TIDMWCW
RNS Number : 6013P
Walker Crips Group plc
18 November 2016
18(th) November 2016
Walker Crips Group plc
Results for the six months ended 30 September 2016
Walker Crips Group plc ("Walker Crips", the "Company" or the
"Group"), is a financial services group with activities including
stockbroking, investment and wealth management.
HIGHLIGHTS
-- Gross profit (net revenues) increased by 1% to GBP9.0m (2015: GBP8.9m)
-- Profit before taxation decreased by 91% to GBP53,000 (2015:
GBP589,000). Underlying profitability before one-off costs was
GBP0.3 million.
-- Total Assets under Management and Administration (AUMA)
increased by 23% to GBP4.8 billion (30 Sep 2015: GBP3.9 billion; 31
Mar 2016: GBP4.1 billion)
-- Discretionary and Advisory Assets under Management represent
GBP2.7 billion (30 September 2015: GBP2.1 billion), an increase of
29%
-- Fee and non-broking income improved to 61% of total income
(2015: 60%), reflecting the strategy to reduce reliance on
transaction-driven commission revenue
-- Interim dividend maintained at 0.58p per share (2015: 0.58p per share)
David Gelber, Chairman, Walker Crips, says:
"In my year end statement I reported that trading activity in
the opening weeks of the new financial year had been quiet and this
trend continued in difficult conditions during the first quarter,
in the run up to the Brexit vote. I am pleased to report the Group
has traded profitably since the Period end, but we remain cautious
about the short term outlook, due to continued market
uncertainty."
For further information, please contact:
Walker Crips Group plc Tel: +44 (0)20 3100 8000
Geri Jacks, Media Relations
Four Broadgate Tel: +44 (0)20 3697 4200
Roland Cross /Gareth David
walkercrips@fourbroadgate.com
Cantor Fitzgerald Europe Tel: +44 (0)20 7894 8043
Rishi Zaveri
Further information on Walker Crips Group is available on the
Company's website: www.wcgplc.co.uk
Chairman's Statement
Introduction
In my year end statement I reported that trading activity in the
opening weeks of the new financial year had been quiet and this
trend continued in difficult conditions during the run up to the
Brexit vote.
We have continued our strategy of building the systems and
controls to deliver higher client service levels and regulatory
standards. Accordingly, whilst always seeking to control expense,
we have incurred increasing related costs in our drive for growth,
with its focus on premium service and integrity in all that we do
for clients. Specifically we have invested significantly in
compliance resources and client-facing systems and will continue to
do so. This has been one of the main factors that led to Operating
Profit for the period being reduced by a sharp increase in
administrative expenses of GBP0.5 million to GBP8.9 million (2015:
GBP8.4 million). A significant proportion of this increase derives
from a combination of one-off employment costs and growth-related
development costs. The Board has not taken the decision to incur
these costs lightly and tight control of costs will receive
continued management focus and scrutiny given the substantial
regulatory changes ahead.
These increased costs resulted in profit before tax being
reduced by 91% to GBP0.1 million from GBP0.6 million in the prior
year. Underlying profitability before the one-off costs was GBP0.3
million.
Revenues improved in the second quarter, despite continuing
challenging markets, resulting in a small decrease in Revenue of 1%
to GBP13.2 million for the first half of our current year. Income
from both traditional investment management business and from our
structured investments desk during the period was lower than
forecast as volumes slowed significantly leading up to, and
following, the result of the EU Referendum. Since the end of the
period, however, these revenue streams have increased considerably
as the improvement in investor sentiment gathers pace.
The Board is, however, very encouraged that certain long-term
aims are being achieved, noting the growth of 29% in Discretionary
and Advisory Assets under Management over the last 12 months and of
17% over the current six month period during which the value of the
FTSE100 Index recorded a 12% increase. The ongoing expansion of our
client base, predominantly through recruitment of new investment
managers, has only been partially reflected in Revenue for the
current period due to a timing lag of new client assets
transferring to the company from previous employers. The
corresponding increases in Revenue will benefit subsequent
periods.
Trading
Gross Profit (Net Revenue) during the Period increased by 1% to
GBP9.0 million (2015: GBP8.9 million), demonstrating a small uplift
in growth, driven by our strategy for our Investment and Wealth
Management businesses in the last few years.
Non-broking income as a proportion of total income increased to
61% (2015: 60%) as the emphasis of our client base to transfer to
discretionary or portfolio-managed mandates continues.
After payment of the final dividend in relation to the previous
year end, at the Period end, the Group had net assets of GBP20.2
million (31 March 2016: GBP20.6 million) including net cash of
GBP5.9 million (31 March 2016: GBP7.2 million), a robust balance
sheet from which to generate further growth and development in line
with the Board's Strategic Plan, part of which is the continuing
acquisition of individuals or teams of advisers and their clients'
business.
Operations
Investment Management
Discretionary and Advisory assets under management at the Period
end were GBP2.7 billion (30 September 2015: GBP2.1 billion; 31
March 2016: GBP2.3 billion). This increase over the prior year is a
clear reflection of the Company's greater emphasis on fee
generation rather than transactional brokerage. Discretionary
assets were GBP1.24 billion (30 September 2015: GBP0.94 billion)
and Advisory assets were GBP1.52 billion (30 September 2015:
GBP1.19 billion).
Revenues from the Investment Management division increased by 1%
during the Period to GBP12.1 million (2015: GBP12.0 million), with
strong increases in portfolio management fee revenues, being offset
by weaker broking commissions and Structured investment revenues as
a result of the difficult market conditions relating to Brexit.
Wealth Management
Against the backdrop of political uncertainty during the summer,
Revenues and divisional profits reduced by 12% and 70% respectively
when compared to an above average first 6 months last year at our
York-based wealth management division. When compared with the 6
months to 31 March 2016, gross revenue is down 10% and profits down
20%. AUMA of this division has increased by 2.1% to GBP489m (2015:
GBP479m). However the second half is showing a healthy pipeline of
new business.
Dividend
Although your Board is disappointed to be reporting a decline in
profitability for this half year, our confidence in achieving more
favourable second half results enables us to declare an unchanged
interim dividend of 0.58 pence per share (2015: 0.58 pence per
share). This reflects the encouraging progress being made in the
Group's underlying key trading performance indicators. The interim
dividend will be paid on 16 December 2016 to those shareholders on
the register at the close of business on 2 December 2016.
Directors, Account Executives and Staff
I would like to thank all my fellow directors, account
executives and members of staff for their continued support and
hard work during a challenging period. Their professionalism,
diligence and loyalty in recent years give the Company every reason
to be regarded as a special place to work, as we now start to bear
the fruits directly resulting from our recent efforts in further
raising our standards to meet the ever-increasing expectations of
clients, regulators and other stakeholders.
Outlook
The Group remains in a very sound financial position and I am
pleased to report that we have traded profitably since the Period
end. We remain cautious about the short term outlook, due to
continued market uncertainty
David Gelber
Chairman
18 November 2016
Walker Crips Group plc
Walker Crips Group plc
Condensed Consolidated Income Statement
For the six months ended
30 September 2016
Unaudited Unaudited Audited
Notes Six months Six months Year to
to to
30 September 30 September 31 March
2016 2015 2016
GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 2 13,187 13,265 26,070
Commission payable (4,233) (4,397) (8,433)
------------- ------------- ---------
Gross profit 8,954 8,868 17,637
Share of after tax profit
of joint venture 5 6 10
Administrative expenses (8,920) (8,372) (17,774)
Operating profit/(loss) 39 502 (127)
Gain on disposal of investment - - 942
Investment revenues 15 88 131
Finance costs (1) (1) (2)
Profit before tax 53 589 944
Taxation (11) (130) (149)
Profit for the period
attributable to equity
holders of the company 42 459 795
------------- ------------- ---------
Earnings per share 3
Basic 0.11p 1.22p 2.11p
Diluted 0.11p 1.22p 2.11p
Walker Crips Group plc
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2016
Unaudited Unaudited Audited
Six months Six months Year to
to to
30 September 30 September 31 March
2016 2015 2016
GBP'000 GBP'000 GBP'000
Profit for the period 42 459 795
Other comprehensive income:
Reversal of revaluation
of available-for-sale
investments - - (959)
Reversal of deferred
tax charge on revaluation
of available-for-sale
investments - - 192
Total comprehensive income
for the period
attributable to equity
holders of the company 42 459 28
Walker Crips Group plc
Condensed Consolidated Statement of Financial Position
As at 30 September 2016
Unaudited Unaudited Audited
30 September 30 September 31 March
2016 2015 2016
Notes GBP'000 GBP'000 GBP'000
Non-current Assets
Goodwill 4,388 4,388 4,388
Other intangible
assets 8,313 6,580 7,992
Property, plant and
equipment 791 960 841
Investment in joint
ventures 33 34 28
Available for sale
investments 6 57 1,034 57
------------- ------------- ---------
13,582 12,996 13,306
Current Assets
Trade and other receivables 30,274 41,068 38,799
Trading Investments 6 968 1,793 1,237
Cash and cash equivalents 5,972 6,916 7,257
------------- ------------- ---------
37,214 49,777 47,293
Total assets 50,796 62,773 60,599
------------- ------------- ---------
Current liabilities
Trade and other payables (26,554) (38,168) (36,424)
Current tax liabilities (288) (363) (141)
Bank Overdrafts (123) (6) (77)
Deferred tax liabilities (380) (740) (517)
Shares to be issued (1,131) (362) (912)
------------- ------------- ---------
(28,476) (39,639) (38,071)
Net current assets 8,738 10,138 9,222
------------- ------------- ---------
Long term liability
- deferred cash consideration (1,786) (1,815) (1,556)
Long term liability
- shares to be issued (158) (348) (218)
Long term liability
- dilapidation provision (132) - (132)
Net assets 20,244 20,971 20,622
============= ============= =========
Equity
Share capital 7 2,605 2,551 2,595
Share premium account 2,336 2,023 2,279
Own shares (312) (312) (312)
Revaluation reserve - 767 -
Other reserves 4,668 4,668 4,668
Retained earnings 10,947 11,274 11,392
Equity attributable
to equity holders
of the company 20,244 20,971 20,622
============= ============= =========
Walker Crips Group plc
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 September 2016
Unaudited Unaudited Audited
Six months Six months Year to
to to
30 September 30 September 31 March
2016 2015 2016
GBP'000 GBP'000 GBP'000
Operating activities
Cash used by operations (168) (1,243) (1,119)
Interest received 13 39 85
Interest paid (1) (1) (2)
Tax paid - (6) (120)
Net cash used by operating
activities (156) (1,211) (1,156)
--------------------- ----------------- ---------
Investing activities
Purchase of property, plant
and equipment (160) (109) (247)
Purchase of intangible assets (199) (170) (810)
Net sale of investments
held for trading 269 908 1,464
Consideration paid on acquisition
of subsidiary (600) - (13)
Net sale proceeds of available
for sale investments - 1,383 2,044
Dividends received 2 47 54
Net cash (used by)/generated
from investing activities (688) 2,059 2,492
--------------------- ----------------- ---------
Financing activities
Dividends paid (487) (439) (657)
Net cash used in financing
activities (487) (439) (657)
--------------------- ----------------- ---------
Net (decrease)/ increase
in cash and cash equivalents (1,331) 409 679
Net cash and cash equivalents
at the start of the period 7,180 6,501 6,501
Net Cash and cash equivalents
at the end of the period 5,849 6,910 7,180
Cash and cash equivalents 5,972 6,916 7,257
Bank overdrafts (123) (6) (77)
--------------------- ----------------- ---------
5,849 6,910 7,180
--------------------- ----------------- ---------
Walker Crips Group plc
Condensed Consolidated Statement Of Changes In Equity
For the six months ended 30 September 2016 (GBP000's)
Called Share Own Capital Other Revaluation Retained Total
up premium shares Redemption earnings Equity
share held
capital
Equity as at 31 March
2015 2,545 1,988 (312) 111 4,557 767 11,254 20,910
Profit for the 6
months ended 30 September
2015 - - - - - - 459 459
-------- -------- ------- ----------- ----- ----------- --------- -------
Total recognised
income and expense
for the period - - - - - - 459 459
March 2015 final
dividend - - - - - - (439) (439)
Issue of shares on
acquisition of intangible
asset 6 35 - - - - - 41
Equity as at 30 September
2015 2,551 2,023 (312) 111 4,557 767 11,274 20,971
Reversal of revaluation
of
available-for-sale
investments - - - - - (959) - (959)
Reversal of deferred
tax
charge on revaluation
of
available-for-sale
investments - - - - - 192 - 192
Profit for the 6
months ended 31 March
2016 - - - - - - 336 336
-------- -------- ------- ----------- ----- ----------- --------- -------
Total recognised
income and expense
for the period - - - - - - 336 336
September 2015 interim
dividend - - - - - - (218) (218)
Issue of shares on
acquisition of subsidiary 44 256 - - - - - 300
Equity as at 31 March
2016 2,595 2,279 (312) 111 4,557 - 11,392 20,622
Profit for the 6
months ended 30 September
2016 - - - - - - 42 42
-------- -------- ------- ----------- ----- ----------- --------- -------
Total recognised
income and expense
for the period - - - - - - 42 42
March 2016 final
dividend - - - - - - (487) (487)
Issue of shares on
acquisition of intangible
asset 10 57 - - - - - 67
Equity as at 30 September
2016 2,605 2,336 (312) 111 4,557 - 10,947 20,244
Walker Crips Group plc
Notes to the condensed consolidated financial statements
For the six months ended 30 September 2016
1. Basis of preparation and accounting policies
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 2016.
The condensed consolidated financial statements should be read
in conjunction with the Group's audited financial statements for
the year ended 31 March 2016.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 2016 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.
New standards and interpretations
A number of new standards and amendments to standards and
interpretations are effective for annual periods beginning after 1
April 2016 and have not been applied in preparing these
consolidated financial statements. None of these are expected to
have a significant effect on the consolidated financial statements
of the Group except for IFRS 9 'Financial Instruments', IFRS 15
'Revenue from Contracts with Customers' and IFRS 16 'Leases'. The
effective dates of IFRS 9, IFRS 15 and IFRS 16 are not until 2019,
2019 and 2020 year ends respectively; the Group has therefore
decided not to implement these standards early.
Going Concern
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
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 assets
At 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 asset belongs.
Deferred tax
Deferred 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 uncertainties
Under 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 2016.
Related party transactions
No transactions took place in the period that would materially
or significantly affect the financial position or performance of
the group.
2. Segmental analysis
Investment Wealth Total
Management Management
Revenue (GBP'000)
6m to 30 September
2016 12,102 1,085 13,187
------------ ------------- ---------------
6m to 30 September
2015 12,036 1,229 13,265
------------ ------------- ---------------
Year to 31 March
2016 23,639 2,431 26,070
------------ ------------- ---------------
Unallocated Operating
Result (GBP'000) Costs Profit/(Loss)
6m to 30 September
2016 776 36 (773) 39
------------ ------------- ------------ ---------------
6m to 30 September
2015 990 120 (608) 502
------------ ------------- ------------ ---------------
Year to 31 March
2016 987 165 (1,279) (127)
------------ ------------- ------------ ---------------
3. Earnings per share
The calculation of basic earnings per share for continuing
operations is based on the post-tax profit for the period of
GBP42,000 (2015: GBP459,000) and on 38,304,050 (2015: 37,531,391)
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. Any remaining outstanding
options expired during the prior period. The calculation of diluted
earnings per share is based on 38,304,050 (2015: 37,643,593)
ordinary shares, being the weighted average number of ordinary
shares in issue during the period adjusted for dilutive potential
ordinary shares.
4. Dividends
The interim dividend of 0.58 pence per share (2015: 0.58 pence)
is payable on 16 December 2016 to shareholders on the register at
the close of business on 2 December 2016. The interim dividend has
not been included as a liability in this interim report.
5. Total Income (GBP'000)
Six months Six months Year Ended
Ended Ended 31 March
30 September 30 September 2016
2016 2015
Revenue 13,187 13,265 26,070
Net Investment revenues 14 87 129
-------------- -------------- -----------
13,201 13,352 26,199
-------------- -------------- -----------
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.
Six months % Six months % Year %
Income (GBP'000) Ended Ended Ended
30 September 30 September 31 March
2016 2015 2016
Broking 5,174 39 5,345 40 10,007 38
Non-Broking 8,027 61 8,007 60 16,192 62
-------------- ---- -------------- ---- ---------- ----
13,201 100 13,352 100 26,199 100
-------------- ---- -------------- ---- ---------- ----
6. Investments
Available-for-sale investments
Qualifying
Collective
Life Policy Equity Investment
investments investments scheme Total
GBP'000 GBP'000 GBP'000 GBP'000
Fair value
At 1 April 2015 - 1,034 1,383 2,417
Additions in the period - - - -
Disposals in the year - - (1,383) (1,383)
Recognised in comprehensive income - - - -
----------------------------------- ------------ ------------ ----------- --------
At 30 September 2015 - 1,034 - 1,034
Additions in the period 57 - - 57
Disposals in the period - (1,034) - (1,034)
Recognised in comprehensive income - - - -
At 31 March 2016 57 - - 57
Additions in the year - - - -
Disposals in the year - - - -
Recognised in comprehensive income - - - -
----------------------------------- ------------ ------------ ----------- --------
At 30 September 2016 57 - - 57
Equity investments comprise the Group's investment in a life
policy investment. The fair value is based upon the life company's
forecast terminal value. During the period to 30 September 2016
there were no movements in available for sale investments.
During the period to 30 September 2015, following the closure
and liquidation of the TB Walker Crips Income from Short Term
Lending Fund (STLF), a qualifying collective investment scheme
(QCIS), the Group's holding of 1.383m units was redeemed and repaid
in full (resulting in no gain or loss) with GBP1,383,000 being
received on 7th September 2015.
As at 30 As at 30 As at As at 30 6 Months
September September 31 March September to 30 September
2016 2015 2016 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ---------- ---------- --------- ---------- ----------------
Trading investments
Fair value 968 1,793 1,237 968 1,793
--------------------- ---------- ---------- --------- ---------- ----------------
Trading investments represent investments in equity securities
and bonds that present the Group with opportunity for return
through dividend income, interest and trading gains. The fair
values of these securities are based on quoted market prices.
The following provides an analysis of financial instruments that
are measured subsequent to initial recognition at fair value,
grouped into Levels 1 to 3 based on the degree to which the fair
value is observable:
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities. The trading investments fall within this category;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices). The Group does
not hold financial instruments in this category; and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable inputs).
The Group's available-for-sale investments fall within this
category.
The following tables analyse within the fair value hierarchy the
Group's Investments measured at fair value.
At 30 September 2016 Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------- ---------- ---------- ---------- ----------
Financial assets held at fair value through profit and loss 968 _ 57 1,025
------------------------------------------------------------- ---------- ---------- ---------- ----------
At 30 September 2015 Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------- ---------- ---------- ---------- ----------
Financial assets held at fair value through profit and loss 1,793 _ 1,034 2,827
------------------------------------------------------------- ---------- ---------- ---------- ----------
At 31 March 2016 Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------- ---------- ---------- ---------- ----------
Financial assets held at fair value through profit and loss 1,237 _ 57 1,294
------------------------------------------------------------- ---------- ---------- ---------- ----------
7. Issue of share capital
During the period to 30 September 2016, 150,574 new Ordinary
Shares were issued and allotted to the sellers of Barker Poland
Asset Management (BPAM) in order to satisfy the Group's obligation
in connection with the payment of year one deferred consideration.
The BPAM business has met the targets required to trigger a payment
by the Group of the full amount of the first of 3 potential
payments.
During the period to 30 September 2015, 95,476 new Ordinary
Shares were issued and allotted to fulfil contractual obligations
of employees of the Group.
Directors' Responsibility Statement
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
Chief Executive Officer
18 November 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFFVLTLTLIR
(END) Dow Jones Newswires
November 18, 2016 11:00 ET (16:00 GMT)
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