unaudited Unaudited Unaudited IFRS IFRS IFRS Six months Six months Year ended ended ended 30 30 31 September September March 2005 2004 2005 Notes £'000 £'000 £'000 Continuing operations Turnover 7,815 5,536 13,132Commission payable (2,310) (1,713) (4,416) ----------- ----------- -----------Gross profit 5,505 3,823 8,716 Operating expenses - pre-exceptional (4,540) (3,386) (7,344)Operating expenses - exceptional items 2 (2,460) - - ----------- ----------- -----------Total operating expenses (7,000) (3,386) (7,344) ----------- ----------- -----------Operating (loss)/profit (1,495) 437 1,372 Investment revenue 111 264 396Finance costs (10) (3) (5)Profit on disposal of available-for-sale investment 500 - 490 ----------- ----------- -----------(Loss)/profit before tax (894) 698 2,253 ----------- ----------- ----------- Analysed as:Profit before tax and exceptional items 1,566 698 2,253Operating expenses - exceptional items (2,460) - - ----------- ----------- -----------(Loss)/profit before tax (894) 698 2,253 Tax 272 (158) (633) ----------- ----------- -----------(Loss)/profit after tax (622) 540 1,620 ----------- ----------- ----------- (Loss)/earnings per shareBasic (5.8p) 5.0p 15.2pDiluted (5.8p) 4.9p 14.9pBasic - before exceptional items 10.3p 5.0p 15.2p DividendPaid 4.0p 3.0p 2.35pProposed 3 2.45p 2.35p 4.0p Walker Crips Weddle Beck plcConsolidated balance sheetAs at 30 September 2005 Unaudited Unaudited Unaudited IFRS IFRS IFRS As at As at As at 30 30 31 September September March 2005 2004 2005 Notes £'000 £'000 £'000 AssetsNon current AssetsIntangible - Goodwill 6,314 2,264 2,297Property, plant and equipment 539 296 296Available-for-sale investments 208 962 619 ----------- ----------- ----------- 7,061 3,522 3,212Current AssetsTrade and other debtors 46,594 58,115 76,928Investments held for trading 103 363 276Cash and cash equivalents 2,867 4,102 5,126 ----------- ----------- ----------- 49,564 62,580 82,330 ----------- ----------- -----------Total Assets 56,625 66,102 85,542 ----------- ----------- ----------- Equity and liabilitiesCapital and reservesShare capital 5 2,320 2,142 2,153Share premium account 5 1,367 1,266 1,337Own shares held 5 (173) (173) (173)Revaluation reserve 5 80 621 381Other reserves 5 3,498 1,673 1,689Retained earnings 5 3,079 3,326 4,158 ----------- ----------- ----------- 10,171 8,855 9,545 Non current liabilitiesDeferred tax liabilities 34 266 163Provisions 272 135 350 ----------- ----------- ----------- 306 401 513 Current liabilitiesTrade and other creditors 42,390 54,841 72,980Current tax liabilities 783 942 914Bank loans & overdrafts 155 - 105Provisions 2,820 1,063 1,485 ----------- ----------- ----------- 46,148 56,846 75,484 ----------- ----------- -----------Total liabilities 46,454 57,247 75,997 ----------- ----------- -----------Total equity and liabilities 56,625 66,102 85,542 ----------- ----------- ----------- Walker Crips Weddle Beck plcConsolidated cash flow statementFor the six months to 30 September 2005 Unaudited Unaudited Unaudited IFRS IFRS IFRS Six months Six months Year ended ended ended 30 30 31 September September March 2005 2004 2005 £'000 £'000 £'000 Cash generated from operating activitiesCash generated from operations (1,433) 1,321 2,570Interest received 85 76 203Interest paid (10) - (5)Tax paid (137) - (545) ----------- ----------- -----------Net cash from operating activities (1,495) 1,397 2,223 ----------- ----------- ----------- Cash generated from investing activitiesAcquisition of subsidiary (750) - (55)Purchase of property, plant and equipment (345) (120) (196)Proceeds from disposal of available-for-sale investments 500 - 490Proceeds from disposal of investments held for trading 174 - (108)Dividends received 26 185 193 ----------- ----------- -----------Net cash used in investing activities (395) 65 324 ----------- ----------- ----------- Cash generated from financing activitiesProceeds on issue of shares 38 2 84Purchase of own treasury shares - (173) (173)Dividends paid (457) (321) (569) ----------- ----------- -----------Net cash used in financing activities (419) (492) (658) ----------- ----------- ----------- Net(decrease)/increase in cash and cash equivalents (2,309) 970 1,889 Cash and cash equivalents at the start of the period 5,021 3,132 3,132 ----------- ----------- -----------Cash and cash equivalents at the end of the period 2,712 4,102 5,021 ----------- ----------- ----------- Walker Crips Weddle Beck plcConsolidated statement of recognised income and expenseFor the six months ended 30 September 2005 Unaudited Unaudited Unaudited IFRS IFRS IFRS Six months Six months Year ended ended ended 30 30 31 September September March 2005 2004 2005 £'000 £'000 £'000 LSE share consolidation - (150) (150)Revaluation of available-for- sale securities 23 (14) 124Deferred tax on available- for-sale securities (7) 49 7 ----------- ----------- -----------Net income/(loss) recognised directly into equity 16 (115) (19) TransfersTransfers to profit and loss from equity on sale of available-for-sale investments (453) - (481)Tax on sale of available-for- sale investments 136 - 145(Loss)/profit for the period (622) 540 1,620 ----------- ----------- -----------Recognised income and expense for the period (923) 425 1,265 ----------- ----------- ----------- Walker Crips Weddle Beck plcNotes to the accountsFor the six months ended 30 September 2005 1. Basis of preparation and accounting policies The Group's financial statements for the year ended 31 March 2005 were presentedunder UK Generally Accepted Accounting Principles (UK GAAP). To comply with European Union (EU) legislation the Group is required to prepareits consolidated financial statements for the year ending 31 March 2006 inaccordance with International Financial Reporting Standards (IFRS). Accordingly,this interim financial information has been prepared using the IFRS accountingpolicies which management expects to apply in the Group's first IFRS financialstatements for the year ending 31 March 2006. The interim financial information has been prepared on the basis of theaccounting policies set out in the most recent set of annual financialstatements except where noted below. IFRS currently in issue are subject toongoing amendment by the IASB and subsequent endorsement by the EU and aretherefore subject to change. The Group's IFRS financial statements for the yearending 31 March 2006 may, therefore, be prepared in accordance with somedifferent accounting policies from the information presented here. The interimfinancial information is unaudited and does not constitute statutory financialstatements within the meaning of section 240 of the Companies Act 1985. The Group's statutory consolidated financial statements for the year ended 31March 2005 were presented under UK GAAP, on which the auditors of the Group madean unqualified report, and have been delivered to the Registrar of Companies.Comparative figures for the year ended 31 March 2005 presented here are abridgedand non-statutory, have been adjusted to reflect the transition to IFRS and areunaudited. Intangible assetsGoodwill arising on the acquisition of subsidiaries represents the excess ofconsideration paid or payable over the fair value of net assets acquired.Goodwill is tested annually for impairment and carried at cost less accumulatedimpairment losses. Deferred taxDeferred tax is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date where transactions orevents that result in an obligation to pay more tax in the future or a right topay less tax in the future have occurred at the balance sheet date.Deferred tax is accounted for using the balance sheet liability method inrespect of temporary differences between the carrying amount of assets andliabilities in the financial statements and the corresponding tax basis used inthe computation of taxable profit. Deferred tax liabilities are recognised forall temporary differences and deferred tax assets are recognised to the extentthat it is probable that taxable profits will be available against whichdeductible temporary differences may be utilised. Such assets and liabilitiesare not recognised if the temporary difference arises from goodwill Share based compensationThe Group operates a number of share option schemes for employees and accountexecutives. The charge to the income statement is determined by the fair valueof the options granted at the date of grant and recognised over the vestingperiod. IFRS 1 transitional arrangementsThe following exemptions have been applied to the financial information: a) Business combinationsThe Group has chosen to apply IFRS 3 and not restate business combinations priorto the transition date, 1 April 2004; b) Share based paymentsThe Group has chosen to apply IFRS 2 Share-based payments to awards grantedafter 7 November 2002. c) Income taxesThe group now recognises a deferred tax liability on revaluations of investmentsunder IAS 12. d)InvestmentsCumulative gains or losses on realisation revalued available-for-saleinvestments are now reported in the income statement under IAS 39. 2. Operating expenses - exceptional items On 25 July 2005, the Company announced the implementation of a bad debtprovision of £2.5 million relating to the outstanding settlement of unauthorisedtransactions from two clients, for which legal proceedings have since commenced.The full value of the debt, reduced by amounts recovered and value of collateralheld, together with the legal costs incurred, are included in the charge of£2,460,000 to the income statement for the six months to 30 September 2005. 3. Dividends An interim dividend relating to the six months ended 30 September 2005 of 2.45p,amounting to £284,000 is proposed.This interim dividend, which is due to be paid on 19 December 2005 toshareholders on the register on 2 December 2005, is not reflected in thisfinancial information. 4. Reconciliation of changes in equity Called up Own share Share shares Capital Retained Total capital premium held Redemption Other Revaluation earnings Equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Equity as at 1 April 2004 under IFRS 2,141 1,265 - 111 1,545 736 3,107 8,905 Revaluation of investment at fair value - - - - - (14) - (14)Deferred tax credit - - - - - 49 - 49LSE share consolidation - - - - - (150) - (150)Profit for the 6 months ended 30 September 2004 - - - - - - 540 540 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------Total recognised income and expense for the period - - - - - (115) 540 425March 2004 final dividend - - - - - - (321) (321)Fair value adjustment for equity-settled share-based payments - - - - 17 - - 17Issue of shares 1 1 - - - - - 2Purchase of treasury shares - - (173) - - - - (173) ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------Equity as at 30 September 2004 under IFRS 2,142 1,266 (173) 111 1,562 621 3,326 8,855 Revaluation of investment at fair value - - - - - 138 - 138Deferred tax charge - - - - - (42) - (42)Transfer of realised gain on sale of available- for-sale investments - - - - - (481) - (481)Taxation on prior period realised gain - - - - - 145 - 145Profit for the 6 months ended 31 March 2005 - - - - - - 1,080 1,080 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------Total recognised income and expense for the period - - - - - (240) 1,080 840September 2004 interim dividend - - - - - - (248) (248)Fair value adjustment for equity-settled share-based payments - - - - 16 - - 16Issue of shares 11 71 - - - - - 82 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------Equity as at 31 March 2005 under IFRS 2,153 1,337 (173) 111 1,578 381 4,158 9,545 Revaluation of investment at fair value - - - - - 23 - 23Deferred tax charge - - - - - (7) - (7)Transfer of realised gain on sale of available-for- sale investments - - - - - (453) - (453)Taxation on prior period realised gain - - - - - 136 - 136Loss for the 6 months ended 30 September 2005 - - - - - - (622) (622) ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------Total recognised income and expense for the period - - - - - (301) (622) (923)March 2005 final dividend - - - - - - (457) (457)Fair value adjustment for equity-settled share-based payments - - - - 37 - - 37Issue of shares 7 30 - - - - - 37Purchase consideration issue of 800,000 shares 160 - - - 1,772 - - 1,932 ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------Equity as at 30 September 2005 under IFRS 2,320 1,367 (173) 111 3,387 80 3,079 10,171 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 5. Explanation of transition to IFRS Effect of IFRS on the UK GAAP consolidated balance sheet as at 30 September 2004 Unaudited UK GAAP Presentation Events IFRS as at of Share after the as at 30 financial based Business balance 30 September statements payments combinations sheet Taxation September 2004 IAS 1 IFRS 2 IFRS 3 IAS 10 IAS 12 2004 £'000 £'000 £'000 £'000 £'000 £'000 £'000 AssetsNon current assetsIntangible - Goodwill 2,188 - - 76 - - 2,264Tangible 296 (296) - - - - -Property, plant and equipment - 296 - - - - 296Investments 962 - - - - - 962 ----------- ----------- ----------- ----------- ----------- ----------- ----------- 3,446 - - 76 - - 3,522Current assetsTrade and other debtors 58,115 - - - - - 58,115Investments held for trading 363 - - - - - 363Cash and cash equivalents 4,102 - - - - - 4,102 ----------- ----------- ----------- ----------- ----------- ----------- ----------- 62,580 - - - - - 62,580 ----------- ----------- ----------- ----------- ----------- ----------- -----------Total assets 66,026 - - 76 - - 66,102 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Equity and liabilitiesCapital and reservesShare capital 2,142 - - - - - 2,142Share premium account 1,266 - - - - - 1,266Own shares held (173) - - - - - (173)Revaluation reserve 887 - - - - (266) 621Other reserves 1,640 - 33 - - - 1,673Retained earnings 3,035 - (33) 76 248 - 3,326 ----------- ----------- ----------- ----------- ----------- ----------- ----------- 8,797 - - 76 248 - 9,121Non current liabilitiesDeferred tax liabilities - - - - - 266 266Provisions 135 - - - - - 135 ----------- ----------- ----------- ----------- ----------- ----------- ----------- 135 - - - - 266 401Current liabilitiesTrade and other creditors 54,841 - - - - - 54,841Current tax liabilities 942 - - - - - 942Provisions 1,311 - - - (248) - 1,063 ----------- ----------- ----------- ----------- ----------- ----------- ----------- 57,094 - - - (248) - 56,846 ----------- ----------- ----------- ----------- ----------- ----------- -----------Total liabilities 57,229 - - - (248) 266 57,247 ----------- ----------- ----------- ----------- ----------- ----------- -----------Total equity and liabilities 66,026 - - 76 - - 66,102 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Effect of IFRS on the UK GAAP consolidated income statement for the six months ended 30 September 2004 Unaudited UK GAAP Presentation Events IFRS as at of Share after the as at 30 financial based Business balance 30 September statements payments combinations sheet Taxation September 2004 IAS 1 IFRS 2 IFRS 3 IAS 10 IAS 12 2004 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Continuing operations Turnover 5,536 - - - - - 5,536Commission payable (1,713) - - - - - (1,713) ----------- ----------- ----------- ----------- ----------- ----------- -----------Gross profit 3,823 - - - - - 3,823Operating expenses (3,445) - (17) 76 - - (3,386) ----------- ----------- ----------- ----------- ----------- ----------- -----------Operating profit 378 - (17) 76 - - 437Investment revenue 264 - - - - - 264Finance costs (3) - - - - - (3) ----------- ----------- ----------- ----------- ----------- ----------- -----------Profit before tax 639 - (17) 76 - - 698Tax (158) - - - - - (158) ----------- ----------- ----------- ----------- ----------- ----------- -----------Profit after tax 481 - (17) 76 - - 540 ----------- ----------- ----------- ----------- ----------- ----------- ----------- 6. Acquisition On 11 April 2005 the Group completed the acquisition of the entire share capitalof G&E Investment Services Limited, the parent Company of six tradingsubsidiaries comprising the London York group, which provide a range ofinvestment, fund management and pension advisory services, for an initialconsideration of £1,200,000 in cash and 800,000 ordinary shares in the Company.Deferred consideration of a maximum of £1,600,000 may be satisfied by a furtherissue of ordinary shares in the Company in April 2008 upon the achievement ofcertain profit levels. This information is provided by RNS The company news service from the London Stock Exchange