TIDMWCW
RNS Number : 3101L
Walker Crips Group plc
18 July 2017
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain
18 July 2017
News Release
Walker Crips Group plc
Strong second half of year helps lift annual revenues by nearly
12% and assets under management and administration increase by
26.8%
Walker Crips Group plc ("Walker Crips", the "Company" or the
"Group"), the financial services group with activities covering
stockbroking, investment and wealth management services, announces
audited results for the year ended 31 March 2017.
Highlights
-- Group revenues increased by 12% to GBP29.2 million (2016:
GBP26.1 million)
-- Underlying operating profit, before tax and exceptional
items, increased to GBP1,142,000 (2016: GBP651,000)
-- Reported profit before tax decreased to GBP804,000 (2016:
GBP944,000)
-- Discretionary and advisory assets under management increased
by 39.1% to a high of GBP3.2 billion (2016: GBP2.3 billion)
-- Non-broking income as a percentage of total income remains
steady at 61.7% (2016: 61.8%)
-- Proposed final dividend increased by 1.6% to 1.29 pence per
share (2016: 1.27 pence per share), bringing total dividends for
the year to 1.87 pence per share (2016: 1.85 pence per share)
-- Achieved GBP5bn AUMA target a year ahead of strategic
objective
-- Record turnover for second year in succession
David Gelber, Chairman, Walker Crips, says:
"The delivery of personal investment advice and investment
management remains at the core of our approach as we looked to
refine our client-focused strategy regularly during the year. Our
aim is to increase shareholder value by growing revenue, improving
efficiency and continuing to increase our dividend payments.
"We continue to advance the delivery of our strategy for growth
in a fast-moving sector in which the pace of change in regulation
and technology are a constant.
"In recent years we have achieved substantial growth, continuing
to refine our strategy and business model to make further strides
towards attaining our long-term strategic goals. We are now even
more committed to increasing our service proposition through
greater use of technology that is relevant to clients,
intermediaries and our own advisers."
For further information, please contact:
Walker Crips Group plc Tel: +44 (0)20 3100 8000
Geri Jacks/Bridgette Campbell,
Media Relations
Four Broadgate Tel: +44 (0)20 3697 4200
Roland Cross/Anthony Cornwell
Cantor Fitzgerald Europe Tel: +44 (0) 20 7894
7667
Marc Milmo
Further information on Walker Crips Group is available on the
Company's website at www.wcgplc.co.uk
Chairman's Statement
This year has shown strong performances for the business, in
which we have reached record highs and have concentrated on
delivering initiatives to move forward with confidence into
2017/2018.
Overview of 2016/2017
The financial year ended 31 March 2017 can be split into two
halves. In the first six months of the financial year, the
uncertainty surrounding the run-up to the Brexit referendum and the
subsequent challenging markets slowed revenue growth. This, coupled
with a combination of non-recurring employment costs and
growth-related development costs, saw our profitability fall well
below our expectation. We saw a stronger performance, in the last
six months, when improved market conditions favourably impacted by
the result of the US presidential elections, helped increase both
revenues and profit.
Importantly our assets under management and administration, a
key metric of performance, continue to grow. Whilst we have
recently experienced the benefits of more upbeat market conditions,
the full ramifications of the negotiations on Brexit, together with
the uncertainty arising from the outcome of the UK general
election, have yet to emerge. Therefore, we will be monitoring
developments closely in the interests of both shareholders and
clients.
Dividend
In recognition of this year's progress, and notwithstanding the
need to continue monitoring an increasing cost base, the Board is
recommending a 1.6% increase in the final dividend to 1.29 pence
per share (2016: 1.27 pence per share). This increase in the
dividend reflects the Board's confidence in the Group's long-term
prospects and prudent use of available reserves.
Combined with the interim dividend of 0.58 pence per share
(2016: 0.58 pence per share), the total dividend for the year is
1.87 pence per share (2016: 1.85 pence per share), a 1.1% increase.
The final dividend will be paid on 15 September 2017 to
shareholders on the register at the close of business on 1
September 2017.
Strategy
The delivery of high quality personal investment advice and
strong investment management capability remains at the core of our
approach. As highlighted at the time of the interim results, we
have sought to refine our client-focused strategy during the year
to ensure premium service and integrity in all that we do for our
clients. We aim to increase shareholder value by growing revenue,
improving efficiency and continuing to increase our dividend
payments.
We continue to advance the delivery of our strategy for growth
in a fast-moving sector in which the pace of change in regulation
and technology are a constant. Whilst preserving our healthy cash
balance as a buffer for unforeseen events in these potentially
turbulent times, we remain committed to providing a complete range
of services through our core business of investment management and
advice, not only to high net worth and mass affluent clients but
also to clients with smaller portfolios. We also remain committed
to our financial planning and wealth management division as we
increasingly look to position ourselves favourably with
intermediary professionals and their clients.
After four years of rapid expansion, including the corporate
acquisition of Barker Poland Asset Management LLP in 2015, we are
currently concentrating on successfully delivering the many
continuing initiatives to deliver growth and satisfy increasing
regulatory obligations. The Board is acutely aware of the demands
our recent expansion has placed on our personnel, particularly the
financial, compliance and operational teams in Romford, where we
maintain investment and increase resources to mitigate the risks
associated with growth.
Culture, Governance and the Board
By setting the right example at the top, the Board has
prioritised the communication of good conduct and the appropriate
culture across all who represent the Company. We expect all
personnel to exemplify good culture and behaviour to achieve good
outcomes for clients and market contacts. Those aspects which need
to be cascaded down throughout the organisation are identified by
implementing a formal process of measuring and reporting against
suitable metrics. The executive directors and senior management,
through daily contact with employees and associates alike,
endeavour to demonstrate strong leadership and to be inspiring role
models while providing coupled with effective supervision.
Directors, Account Executives and Staff
After another year of attracting new revenue generators to the
group, and absorbing their additional investment business through
transfers of clients and their assets, we would like to thank all
our fellow Directors, Investment Managers and Advisers, and members
of our operations team for their hard work and diligence in
assisting in this process.
The Board and in particular the Executive Directors have
undergone a year of structural change in the governance and
oversight of the business. We reported last year the newly created
role of Group Compliance Director into which Guy Jackson has made
an effective contribution since joining in May 2016. After managing
the York office profitably for over ten years, David Hetherton has
taken retirement from his role as Executive Director, Wealth
Management and we wish him well. Last year, Robert Elliott advised
the Board of his intention to retire as Non-executive Director and
also as Chairman of the Audit Committee and he will not be seeking
to be re-elected to the Board at the forthcoming AGM. We will still
benefit from his experience as a business leader and Chartered
Accountant within our divisions. Clive Bouch, whom many colleagues
will remember as a former partner with Deloitte LLP, has a
long-standing relationship with the Company and we are delighted
that he has joined the Board to serve as Chairman of the Audit
Committee. His guidance, based on his recent relevant Board
experience in several sectors of financial services, will be an
invaluable asset to the Group.
Looking Ahead
In recent years we have achieved substantial growth, continuing
to refine our strategy and business model to make further strides
towards attaining our long-term strategic goals. We are now even
more committed to increasing our service proposition through
greater use of technology that is relevant to clients,
intermediaries and our own advisers. Our willingness to innovate
beyond our traditional business using our stable capital base is
well established.
D. M. Gelber
Chairman
17 July 2017
CEO's Statement
The year to 31 March 2017 saw a rise in annual revenue of 12% to
a record GBP29.2 million and underlying operating profit before tax
and exceptional items of GBP1.14 million, an improvement of 75.4%
over last year, reflecting the continuing strength of our strategy
for growth.
Overview
After a difficult first half, it is pleasing to report that the
Group saw a rise in annual Revenue of 12% to a record GBP29.2
million for the current full year. Profit before tax fell 14.8% to
GBP0.8 million from GBP0.94 million. However, when adjusted for
exceptional administrative expenses and the prior year gain of
GBP0.94 million on the sale of Euroclear shares, there was an
underlying improvement of 49% to GBP1.16 million from GBP0.78
million.
Notwithstanding the improvement, the Board and executive
management remain focused on improving the gross margin, managing
the administrative cost-base and maintaining revenue growth.
The market's strength since September has demonstrated its
resilience to the potential repercussions of the Brexit vote and
also the surprise at the Trump victory in the USA. This strength,
alongside inflows of new assets (being mainly client lists acquired
during the year) has enabled our Assets under Management and
Administration (AUMA) to grow by 26.8% to a record high of GBP5.2
billion, with a corresponding positive effect on our portfolio
managed revenues in our final quarter.
The proportion of less volatile non-broking income as a
percentage of total income has remained steady at 61.7% (2016:
61.8%) and cash reserves of GBP7.69m (2016: GBP7.20m) have also
been maintained.
Statement of Financial Position
As at 31 March 2017, the Group's financial position remains
strong with a 6.6% increase in the level of net assets to GBP21.8m
(2016: GBP20.5m), including an increase in net cash held at the
year end date of GBP7.69m (2016: GBP7.2m) despite higher dividend
payments of GBP716,000 (2016: GBP657,000) and acquisition cash
consideration payments of GBP1,098,000 (2016: GBP823,000).
Reconciliation of Profit Reconciliation of Operating
before tax profit/ (loss) to Operating
to Adjusted profit before profit before tax and
tax exceptional items 2017 2016
2017 2016 GBP000 GBP000
GBP000 GBP000 ------------- -------- --------
------------- -------- -------- Operating
Profit profit
before (loss) 782 (127)
tax 804 944 Exceptional
Exceptional items 360 778
items 360 778 ------------- -------- --------
Gain on Adjusted
Euroclear operating
sale - (942) profit 1,142 651
------------- -------- -------- ------------- -------- --------
Adjusted
profit
before
tax 1,164 780
------------- -------- --------
Operations
Although we have seen an increase in administrative expenses and
development expenses, a material proportion of which relates to
exceptional items and development expenses associated with enhanced
systems and controls for meeting higher client service levels and
regulatory standards, costs were strictly monitored and headcount
has been largely restricted to incoming revenue earners, their
support teams and administrative sections directly affected by our
growth.
During the last eighteen months our Executive Directors and
Investment Managers have been heavily engaged in a major upgrading
of our systems, monitoring and record-keeping in order to develop
our own rising regulatory standards and those seen across our
sector. This has led to a significant re-definition of the way in
which we communicate with our substantial client base alongside a
much greater use of technology. We are moving forward to complete
the hard yards of this exercise imminently. The outcome is intended
to reinforce our current offering to clients by continuing to build
and maintain a closer and deeper understanding of each client's
circumstances and requirements, thereby ensuring the suitability of
the individual service being provided. We are hugely appreciative
of our clients' continuing understanding throughout this
time-consuming but important process, which should see a much
improved premium service delivered to our clients. We firmly
believe it will underpin our prosperity with a stronger foundation
to ensure a company-wide emphasis on good client outcomes in a
manner aligned with our culture. The costs associated with these
developments and improvements were recorded mainly in the prior
year and in the first half of the current financial year.
Preparations are well underway to meet the challenges posed by
the UK's adoption of the European Parliament's MiFID II Directive.
We continue to fully support and reinforce Financial Conduct
Authority ('FCA') guidance on its drive to ensure that advice given
to clients by our account executives is suitable, well-explained
and properly recorded.
Encouragingly, following its acquisition in March 2015, Barker
Poland Asset Management LLP (BPAM) has delivered its second full
contribution to our results above our expectations which has helped
our stated aim of materially increasing the proportion of our
revenues earned as fees, rather than through transaction-driven
commissions. This is a key performance indicator reflecting the
changing shape of the business from traditional stockbroking to an
increasingly integrated investment and wealth management model.
Investment Management
The Group's assets under management have grown to record levels.
We recognise the growing importance of scale, which gives clients
and market participants a degree of reassurance of the security of
their assets and the strength and stability of the organisation.
With total Assets Under Management and Administration (AUMA) at the
year end standing at a high of GBP5.2 billion (31 March 2016:
GBP4.1 billion), our target of GBP5bn AUMA by 2018 has already been
achieved with GBP10bn being a realistic milestone for the
future.
Discretionary and Advisory Assets Under Management (AUM) at the
year end were GBP3.2bn (31 March 2016: GBP2.3bn). This pleasing
increase resulted partly from the inflow of AUM from the clients of
new Advisers and Investment Managers, alongside transactional
revenue and positive investment markets. Commission income from
broking and investment activity showed a strong recovery in the
second half of the year, after a poor first half that had been
negatively affected by Brexit. Net investment management fees
signalled growth on the back of new AUM and portfolio values
increased by 5.1% to GBP8.2m (2016: GBP7.8m).
Gross revenues from the Investment Management division increased
by 14.4% during the period to GBP27.0m (2016: GBP23.6m), which
contributed to this segment's significantly improved reported
result compared to the previous year. Management believe that the
scope for additional expansion continues to be a realistic
prospect. The new and meaningful increase in the annual ISA
allowance from GBP15,240 to GBP20,000 provides an incentive to
clients to continue investing into our ISA wrapper enabling income
and capital gain to remain tax free. The number of new ISA
subscriptions this year was higher by 9.7%, alongside a similarly
impressive increase for Junior ISAs of 16.8%. Assets under
management within our ISAs soared by 26% to GBP764 million from
last year's GBP600 million.
The Structured Investments division has produced an excellent
year of results for investors with many 'kick-out' style products
maturing early with healthy gains against a backdrop of strong
equity market performance. Despite a financial year dominated by
political uncertainty, re-investment rates amongst investors have
remained strong. Our competitive range of structured investment
products continues to garner strong support amongst the financial
adviser community, enabling us to broaden our client base and
assets under management.
In addition, our Alternative Investments management team
delivered substantial growth in revenues and funds under management
through the Tier 1 (Investor) Visa Investment Programme and Short
Term Lending (property financing) mandates. The equity arbitrage
desk continues to perform well, delivering even greater
profitability compared to last year.
Wealth Management
Our Wealth Management division, run from York, continues to be
driven by a focused management team and a highly qualified team of
Advisers, who provide a committed, quality service to a growing
client base.
Complementing this division, our Ebor Pensions business
administers Self Invested Personal Pensions (SIPP) and Small Self-
Administered Schemes (SSAS), along with a small number of Funded
Unapproved Retirement Benefit Schemes (FURBS).
AUMA of the combined divisions within our Wealth Management arm
increased to GBP514 million (2016: GBP501 million). Turnover from
Wealth Management fell slightly reflecting the shift towards taking
lower recurring fees as opposed to higher initial revenue and this
has contributed to the lower reported result for this segment
compared to the previous year. However, a degree of cost cutting
and growth in on-going activity has led to an anticipated
improvement in profitability at the start of the current calendar
year. There has been a pleasing continuation of this in the opening
weeks of the new financial year.
Outlook
In keeping with our plans for expansion, we are finalising the
move of our London head office to new more modern, high quality
premises within central London before the end of 2017.
Trading activity in the opening weeks of the new financial year
has continued the positive momentum seen in the last quarter of the
year ended 31 March 2017 and your Board correspondingly looks to
the immediate future with greater optimism, albeit tempered by
potential political challenges and geopolitical headwinds.
Despite the present threat to political stability caused by the
recent outcome of the UK general election and the significant
demands we face from our continuing regulatory initiatives over the
next 18 months, it is our emphasis on integrity, service and good
customer outcomes which will drive our public profile and
competitive positioning to deliver underlying growth in the next
phase of the Group's development.
R. A. FitzGerald FCA
Chief Executive Officer
17 July 2017
Consolidated income statement
year ended 31 March 2017
2017 2016
Notes GBP'000 GBP'000
---------------------------------------- ------- --------------- --------------
Revenue 3 29,215 26,070
Commission payable (10,009) (8,433)
Share of after tax profits of
joint ventures 12 10
---------------------------------------- ------- --------------- --------------
Administrative expenses - other (18,076) (16,996)
Administrative expenses - exceptional
items 5 (360) (778)
---------------------------------------- ------- --------------- --------------
Total administrative expenses (18,436) (17,774)
Operating profit/(loss) 782 (127)
---------------------------------------- ------- --------------- --------------
Analysed as:
Operating profit before tax and
exceptional item 1,142 651
Administrative expenses - exceptional
items 5 (360) (778)
---------------------------------------- ------- --------------- --------------
Operating profit/(loss) 782 (127)
Gain on disposal of available-for-sale
investments 6 - 942
Investment revenues 24 131
Finance costs (2) (2)
---------------------------------------- ------- --------------- --------------
Profit before tax 804 944
Taxation (196) (149)
---------------------------------------- ------- --------------- --------------
Profit for the year attributable
to equity holders of the Company 608 795
---------------------------------------- ------- --------------- --------------
Earnings per share
Basic 7 1.56 2.11
Diluted 7 1.56 2.11
---------------------------------------- ------- --------------- --------------
Consolidated statement of comprehensive income
year ended 31 March 2017
2017 2016
GBP'000 GBP'000
-------------------------------------- ------------- -------------
Addition/(reversal) of revaluation
of available-for-sale investments - (959)
Reversal of deferred tax charge
on revaluation of available-for-sale
investments - 192
--------------------------------------- ------------- -------------
Net loss recognised directly in
equity - (767)
Profit for the year 608 795
--------------------------------------- ------------- -------------
Total comprehensive income for the
year attributable to equity holders
of the Company 608 28
--------------------------------------- ------------- -------------
Consolidated statement of financial position
year ended 31 March 2017
Restated Restated
Group Group Group
2017 2016 2015
GBP'000 GBP'000 GBP'000
------------------------------- -------- --------------- ------------------
Non-current assets
Goodwill 4,388 4,388 4,388
Other intangible assets 8,294 7,992 6,631
Property, plant and equipment 836 841 1,110
Interest in joint ventures 40 28 28
Available-for-sale investments 68 57 2,417
-------------------------------- -------- --------------- ----------------
13,626 13,306 14,574
------------------------------- -------- --------------- ----------------
Current assets
Trade and other receivables 52,179 38,799 28,332
Financial assets held for
trading 1,086 1,237 2,701
Cash and cash equivalents 7,729 7,257 6,635
-------------------------------- -------- --------------- ----------------
60,994 47,293 37,668
------------------------------- -------- --------------- ----------------
Total assets 74,620 60,599 52,242
-------------------------------- -------- --------------- ----------------
Current liabilities
Trade and other payables (51,402) (36,572)* (27,685)*
Current tax liabilities (288) (117)* (215)*
Deferred tax liabilities (308) (512)* (736)*
Bank overdrafts (35) (77) (134)
Shares to be issued - deferred
consideration (366) (912) (298)
-------------------------------- -------- --------------- ----------------
(52,399) (38,190)* (29,068)*
------------------------------- -------- --------------- ----------------
Net current assets 8,595 9,103* 8,600*
-------------------------------- -------- --------------- ----------------
Long-term liabilities
Deferred cash consideration (372) (1,556) (1,930)
Shares to be issued - (218) (453)
Dilapidation provision - (132) -
-------------------------------- -------- --------------- ----------------
(372) (1,906) (2,383)
------------------------------- -------- --------------- ----------------
Net assets 21,849 20,503* 20,791*
-------------------------------- -------- --------------- ----------------
Equity
Share capital 2,826 2,595 2,545
Share premium account 3,502 2,279 1,988
Own shares (312) (312) (312)
Retained earnings 11,165 11,273* 11,135*
Revaluation reserve - - 767
Other reserves 4,668 4,668 4,668
-------------------------------- -------- --------------- ----------------
Equity attributable to
equity holders of the Company 21,849 20,503* 20,791*
-------------------------------- -------- --------------- ----------------
* Amounts have been restated and are explained further in Note 9.
Consolidated statement of cash flows
year ended 31 March 2017
2017 2016
GBP'000 GBP'000
--------------------------------------------- -------------- --------------
Operating activities
Cash generated/(used) by operations 2,883 (1,119)
Tax paid (229) (120)
--------------------------------------------- -------------- --------------
Net cash generated/(used) by operating
activities 2,654 (1,239)
--------------------------------------------- -------------- --------------
Investing activities
Purchase of property, plant and equipment (499) (247)
Net sale of investments held for trading 151 1,464
Net sale proceeds/cost of available-for-sale
investments - 2,044
Consideration paid on acquisition of
client lists (1,098) (810)
Deferred consideration paid on acquisition
of subsidiary - (13)
Dividends received 4 54
Interest received 20 85
Net cash (used)/ generated by investing
activities (1,422) 2,577
--------------------------------------------- -------------- --------------
Financing activities
Dividends paid (716) (657)
Interest paid (2) (2)
--------------------------------------------- -------------- --------------
Net cash used by financing activities (718) (659)
--------------------------------------------- -------------- --------------
Net increase in cash and cash equivalents 514 679
Net cash and cash equivalents at beginning
of year 7,180 6,501
--------------------------------------------- -------------- --------------
Net cash and cash equivalents at end
of year 7,694 7,180
--------------------------------------------- -------------- --------------
Cash and cash equivalents 7,729 7,257
Bank overdrafts (35) (77)
--------------------------------------------- -------------- --------------
7,694 7,180
--------------------------------------------- -------------- --------------
Consolidated statement of changes in equity
year ended 31 March 2017
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
----------------------- --------- --------- --------- ------------ --------- ------------ ---------- ---------
Restated* equity
as at
31 March 2015 2,545 1,988 (312) 111 4,557 767 11,135 20,791
Reversal of revaluation
of
available-for-sale
investments - - - - - (959) - (959)
Reversal of deferred
tax charge
on revaluation
of available-for-sale
investments - - - - - 192 - 192
Comprehensive
income for the
year - - - - - - 795 795
----------------------- --------- --------- --------- ------------ --------- ------------ ---------- ---------
Total comprehensive
income
for the year - - - - - (767) 795 28
----------------------- --------- --------- --------- ------------ --------- ------------ ---------- ---------
Contributions
by and
distributions
to owners
Dividends paid - - - - - - (657) (657)
Issues of shares
on acquisition
of intangibles
and as
deferred consideration 50 291 - - - - - 341
----------------------- --------- --------- --------- ------------ --------- ------------ ---------- ---------
Total contributions
by and distributions
to owners 50 291 - - - - (657) (316)
----------------------- --------- --------- --------- ------------ --------- ------------ ---------- ---------
Restated* equity
as at
31 March 2016 2,595 2,279 (312) 111 4,557 - 11,273 20,503
Total comprehensive
income for the
year - - - - - - 608 608
Contributions
by and
distributions
to owners
----------------------- --------- --------- --------- ------------ --------- ------------ ---------- ---------
Dividends paid - - - - - - (716) (716)
Issue of shares
on acquisition
of intangibles**
and as deferred
consideration 231 1,223 - - - - - 1,454
----------------------- --------- --------- --------- ------------ --------- ------------ ---------- ---------
Total contributions
by and distributions
to owners 231 1,223 - - - - (716) 738
----------------------- --------- --------- --------- ------------ --------- ------------ ---------- ---------
Equity as at
31 March 2017 2,826 3,502 (312) 111 4,557 - 11,165 21,849
----------------------- --------- --------- --------- ------------ --------- ------------ ---------- ---------
* Equity as at 31 March 2015, restated Note 9.
** The acquisition of intangibles includes the deferred taxation
at 20% arising on consolidation.
Extract from Statement of Directors' Responsibilities
Pursuant to Rule 4 of the Disclosure Guidance and Transparency
Rules, each of the Directors, whose names and functions are listed
on page 24 of the Annual Report and Accounts confirm that, to the
best of their knowledge:
-- The Group Financial Statements have been prepared in
accordance with IFRSs as adopted by the EU and Article 4 of the IAS
Regulation and give a true and fair view of the assets,
liabilities, financial position and profit and loss of the
Group.
-- The Annual Financial Report includes a fair review of the
development and performance of the business and the financial
position of the Group and the Company, together with a description
of the principal risks and uncertainties that they face.
On behalf of the Board
D Gelber
Chairman
17 July 2017
Notes to the Accounts
year ended 31 March 2017
1. Basis of preparation of financial statements
The financial information set out in these financial statements
does not constitute the Group's statutory accounts for the years
ended 31 March 2017 and 2016.
The statutory accounts for 31 March 2017 to which these
non-statutory accounts relate have not been delivered to the
registrar of companies.
The auditor's report has been signed and was unqualified.
This preliminary announcement is based on the Group financial
statements which are prepared in accordance with IFRS.
2. Going concern
The Group continues to maintain a robust financial position.
Having conducted detailed cash flow and working capital projections
and appropriate stress-testing on liquidity, profitability and
regulatory capital, taking account of possible adverse changes in
trading performance, the Board is satisfied 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 imposed by our
regulator, the Financial Conduct Authority (FCA). Accordingly, the
Board continues to adopt the going concern basis for the
preparation of the financial statements.
3. Revenue
An analysis of the Group's revenue is as follows:
2017 2017 2016 2016
Broking Non-broking 2017 Broking Non-broking 2016
income income Total income income Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- ------------ -------- -------- ------------ --------
Stockbroking commission 11,194 - 11,194 10,007 - 10,007
Fees and other revenue* - 15,795 15,795 - 13,632 13,632
------------------------ -------- ------------ -------- -------- ------------ --------
Investment Management 11,194 15,795 26,989 10,007 13,632 23,639
Wealth Management - 2,226 2,226 - 2,431 2,431
------------------------ -------- ------------ -------- -------- ------------ --------
Revenue 11,194 18,021 29,215 10,007 16,063 26,070
Net investment revenue - 22 22 - 129 129
------------------------ -------- ------------ -------- -------- ------------ --------
Total income 11,194 18,043 29,237 10,007 16,192 26,199
------------------------ -------- ------------ -------- -------- ------------ --------
% of total income 38.3 61.7 100.0 38.2 61.8 100.0
------------------------ -------- ------------ -------- -------- ------------ --------
* Includes Investment Management, Structured Investments,
Alternative Investments.
4. Segmental analysis
For segmental reporting purposes, the Group currently has two
operating segments, Investment Management, being portfolio based
transaction execution and investment advice and Wealth Management,
being financial planning and pension advice. Unallocated corporate
expenses, assets and liabilities are not considered to be allocable
accurately, or fairly, under any known basis of allocation and are
therefore disclosed separately.
The investment management division activities focus
predominantly on investment management of various types of
portfolios and asset classes.
The wealth management division provides advisory and
administrative services to clients in relation to their financial
planning, life insurance, inheritance tax and pension arrangements.
These divisions, both 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 Wealth 31 March
Management Management 2017
2017 GBP'000 GBP'000 GBP'000
--------------------------------------- ----------- ----------- ------------
Revenue
External sales 26,989 2,226 29,215
--------------------------------------- ----------- ----------- ------------
Result
Segment result 2,420 72 2,492
Unallocated corporate expenses (1,710)
--------------------------------------- ----------- ----------- ------------
Operating profit 782
Gain on disposal of available-for-sale
investments _
Investment revenues 24
Finance costs (2)
--------------------------------------- ----------- ----------- ------------
Profit before tax 804
Tax (196)
--------------------------------------- ----------- ----------- ------------
Profit after tax 608
--------------------------------------- ----------- ----------- ------------
Consolidated
year ended
Investment Wealth 31 March
Management Management 2017
2017 GBP'000 GBP'000 GBP'000
---------------------------------- ----------- ----------- ------------
Other information
Capital additions 497 2 499
Depreciation 486 18 504
Statement of financial position
Assets
Segment assets 67,362 2,213 69,575
Unallocated corporate assets 5,045
---------------------------------- ----------- ----------- ------------
Consolidated total assets 74,620
---------------------------------- ----------- ----------- ------------
Liabilities
Segment liabilities 51,623 738 52,361
Unallocated corporate liabilities 410
---------------------------------- ----------- ----------- ------------
Consolidated total liabilities 52,771
---------------------------------- ----------- ----------- ------------
Consolidated
year ended
Investment Wealth 31 March
Management Management 2016
2016 GBP'000 GBP'000 GBP'000
---------------------------------------- ----------- ----------- ------------
Revenue
External sales 23,639 2,431 26,070
---------------------------------------- ----------- ----------- ------------
Result
Segment result 987 165 1,152
Unallocated corporate expenses (1,279)
---------------------------------------- ----------- ----------- ------------
Operating loss (127)
Gains on disposal of available-for-sale
investments 942
Investment revenues 131
Finance costs (2)
---------------------------------------- ----------- ----------- ------------
Profit before tax 944
Tax (149)
---------------------------------------- ----------- ----------- ------------
Profit after tax 795
---------------------------------------- ----------- ----------- ------------
Restated
Consolidated
Restated year ended
Investment Wealth 31 March
Management Management 2016
2016 GBP'000 GBP'000 GBP'000
---------------------------------- ------------ ----------- -------------
Other information
Capital additions 231 16 247
Depreciation 497 19 516
Statement of financial position
Assets
Segment assets 52,131 1,963 54,094
Unallocated corporate assets 6,505
---------------------------------- ------------ ----------- -------------
Consolidated total assets 60,599
---------------------------------- ------------ ----------- -------------
Liabilities
Segment liabilities 39,137* 543 39,680*
Unallocated corporate liabilities 416
---------------------------------- ------------ ----------- -------------
Consolidated total liabilities 40,096*
---------------------------------- ------------ ----------- -------------
*Amounts have been restated and are explained further in Note
9
5. Administrative expenses - exceptional items
As a result of its materiality the Directors decided to disclose
certain amounts separately in order to present results which are
not distorted by significant exceptional events.
2017 2016
GBP'000 GBP'000
------------------------------------------ ------------ -------------
Costs incurred on suitability project (58) 778
Exceptional employment-related costs 418 -
------------------------------------------ ------------ -------------
360 778
------------------------------------------ ------------ -------------
During the period to 31 March 2016, and as disclosed in the
prior year, the Group incurred substantial legal and professional
adviser costs of an exceptional nature to improve its regulatory
control framework in relation to suitability of advice given to
clients.
In the year to 31 March 2017, GBP58,000 of the estimated costs
provided in the prior year were not required and therefore have
been reversed. In the year to 31 March 2017, the Group also
incurred significant legal fees and other costs in connection with
employment matters of an exceptional nature.
6. Gain on disposal of available-for-sale investments
Net gains comprise:
2017 2016
GBP'000 GBP'000
------------------------------------------- ------------- -------------
Gain on disposal of available for sale
investments _ 942
------------------------------------------- ------------- -------------
There were no gains or losses on the disposal of investments in
the current period.
During the period to 31 March 2016, the Group disposed of its
holding of 1,809 shares in Euroclear plc realising a gain of
GBP942,000. Due to their level of materiality and one-off nature,
the Board has decided to disclose this item separately
7. 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 GBP608,000 (2016: GBP795,000) and on 38,974,002 (2016:
37,678,525) Ordinary Shares of 6(2) /3 pence, being the weighted
average number of Ordinary Shares in issue during the year.
8. Contingent liability
During the year, two Group companies, Walker Crips Group plc
(WCG) and Walker Crips Stockbrokers Limited (WCSB), received draft
proceedings in respect of a potential claim, from a former listed
corporate client of Keith Bayley Rogers & Co (KBR), a former
subsidiary of the Group.
The corporate client alleges that its former Executive Chairman
and his associates misappropriated assets of GBP5.6 million from it
between 2010 -2014 and used these assets to purchase and sell
shares in the client through the brokerage of WCG, WCSB and KBR.
The client asserts that WCG and WCSB acted dishonestly to assist
the Chairman to perpetrate the alleged fraud and was party to an
unlawful means conspiracy to cause it loss. It is also claimed that
WCG, WCSB are vicariously liable for any wrongdoing on the part of
KBR. The potential quantum of the claim is in excess of GBP1
million. The claims are strenuously denied by the Directors and the
Directors consider the claim to be without any merit, as supported
by a legal opinion obtained by WCG and WCSB, which advises that the
claims are "weak". A detailed response denying liability for the
claims was submitted to the client's representatives in December
2016. The Directors have heard nothing further from the former KBR
client since then.
9. Prior year adjustment
An adjustment has been made to retained earnings brought forward
at 1 April 2015 to reflect unused holiday entitlement costs of
GBP148,000 at 31 March 2015 together with the tax impact of
GBP29,000 and reducing retained earnings by GBP119,000 as at 31
March 2015 and 2016. Movements in the liability since are
considered immaterial and there is therefore no impact to profit
before tax for subsequent years.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKODKCBKDNOD
(END) Dow Jones Newswires
July 18, 2017 02:00 ET (06:00 GMT)
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