Interim Results

Walker,Crips,Weddle,Beck PLC 18 November 2005 Interim Results for the six months to 30 September 2005 Walker, Crips, Weddle, Beck Plc (Code: WCW), the financial services firm whose activities cover stockbroking, fund management, corporate finance and personal financial services, today announces interim results for the six months ended 30 September 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 unit trust funds under management currently totalling £119m, including £14m of London York funds, an increase of 22.9% since 30 September 2005, and we anticipate further strong growth during the year. In addition, a further product launch is currently planned for the second half 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 corporate finance activities continue to grow. The second half of our year has, historically, outperformed the first half and we anticipate this trend to continue in the current financial year. We will also have the benefit of the synergies from the acquisition of the London York group for the entire six month period.' 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. 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's website: www.wcwb.co.uk. Chairman's statement Once again, I am delighted to announce another improvement in the performance of the business with a pre-tax profit before exceptional items of £1,566,000, an increase 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 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 £103,000 on turnover of £1,038,000. The results for the first six months of the year have been prepared under the International Financial Reporting Standards ('IFRS') regime as have comparatives for 2004 and the full year to 31 March 2005, which have been re-stated. A detailed analysis is included in the attached Notes but the most significant changes 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 options granted to employees and account executives under the Company's share option schemes and, thirdly, we have to provide for the potential tax liability on the unrealised appreciation in value of our investment in the London Stock ExchangeIn addition, cumulative gains or losses on previously revalued investments are now included in the income statement of the period when realised, previously reported directly in equity reserves. As previously announced, the six month results also contain an exceptional cost of £2,460,000 relating to a specific bad debt provision. After accounting for this cost, the Group recorded a loss before tax of £894,000 for the six month period compared with a profit of £698,000 a year before. We announced in July that we would be commencing legal proceedings against two clients for settlement of certain unauthorised and partially collateralised securities transactions. I am able to report today that litigation is now well under way and that we are making every effort to recover the outstanding amounts. It has, however, been necessary to extend our legal action to overseas jurisdictions which has resulted in slower than expected progress due to the additional steps needed in the legal process abroad. We have also carried out a review of our internal procedures and are confident that we have taken all appropriate steps to prevent a repitition. 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 increase the interim dividend to 2.45p per share (2004: 2.35p per share) reflecting our confidence in the future of the group. This dividend will be paid on 19 December 2005 to those shareholders on the register at the close of business on 2 December 2005. Performance of business The performance of our boutique fund management operation has been stellar in the 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, an increase 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 with the fund ranked first in its sector on both a one-year view and in the current year to date. The CF Walker Crips Equity Income Fund, meanwhile, has been ranked second in its sector since its launch two years ago and fifth in the year to date. The funds continue to attract significant institutional and retail interest and we intend to recruit further sales and support staff, particularly in the North of England and the Midlands, to meet this continued demand and to exploit this opportunity. As previously announced, our AAA-rated fund management team will also be managing 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 Crips UK Growth fund. Stockbroking volumes have also remained buoyant. We are pleased to report an increase in volumes of private client transactions of 8.7% which, together with an increase in the average value of transactions, has resulted in 34.4% higher commission revenues of £5,037,000 compared to the previous half year period. The corporate finance division has enjoyed a solid half year and 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 emerging and we are optimistic about increasing our pension management fee base from both our own 'Ebor' SIPP product and from the run-up to 'A-day' in April 2006. As ever, we remain committed to building up our fee-based revenue. Non-broking revenue 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 funds under management currently totalling £119m, including £14m of London York funds, an increase of 22.9% since 30 September 2005, and we anticipate further strong growth during the year. In addition, a further product launch is currently planned for the second half 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 corporate finance activities continue to grow. The second half of our year has, historically, outperformed the first half and we expect this trend to continue in the current financial year. We will also have the benefit of the synergies from the acquisition of the London York group for the entire six month period. G.N. Kennedy CVO Chairman 18 November 2005 Walker Crips Weddle Beck plc Consolidated income statement For 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 13,132 Commission 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 111 264 396 Finance 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 2,253 Operating 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 share Basic (5.8p) 5.0p 15.2p Diluted (5.8p) 4.9p 14.9p Basic - before exceptional items 10.3p 5.0p 15.2p Dividend Paid 4.0p 3.0p 2.35p Proposed 3 2.45p 2.35p 4.0p Walker Crips Weddle Beck plc Consolidated balance sheet As 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 Assets Non current Assets Intangible - Goodwill 6,314 2,264 2,297 Property, plant and equipment 539 296 296 Available-for-sale investments 208 962 619 ----------- ----------- ----------- 7,061 3,522 3,212 Current Assets Trade and other debtors 46,594 58,115 76,928 Investments held for trading 103 363 276 Cash 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 liabilities Capital and reserves Share capital 5 2,320 2,142 2,153 Share premium account 5 1,367 1,266 1,337 Own shares held 5 (173) (173) (173) Revaluation reserve 5 80 621 381 Other reserves 5 3,498 1,673 1,689 Retained earnings 5 3,079 3,326 4,158 ----------- ----------- ----------- 10,171 8,855 9,545 Non current liabilities Deferred tax liabilities 34 266 163 Provisions 272 135 350 ----------- ----------- ----------- 306 401 513 Current liabilities Trade and other creditors 42,390 54,841 72,980 Current tax liabilities 783 942 914 Bank loans & overdrafts 155 - 105 Provisions 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 plc Consolidated cash flow statement For 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 activities Cash generated from operations (1,433) 1,321 2,570 Interest received 85 76 203 Interest paid (10) - (5) Tax paid (137) - (545) ----------- ----------- ----------- Net cash from operating activities (1,495) 1,397 2,223 ----------- ----------- ----------- Cash generated from investing activities Acquisition of subsidiary (750) - (55) Purchase of property, plant and equipment (345) (120) (196) Proceeds from disposal of available-for-sale investments 500 - 490 Proceeds 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 activities Proceeds on issue of shares 38 2 84 Purchase 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 plc Consolidated statement of recognised income and expense For 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) 124 Deferred tax on available- for-sale securities (7) 49 7 ----------- ----------- ----------- Net income/(loss) recognised directly into equity 16 (115) (19) Transfers Transfers 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 plc Notes to the accounts For 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 presented under UK Generally Accepted Accounting Principles (UK GAAP). To comply with European Union (EU) legislation the Group is required to prepare its consolidated financial statements for the year ending 31 March 2006 in accordance with International Financial Reporting Standards (IFRS). Accordingly, this interim financial information has been prepared using the IFRS accounting policies which management expects to apply in the Group's first IFRS financial statements for the year ending 31 March 2006. The interim financial information has been prepared on the basis of the accounting policies set out in the most recent set of annual financial statements except where noted below. IFRS currently in issue are subject to ongoing amendment by the IASB and subsequent endorsement by the EU and are therefore subject to change. The Group's IFRS financial statements for the year ending 31 March 2006 may, therefore, be prepared in accordance with some different accounting policies from the information presented here. 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 statutory consolidated financial statements for the year ended 31 March 2005 were presented under UK GAAP, on which the auditors of the Group made an unqualified report, and have been delivered to the Registrar of Companies. Comparative figures for the year ended 31 March 2005 presented here are abridged and non-statutory, have been adjusted to reflect the transition to IFRS and are unaudited. Intangible assets Goodwill arising on the acquisition of subsidiaries represents the excess of consideration paid or payable over the fair value of net assets acquired. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Deferred tax Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of taxable profit. Deferred tax liabilities are recognised for all temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences may be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill 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. IFRS 1 transitional arrangements The following exemptions have been applied to the financial information: a) Business combinations The Group has chosen to apply IFRS 3 and not restate business combinations prior to the transition date, 1 April 2004; b) Share based payments The Group has chosen to apply IFRS 2 Share-based payments to awards granted after 7 November 2002. c) Income taxes The group now recognises a deferred tax liability on revaluations of investments under IAS 12. d)Investments Cumulative gains or losses on realisation revalued available-for-sale investments 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 debt provision of £2.5 million relating to the outstanding settlement of unauthorised transactions from two clients, for which legal proceedings have since commenced. The full value of the debt, reduced by amounts recovered and value of collateral held, 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 to shareholders on the register on 2 December 2005, is not reflected in this financial 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 - 49 LSE share consolidation - - - - - (150) - (150) Profit for the 6 months ended 30 September 2004 - - - - - - 540 540 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total recognised income and expense for the period - - - - - (115) 540 425 March 2004 final dividend - - - - - - (321) (321) Fair value adjustment for equity-settled share-based payments - - - - 17 - - 17 Issue of shares 1 1 - - - - - 2 Purchase 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 - 138 Deferred tax charge - - - - - (42) - (42) Transfer of realised gain on sale of available- for-sale investments - - - - - (481) - (481) Taxation on prior period realised gain - - - - - 145 - 145 Profit for the 6 months ended 31 March 2005 - - - - - - 1,080 1,080 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total recognised income and expense for the period - - - - - (240) 1,080 840 September 2004 interim dividend - - - - - - (248) (248) Fair value adjustment for equity-settled share-based payments - - - - 16 - - 16 Issue 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 - 23 Deferred tax charge - - - - - (7) - (7) Transfer of realised gain on sale of available-for- sale investments - - - - - (453) - (453) Taxation on prior period realised gain - - - - - 136 - 136 Loss 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 - - 37 Issue of shares 7 30 - - - - - 37 Purchase 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 Assets Non current assets Intangible - Goodwill 2,188 - - 76 - - 2,264 Tangible 296 (296) - - - - - Property, plant and equipment - 296 - - - - 296 Investments 962 - - - - - 962 ----------- ----------- ----------- ----------- ----------- ----------- ----------- 3,446 - - 76 - - 3,522 Current assets Trade and other debtors 58,115 - - - - - 58,115 Investments held for trading 363 - - - - - 363 Cash and cash equivalents 4,102 - - - - - 4,102 ----------- ----------- ----------- ----------- ----------- ----------- ----------- 62,580 - - - - - 62,580 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Total assets 66,026 - - 76 - - 66,102 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Equity and liabilities Capital and reserves Share capital 2,142 - - - - - 2,142 Share premium account 1,266 - - - - - 1,266 Own shares held (173) - - - - - (173) Revaluation reserve 887 - - - - (266) 621 Other reserves 1,640 - 33 - - - 1,673 Retained earnings 3,035 - (33) 76 248 - 3,326 ----------- ----------- ----------- ----------- ----------- ----------- ----------- 8,797 - - 76 248 - 9,121 Non current liabilities Deferred tax liabilities - - - - - 266 266 Provisions 135 - - - - - 135 ----------- ----------- ----------- ----------- ----------- ----------- ----------- 135 - - - - 266 401 Current liabilities Trade and other creditors 54,841 - - - - - 54,841 Current tax liabilities 942 - - - - - 942 Provisions 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 - - - - - 5,536 Commission payable (1,713) - - - - - (1,713) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Gross profit 3,823 - - - - - 3,823 Operating expenses (3,445) - (17) 76 - - (3,386) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Operating profit 378 - (17) 76 - - 437 Investment revenue 264 - - - - - 264 Finance costs (3) - - - - - (3) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Profit before tax 639 - (17) 76 - - 698 Tax (158) - - - - - (158) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Profit after tax 481 - (17) 76 - - 540 ----------- ----------- ----------- ----------- ----------- ----------- ----------- 6. Acquisition On 11 April 2005 the Group completed the acquisition of the entire share capital of G&E Investment Services Limited, the parent Company of six trading subsidiaries comprising the London York group, which provide a range of investment, fund management and pension advisory services, for an initial consideration 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 further issue of ordinary shares in the Company in April 2008 upon the achievement of certain profit levels. This information is provided by RNS The company news service from the London Stock Exchange

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