TIDMWCW
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 GBP20.12 million (2010: GBP17.65
million)
-- Net revenue (gross profit) up 12.5% to GBP14.99 million
(2010: GBP13.33 million)
-- Reported profit before tax up 15% to GBP1.75 million (2010:
GBP1.52 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 GBP787 million at
the year end (31 March 2010: GBP630 million; 30 September 2010:
GBP750 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: +44 (0)20 3100 8000
Rodney FitzGerald, Chief Executive
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 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 GBP14.7 million (2010: GBP14.6
million) leaving us well placed to fund future growth and withstand
any further volatility in world markets. Cash balances at the year
end were GBP4.3 million (2010: GBP5.7 million) after the payment of
GBP0.96 million (2010: GBP0.93 million) of dividends to
shareholders during the year and the repurchase of GBP139,000 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 GBP787 million at the year end (31
March 2010: GBP630 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
GBP200,000 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
GBP787 million at year end (2010: GBP630 million). Increasing
institutional investor interest resulted in strong net inflows of
GBP97.5 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 GBP181
million (2010: GBP160 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
GBP50 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 GBP82
million (2010: GBP70 million). SSAS plans under administration
amounted to GBP204 million (2010: GBP200 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 GBP3 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
2011 2010
Notes GBP'000 GBP'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 2010
GBP'000 GBP'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 Group
2011 2010
GBP'000 GBP'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 720 451
Deferred tax asset 26 -
Cash and cash equivalents 4,281 5,655
40,874 36,351
Total assets 48,440 44,259
Current liabilities
Trade and other payables (33,207) (28,963)
Current tax liabilities (568) (494)
Bank overdrafts - (72)
Deferred tax liability - (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 2010
GBP'000 GBP'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 - 27
Purchase of treasury shares (139) -
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 Own
share Share shares Capital Retained Total
capital premium held Redemption Other Revaluation earnings Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 GBP1,216,000 (2010 - GBP1,049,000) 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.
Consolidated
Year ended
Investment Corporate Financial Fund 31 March
Management Finance Services Management 2011
2011 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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)
Consolidated
Year ended
Investment Corporate Financial Fund 31 March
Management Finance Services Management 2010
2010* GBP'000 GBP'000 GBP'000 GBP'000 GBP'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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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