Final Results
Walker,Crips,Weddle,Beck PLC
09 June 2006
Preliminary Results
for the year ended 31 March 2006
Walker, Crips, Weddle, Beck Plc (Code: WCW), the financial services group whose
activities cover stockbroking, fund management, corporate finance and personal
financial services, today announces preliminary results for the year ended 31
March 2006, the highlights of which are:
• Revenue of £16,861,000 (2005: £13,132,000), an increase of 28.4%
• Pre-tax profit before exceptional items of £3,062,000 (2005:
£2,253,000), an increase of 35.9%
• Exceptional provision as previously announced is maintained - legal
proceedings being progressed resulting in pre-tax profit of £370,000
(2005: £2,253,000)
• Final proposed dividend increased to 4.2p per share (2005: 4.0p per
share)
• Continued excellent performance from unit trust funds with funds under
management rising to over £203m from £52.6m at 31 March 2005, an
increase of 285.9%
• Asset management division enters distribution agreement contracts with
Cofunds and Norwich Union Lifetime who will list our funds on their
electronic platforms
• Newly-acquired London York group makes material contribution of
£321,000 operating profit
Graham Kennedy, Chairman, said: 'The current year has started strongly and we
anticipate further strong growth in funds under management during the
forthcoming year. Although stockbroking volumes remain excellent, we expect our
non-broking revenue to continue to rise as a percentage of group revenue as our
financial services and fund management activities continue to grow.
Michael Sunderland, Chief Executive Officer, said: 'There is much to report upon
positively in key areas of our business and we are now seeing quite clearly the
justification and benefits of our overall strategy laid down four years ago. At
that time little over 26% of our pre-exceptional operating expenses were covered
by structured predictable management fee income, but we have been able to
increase this to a level of 72%, ensuring a more reliable revenue stream and
enhanced operational stability. The first two months of the current trading year
have gone well and we are excited about the outlook for the current year.'
For further information, please contact:
Walker, Crips, Weddle, Beck plc Tel: +44 (0)20 72537502
Michael Sunderland, Chief Executive
Rodney FitzGerald, Finance Director
Stephen Bailey, Investment Director
Further information on Walker, Crips, Weddle, Beck plc:
Further information on Walker, Crips, Weddle, Beck plc is available on the
Company's website:
www.wcwb.co.uk.
Chairman's statement
I am delighted to announce another improvement in the performance of the
business with pre-tax profit before exceptional items of £3,062,000, an increase
of 35.9% over last year. Total revenue improved 28.4% to £16,861,000,
reflecting the increase in stockbroking activity across global equity markets.
The results also include an initial contribution from newly-acquired G & E
Investment Services Limited, a financial services company known as the London
York Group. London York reported an operating profit of £321,000 on revenue of
£2,225,000.
The results for the year have been prepared under the International Financial
Reporting Standards ('IFRS') regime as have comparatives for 2005, which have
been re-stated. The most significant changes are that we no longer amortise
goodwill, instead we conduct an annual impairment review,. We now include a
charge to income determined by the fair value of share options granted to
employees and account executives under the Company's share option schemes and
thirdly, we have to recognise the potential tax liability on the unrealised
appreciation in value of our investment in the London Stock Exchange at the
prior year end and Euroclear plc for both years. In addition, the cumulative
gains or losses on revalued investments are now included in the income statement
of the period when realised.
As previously announced, these results also contain an exceptional cost of
£2,692,000 relating to a specific bad debt provision. After accounting for this
cost, the Group recorded a profit before tax of £370,000 for the year compared
with £2,253,000 a year ago. Further details are provided in the Chief
Executive's report.
Despite the provision referred to above, I am pleased to announce that the
continued growth in pre-tax profit before exceptional items has enabled your
Board to propose an increased final dividend of 4.2p per share (2005: 4.0p per
share) which fully reflects both our confidence in our business strategy and the
future of the group. This dividend will be paid on 17 July 2006 to those
shareholders on the register at the close of business on 23 June 2006.
Operations
The performance of our boutique fund management operation has been outstanding
during the past year with funds under management growing to over £203 million,
which includes £13 million of London York funds acquired and re-badged under the
Walker Crips Asset Managers brand, from £52.6 million at 31 March 2005, an
increase of 285.9% from a year ago.
Our flagship fund, the Walker Crips UK Growth fund has continued its impressive
performance with the fund remaining amongst the top performers within its sector
over all periods since launch. The Walker Crips Equity Income Fund, meanwhile,
has been ranked second in its sector since its launch two years ago and sixth in
the year to date
The funds continue to attract significant institutional and retail interest and
we have strengthened our sales team in order to expand our list of contacts and
maintain a high level of client support and service.
We are delighted to announce that our asset management division has signed
agreements with Cofunds and Norwich Union Lifetime to list our funds on their
electronic platforms. This development should significantly enhance the
distribution of the product to a much wider audience of IFAs and discretionary
managers who utilise these electronic platforms. It is anticipated that further
distribution agreements will be concluded in the coming months.
Stockbroking volumes have also remained buoyant. We are pleased to report an
increase in volumes of private client transactions of 2.3% which, together with
an increase in the average value of transactions, has resulted in commission
revenues of £10,154,000, 13.3% higher than the previous year. The corporate
finance division had a more modest year after the previous year's record
performance.
We remain excited by the prospects for our financial services division. The
anticipated synergies from operating an enlarged financial services group after
the acquisition of the London York group are continuing to be realised and we
are optimistic about increasing our pension management fee base from both our
own 'Ebor' SIPP product and from the additional revenues generated by the
changes subsequent to 'A-day' in April 2006. The rate of growth in revenue and
profitability is expected to increase through their second year after
acquisition.
Non-broking revenue as a proportion of total income increased again in the year
to £6,948,000 to stand at 40.6%, compared to 33.7% in 2005 and, as ever, we
remain committed to building up our fee-based revenue.
Board changes
On completion of the acquisition of the London York group in April 2005 we
welcomed David Hetherton and Robert Elliott to the board, respectively, as
executive and non-executive directors.
Executive Directors, Associates and Staff
On behalf of the board I thank all subsidiary directors, account executives and
staff for their continued effort and commitment. We welcome all new associates
and account executives who have joined us in our quest for diversified growth.
Our commitment to and investment in training of all our personnel has also never
been higher, as we look to broaden our expertise in all areas of financial
services and investment advice.
Outlook
The current year has started strongly and we anticipate further strong growth in
funds under management during the forthcoming year. In addition, the launch of
a new fund, the Walker Crips High Alpha fund, will complement our existing
range of funds and is currently planned for the autumn of 2006.
Although stockbroking volumes remain excellent, we expect our non-broking
revenue to continue to rise as a percentage of group revenue as our financial
services and fund management activities continue to grow.
We have embarked on the current year with cautious confidence and anticipation
of a successful year if markets remain healthy. We will also have the benefit
of the synergies from the acquisition of the London York group for the entire
year.
G.N. Kennedy, CVO
Chairman
9 June 2006
Chief Executive's Report
There is much to report upon positively in key areas of our business and we are
now seeing quite clearly the justification and benefits of our overall strategy
laid down four years ago. At that time little over 26% of our pre-exceptional
operating expenses were covered by structured predictable management fee income,
but we have been able to increase this to a level of 72%, ensuring a more
reliable revenue stream and enhanced operational stability.
Walker Crips Asset Managers Limited
The dramatic growth of funds under management ('FUM') and the extension of our
unit trust range to include the London York Global Growth and Select Income
trusts has led to the recent re-branding of this subsidiary. Stephen Bailey and
Jan Luthman, our Fund Managers, have consistently performed well and now command
the attention of a growing number of institutions which have contributed to
overall funds under management, growing sharply to a level of £203 million at
year end - this having been achieved over a brief period of three years. The
mandate for managing a Collins Stewart Growth Fund tracking the Walker Crips UK
Growth Fund is testament to our management team's ability.
We are particularly pleased to now have available the two Fund of Funds
products, the Global Growth Fund and the Select Income Fund, capably managed by
Andy Tuck in York - his knowledge of the multi-manager market is illustrated by
solid performance over the years.
We have ambitious targets for our asset management division going forward to
include the launch of a further Fund in the autumn.
Walker Crips Stockbrokers Limited
The revenue and earnings stream from this division is ever-changing and it is
clear now more than ever that the private client requires a dedicated and
experienced broker to give sound advice and a quality service to guide him or
her through volatile markets. Our account executives have been exceptionally
busy over the past twelve months and have contributed in large part to gross
commission reaching a record level of £10.2 million, an incremental increase of
13.3% over the previous year.
The stockbroking division's Private Client Department has expanded as the client
base has broadened through a number of associates joining the team. Portfolios
under advice and management from the stockbroking division now total £820
million with a growing requirement for our nominee service now used by
approximately 12,000 clients Proposals are being considered next year for
share certificates to be abolished and so we see our Nominee / Custody Service
growing to accommodate larger portfolios.
PEP's and ISA's and now Child Trust Funds ('CTF') have expanded in value to a
record £230 million at the year end. Over 10,000 active Plans / Accounts are
under management / administration, generating a strong contribution to fees and
interest income. The CTF may be in its infancy but we already manage 2,300
accounts with a value of £1.3 million, the majority of which have selected our
in-house range of unit trusts as a long-term investment. Many of these CTF
accounts will be supplemented in the years ahead through the ability to
subscribe £1,200 annually.
I am again pleased to report that our execution-only division InvestorLink /
INVESTeLINK had a further successful year, recording a gross commission
contribution of £718,000 - importantly, the average commission per trade was
maintained at a satisfactory £28 - we continue to receive referrals from this
client base for other managed products within the group.
The Treasury Department may not be seen as core to our operations but there is
widespread demand for our deposit service which is now used by 3,500 of our
client base and where total deposits at year end exceeded £112 million.
Ebor Pensions Management Limited
At the beginning of last year we were pleased to welcome into Walker Crips the
London York Group of Companies and in so doing take a more active interest in
the pensions market. Our confidence in David Hetherton and his team in York has
been fully justified with the first year's target profitability being exceeded.
A number of positive initiatives are underway, not least Joint Ventures with
professional organisations, but the new Ebor SIPP was launched in advance of 'A'
Day and we already have 82 SIPPs under management with a value of £15 million -
continuous steady growth of this product is anticipated. We regard pensions as
a key element in creating a diversified financial services group and we are
pleased to have access to the widespread expertise of our colleagues at London
York.
Keith Bayley Rogers & Co Limited - Corporate Finance
Although turnover this year was lower than the exceptional levels of 2005, our
corporate finance division had a busy year with a positive contribution to
profits. We have extended the number of listed companies for whom we are
retained to advise and which benefit from our support. The division anticipates
expanding the service it provides to their corporate clients during the current
year. With this in mind, it expects to add to the number of executives within
the division and believe that the number of corporate clients they serve will
expand during the year. Current work in progress is significant and includes
potential flotations on the London Stock Exchange.
Exceptional Debt Provisioning
In July 2005 it was necessary for our Board to announce a substantial provision
of £2,500,000 against potential irrecoverable sums from two clients. We are
resolutely pursuing recovery of these sums with our forensic accountants and
lawyers. Despite attempts by the clients to evade service, legal proceedings
have been commenced and are continuing against them. As is often the case with
litigation, the timetable is frustratingly slow. However, we expect to bring
the matter to a full Court hearing in the autumn. In the interim, your Board
feel it appropriate to retain the provision intact for the time being. As and
when we have further news we will appraise shareholders, but in the meantime we
will continue to pursue vigorously the parties involved. Our provision includes
the costs of so doing.
Future Outlook
In the coming year we intend relocating our office from Sophia House, London to
nearby Finsbury Tower in Bunhill Row - this move should significantly enhance
our group's profile and give us a range of operational efficiencies. It is most
appropriate for me to pass on our Board's great appreciation of the hard work
and at times strenuous efforts given by many of the highly capable and talented
people in our group who have met the challenges arising in not the easiest of
years. The first two months of current trading have gone well and we are
excited about the outlook for the current year. We are pleased with the shape
of our business and believe 2006 / 2007 will be a more successful year.
Michael J. Sunderland
Chief Executive Officer
9 June 2006
Walker, Crips, Weddle, Beck plc
Consolidated Income Statement
For the year ended 31 March 2006
2006 2005
£'000 £'000
unaudited restated
unaudited
Revenue 16,861 13,132
Commission payable (5,022) (4,416)
Gross profit 11,839 8,716
Share of after tax profits of joint 50 -
venture
Administrative expenses - other (9,736) (7,344)
Administrative expenses - exceptional item (2,692) -
Total administrative expenses (12,428) (7,344)
Operating (loss)/profit (539) 1,372
Investment revenues 262 396
Finance costs (21) (5)
Profit on disposal of available-for-sale 668 490
investments
Profit before tax 370 2,253
Analysed as:
Profit before tax and exceptional item 3,062 2,253
Administrative expenses
- exceptional item (2,692) -
Profit before tax 370 2,253
Taxation (136) (633)
Profit for the year attributable to equity
holders of the company 234 1,620
Earnings per share
Basic 2.0p 15.2p
Diluted 1.9p 15.0p
Dividends Paid: - Final 4.00p 3.00p
- Interim 2.45p 2.35p
Walker, Crips, Weddle, Beck plc
Consolidated statement of recognised income and expense
For the year ended 31 March 2006
2006 2005
£'000 £'000
unaudited restated
unaudited
Gain on revaluation of available-for-sale investments taken to 51 187
equity
LSE share consolidation - (150)
Deferred tax on gains on available-for-sale investments (15) (12)
Net income recognised directly in equity 36 25
Transfers
Transferred to profit or loss on sale of available-for sale
investments (544) (481)
Tax on sale of available-for-sale investments 162 145
Profit for the period 234 1,620
Total recognised income and expense for the period attributable to
equity holders of the company (112) 1,309
Walker, Crips, Weddle, Beck plc
Consolidated balance sheet
31 March 2006
Group Group
2006 2005
£'000 £'000
unaudited restated
unaudited
Non-current assets
Goodwill 4,677 2,297
Other intangible assets 1,036 -
Property, plant and equipment 547 296
Investment in joint venture 55 -
Available for sale investments 845 1,338
7,160 3,931
Current assets
Trade and other receivables 50,659 76,928
Trading investments 135 276
Cash and cash equivalents 2,549 5,126
53,343 82,330
Current liabilities
Trade and other payables (46,797) (74,465)
Current tax liabilities (483) (914)
Bank overdrafts and loans (165) (105)
Provisions (411) (350)
(47,856) (75,834)
Net current assets 5,487 6,496
Non-current liabilities
Deferred tax liabilities (268) (401)
Shares to be issued (1,113) -
(1,381) (401)
Total assets less liabilities 11,266 10,026
Equity
Share capital 2,326 2,153
Share premium account 1,396 1,337
Own shares (173) (173)
Retained earnings 3,654 4,158
Revaluation reserve 515 862
Other reserves 3,548 1,689
Equity attributable to equity holders of the
company 11,266 10,026
Walker, Crips, Weddle, Beck plc
Consolidated cash flow statement
For the year ended 31 March 2006
2006 2005
£'000 £'000
unaudited restated
unaudited
Cash (used)/generated from operating activities
Cash (used) generated from operations (1,521) 2,570
Interest received 239 203
Interest paid (21) (5)
Tax paid (454) (545)
Net cash (used)/generated from operating activities (1,757) 2,223
Cash (used)/generated from investing activities
Acquisition of subsidiary/business (740) (55)
Purchase of property, plant and equipment (306) (196)
Proceeds from disposal of available-for-sale investments 668 490
Proceeds/(purchase) from disposal of investments held for 141 (108)
trading
Dividends received 23 193
Net cash (used)/generated from investing activities (214) 324
Cash generated from financing activities
Proceeds on issue of shares 72 84
Purchase of own treasury shares - (173)
Dividends paid (738) (569)
Net cash used in financing activities (666) (658)
Net (decrease)/increase in cash and cash equivalents (2,637) 1,889
Cash and cash equivalents at beginning of year 5,021 3,132
Cash and cash equivalents at end of year 2,384 5,021
Walker Crips Weddle Beck plc
Notes
For the year ended 31 March 2006
1. The financial information set out in the announcement does not
constitute the company's statutory accounts for the years ended 31 March 2006 or
2005. The financial information for the year ended 31 March 2005 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 2006 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.
2. Whilst the financial information included in this preliminary
announcement has been computed in accordance with International Financial
Reporting Standards (IFRSs) for the first time, this announcement does not
itself contain sufficient information to comply with IFRSs. The Company expect
to publish full financial statements that comply with IFRSs in June 2006.
This information is provided by RNS
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