Walker Crips Regulatory News (WCW)

RNS Number : 2044N

Walker Crips Group plc

08 June 2010

 

8 June 2010

Walker Crips Group plc

 

Preliminary results for the year ended 31 March 2010

 

Walker Crips Group plc ("WCG", the "Company" or the "Group"), the integrated financial services group, today announces its unaudited preliminary results for the year ended 31 March 2010.

 

Financial highlights

 

·; Total revenue up 11% to £17.64 million (2009: £15.86 million)

 

·; Operating profit up 61% to £1.47 million (2009: £0.91 million)

 

·; Pre-tax profit up 39% to £1.52 million (2009: £1.09 million)

 

·; Basic earnings per share up 26% to 2.9 pence (2009: 2.3 pence)

 

·; Proposed final dividend increased to 1.7 pence per share (2009: 1.6 pence per share)

 

·; Net cash resources at year end increased to £5.6 million (2009: £3.3 million)

 

Business highlights

 

·; WCAM funds under management (FUM) increased to £630 million at the year end (31 March 2009: £383 million; 30 September 2009: £519 million).

 

·; Commission from retail stockbroking up by 24% to £7.9 million (2009: £ 6.4 million).

 

·; Structured products business launched several new products.

 

·; Administrative expenses remained stable through continuous emphasis on cost control.

 

Commenting on the results, David Gelber, Chairman, said:

 

"Over the past few months we have seen a degree of confidence return to our markets. Although uncertainty remains, your Board is confident of the Group's market position and ability to increase profitability as economic 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 4010

Ben Thorne

Tim Richardson

 

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

 

 

CHAIRMAN'S STATEMENT

 

I am delighted to report a significantly improved set of results for the Group with profit before tax increasing by 39% to £1.52 million from £1.09 million last year. This impressive performance has been achieved thanks to an improvement in market conditions, tight cost control and increased efficiency measures and despite further material interest rate driven reductions in investment revenues and deposit management fees.

 

Basic earnings per share increased 26% to 2.9p from last year's 2.3p.

 

After the payment of £0.93 million of dividends during the year, our financial position remains robust with net assets of £14.6 million (2009: £14.6 million) and net cash resources of £5.6 million (2009: £3.3 million) at the year end, leaving us well placed to withstand any further turbulence in world markets.

 

Business Performance Overview

 

Substantial performance improvements have been seen across all the Group's divisions during the year.

 

WCAM, our asset management business, grew its funds under management ('FUM') by 64% over the year to £630 million as at 31 March 2010 (31 March 2009: £383 million) through a combination of investment performance and net subscriptions. The benefits of scale in managing an increasing level of assets should be realised over the coming years.

 

The stockbroking division saw a substantial improvement in profitability, driven by the exceptional performance of the Private Client Portfolio Management team, but also reflecting the action taken in previous periods to control costs.

 

The corporate finance division saw a pick up in activity levels as market confidence started to return. Operations have been streamlined and the division is well placed to take advantage of any increase in transactions on the AIM and PLUS markets.

 

Our financial services division took advantage of improved sentiment in the pensions management sector, with higher revenue feeding through to increased profitability.

 

The structured products business, WCSI, made an increased contribution to Group profitability. A number of innovative product launches during the year helped WCSI to develop a strong reputation in the IFA market place, which has led to further expansion of its distribution network.

 

Dividend

 

I am pleased to announce that the Group's improved performance over the year has allowed your Board to recommend an increase in the final dividend to 1.7 pence per share (2009:1.6 pence per share) making a total for the year of 2.64 pence per share (2009: 2.54 pence per share). The increased dividend reflects your Board's confidence in the future strength and profitability of the business and is in line with its stated policy of rewarding shareholders with a steady dividend income stream.

 

The dividend will be paid on 23 July 2010 to those shareholders on the register at the close of business on 18 June 2010.

 

Outlook

 

Over the past few months we have seen a degree of confidence return to our markets. Although uncertainty remains, your Board is confident of the Group's market position and ability to increase profitability as economic conditions improve.

 

D M Gelber Chairman

8 June 2010

 

 

CHIEF EXECUTIVE'S REPORT

 

Results overview

 

The combination of a return of market confidence together with a stable, controlled cost base has led to an 11% increase in Group revenue and a 39% increase in Group profits before tax. We are very proud of this performance particularly given the underlying economic uncertainty that prevailed throughout the year. I would like to thank our staff for their hard work and application during this difficult period.

 

Fund Management (WCAM)

 

The performance by our fund managers once again proved the key to a successful year. Increasing institutional investor interest resulted in strong net inflows during the period, helping total FUM rise to a record £630 million by the year end.

 

The recurring annual revenue streams which will result, augur well for the future balance of the Group's revenue mix, which has historically been made up principally of private client investment management and stockbroking income. The division also generated a material share of Group profitability but was impacted during the year by additional trade execution charges and higher performance-related employment costs.

 

The Board believes that the Senior Executive Long Term Incentive Plan recently put to shareholders for approval will incentivise our fund managers to continue to maintain and enhance the value of the WCAM business and to maximise returns to shareholders.

 

Investment Management/Stockbroking

 

The Private Client Portfolio Management team continues to go from strength to strength. Despite restrictions on headcount during the year, the team members delivered a 26% increase in revenue from broking commission across the diversified retail client base. The division's tailored services now range from the more complex options and contracts for difference derivative products to traditional bonds and equities portfolio management. With offices now in both York and London, funds under management have increased by 16% to £160 million (2009: £138 million).

 

Our small structured investment team has been in operation since 2008 and has already captured market share in the IFA arena, successfully launching innovative products and raising in excess of £45 million.

 

The current strategy of concentrating on hiring individual teams, as opposed to making full-scale acquisitions of other stockbroking entities, continues to pay off with six new hires generating well in excess of £500,000 of new quality annual gross revenue throughout the year.

 

The combined effort of our three main income generating areas, together with organic growth from our existing client base, helped to materially push up profitability of the investment management/stockbroking business unit compared to the previous year.

 

Subscriptions into our ISA product increased by 59% year on year, justifying once again our policy of incubating products for several years until more lucrative returns can be enjoyed. On this note, it is disappointing to learn of the government's decision to scrap the Child Trust Fund initiative which we have supported since 2005 (for children born from 1st September 2002). Nevertheless it has yielded over 4,400 clients below the age of 8, many of whom we expect to remain with us as clients of the next generation.

 

Preparations are well under way to meet the challenges posed by the FSA's Retail Distribution Review.

 

Wealth Management (London York group)

 

Our innovative Financial Services and Pensions Management division continues to be driven by focused management and advisers, who provide a committed, premium service to a predominantly regional client base.

 

The flagship SIPP (Self Invested Personal Pension) product has been rebranded from Ebor to Walker Crips Pensions, and a targeted marketing drive has recently commenced aiming to attract wider professional introducer support from the considerable pensions investment community. In addition, the SSAS (Small Self Administered Scheme) is being marketed to small corporate and family controlled companies in need of dedicated pension services.

 

SIPP plans at the year end numbered 272, of which 250 were deemed active. Funds under administration stood at just over £70 million (2009: 250 of which 232 active; £50 million). SSAS plans totalled 181 at year end, with funds under administration standing at almost £200 million (2009: 203 plans; £200 million).

 

The Wealth Management operation has benefited from signs of a return in investor appetite which, coupled with the clients' need for professional advice and guidance through the testing and volatile economic climate, resulted in a successful year.

 

Corporate Finance (Keith Bayley Rogers & Co Limited)

 

The Corporate Finance division fell just short of breaking even despite another challenging year in the markets in which it operates. Several experienced advisers have joined the team in readiness for any improvement in activity and sentiment, and the division is encouraged by an active and growing pipeline. The number of retained clients at the year end stood at 12, whilst costs remain strictly monitored.

 

Staffing

 

I would like to thank all our personnel for their efforts this year, in particular our loyal back office staff who have continued to deliver a consistent and effective service to our clients even under the restraints imposed by the recession.

 

Liquidity

 

The current level of cash resources within the business remains more than sufficient for working capital purposes and provides adequate headroom even when faced with volatile business flows. Great emphasis is placed on the credit risk of the banking institutions with whom we place funds, with financial stability taking greater priority over rates of return.

 

Going Concern

 

The Group continues to have a robust financial position. Having conducted detailed forecasts and appropriate stress-testing, taking account of possible adverse changes in trading performance, the Board has sufficient grounds to believe the Group is well placed to manage its business risks adequately and that it will be able to operate within the level of its current financing arrangements and regulatory capital limits, which includes a £3 million overdraft facility. Accordingly, the Board continues to adopt the going concern basis for the preparation of the financial statements.

 

Outlook

 

Revenue from the opening weeks of the new financial year is ahead of the prior year and we would expect some upward pressure on the cost base as the year progresses if this trend continues. Your Board believes that the Group should be well positioned to capitalise on further improvements in its markets or given recent volatility in both UK and global markets, to show resilience against any further downturn in global economies or investor sentiment.

 

R A FitzGerald FCA

8 June 2010

Walker Crips Group plc

 

Consolidated Income Statement

Year ended 31 March 2010

 

 

	Notes			2010 £'000		2009 £'000
Revenue	4			17,648		15,865
Commission payable				(4,320)		(3,225)
Gross profit				13,328		12,640
Share of after tax profits of joint ventures				-		175
Administrative expenses				(11,862)		(11,906)
Operating profit				1,466		909
Investment revenues Finance costs				60 (3)		193 (5)
Profit before tax				1,523		1,097
Taxation				(474)		(283)
Profit for the year attributable to equity holders of the company				1,049		814
Earnings per share
Basic	3			2.9p		2.3p
Diluted	3			2.8p		2.2p

Walker Crips Group plc

 

Consolidated Statement of Comprehensive Income

Year ended 31 March 2010

 

		2010 £'000		2009 £'000
(Loss) /gain on revaluation of available-for-sale investments taken to equity		(98)		248
Deferred tax on loss / (gain) on available-for-sale investments		27		(70)
Deferred tax on share options		3		(120)
Net (loss) / income recognised directly in equity		(68)		58
Profit for year		1,049		814
Total comprehensive income for the year attributable to equity holders of the company		981		872

Walker Crips Group plc

 

Consolidated Statement of Financial Position

31 March 2010

 

			Group 2010 £'000		Group 2009 £'000
Non-current assets
Goodwill			5,121		5,121
Other intangible assets			576		691
Property, plant and equipment			868		1,203
Investment in joint ventures			23		28
Available for sale investments			1,320		1,418
			7,908		8,461
Current assets
Trade and other receivables			30,245		31,907
Trading investments			451		316
Cash and cash equivalents			5,655		3,671
			36,351		35,894
Total assets			44,259		44,355
Current liabilities
Trade and other payables Current tax liabilities Bank overdrafts Deferred tax liability Cash consideration due under acquisition agreements			(28,963) (494) (72) (99) -		(28,891) (292) (337) (134) (150)
			(29,628)		(29,804)
Net current assets			6,723		6,090
Net assets			14,631		14,551
Equity
Share capital			2,470		2,464
Share premium account			1,626		1,605
Own shares			(173)		(173)
Retained earnings			5,134		5,013
Revaluation reserve			896		967
Other reserves			4,678		4,675
Equity attributable to equity holders of the company			14,631		14,551

Walker Crips Group plc

 

Consolidated Statement of Cash Flows

Year ended 31 March 2010

 

			2010 £'000		2009 £'000
Operating activities
Cash generated by / (used in) operations			3,733		(414)
Interest received			28		150
Interest paid			(3)		(5)
Tax paid			(277)		(581)
Net cash generated by / (used in) operating activities			3,481		(850)
Investing activities
Joint venture termination fee Deferred consideration payment under acquisition agreements			- (150)		205 -
Purchase of property, plant and equipment			(83)		(195)
Net Purchases of investments held for trading			(135)		(100)
Dividends received			37		78
Net cash used in investing activities			(331)		(12)
Financing activities
Proceeds on issue of shares			27		46
Dividends paid			(928)		(902)
Net cash used in financing activities			(901)		(856)
Net increase / (decrease) in cash and cash equivalents			2,249		(1,718)
Net cash and cash equivalents at beginning of year			3,334		5,052
Net cash and cash equivalents at end of year			5,583		3,334
Cash and cash equivalents			5,655		3,671
Bank overdrafts			(72)		(337)
			5,583		3,334

 Walker Crips Group plc

 

Consolidated Statement Of Changes In Equity

Year ended 31 March 2010

 

	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 31 March 2008	2,360	1,568	(173)	111	3,665	789	5,101	13,421
Revaluation of investment at fair value						248		248
Deferred tax charge to equity						(70)		(70)
Movement on deferred tax on share options					(120)			(120)
Profit for the year ended 31 March 2009							814	814
Total comprehensive income for the year					(120)	178	814	872
Dividends							(902)	(902)
Share-based payments					9			9
Issue of shares as Deferred consideration	95				1,010			1,105
Issue of shares on exercise of options	9	37						46
Equity as at 31 March 2009	2,464	1,605	(173)	111	4,564	967	5,013	14,551
Revaluation of investment at fair value						(98)		(98)
Deferred tax credit to equity						27		27
Movement on deferred tax on share options					3			3
Profit for the year ended 31 March 2010							1,049	1,049
Total comprehensive income for the year					3	(71)	1,049	981
Dividends							(928)	(928)
Issue of shares on exercise of options	6	21						27
Equity as at 31 March 2010	2,470	1,626	(173)	111	4,567	896	5,134	14,631

   

Walker Crips Group plc

 

Notes to the accounts

Year ended 31 March 2010

 

 

1. The financial information set out in the announcement does not constitute the company's statutory accounts for the years ended 31 March 2010 or 2009. The financial information for the year ended 31 March 2009 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under s. 237(2) or (3) Companies Act 1985. The statutory accounts for the year ended 31 March 2010 are yet to be signed but will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the company's annual general meeting.

 

Going Concern

 

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement and Chief Executive's report.

The Group has healthy financial resources together with a long established, well proven and tested business model. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully despite the current difficult climate.

 

After conducting enquiries, the directors believe that the Company and the Group have adequate resources to continue in existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

 

2. Whilst the information as set out in this preliminary announcement is prepared in accordance with International Financial Reporting Standards ('IFRS') the announcement itself does not contain sufficient information to comply with IFRS.

 

The accounting policies are consistent with those applied in the full financial statements and are consistent with those of the prior year.

 

3. Earnings per share

 

The calculation of basic earnings per share for continuing operations is based on the post-tax profit for the financial year of £1,049,000 (2009: £814,000) and on 36,573,308 (2009: 35,988,221) ordinary shares of 6 2/3p, being the weighted average number of ordinary shares in issue during the year.

 

The effect of options granted would be to reduce the reported earnings per share. The calculation of diluted earnings per share is based on 37,470,621 (2009: 37,067,260) ordinary shares, being the weighted average number of ordinary shares in issue during the period adjusted for dilutive potential ordinary shares.

 4. Segmental analysis

 

For management purposes the Group is currently organised into four operating divisions - Investment Management/Stockbroking, Corporate Finance, Financial Services and Fund Management. These divisions, all of which conduct business in the United Kingdom only, are the basis on which the Group reports its primary segment information.

 

2010	Investment Management / Stockbroking £'000		Corporate  Finance £'000		Financial services £'000		Fund Management £'000		Consolidated Year ended 31 March 2010 £'000
Revenue
External sales	12,755		358		1,495		3,040		17,648
Total revenue	12,755		358		1,495		3,040		17,648
Result
Segment result	644		(44)		301		1,423		2,324
Unallocated corporate expenses									(858)
Operating profit									1,466
Investment revenues									60
Finance costs									(3)
Profit before tax									1,523
Tax									(474)
Profit after tax									1,049
Other information
Capital additions	72		4		2		5		83
Depreciation	337		18		38		25		418
Balance sheet
Assets
Segment assets	33,454		465		1,201		1,369		36,489
Unallocated corporate assets									7,770
Consolidated total assets									44,259
Liabilities
Segment liabilities	28,031		38		310		557		28,936
Unallocated corporate liabilities									692
Consolidated total liabilities									29,628

 

 4. Segmental analysis (continued)

 

2009	Investment Management / Stockbroking £'000		Corporate  Finance £'000		Financial services £'000		Fund Management £'000		Consolidated Year ended 31 March 2009 £'000
Revenue
External sales	11,922		311		1,056		2,576		15,865
Total revenue	11,922		311		1,056		2,576		15,865
Result
Segment result	109		(174)		180		1,464		1,579
Unallocated corporate expenses									(670)
Operating profit									909
Investment revenues									193
Finance costs									(5)
Profit before tax									1,097
Tax									(283)
Profit after tax									814
Other information
Capital additions	183		-		12		-		195
Depreciation	354		18		48		23		443
Balance sheet
Assets
Segment assets	34,149		132		620		1,021		35,922
Unallocated corporate assets									8,433
Consolidated total assets									44,355
Liabilities
Segment liabilities	28,779		51		259		565		29,654
Unallocated corporate liabilities									150
Consolidated total liabilities									29,804

 

 

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