Walker Crips Group plc ("Walker Crips", the "Company" or the "Group"), the financial services group with activities covering stockbroking, investment and wealth management services today announces unaudited results for the six months ended 30 September 2014 (the "Period").
Highlights
§ Revenue for the Period increased 12.4% to £10.9 million (2013: £9.7 million)
§ Gross profit (Net Revenue) for the Period increased 10.4% to £7.4 million (2013: £6.7 million) reflecting considerable progress made in investment and wealth management businesses
§ Excluding uncontrollable FSCS levy costs and despite volatile markets, Group operating profit of £0.28 million in the Period compares with £0.36 million in the prior period
§ Group operating profit of £0.13 million in the Period (2013: operating profit of £0.26 million) after FSCS
levy costs of £0.15 million (2013: £0.10 million)
§ Administrative expenses of £7.3 million (2013: £6.4 million) reflect growth costs incurred expanding the number of investment managers whose revenue benefits are expected to accrue in future periods
§ Interim dividend up 3.9% to 0.53 pence per share (2013: 0.51 pence per share)
§ Discretionary and Advisory Assets under Management (AUM) at Period end increased 26.1% to £1.45 billion year on year (30 September 2013: £1.15 billion) and 9.4% over the period (31 March 2014: £1.32 billion)
§ Total Assets under Management and Administration increased 24.9% year on year to £2.66 billion (30
September 2013; £2.13 billion) and 6.0% over the period (31 March 2014: £2.51 billion)
§ Fees and non-broking income up 23.5% to £6.3 million (2013: £5.1 million) representing 57% of total income (2013: 52%)
Commenting, David Gelber, Chairman of Walker Crips, says:
"As we approach the end of our centenary year in 2014, the implementation of our strategic plan continues to strengthen the business and evidences our ability and commitment to expand.
The successful execution of the strategy is becoming increasingly recognised by market participants. We remain committed to increasing shareholder value and to growing the dividend for shareholders not only by focusing on organic growth but also through expansion in London, York and targeted regions through new hires. In each of these earnings enhancing initiatives we are ahead of expectations. We also continue to evaluate target companies and businesses for suitably measured and value-added acquisitions."
Louie Perry, Media Relations
Telephone: +44 (0)20 3100 8000
Rishi Zaveri
Telephone: +44 (0)20 726 6111
Telephone: +44 (0) 20 7894 7667
Further information on Walker Crips Group plc is available on the Company's website: www.wcgplc.co.uk
I am very pleased to report a continuation of the successful implementation of our strategy for expansion reflected by a rise in Revenue of 12.4% to £10.9 million for the first half of our current year.
Development through organic growth and recruitment in our investment and wealth management divisions has been continuing apace. The steady influx of additional Investment Managers with strong revenue bases now exceeds 40 since April 2012. The full impact of the new revenues of the most recent seven such individuals will be felt materially in the second half year, most of whom have commenced towards the end of the period being reported. They have strong backgrounds and expertise having transferred from some of our peers such as Barclays Wealth, JM Finn, Charles Stanley and EFG Harris Allday with the attraction being a combination of the Group's committed advisory offering, a strong control and reporting framework and a traditional approach to client relationship management.
Notwithstanding the increase in revenue, after recording an increase in administrative expenses, a material proportion of which relate to the development and growth of existing businesses referred to above from which future revenues will emerge. The operating profit for the period consequently showed a reduction, which we believe to be temporary, of 51% to £128,000 from £263,000 for the prior period. These results also include uncontrollable half year costs levied by the Financial Services Compensation scheme of £155,000 (2013: £102,000) being an increase of 52% over the prior period levy. Nevertheless the overall trend is encouraging given the full year loss of
£1.1 million in year ended 31 March 2012.
The Board is further encouraged by growth of 26.1% in Discretionary and Advisory Assets under Management over the six month period during which the value of the FTSE Index recorded a material decrease.
Revenue for the Period was £10.9 million (2013: £9.7 million), an increase of 12.4%.
Gross Profit (Net Revenue) in the Period increased by 10.4% to £7.4 million (2013: £6.7 million), further demonstrating the pleasing rate of growth driven by our strategy for our Investment and Wealth Management businesses in the last three years.
Non-broking income as a proportion of total income increased to 57% (2013: 52%) as the conversion of our client base to discretionary or portfolio-managed mandates gathers pace, fuelled by incoming new advisers whose clients already provide predominantly fee driven revenue streams and a further shift by existing clients to fee-based charging.
Higher employment costs, particularly in revenue generating areas, will yield corresponding higher revenues after the inevitable delay in transferring new clients and assets across. Overall administrative expenses in the Period were
£7.3 million (2013: £6.4 million).
After payment of the final and special dividends in relation to the previous year end, at the Period end, the Group had net assets of £20.9 million (31 March 2014: £21.5 million) including net cash of £7.8 million (31 March 2014:
£8.2 million), a very strong balance sheet from which to generate further growth in line with the Board's Strategic
Plan.
Investment Management
Discretionary and Advisory assets under management at the Period end were £1.45 billion (30 September 2013:
£1.15 billion; 31 March 2014: £1.33 billion). This increase is a clear reflection of the Company's greater emphasis on fee generation rather than transactional brokerage. Discretionary assets were £0.57 billion (30 September 2013:
£0.47 billion) and Advisory assets were £0.88 billion (30 September 2013: £0.68 billion).
Revenues from the Investment Management division increased by 10.5% during the Period to £9.5 million (2013:
£8.6 million), a significant improvement considering the uncertainty in investment sentiment and lower market volumes of recent months.
Despite challenging market conditions for structured products, continued low interest rates and low equity market volatility, our Structured Investments business has continued to deliver consistent results both in terms of revenue for the firm but moreover, consistent returns for investors.
Wealth Management
Revenues and profits increased materially by 27% and 115% respectively at our York-managed wealth management division following a strong contribution from our recently acquired Inverness branch, improving joint venture profits and a significant overall increase in AUM.
DividendA 3.9% increase in the interim dividend to 0.53 pence per share (2013: 0.51 pence per share) recognises the encouraging progress being made in the Group's trading performance and the confidence of much greater profitability in the near future. The interim dividend will be paid on 19 December 2014 to those shareholders on the register at the close of business on 5 December 2014.
Directors, Account Executives and StaffI would like to thank all my fellow directors, account executives and members of staff for their continued support. Their professionalism, diligence and loyalty give the Company every reason to be regarded as a special place to work in this most exciting phase of our long history.
Outlook
As we approach the end of our centenary year in 2014, the implementation of our strategic plan continues to strengthen the business and evidences our ability and commitment to expand.
The successful execution of the strategy is becoming increasingly recognised by market participants. We remain committed to increasing shareholder value and to growing the dividend for shareholders not only by focusing on organic growth but also through expansion in London, York and targeted regions through new hires. In each of these earnings enhancing initiatives we are ahead of expectations. We also continue to evaluate target companies and businesses for suitably measured and value-added acquisitions.
The Group has continued trading profitably since the Period end and remains in a strong financial position. Since the reporting date, encouragement has been gained from revenues of the newly recruited investment managers which are now coming through and we remain cautiously optimistic in volatile markets.
D. M. Gelber
Chairman
20 November 2014
Notes Six months to Six months to Year to
30 September 2014 30 September 2013 31 March 2014 £'000 £'000 £'000 Continuing operations
Revenue 2 10,881 9,722 20,688
Commission payable (3,507) (3,052) (6,584)
Share of after tax profit of joint venture 7 4 17
Administrative expenses (7,253) (6,411) (13,651)
Gain on disposal of investments 3 - 1,836 1,836
Loss on disposal of subsidiary undertaking 4 - (8) (13)
Investment revenues 143 141 240
Finance costs (1) (2) (4)
Taxation (65) (524) (495)
Basic 0.55p 4.62p 5.50p
Diluted 0.55p 4.52p 5.39p
Profit on revaluation of available-for-sale investments taken to equity
Deferred tax on profit on available-for-sale investments
- 62 243
- (13) (35)
Long Term Incentive Plan (LTIP) credit to equity - - 13
Goodwill 2,901 2,901 2,901
Other intangible assets 1,148 1,279 1,168
Property, plant and equipment 801 846 872
Investment in joint ventures 34 30 38
Available for sale investments 2,458 1,142 2,404
7,342 6,498 7,383
Trade and other receivables 29,568 41,388 46,648
Trading Investments 2,015 1,071 1,670
Deferred tax asset - 16 - Cash and cash equivalents 7,857 9,970 8,173
39,440 52,445 56,491
Trade and other payables (25,238) (37,148) (41,801) Current tax liabilities (388) (544) (330) Bank Overdrafts (40) (91) (70) Deferred tax liabilities (202) - (202) (25,868) (37,783) (42,403)
Equity Share capital | 2,515 | 2,515 | 2,515 |
Share premium account | 1,818 | 1,818 | 1,818 |
Own shares | (312) | (312) | (312) |
Revaluation reserve | 827 | 668 | 827 |
Other reserves | 4,668 | 4,668 | 4,668 |
Retained earnings | 11,398 | 11,803 | 11,955 |
Equity attributable to equity holders of the company | 20,914 | 21,160 | 21,471 |
Cash generated/(used) by operations 953 (3,149) (3,074) Interest received 46 157 229
Interest paid (1) (2) (4) Tax paid - - - Net cash generated/(used) by operating activities 998 (2,994) (2,849)
Purchase of property, plant and equipment (104) (345) (542) Purchase of intangible assets (116) (474) (602) Net (purchase)sale of investments held for trading (345) (408) (1,036) Net sale of available for sale investments - 6,248 5,466
Net cash received on disposal of subsidiary - 292 292
Dividends received 43 39 42
Proceeds on issue of shares - 6 6
Dividends paid (762) (333) (522)
Cash and cash equivalents 7,857 9,970 8,173
Bank overdrafts (40) (91) (70)
7,817 9,879 8,103
Called up share capital | Share premium | Own shares held | Capital Redempti on | Other | Revaluati on | Retained earnings | Total Equity | |
Equity as at 31 March 2013 | 2,470 | 1,630 | (312) | 111 | 4,557 | 619 | 10,430 | 19,505 |
Revaluation of investment at fair value | 62 | 62 | ||||||
Deferred tax credit to equity | (13) | (13) | ||||||
Profit for the 6 months ended 30 September 2013 | 1,706 | 1,706 | ||||||
Total recognised income and expense for the period | 49 | 1,706 | 1,755 | |||||
March 2013 final dividend | (333) | (333) | ||||||
Issue of shares on exercise of options | 1 | 5 | 6 |
Issue of shares on acquisition of
intangible asset 44 183 227
Revaluation of investment at fair value 181 181
Deferred tax credit to equity (22) (22) Long Term Incentive Plan (LTIP) credit to
equity 13 13
Profit for the 6 months ended 31 March
2014 328 328
Total recognised income and expense for
the period 159 341 500
September 2013 interim dividend (189) (189)
Profit for the 6 months ended 30
September 2014 205 205
Total recognised income and expense for
the period 205 205
March 2014 final dividend (392) (392) Special final dividend (370) (370)
The Group's consolidated financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the EU (IFRS). These condensed financial statements are presented in accordance with IAS 34 Interim Financial Reporting.
The condensed consolidated 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 2014.
The condensed consolidated financial statements should be read in conjunction with the Group's audited financial statements for the year ended 31 March 2014.The interim financial information is unaudited and does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.The Group's financial statements for the year ended 31 March 2014 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 498 (2)
or (3) of the Companies Act 2006.
As both the net asset base and cash position remain healthy, the directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they also conclude in accordance with guidance from the Financial Reporting Council, that the use of the going concern basis for the preparation of the financial statements continues to be appropriate.
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 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 the income statement and is not subsequently reversed in future periods.
Intangible assetsAt each period end 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 taxDeferred 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.
Principal risks and uncertaintiesUnder the Financial Conduct 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 are discussed in detail in the Annual Report for the year ended 31 March 2014.
Related party transactionsNo transactions took place in the period that would materially or significantly affect the financial position or performance of the group.
2. Segmental analysis Revenue (£'000) Investment Management Wealth Management Total
6m to 30 September 2014 9,514 1,367 10,881
6m to 30 September 2013 8,645 1,077 9,722
Year to 31 March 2014 18,290 2,398 20,688
6m to 30 September 2014 319 247 (438) 128
6m to 30 September 2013 574 115 (426) 263
Year to 31 March 2014 1,150 221 (901) 470
Subsequent to the sale of subsidiary Keith Bayley Rogers & Co Ltd in the prior period, the Directors have determined that Corporate Finance is no longer a segment of continuing significance and has therefore been omitted from current and prior periods which have been restated. The immaterial amounts involved have been included within the Investment Management segment for all periods.
There were no disposals of investments during the period.
During the prior period, conversion and disposal of Liontrust Convertible Unsecured Loan Stock (CULS) with a nominal value of
£3.03million and the redemption of the remaining holding with a nominal value of £0.07m, yielded a profit of £1,836,000.
There were no disposals of subsidiary undertakings during the period.
During the prior period, on 31 May 2013 the Group completed the disposal of its subsidiary Keith Bayley Rogers & Co Limited
(following FCA approval) resulting in a loss of £8,000.
The calculation of basic earnings per share for continuing operations is based on the post-tax profit for the period of £205,000 (2013:
£1,706,000) and on 36,996,187 (2013: 36,938,203) ordinary shares of 6 2/3p, being the weighted average number of ordinary shares in issue during the period.
The effect of the exercise of outstanding options would be to reduce the reported earnings per share. The calculation of diluted earnings per share is based on 37,607,437 (2013: 37,752,011) ordinary shares, being the weighted average number of ordinary shares in issue during the period adjusted for dilutive potential ordinary shares.
The interim dividend of 0.53 pence per share (2013: 0.51 pence) is payable on 19 December 2014 to shareholders on the register at the close of business on 5 December 2014. The interim dividend has not been included as a liability in this interim report.
7. Total Income (£'000) Six months Ended 30 September 2014 Six months Ended 30 September 2013 Year Ended 31 March 2014
Revenue 10,881 9,722 20,688
Investment revenues 143 141 240
11,024 9,863 20,928
The Group's income can also be categorised as follows for the purpose of measuring a Key Performance Indicator, non-broking income to total income.
Broking 4,719 43 4,722 48 9,904 47
Non-Broking 6,305 57 5,141 52 11,024 53
11,024 100 9,863 100 20,928 100
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
20 November 2014
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