TIDMWCW
RNS Number : 1576R
Walker Crips Group plc
25 June 2015
25 June 2015
News Release
Walker Crips Group plc
Continued growth in core business after a year of expansion
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
unaudited results for the year ended 31 March 2015.
Highlights
-- Group revenues increased by 11.1% to GBP23.0m (2014: GBP20.7m)
-- Gross profit (net revenues) increased by 8.5% to GBP15.3m (2014: GBP14.1m)
-- Operating profit, before exceptional expenses, up 14.9% to GBP0.54m(2014: GBP0.47m)
-- Reported pre-tax profit of GBP0.44m which includes Barker
Poland Asset Management LLP (BPAM) acquisition (2014: GBP2.5m which
included investment disposal gains of GBP1.84m)
-- BPAM acquisition, together with branch openings and
expansion, gives the group a national footprint with 13 offices
nationwide
-- Non-broking income as a percentage of total income increased
to 56.3% (2014: 52.7%), reflecting further reduction in reliance on
transaction-driven commission revenue
-- Discretionary and advisory assets under management increased
by 50.3% to GBP2.0 billion (2014: GBP1.33 billion). Together with
administered assets (AUMA), total assets increased by 26.7% to
GBP3.8 billion (2014: GBP3.0 billion)
-- Proposed final dividend increased by 10.4% to 1.17p per share
(2014: 1.06p per share) bringing total dividends for the year to
1.70p per share (2014: 1.57p per share)
David Gelber, Chairman, Walker Crips, says:
"As the UK economic recovery continues, supported by political
stability after the decisive general election, we are confident
that the Group is well positioned to continue making strides, which
will produce higher dividends and added value for the benefit of
shareholders.
"Trading activity in the opening weeks of the new financial year
has started strongly. Despite increasing competition and
significant regulatory initiatives, including MIFiD II over the
next 18 months, it is our emphasis on service and integrity which
will drive our public profile and competitive positioning to
deliver underlying growth in the next phase of the Group's
development."
For further information, please contact:
Walker Crips Group plc Tel: +44 (0)20 3100 8000
Louie Perry, Media Relations
Broadgate Mainland Tel: +44 (0)20 7726 6111
Roland Cross, Director Mob: 07831 401 309
Cantor Fitzgerald Europe Tel: +44 (0) 20 7894
7667
Rishi Zaveri
Further information on Walker Crips Group is available on the
Company's website: www.wcgplc.co.uk
Chairman and Chief Executive's Statement
Performance overview
This year's results build on the momentum of growth in our core
business of investment and wealth management, flowing from the
Group's adoption of a refocused strategy in mid-2012. Operating
profit before exceptional expenses increased, for the second year
running, by 14.9% to GBP0.54m (2014: GBP0.47m). After net
investment revenues and exceptional costs of GBP0.33m, incurred
through the acquisition of the investment management firm Barker
Poland Asset Management LLP (BPAM), pre-tax profits were GBP0.44m,
compared to GBP2.5m in 2014, when we benefited from investment
disposal gains of GBP1.84m.
We have continued to advance the delivery of our strategy for
growth and have consolidated the progress we have made over the
previous two years. We now look ahead to continuing our expansion
and business transformation. A big step was made with the
acquisition of BPAM, the group's first corporate acquisition in ten
years, which concluded at the end of a year in which regional
expansion has also gathered pace. Further growth in numbers of
fee-generating investment managers and advisers has continued with
an additional 14 taken on during the year, bringing our total
number of fee earning personnel to 120. Along with the opening of a
branch in Truro, we expanded in Birmingham, London and York, giving
us a truly national footprint, with 13 offices nationwide.
At a time when our peers have reported decreases in commission
revenues, we have shown resilience by stabilising our own broking
income levels at GBP10.2m (2014: GBP9.9m) through gathering new
clients who come with the increasing number of investment
management personnel deciding to join us in this exciting phase of
expansion. As well as commission from stockbroking, the higher
level of fees generated from our rapidly increasing pool of
clients' assets under management and administration (AUMA) has, in
turn, led to a robust increase in revenue by 11.1% to GBP23.0m from
GBP20.7m in the prior year.
Earnings per share (EPS) for the year were 0.69 pence (2014: 5.5
pence). EPS in 2014 of course included the effect of the one-off
disposal of our investment in Liontrust Convertible Loan Stock.
Dividend
In recognition of this year's sound progress and the continued
confidence in the group's longer term prospects, the Board is
recommending a 10.4% increase in the final dividend to 1.17 pence
per share (2014: 1.06 pence per share).
Combined with the interim dividend of 0.53 pence per share
(2014: 0.51 pence per share excluding the special dividend), this
makes a total dividend for the year of 1.70 pence per share (2014:
1.57 pence per share). This increase of 8.3% reflects the further
progress made during the year driven by the turnaround in Operating
Profit before exceptionals over the past two years.
The final dividend will be paid on 7 August 2015 to shareholders
on the register at the close of business on 17 July 2015.
Strategy for growth
Since the disposal of non-core subsidiaries in 2012 and 2013,
our remaining businesses of investment management and wealth
management have continued to target higher net worth and affluent
clients. The strategic evolution, from traditional private client
stockbroker to an integrated investment and wealth management
group, continues to be reinforced by our commitment to a long
established set of values, premium service, strong culture and
integrity in all we do for clients and this has continued to
attract new business. We put clients first, a principle that has
underpinned our longevity, sound reputation and independence, which
are valued by clients. We operate within a framework of strong
corporate governance and growing financial strength.
Acquisition
After assessing many prospective targets to identify a suitable
earnings-enhancing acquisition, we completed the purchase of the
membership interests in BPAM on 6 March 2015. BPAM is based in
London and provides investment and wealth management services to a
loyal and established base of private clients on a predominantly
discretionary basis. They hold dear to the same values as we do and
have a culture aimed at clients and suitable investments. The
business fits well within the Walker Crips business philosophy.
Apart from opportunities for cost synergies, the addition of
capable investment managers and advisers and their discretionary
fee based recurring revenue stream is a key step in achieving the
additional scale needed to reach one of the Company's stated
medium-term targets - to take our Assets under Management and
Administration through the threshold of GBP5 billion.
Operations
As a result of our growing client base, gross profit increased
by 8.5% to GBP15.3m.
Administration expenses before exceptional costs for the period
correspondingly increased by 8.1% and have been largely contained
despite the expected increase in employment and regulatory costs
associated with our current and proposed revenue generating
initiatives. A lease for additional floor space at our London
headquarters has recently been entered into in response to the
stream of additional advisers we are welcoming, and to capitalise
on a significant premises cost saving for our new subsidiary,
BPAM.
One of our key performance indicators, non-broking income
expressed as a proportion of total income, was higher at 56.3%
(2014: 52.7%), further diminishing our reliance on
transaction-driven commission revenue.
Investment Management
The Company's assets under management have grown substantially,
and are set to continue to do so, as our pipeline of potential new
recruits and their clients remains healthy.
Discretionary and Advisory assets under management (AUM) at the
year end were GBP2.0bn (31 March 2014: GBP1.33bn), reflecting the
strategic emphasis and the longer term revenue benefits of asset
gathering alongside transactional brokerage. Commission income from
broking remained stable, whilst investment management fees
increased by 23.8% to GBP10.4m (2014: GBP8.4m).
Gross revenues from the investment management division increased
by 12.6% during the Period to GBP20.6m (2014: GBP18.3m), another
marked improvement and clear demonstration that the scope for
additional expansion is a realistic prospect in a very competitive
sector, where the reduction in the quality of service caused by
increase in scale through mergers and acquisitions is repeatedly
being evidenced amongst our peers. This has led to disenchantment
amongst the affected advisers of competitors, who invariably seek
stability and reliability of service for their clients in a more
efficient, technologically competent and successful organisation
such as ours.
After receiving another boost to the ISA regime in the last
budget, investors now have much greater flexibility ensuring that
subscriptions into our ISA stocks and shares products continued
their dramatic growth by 48% this year (2014: 32%). Forthcoming
additional tax-efficient transferability allowances will also
encourage inherited funds to remain under our management.
The Structured Investments division produced another strong
year, as it continued to strengthen its position with the
professional adviser community. The current year is also promising,
with a backdrop of global economic growth and the outlook for a
sustained low interest rate environment, both of which serve to
underpin demand for structured investment products.
In addition, our Alternative Investments management team
delivered substantial growth in new clients and assets from the
Investor Immigration Programme and the greater profitability
generated by the Equity Arbitrage desk continues to be a welcome
success.
Wealth Management
Our innovative Wealth Management division, run from York,
continues to be driven by focused management and a competent team
of advisers, who provide a committed, high-quality service to its
widening client base.
In the year to 31 March 2015, our York operation benefited from
the first full year's figures from the new Inverness office and
delivered an improved operating profit. Since the advent of the
Retail Distribution Review and pension freedoms, activity remains
strong, boosted also by continued Auto Enrolment activity and a
helpful Spring Budget, which bodes well for a productive year
ahead.
The Pensions division, which is also based in York,
administering SIPP (Self Invested Personal Pension) and SSAS (Small
Self Administered Scheme) produced a resilient performance with
SIPPs experiencing 8% net growth in funds under administration,
ending the year at GBP105 million (2014: GBP97 million). SSAS
assets under our care at the year end amounted to GBP200 million
(2014: GBP206 million).
Regulation
Preparations are well under way to meet the challenges posed by
the European Parliament's MiFID II initiative. We continue to fully
support and reinforce FCA guidance on its drive to ensure advice
given to clients by our account executives is suitable and properly
recorded. Our culture of serving clients in their best interests is
now well established in our DNA.
Statement of Financial Position
As at 31 March 2015, the Group maintained a steady level of net
assets of GBP21.0m (2014: GBP21.4m), including net cash of GBP6.5m
(2014: GBP8.1m), a decrease of GBP1.6m mainly due to the initial
cash consideration of GBP1.8m for the recent acquisition of
BPAM.
Going Concern
The Group continues to maintain a robust financial position.
Having conducted detailed cash flow and working capital forecasts
and appropriate stress-testing on liquidity, profitability and
regulatory capital, taking account of possible adverse changes in
trading performance, the Board has more than 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.
Accordingly, the Board continues to adopt the going concern basis
for the preparation of the financial statements.
Directors, Account Executives and Staff
After another year of increasing numbers of revenue generators
and the absorption of 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 continuing hard work and diligence in
shouldering this burden. The Walker Crips team remains true to the
core values of your Company; and their integrity, courtesy,
fairness, diligence, responsibility and loyalty make it an
appealing firm for prospective clients and professionals to
join.
Annual General Meeting
This year's Annual General Meeting will be held at the South
Place Hotel, 3 South Place, London, EC2M 2AF on 31 July 2015, at
11.00 am.
Outlook
Your Board is committed to continuing the execution of the
Strategic Plan and the long term value for the Group it is
creating. As the economy recovers, and with political stability
largely assured after the recent decisive UK general election, we
are confident that the Group is well positioned to continue making
strides, which will ultimately produce higher dividends and added
value for the benefit of shareholders.
Trading activity in the opening weeks of the new financial year
has started strongly.
Despite increasing competition and significant demands from
regulatory initiatives over the next 18 months, it is our emphasis
on service and integrity which will drive our public profile and
competitive positioning to deliver underlying growth in the next
phase of the Group's development.
D. M. Gelber R. A. FitzGerald FCA
Chairman Chief Executive Officer
25 June 2015 25 June 2015
Consolidated income statement
year ended 31 March 2015
2015 2014
Notes GBP'000 GBP'000
-------------------------------------- ----- -------- --------
Continuing operations
Revenue 9 22,994 20,688
Commission payable (7,653) (6,584)
-------------------------------------- ----- -------- --------
Gross profit 15,341 14,104
Share of after tax profits of
joint ventures 13 17
-------------------------------------- ----- -------- --------
Administrative expenses - other (14,810) (13,651)
Administrative expenses - exceptional
item 5 (329) -
-------------------------------------- ----- -------- --------
Total administrative expenses (15,139) (13,651)
-------------------------------------- ----- -------- --------
Operating profit 215 470
-------------------------------------- ----- -------- --------
Analysed as:
Profit before tax and exceptional
item 544 470
Administrative expenses - exceptional
item (329) -
-------------------------------------- ----- -------- --------
Operating profit 215 470
Gains on disposal of investments 6 - 1,836
Loss on disposal of subsidiary
undertaking 7 - (13)
Investment revenues 9 225 240
Finance costs (1) (4)
-------------------------------------- ----- -------- --------
Profit before tax 439 2,529
Taxation (182) (495)
-------------------------------------- ----- -------- --------
Profit for the year attributable
to equity holders of the company 257 2,034
-------------------------------------- ----- -------- --------
Earnings per share
Basic 4 0.69 5.50
Diluted 4 0.68 5.39
-------------------------------------- ----- -------- --------
Consolidated statement of comprehensive income
year ended 31 March 2015
2015 2014
Notes GBP'000 GBP'000
--------------------------------------------------- ------ -------- --------
(Loss)/Profit on revaluation of available-for-sale
investments taken to equity (88) 243
Deferred tax on profit on available-for-sale
investments 28 (35)
Long Term Incentive Plan (LTIP) credit
to equity - 13
----------------------------------------------------------- -------- --------
Net (loss)/profit recognised directly
in equity (60) 221
Profit for the year 257 2,034
----------------------------------------------------------- -------- --------
Total comprehensive income for the
year attributable to equity holders
of the company 197 2,255
----------------------------------------------------------- -------- --------
Consolidated statement of financial position
31 March 2015
Group Group
2015 2014
Notes GBP'000 GBP'000
--------------------------------- ------ -------- --------
Non-current assets
Goodwill 4,388 2,901
Other intangible assets 6,631 1,168
Property, plant and equipment 1,110 872
Interest in joint ventures 28 38
Available-for-sale investments 2,417 2,404
----------------------------------------- -------- --------
14,574 7,383
Current assets
Trade and other receivables 28,332 46,648
Trading investments 2,701 1,670
Deferred tax asset - -
Cash and cash equivalents 6,635 8,173
----------------------------------------- -------- --------
37,668 56,491
---------------------------------------- -------- --------
Total assets 52,242 63,874
----------------------------------------- -------- --------
Current liabilities
Trade and other payables (27,537) (41,801)
Current tax liabilities (239) (330)
Deferred tax liabilities (741) (202)
Bank overdrafts (134) (70)
Shares to be issued (298) -
----------------------------------------- -------- --------
(28,949) (42,403)
---------------------------------------- -------- --------
Net current assets 8,719 14,088
Long Term Liability - Deferred
Cash Consideration (1,930) -
Long Term Liability - Shares to
be issued (453) -
--------------------------------- ------ -------- --------
Net assets 20,910 21,471
----------------------------------------- -------- --------
Equity
Share capital 2,545 2,515
Share premium account 1,988 1,818
Own shares (312) (312)
Retained earnings 11,254 11,955
Revaluation reserve 767 827
Other reserves 4,668 4,668
----------------------------------------- -------- --------
Equity attributable to equity
holders of the company 20,910 21,471
----------------------------------------- -------- --------
Consolidated statement of cash flows
year ended 31 March 2015
2015 2014
Note GBP'000 GBP'000
------------------------------------ ----- -------- --------
Operating activities
Cash generated/(used) by operations 3,806 (3,074)
Interest received 78 229
Interest paid (1) (4)
Tax paid (337) -
------------------------------------------- -------- --------
Net cash generated/(used) by
operating activities 3,546 (2,849)
------------------------------------------- -------- --------
Investing activities
Purchase of property, plant
and equipment (565) (542)
Net purchase of investments
held for trading (1,031) (1,036)
Net sale proceeds/cost of available
for sale investments - 5,466
Consideration paid on acquisition
of businesses (765) (602)
Net proceeds on sale of subsidiary - 292
Consideration paid on acquisition
of subsidiary (1,875) -
Dividends received 46 42
------------------------------------------- -------- --------
Net cash (used)/generated by
investing activities (4,190) 3,620
------------------------------------------- -------- --------
Financing activities
Issue of new shares - 6
Dividends paid (958) (522)
------------------------------------------- -------- --------
Net cash used in financing
activities (958) (516)
------------------------------------------- -------- --------
Net (decrease)/increase in
cash and cash equivalents (1,602) 255
Net cash and cash equivalents
at beginning of year 8,103 7,848
------------------------------------------- -------- --------
Net cash and cash equivalents
at end of year 6,501 8,103
------------------------------------------- -------- --------
Cash and cash equivalents 6,635 8,173
Bank overdrafts (134) (70)
------------------------------------------- -------- --------
6,501 8,103
------------------------------------------ -------- --------
Notes to the Accounts
year ended 31 March 2015
1. The financial information set out in the announcement does
not constitute the company's statutory accounts for the years ended
31 March 2015 or 2014. The financial information for the year ended
31 March 2014 is derived from the statutory accounts for that year
which have been delivered to the Registrar of Companies. The
auditor's report 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 2015 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.
2. Going concern
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
difficult climate.
After conducting enquiries, the directors believe that the
company and 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.
3. Whilst the information as set out in the 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.
4. 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 GBP257,000 (2014: GBP2,034,000) and on 37,017,924 (2014:
36,967,116) ordinary shares of 6(2) /(3) pence, 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 37,629,174 (2014: 37,717,319) ordinary shares, being
the weighted average number of ordinary shares in issue during the
period adjusted for the dilutive effect of potential ordinary
shares.
5. Administrative expenses - exceptional item
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 non-recurring events.
2015 2014
GBP'000 GBP'000
---------------------------------------- ------------ ------------
Short Term Lending Fund winding down
costs 68 -
Costs incurred on acquisitions 261 -
---------------------------------------- ------------ ------------
329 -
---------------------------------------- ------------ ------------
Towards the end of the year, a decision was made to wind down
our Short Term Lending Fund. All investors are expected to receive
a full return of sums invested before September 2015.
Administrative costs associated with the wind down have been
provided for in this year's results. Acquisition costs are largely
made up of legal and professional costs being incurred and payable
on completion of the acquisition of BPAM on 6 March 2015.
6. Gain on disposal of investments
During the period to 31 March 2015, there were no gains or
losses on disposal of investments.
During the period to 31 March 2014, conversion and disposal of
Liontrust Convertible Unsecured Loan Stock (CULS) with a nominal
value of GBP3.03 million and the redemption of the remaining
holding with a nominal value of GBP0.07 million, yielded a profit
of GBP1,836,000.
Due to its level of materiality and one-off nature, the Board
has decided to disclose these items separately.
7. Loss on disposal of subsidiary undertaking
During the period to 31 March 2015, there were no gains or
losses on disposal of subsidiary undertakings.
During the period to 31 March 2014 the Group completed the
disposal of its subsidiary Keith Bayley Rogers & Co Limited
(following FCA approval) on 31 May 2013, realising a loss of
GBP13,000.
8. Segmental analysis
For management purposes the Group is currently organised into
two operating divisions - Investment Management and Wealth
Management. 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 2015
2015 GBP'000 GBP'000 GBP'000
------------------------------- ----------- ----------- ------------
Revenue
External sales 20,590 2,404 22,994
------------------------------- ----------- ----------- ------------
Result
Segment result 931 338 1,269
Unallocated corporate expenses (1.054)
------------------------------- ----------- ----------- ------------
Operating profit 215
Investment revenues 225
Finance costs (1)
------------------------------- ----------- ----------- ------------
Profit before tax 439
Tax (182)
------------------------------- ----------- ----------- ------------
Profit after tax 257
------------------------------- ----------- ----------- ------------
Consolidated
year ended
Investment Wealth 31 March
Management Management 2015
2015 GBP'000 GBP'000 GBP'000
---------------------------------- ----------- ----------- ------------
Other information
Capital additions 552 13 565
Depreciation 380 16 396
Statement of financial position
Assets
Segment assets 35,133 1,856 36,989
Unallocated corporate assets 15,253
---------------------------------- ----------- ----------- ------------
Consolidated total assets 52,242
---------------------------------- ----------- ----------- ------------
Liabilities
Segment liabilities 28,614 615 29,229
Unallocated corporate liabilities 2,103
---------------------------------- ----------- ----------- ------------
Consolidated total liabilities 31,332
---------------------------------- ----------- ----------- ------------
Consolidated
year ended
Investment Wealth 31 March
Management Management 2014
2014 GBP'000 GBP'000 GBP'000
--------------------------------- ----------- ----------- ------------
Revenue
External sales 18,290 2,398 20,688
--------------------------------- ----------- ----------- ------------
Result
Segment result 1,150 221 1,371
Unallocated corporate expenses (901)
--------------------------------- ----------- ----------- ------------
Operating profit 470
Gains on disposal of investments 1,836
Loss on disposal of subsidiary
undertaking (13)
Investment revenues 240
Finance costs (4)
--------------------------------- ----------- ----------- ------------
Profit before tax 2,529
Tax (495)
--------------------------------- ----------- ----------- ------------
Profit after tax 2,034
--------------------------------- ----------- ----------- ------------
Consolidated
year ended
Investment Wealth 31 March
Management Management 2014
2014 GBP'000 GBP'000 GBP'000
---------------------------------- ----------- ----------- ------------
Other information
Capital additions 508 34 542
Depreciation 292 14 306
Statement of financial position
Assets
Segment assets 48,377 1,724 50,101
Unallocated corporate assets 13,773
---------------------------------- ----------- ----------- ------------
Consolidated total assets 63,874
---------------------------------- ----------- ----------- ------------
Liabilities
Segment liabilities 41,348 542 41,890
Unallocated corporate liabilities 513
---------------------------------- ----------- ----------- ------------
Consolidated total liabilities 42,403
---------------------------------- ----------- ----------- ------------
9. Revenue
An analysis of the Group's revenue is as follows:
2015 2015 2014 2014
Broking Non-broking 2015 Broking Non-broking 2014
income income Total income income Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ -------- ------------ -------- -------- ------------ --------
Stockbroking commission 10,152 - 10,152 9,904 - 9,904
Fees and other revenue - 10,438 10,438 - 8,386 8,386
------------------------ -------- ------------ -------- -------- ------------ --------
Investment Management 10,152 10,438 20,590 9,904 8,386 18,290
Wealth Management - 2,404 2,404 - 2,398 2,398
------------------------ -------- ------------ -------- -------- ------------ --------
Revenue 10,152 12,842 22,994 9,904 10,784 20,688
Net investment revenue - 224 224 - 236 236
------------------------ -------- ------------ -------- -------- ------------ --------
Total income 10,152 13,066 23,218 9,904 11,020 20,924
------------------------ -------- ------------ -------- -------- ------------ --------
% of total income 43.7 56.3 100.0 47.3 52.7 100.0
------------------------ -------- ------------ -------- -------- ------------ --------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR DMGZVRDFGKZM
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