Walker Crips Regulatory News (WCW)

18 Nov 2008 07:00



Walker Crips Group PLC (WCW)

 18 November, 2008 

 7:00A - Interim Results

 

Press Release Embargoed until: 07.00, 18 November 2008.

Walker Crips Group PLC

Results for the six months ended 30 September 2008

Walker Crips Group PLC ("Walker Crips" or the "Company"), the financial services firm with activities covering stockbroking, fund management, corporate finance and personal wealth management, today announces results for the six months ended 30 September 2008.

Highlights

Revenue down 5.7% to £8.56m (2007: £9.08m)

Recurring non-broking income as a proportion of total income increased to 50.4% (2007:48.1%)

Pre-tax profit down 42% to £0.81m (2007: £1.40m)

Interim dividend maintained at 0.94p per share (2007: 0.94p)

Investment funds under management decreased by 0.5% over the six month period to 30 September 2008 to £403m (31 March 2008: £405m) compared with a decrease in the FTSE100 of 14% over the same period

Equity shareholders funds increased by 8% over the six month period to 30 September 2008 to £14.5m (31 March 2008: £13.4m) 

Net cash resources remain healthy at £4.0m at 30 September 2008 (31 March 2008: £5.1m)

Commenting on the results, David Gelber, Chairman of Walker Crips said: 'Although we can see little in the way of short term relief from the stresses in financial markets, I remain cautiously optimistic about the outlook in the medium to longer term. The ongoing unpredictability and volatility in investor sentiment and market confidence is presenting the Company with a very challenging operating environment which is likely to impact materially on the Company's financial performance for the remainder of the current financial year. However, your Company's breadth of products and conservatively financed balance sheet provide the platform enabling us to benefit when conditions improve.' 

For further information, please contact:

Walker Crips Group Plc Tel: +44 (0)20 3100 8000

Rodney FitzGerald, Chief Executive.

Stephen Bailey, Investment Director.

Altium Tel: +44 (0) 20 7484 4040

Ben Thorne

Tim Richardson

Further information on Walker Crips Group plc:

Further information on Walker Crips Group is available on the Company's website: www.wcgplc.co.uk

 

Chairman's statement

The turbulence seen in the stock and credit markets during the period under review was unprecedented and, inevitably, impacted upon your Company's performance.

Profit before tax decreased 42% to £0.81m (2007:£1.40m). However, your board considers this to be a creditable performance, consistent with the results reported in the second half of last year in the face of the worst financial market conditions seen in a generation. Revenue fell by 5.7% to £8.56m (2007: £9.08m).

 

The Group's regulatory capital position remains comfortably in surplus, benefiting further during the period from the increase in shareholders' equity to £14.5m (31 March 2008: £13.4m).

Operations

WCAM, our investment management division, has performed satisfactorily over the six month period to 30 September 2008, maintaining funds under management (FUM) at £403m (31 March 2008: £405m) during a period when the FTSE100 fell by 14% and only slightly down on the £426m FUM as at 30 June 2008. Our investment managers have performed consistently and in line with their long-term trading record, which remains one of the most impressive in the industry. The macro economic process behind their investment philosophy has proved well suited to the difficult economic conditions that currently prevail.

The stockbroking division suffered a 10% decline in net commission revenue, compared to the same period last year, reflecting the difficult market conditions. A new business unit, Walker Crips Structured Investments, has recently launched its first tailored investment aimed at the Company's advisory and discretionary customers, as well as external intermediaries, in keeping with our aim of providing a bespoke and suitable investment strategy to meet the increasingly sophisticated needs of the modern investor. 

Our corporate finance division suffered a significant fall in revenue over the period under review and accounted for just 2.3% of group revenues. The appetite for small-cap corporate transactions, particularly on the AIM Market where Keith Bayley Rogers is focussed, has reduced significantly, with investors becoming increasingly risk averse.

Whilst performance at both our wealth management arm and pension products division, was adversely affected by the economic climate during the period, we were pleased that the Ebor SIPP completed another successful period with total funds held increasing to £47m from £44m at 31 March 2008. Full integration of London's wealth management operation into the York division is now well advanced and the Company should begin to realise the beneficial synergies of this during 2009. 

I am also pleased to report continued progress in our strategy of increasing the proportion of our recurring fee-based revenues. Non broking income rose to 50.4% of total revenue compared to 48.1% in the previous half year.

A segmental analysis of revenue and operating profit is contained within the note 2 to the accounts. Information on principal risks can be found in note 1.

Expenses

Tighter cost control has partially mitigated the negative impact of the investment climate on profitability. Staff numbers in the middle and back office have been reduced by 14% in the current calendar year and further expense reduction programmes are being pursued, always ensuring that resources supporting the revenue generating units are not excessively depleted.

The year on year increase in administrative expenses is due to significant investment undertaken to further develop our fund management activities, which have performed to expectation and enhanced profitability.

Share Issue

In July 2008, 1.4m new ordinary shares of 6 2/3p each were issued as deferred consideration for the acquisition of the London York financial services group (G & E Investment Services). This represented the maximum amount due after a highly profitable earn-out period. As well as achieving demanding profit targets, this successful acquisition continues to deliver longer-term benefits in providing a strong platform for further growth in the wealth management market as well as bringing important diversity to our revenue stream.

Earnings and Dividend

Whilst basic earnings per share fell 42.9% to 1.6p (2007:2.8p), I am pleased to announce that the interim dividend is to be maintained at 0.94p per share (2007: 0.94p per share). This dividend reflects our desire to maintain shareholder income whilst retaining sufficient resources within the business to fund future growth. The dividend will be paid on 12 December 2008 to those shareholders on the register at the close of business on 28 November 2008.

Directors, Account Executives and Staff

On behalf of the board, I would like to thank my fellow directors, all account executives and members of staff for their continued hard work and loyalty in such a difficult period. 

Outlook

Although we can see little in the way of short term relief from the stresses in financial markets, I remain cautiously optimistic about the outlook in the medium to longer term. The ongoing unpredictability and volatility in investor sentiment and market confidence is presenting the Company with a very challenging operating environment which is likely to impact materially on the Company's financial performance for the remainder of the current financial year. However, your Company's breadth of products and conservatively financed balance sheet provide the platform enabling us to benefit when conditions improve.

D. M. Gelber

Chairman

18 November 2008

Walker Crips Group plc
Consolidated interim income statement
For the six months ended 30 September 2008		Unaudited  Six months to  30 September 2008		Unaudited Six months to  30 September 2007		Audited  Year to  31 March 2008
	Notes
		£'000		£'000		£'000
Revenue	2	8,556		9,076		18,312
Commission payable		(1,544)		(1,893)		(3,749)
Gross profit		7,012		7,183		14,563
Share of after tax profits of joint ventures		31		30		69
Administrative expenses - other		(6,377)		(5,987)		(12,530)
Administrative expenses - exceptional item		-		-		(106)
Total administrative expenses		(6,377)		(5,987)		(12,636)
Operating profit		666		1,226		1,996
Investment revenues		144		179		324
Finance costs		(3)		(3)		(3)
Profit before tax		807		1,402		2,317
Analysed as:
Profit before tax and exceptional item		807		1,402		2,423
Administrative expenses - exceptional item		-		-		(106)
Profit before tax		807		1,402		2,317
Taxation		(229)		(413)		(745)
Profit for the period attributable to equity holders of the company		578		989		1,572
Earnings per share	3
Basic		1.6p		2.8p		4.5p
Diluted		1.6p		2.7p		4.2p

  

Walker Crips Group plc
Consolidated interim balance sheet
As at 30 September 2008
	Notes	Unaudited   30 September 2008		Unaudited   30 September 2007		Audited   31 March 2008
		£'000		£'000		£'000
Non current Assets
Goodwill		5,121		5,152		5,121
Other intangible assets		748		863		806
Property, plant and equipment		1,379		1,465		1,451
Investment in joint ventures		89		54		93
Available for sale investments		1,176		980		1,170
Deferred tax asset		-		177		-
		8,513		8,691		8,641
Current Assets
Trade and other receivables		49,107		57,985		40,864
Trading Investments		235		321		216
Cash and cash equivalents		4,058		3,164		5,353
		53,400		61,470		46,433
Total assets		61,913		70,161		55,074
Current liabilities
Trade and other payables		(46,603)		(54,518)		(39,489)
Current tax liabilities		(506)		(654)		(524)
Bank overdrafts		(56)		(86)		(301)
Provisions		-		(155)		-
Deferred tax liability		(113)		-		(84)
Shares to be issued		-		(1,588)		(1,105)
Cash consideration due under acquisition agreements		(150)		-		-
		(47,428)		(57,001)		(41,503)
Net current assets		5,972		4,469		4,930
Non current liabilities
Cash consideration due under acquisition agreements		-		-		(150)
		-		-		(150)
Net assets		14,485		13,160		13,421
Equity
Share capital	5	2,459		2,358		2,360
Share premium account	5	1,584		1,555		1,568
Own shares	5	(173)		(173)		(173)
Revaluation reserve	5	793		633		789
Other reserves	5	4,703		3,940		3,776
Retained earnings	5	5,119		4,847		5,101
Equity attributable to equity holders of the company		14,485		13,160		13,421

Walker Crips Group plc
Consolidated interim cash flow statement
For the six months ended 30 September 2008	Unaudited Six months to  30 September 2008		Unaudited Six months to  30 September 2007		Audited  Year to  31 March 2008
	£'000		£'000		£'000
Operating activities
Cash (used in) / generated from operations	(280)		(1,880)		1,101
Interest received	107		179		295
Interest paid	(3)		(3)		(3)
Tax paid	(235)		(232)		(657)
Net cash (used in) / generated from operating activities	(411)		(1,936)		736
Investing activities
Deferred consideration payment under acquisition agreements	-		-		(302)
Purchase of property, plant and equipment	(152)		(513)		(700)
Purchase of investments held for trading	(19)		(183)		(78)
Dividends received	72		79		79
Net cash used in investing activities	(99)		(617)		(1,001)
Financing activities
Proceeds on issue of shares	20		10		25
Dividends paid	(560)		(529)		(858)
Net cash used in financing activities	(540)		(519)		(833)
Net decrease in cash and cash equivalents	(1,050)		(3,072)		(1,098)
Net Cash and cash equivalents at the start of the period	5,052		6,150		6,150
Net Cash and cash equivalents at the end of the period	4,002		3,078		5,052
Cash and cash equivalents	4,058		3,164		5,353
Bank overdrafts	(56)		(86)		(301)
	4,002		3,078		5,052

Walker Crips Group plc
Consolidated interim statement of recognised income and expense
For the six months ended 30 September 2008			Unaudited Six months to  30 September 2008				Unaudited  Six months to  30 September 2007			Audited Year to  31 March 2008
			£'000				£'000			£'000
Gain on revaluation of available-for-sale investments taken to equity			6				92			282
Deferred tax on gains on available-for-sale investments			(2)				(28)			(62)
Deferred tax on share options			(89)				-			(148)
Net income recognised directly in equity			(85)				64			72
Transfers:
Profit for the period			578				989			1,572
Total recognised income and expense for the period attributable to equity holders of the Company			493				1,053			1,644

Walker Crips Group plc

Notes to the accounts

For the six months ended 30 September 2008

1. Basis of preparation and accounting policies

The Group's consolidated financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the EU (IFRS). These interim financial statements are presented in accordance with IAS 34 Interim Financial Reporting.

The interim financial statements have been prepared on the basis of the accounting policies and methods of computation set out in the Group's consolidated financial statements for the year ended 31 March 2008. The interim financial statements should be read in conjunction with the Group's audited financial statements for the year ended 31 March 2008.The interim financial information is unaudited and does not constitute statutory financial statements within the meaning of section 240 of the Companies Act 1985.

The Group's financial statements for the year ended 31 March 2008 have been reported on by the auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not draw attention to any matters by way of emphasis. They also did not contain a statement under section 237(2) or (3) of the Companies Act 1985.

 

Interests in joint ventures

The Group's share of the assets, liabilities, income and expenses of jointly controlled entities are accounted for in the consolidated financial statements under the equity method.

Income from the sale or use of the Group's share of the output of jointly controlled assets, and its share of the joint venture expenses, are recognised when it is probable that the economic benefits associated with the transactions will flow to / from the Group and their amount can be measured accurately.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary or jointly controlled entity at the date of acquisition. Goodwill is initially recognised as an asset at cost and reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed in future periods.

 

Intangible assets

At each balance sheet date, the Group reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the assets belong.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profits, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Share based compensation

The Group operates a number of share option schemes for employees and account executives. The charge to the income statement is determined by the fair value of the options granted at the date of grant and recognised over the vesting period.

Principal risks and uncertainties

Under the Financial Services Authority's Disclosure and Transparency Rules, the Directors are required to identify those material risks to which the company is exposed and take appropriate steps to mitigate those risks. The principal risks and uncertainties faced by the Group remain unchanged from the year end and are discussed in detail in the Annual Report for the year ended 31 March 2008. 

Related party transactions

No transactions took place in the period that would materially or significantly affect the financial position or performance of the group.

2. Segmental analysis

Revenue	Investment Management / Stockbroking	Corporate Finance	Financial Services	Fund Management		Total
6m to 30 September 2008	5,925	197	802	1,632		8,556
6m to 30 September 2007	6,573	463	955	1,085		9,076
Year to 31 March 2008	12,827	820	2,013	,652		18,312
Result					Unallocated Costs	Operating Profit
6m to 30 September 2008	55	(43)	29	956	(331)	666
6m to 30 September 2007	599	104	103	825	(405)	1,226
Year to 31 March 2008	772	122	490	1,734	(1,122)	1,996

As the group's joint ventures are primarily engaged in financial services activities, it has been decided that the results of these joint ventures will now be reported under financial services. Consequently the Result for financial services in the year to 31 March 2008 has been restated to include the £69,000 share of after tax profits of the joint ventures.

3. Earnings per share

The calculation of basic earnings per share for continuing operations is based on the post-tax profit for the period of £578,000 (2007 - £989,000) and on 35,538,661 (2007 - 34,908,914) ordinary shares of 6 2/3p, being the weighted average number of ordinary shares in issue during the period. 

The effect of options would be to reduce the reported earnings per share. The calculation of diluted earnings per share is based on 36,017,931 (2007 - 36,175,753) ordinary shares, being the weighted average number of ordinary shares in issue during the period adjusted for dilutive potential ordinary shares. In July 1,414,853 new ordinary shares were issued as final deferred consideration for the acquisition of G & E Investment Services.

4. Dividends

The interim dividend of 0.94p per share (2007 : 0.94p) is payable on the 12 December to shareholders on the register at the close of business on the 28 November. The interim dividend has not been included as a liability in this interim report.

Walker Crips Group plc Notes to the accounts (continued) For the six months ended 30 September 2008
5. Reserves and retained earnings	Called up share capital	Share premium	Own shares held	Capital Redemption	Other	Revaluation	Retained earnings	Total Equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Equity as at 1 April 2007	2,356	1,547	(173)	111	3,796	569	4,387	12,593
Revaluation of investment at fair value						92		92
Deferred tax credit						(28)		(28)
Profit for the 6 months ended 30 September 2007							989	989
Total recognised income and expense for the period						64	989	1,053
March 2007 final dividend							(529)	(529)
Share-based payments					33			33
Issue of shares on exercise of options	2	8						10
Equity as at 30 September 2007	2,358	1,555	(173)	111	3,829	633	4,847	13,160
Revaluation of investment at fair value						190		190
Deferred tax charge						(34)		(34)
Movement on deferred tax on share options					(148)			(148)
Profit for the 6 months ended 31 March 2008							583	583
Total recognised income and expense for the period					(148)	156	583	591
September 2007 interim dividend							(329)	(329)
Share-based payments					(16)			(16)
Issue of shares on exercise of options	2	13						15
Equity as at 31 March 2008	2,360	1,568	(173)	111	3,665	789	5,101	13,421
Revaluation of investment at fair value						6		6
Deferred tax credit						(2)		(2)
Movement on deferred tax on share options					(89)			(89)
Profit for the 6 months ended 30 September 2008							578	578
Total recognised income and expense for the period					(89)	4	578	493
March 2008 final dividend							(560)	(560)
Share-based payments					6			6
Issue of shares as Deferred Consideration	95				1,010			1,105
Issue of shares on exercise of options	4	16						20
Equity as at 30 September 2008	2,459	1,584	(173)	111	4,592	793	5,119	14,485

Directors' Responsibility Statement

The Directors confirm that to the best of their knowledge:

(a) The condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with IAS 34 ' Interim Financial Reporting' as adopted by the EU;

(b) The half yearly report from the Chairman (constituting the interim management report) includes a fair review of the information required by DTR 4.2.7R; and

(c) The half yearly report from the Chairman includes a fair review of the information required by DTR 4.2.8R as far as applicable.

On Behalf of the Board

Rodney FitzGerald

Chief Executive Officer

18 November 2008

ENDIR FFSFUWSASELF