Final Results

RNS Number : 0380I

Walker Crips Group plc

08 June 2011

 



8 June 2011

Walker Crips Group plc

Preliminary results for the year ended 31 March 2011

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 2011 (the "period").

Highlights over the period

·     Total revenue up 14% to £20.12 million  (2010: £17.65 million)

·     Net revenue (gross profit) up 12.5% to £14.99 million (2010: £13.33 million)

·     Reported profit before tax up 15% to £1.75 million (2010: £1.52 million), after payment of the excess 2011 FSCS levy

·     Basic earnings per share up 17% to 3.35 pence (2010: 2.87 pence)

·     Proposed final dividend up 6% to 1.8 pence per share (2010: 1.7 pence per share)

·    WCAM funds under management increased to £787 million at the year end (31 March 2010: £630 million; 30 September 2010: £750 million).

·     Non-broking income as a proportion of total income increased to 52.3% (2010: 50.0%).

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

"I am pleased to report a further improvement in the Group's performance, with a 15% increase in profit before tax over the period resulting from more buoyant market conditions, the continued growth in our major business lines and vigilant cost control."

"We expect the first quarter of a new financial year to be relatively subdued and the current more generally uncertain short-term view of the economy and markets has impacted upon the Group's trading in, and our expectations for, the current year.

"However, in the longer term, your Board is confident that the Group's strong financial position and range of products should enable it to grow shareholder value."

For further information, please contact:

Walker Crips Group plc                                                     Tel: [phone]

Rodney FitzGerald, Chief Executive

Altium                                                                                 Tel: [phone]

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 pleased to report a further improvement in the Group's performance, with a 15% increase in profit before tax over the period resulting from more buoyant market conditions, the continued growth in our major business lines and vigilant cost control.

As a consequence, basic earnings per share increased by 17% to 3.35p (2010: 2.87p).

In addition, the Group's financial position remains robust with net assets at the year end of £14.7 million (2010: £14.6 million) leaving us well placed to fund future growth and withstand any further volatility in world markets.  Cash balances at the year end were £4.3 million (2010: £5.7 million) after the payment of £0.96 million (2010: £0.93 million) of dividends to shareholders during the year and the repurchase of £139,000 of ordinary shares into treasury in June 2010.  Our cash balances remain subject to day-to-day variations in client settlement requirements and related swings in the components of working capital.

Business Performance Overview

The continued growth in funds under management at our asset management division, WCAM, to £787 million at the year end (31 March 2010: £630 million) resulted in increased revenues and profits in this division.

The investment management division also experienced growth in fee income.  Michael Sunderland, Private Client Director, retired from the Group after 38 years of loyal service. The Board and staff of the Group wish him well in his retirement. Chris Kitchenham, who has worked alongside Michael for many years, was appointed to lead the team and continue its development plans in readiness for the changes resulting from the Retail Distribution Review.

Whilst activity levels in the corporate finance division picked up towards the end of the period, revenues underperformed the previous year by 14%. Strict cost control minimised the impact to the division's bottom line. The better conditions witnessed towards the end of the period leave the division well placed to participate in any upturn in the small cap arena.

Revenues in the financial services division increased slightly over the previous year, although additional investment in marketing and unbudgeted regulatory charges held back the bottom line as the division positioned itself for future growth.

Walker Crips' Structured Investments business, continued to build on its strong reputation with professional advisers with the launch of a number of new products during the period.  This increased output has helped to lift revenues and profits during the period and presents the Group with scope for further growth.

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 1.8 pence per share (2010: 1.7 pence per share) making a total for the year of 2.74 pence per share (2010: 2.64 pence per share). The increased dividend reflects your Board's desire to continue rewarding shareholders with a growing income stream and as a demonstration of their confidence in the future strength of the Group.

The final dividend will be paid on 22 July 2011 to those shareholders on the register at the close of business on 17 June 2011. 

AGM

This year's annual general meeting will be held as usual at Armourers' Hall, 81 Coleman Street, London EC2R 5BJ on the 15 July 2011, but will commence at the earlier time of 11.00 am. Coffee and biscuits will be served for a short while before and after the meeting.

Outlook

We expect the first quarter of a new financial year to be relatively subdued and the current more generally uncertain short-term view of the economy and markets has impacted upon the Group's trading in, and our expectations for, the current year.

However, in the longer term, your Board is confident that the Group's strong financial position and range of products should enable it to grow shareholder value.

D M Gelber

Chairman

8 June 2011

CHIEF EXECUTIVE'S REPORT

Results overview

The relative stability of UK financial markets during the period provided the environment for further steady progress in Group revenue and profitability. The 14% increase in revenue was buoyed by a strong fourth quarter enabling the Group's reported profit before tax to increase by 15.2%, despite unexpectedly high Financial Services Compensation Scheme (FSCS) Levies of over £200,000 resulting from the failure of firms in other financial sectors.

Administrative expenses were closely monitored and the majority of the 12.1% increase over the prior year  related directly to additional business generated. Investment revenues continued at levels well below recent years, due to the very low level of global interest rates.

Fund Management (WCAM)

The repeated success of our fund management division was once again demonstrated by a 25% increase in total FUM to a record £787 million at year end (2010: £630 million). Increasing institutional investor interest resulted in strong net inflows of £97.5 million during the period which combined with strong market performance to reach this milestone.

Our senior fund managers continued enhancing WCAM with another excellent investment performance in the unit trust funds which have seen considerable organic growth since 2002. During the years in which the UK growth and Equity Income funds have been under the management of WCAM, both funds have outperformed over 95% of their peer group competitors, a remarkable achievement. 

Investment Management

The Private Client Portfolio Management business continued to move forward, delivering an 8% increase in revenue across the diversified retail client base. A substantial amount of this growth was fee based with low correlation to market conditions. The division's services now include more complex derivative instruments, an active Contracts for Difference dealing service as well as traditional bonds and equities. Now with offices in both York and London, funds under management increased by 13% to £181 million (2010: £160 million).

The division has done much to prepare to meet the industry-wide Retail Distribution Review (RDR)  Level 4 qualification requirement for broker/portfolio managers.  The majority of the team have now exceeded this minimum by achieving the Level 6 exams well before the requirements come into place. New products and service offerings specifically designed to capitalise on the opportunities arising from the RDR are expected to be launched later this year.

Our structured investments business, Walker Crips Structured Investments (WCSI), has continued to grow market share with an expanding range of innovative products. Total sales through IFA channels comfortably exceeded last year's results, raising over £50 million in equity linked products.   

A strong finish to the financial year in active markets enabled our traditional advisory and execution-only business to register a small increase in commission income on better volumes.

Subscriptions into our ISA product increased by 12% year on year, justifying once again our policy of incubating products for several years until more lucrative returns can be enjoyed.

The cost of meeting the increasing burden of compliance continues to put pressure on profitability, exacerbated further in the period by events outside our control such as those leading to the exceptionally high FSCS Levy.  

Wealth Management 

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.

Once again, the RDR implementation process is well in hand with the vast majority of advisers already qualified to the RDR required standard.

The flagship SIPP (Self Invested Personal Pension) product showed strong growth after a targeted marketing drive. 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 year end numbered 279 (2010: 250) and funds under administration at the year end were up 18% at just over £82 million (2010: £70 million). SSAS plans under administration amounted to £204 million (2010: £200 million).

The joint venture with a provincial firm of accountants providing Wealth Management services to their client base enjoyed its most profitable year since formation in 2007.

Corporate Finance

The Corporate Finance division made a small loss during another challenging year, despite the number of retained clients increasing to 13 and costs remaining strictly monitored. The division is encouraged by an active pipeline for the current year.

Staff

I would like to thank all our personnel for their efforts this year, in particular the account executives, many of whom are faced with the difficult task of studying and re-qualifying under the RDR. Our back and middle office staff unwaveringly demonstrated loyalty and commitment despite the austerity pressures of the past two years.

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 on liquidity, profitability and regulatory capital, 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

Overall trading activity in the opening weeks of the new financial year has been quiet, reflecting current economic uncertainty.

Whilst this may impact short term performance, your Board believes that the Group is well positioned to capitalise on improvements in its markets over the longer term.

R A FitzGerald FCA

8 June 2011

Walker Crips Group plc

Consolidated Income Statement

Year ended 31 March 2011

	Notes			2011 £'000	2010 £'000
Revenue	4			20,122	17,648
Commission payable				(5,132)	(4,320)
Gross profit				14,990	13,328
Share of after tax profits of joint ventures				11	-
Administrative expenses				(13,295)	(11,862)
Operating profit				1,706	1,466
Investment revenues				50	60
Finance costs				(1)	(3)
Profit before tax				1,755	1,523
Taxation				(539)	(474)
Profit for the year attributable to equity holders of the company				1,216	1,049
Earnings per share
Basic	3			3.35p	2.87p
Diluted	3			3.27p	2.80p

Walker Crips Group plc

Consolidated Statement of Comprehensive Income

Year ended 31 March 2011

		2011 £'000	2010 £'000
Loss on revaluation of available-for-sale investments taken to equity		(137)	(98)
Deferred tax on loss on available-for-sale investments		61	27
Deferred tax on share options		(4)	3
Net loss recognised directly in equity		(80)	(68)
Profit for the year		1,216	1,049
Total comprehensive income for the year attributable to equity holders of the company		1,136	981

Walker Crips Group plc

Consolidated Statement of Financial Position

31 March 2011

			Group 2011 £'000	Group 2010 £'000
Non-current assets
Goodwill			5,121	5,121
Other intangible assets			461	576
Property, plant and equipment			767	868
Investment in joint ventures			34	23
Available for sale investments			1,183	1,320
			7,566	7,908
Current assets
Trade and other receivables			35,847	30,245
Trading investments Deferred tax asset			720 26	451 -
Cash and cash equivalents			4,281	5,655
			40,874	36,351
Total assets			48,440	44,259
Current liabilities
Trade and other payables Current tax liabilities Bank overdrafts Deferred tax liability			(33,207) (568) - -	(28,963) (494) (72) (99)
			(33,775)	(29,628)
Net current assets			7,099	6,723
Net assets			14,665	14,631
Equity
Share capital			2,470	2,470
Share premium account			1,626	1,626
Own shares			(312)	(173)
Retained earnings			5,387	5,134
Revaluation reserve			820	896
Other reserves			4,674	4,678
Equity attributable to equity holders of the company			14,665	14,631

Walker Crips Group plc

Consolidated Statement of Cash Flows

Year ended 31 March 2011

			2011 £'000	2010 £'000
Operating activities
Cash generated by operations			777	3,733
Interest received			33	28
Interest paid			(1)	(3)
Tax paid			(539)	(277)
Net cash generated by operating activities			270	3,481
Investing activities
Deferred consideration payment under acquisition agreements			-	(150)
Purchase of property, plant and equipment			(218)	(83)
Net purchase of investments held for trading			(269)	(135)
Dividends received			17	37
Net cash used in investing activities			(470)	(331)
Financing activities
Proceeds on issue of shares Purchase of treasury shares			- (139)	27 -
Dividends paid			(963)	(928)
Net cash used in financing activities			(1,102)	(901)
Net (decrease)/increase in cash and cash equivalents			(1,302)	2,249
Net cash and cash equivalents at beginning of year			5,583	3,334
Net cash and cash equivalents at end of year			4,281	5,583
Cash and cash equivalents			4,281	5,655
Bank overdrafts			-	(72)
			4,281	5,583

  

Walker Crips Group plc

Consolidated Statement of Changes in Equity

Year ended 31 March 2011

	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 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	-	-	-	-	-	-	1,049	1,049
Dividends paid	-	-	-	-	-	-	(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
Revaluation of investment at fair value	-	-	-	-	-	(137)	-	(137)
Deferred tax credit to equity	-	-	-	-	-	61	-	61
Movement on deferred tax on share options	-	-	-	-	(4)	-	-	(4)
Profit for the year	-	-	-	-	-	-	1,216	1,216
Dividends paid	-	-	-	-	-	-	(963)	(963)
Purchase of treasury shares	-	-	(139)	-	-	-	-	(139)
Equity as at 31 March 2011	2,470	1,626	(312)	111	4,563	820	5,387	14,665

Walker Crips Group plc

Notes to the accounts

Year ended 31 March 2011

1.      The financial information set out in the announcement does not constitute the company's statutory accounts for the years ended 31 March 2011 or 2010.  The financial information for the year ended 31 March 2010 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts was unqualified and did not contain a statement under s. 498(2) or (3) Companies Act 2006.  The statutory accounts for the year ended 31 March 2011 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 climate.

         After conducting enquiries, the directors believe that 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 £1,216,000 (2010 - £1,049,000) and on 36,301,187 (2010 -36,573,308) 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 37,147,771 (2010 - 37,470,621) 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, 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.

2011	Investment Management £'000	Corporate Finance £'000	Financial Services £'000	Fund Management £'000	Consolidated Year ended 31 March 2011 £'000
Revenue
External sales	13,959	308	2,021	3,834	20,122
Result
Segment result	606	(64)	197	2,148	2,887
Unallocated corporate expenses					(1,181)
Operating profit					1,706
Investment revenues					50
Finance costs					(1)
Profit before tax					1,755
Tax					(539)
Profit after tax					1,216
Other information
Capital additions	195	9	1	13	218
Depreciation	270	12	19	18	319
Balance sheet
Assets
Segment assets	38,556	358	886	1,378	41,178
Unallocated corporate assets					7,262
Consolidated total assets					48,440
Liabilities
Segment liabilities	32,385	37	295	742	33,459
Unallocated corporate liabilities					316
Consolidated total liabilities					33,775

Segmental analysis (continued)

2010*	Investment Management £'000	Corporate  Finance £'000	Financial Services £'000	Fund Management £'000	Consolidated Year ended 31 March 2010 £'000
Revenue
External sales	12,391	358	1,990	2,909	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

* Prior year revenue has been re-classified between operating divisions as determined by clients principal activity, whereas previously these income streams were split across several segments.

 

END

 

 

FR UBABRAUANRAR