Interim Results
Walker,Crips,Weddle,Beck PLC
10 November 2006
Press Release For immediate release: 10 November, 2006.
Interim Results
for the six months to 30 September 2006
Walker, Crips, Weddle, Beck Plc (Code: WCW), the financial services firm whose
activities cover stockbroking, fund management, corporate finance and personal
financial services, today announces interim results for the six months ended 30
September 2006, the highlights of which are:
• Revenue of £8,439,000 (2005: £7,801,000), an increase of 8.2%
• Operating Profit of £1,126,000 (2005: £965,000 before exceptional
item), an increase of 16.7%
• Pre-tax profit of £1,225,000 (2005: Loss £894,000)
• Interim dividend increased by 8.2% to 2.65p per share (2005: 2.45p per
share)
• Continued excellent performance from Walker Crips Asset Managers (WCAM)
with funds under management rising to £233.4m from £203m at
31 March 2006, an increase of 15%.
Commenting on the results, Graham Kennedy, Chairman of Walker, Crips, Weddle,
Beck, said: 'It is encouraging to see the company performing well in all
divisions and the group benefiting from a growing proportion of fee based
revenue. '
For further information, please contact:
Walker, Crips, Weddle, Beck PLC Tel: +44 (0)20 72537502
Michael Sunderland, Chief Executive.
Rodney FitzGerald, Finance Director.
Stephen Bailey, Investment Director.
Further information on Walker, Crips, Weddle, Beck plc:
Further information on Walker, Crips, Weddle, Beck is available on the Company's
website: www.wcwb.co.uk.
Chairman's statement
I have great pleasure in announcing another improvement in the performance of
the business reflected by a record interim pre-tax profit of £1,225,000,
compared to a loss of £894,000 for the same period last year. In the six months
to 30 September 2006 revenue improved 8% to £8,439,000, due to an increase in
activity across our core divisions.
Operations
Against the challenging market conditions of the last six months, all of our
business units have made significant contributions towards the group's
profitability. Despite lower transaction volumes within the market place, our
stockbroking subsidiary has performed creditably and has benefited from a
growing proportion of its revenues being fee-based.
Once again our unit trust management subsidiary, Walker Crips Asset Managers Ltd
(WCAM), enjoyed a healthy period with funds under management rising from £203
million to £233 million since 31 March 2006. WCAM now manages six unit trusts
which include two multi manager products and has recently introduced a new high
Alpha fund to complement our existing product range and I am pleased to announce
that the fund has attracted subscriptions in excess of £42 million since
inception on 30 October 2006. It is the stated intention of our fund managers to
'soft close' the fund at £100 million. The division continues to receive the
benefit of significant interest from both institutions and the private client
community and I look forward to reporting further growth in funds under
management at the year end.
Our corporate finance division enjoyed a marked improvement of 160% in fee
income as more of the assignments in progress are reaching completion than in
the previous period.
Due in part to the advent of A Day in April of this year, profitability at our
York-based financial services arm, the London York group, increased dramatically
by 266% over the previous half year. The Ebor SIPP has completed a successful
half-year period with the number of plans rising to 113 from 76 at the last year
end. Total amounts held within Ebor SIPPs now amount to £20 million. The London
York group is well-positioned to capitalise further on the liberalisation of
pension legislation that has benefited the industry since A Day.
The prior half year's results contained an exceptional cost of £2,460,000
relating to a specific bad debt provision. Legal proceedings against two clients
for the recovery of this sum have been ongoing and will continue until the
middle of next year when we expect to be able to report a more conclusive
outcome. In the meantime your board considers the provision made last year to be
sufficient to cover the cost of pursuing this action. During the next financial
year we anticipate our head office relocation to new premises in Bunhill Row,
London to have been completed.
I am pleased to announce an increase in the interim dividend to 2.65p per share
(2005: 2.45p per share) reflecting our confidence in the future prospects of the
group. This dividend will be paid on 18 December 2006 to those shareholders on
the register at the close of business on 24 November 2006.
Strategically, your board remains committed to increasing our fee-based revenues
and I am pleased to state that non-broking revenue as a proportion of total
revenue increased again in this six month period to 47.9%, being over £4,000,000
(2005: £2,900,000), compared to 40.6% for the full year 2006. This reflects the
shift in emphasis during the period from the more volatile commission-based
revenues to the less volume-sensitive management fees which is illustrated
through the commission shared amount decreasing when compared to the prior
period whilst gross revenue has increased.
Board Changes
Some while ago, Michael Sunderland, our Chief Executive Officer, informed the
Board that he wished to relinquish this post on 1 January 2007. Michael has
been with the company since 1972 and our CEO since 1996. During that time he
has been the motivating force behind a number of important acquisitions and
contributed strongly to development of the Group's diverse range of operations.
I am pleased to advise that Michael will remain an Executive Director with
special responsibility for expansion of Private Client Services.
After consideration by a duly constituted Nomination Committee, consisting of
the Company's Non-Executive Directors, I am pleased to advise their unanimous
choice of Rodney FitzGerald, currently Finance Director, as successor. He will
replace Michael as Chief Executive Officer with effect from 1 January 2007. To
pave the way for greater management in depth I am also pleased to advise that
Sean Lam will be appointed Group Managing Director with effect from the same
date. The Board wish both Rodney and Sean well in their new roles.
Directors, Account Executives and staff
On behalf of the board, I would like to thank all our account executives and
members of staff for their continued loyalty and commitment which has been the
foundation for our growth since becoming a fully-listed company in 1996.
Outlook
Since our half year end market activity has improved, benefiting our main core
divisions. WCAM has recently been awarded a substantial institutional mandate to
manage UK equities which will provide a significant boost to funds currently
under management. A further update on this mandate will be provided in due
course.
Furthermore, trading in the second half of the current year has so far exceeded
our expectations and we look to continue our historical trend of achieving
strong trading results in the second half. With our increasingly diverse
business model now firmly in place we remain, despite challenging market
conditions, confident about the strength of our long-term prospects.
G.N. Kennedy CVO
Chairman
10 November 2006
Walker Crips Weddle Beck plc
Consolidated interim income statement
For the six months ended 30 September 2006 Unaudited Unaudited Audited
Notes Six months to Six months to Year to
30 September 30 September 31 March 2006
2006 2005
£'000 £'000 £'000
Revenue 8,439 7,801 16,861
Commission payable (1,944) (2,310) (5,022)
Gross profit 6,495 5,491 11,839
Share of after tax profits of joint venture 21 14 50
Administrative expenses - other (5,390) (4,540) (9,736)
Administrative expenses - exceptional item - (2,460) (2,692)
Total administrative expenses (5,390) (7,000) (12,428)
Operating profit / (loss) 1,126 (1,495) (539)
Investment revenues 111 111 262
Finance costs (12) (10) (21)
Profit on disposal of available-for-sale - 500 668
investment
Profit / (loss) before tax 1,225 (894) 370
Analysed as:
Profit before tax and exceptional item 1,225 1,066 2,394
Profit on disposal of available-for-sale - 500 668
investment
Administrative expenses - exceptional item - (2,460) (2,692)
Profit / (loss) before tax 1,225 (894) 370
Taxation (393) 272 (136)
Profit / (Loss) for the period attributable
to equity holders of the company 832 (622) 234
Earnings / (Loss) per share 2
Basic 7.2p (5.8p) 2.0p
Diluted 7.0p (5.7p) 1.9p
Dividends proposed for the period per 3 2.65p 2.45p 6.65p
ordinary share
Dividends (£'000) 310 284 772
Walker Crips Weddle Beck plc
Consolidated interim balance sheet
As at 30 September 2006
Notes Unaudited Unaudited Audited
30 September 2006 30 September 2005 31 March 2006
£'000 £'000 £'000
Non current Assets
Goodwill 4,677 5,278 4,677
Other intangible assets 978 1,036 1,036
Property, plant and equipment 499 539 547
Investment in joint venture 25 19 55
Available-for-sale investments 886 908 845
7,065 7,780 7,160
Current Assets
Trade and other receivables 40,915 46,594 50,659
Trading Investments 298 103 135
Cash and cash equivalents 4,149 2,867 2,549
45,362 49,564 53,343
Current liabilities
Trade and other payables (38,146) (43,610) (46,797)
Current tax liabilities (731) (783) (483)
Bank loans & overdrafts (78) (155) (165)
Provisions (323) (272) (411)
(39,278) (44,820) (47,856)
Net current assets 6,084 4,744 5,487
Non current liabilities
Deferred tax liabilities (263) (272) (268)
Shares to be issued (1,113) (1,600) (1,113)
(1,376) (1,872) (1,381)
Total assets less liabilities 11,773 10,652 11,266
Equity
Share capital 4 2,336 2,320 2,326
Share premium account 4 1,450 1,367 1,396
Own shares 4 (173) (173) (173)
Revaluation reserve 4 567 561 515
Other reserves 4 3,592 3,498 3,548
Retained earnings 4 4,001 3,079 3,654
Equity attributable to equity
holders of the company 11,773 10,652 11,266
Walker Crips Weddle Beck plc
Consolidated interim cash flow statement
For the six months ended 30 September 2006 Unaudited Unaudited Audited
Six months to Six months to Year to
30 September 30 September 31 March 2006
2006 2005
£'000 £'000 £'000
Cash generated / (used) from operating activities
Cash generated / (used) from operations 2,321 (1,433) (1,521)
Interest received 85 85 239
Interest paid (12) (10) (21)
Tax paid (134) (137) (454)
Net cash generated / (used) from operating 2,260 (1,495) (1,757)
activities
Cash generated / (used) from investing activities
Acquisition of subsidiary / business - (750) (740)
Purchase of property, plant and equipment (68) (345) (306)
Proceeds from disposal of available-for-sale
investments - 500 668
Purchase of investments held for trading (163) 174 141
Dividends received 77 26 23
Net cash (used) / generated in investing (154) (395) (214)
activities
Cash generated / (used) from financing activities
Proceeds on issue of shares 64 38 72
Dividends paid (483) (457) (738)
Net cash used in financing activities (419) (419) (666)
Net increase / (decrease) in cash and cash
equivalents 1,687 (2,309) (2,637)
Cash and cash equivalents at the start of the
period 2,384 5,021 5,021
Cash and cash equivalents at the end of the 4,071 2,712 2,384
period
Walker Crips Weddle Beck plc
Consolidated interim statement of recognised
income and expense
For the six months ended 30 September Unaudited Unaudited Audited
2006 Six months to Six months to Year to
30 September 30 September 31 March 2006
2006 2005
£'000 £'000 £'000
Gain on revaluation of available-for-sale
investments taken to equity 42 23 50
Deferred tax on gains on
available-for-sale investments 10 (7) (15)
Net income recognised directly in equity 52 16 35
Transfers
Transferred to profit or loss on sale of
available-for-sale investments - (453) (544)
Tax on sale of available-for-sale - 136 162
investments
Profit / (loss) for the period 832 (622) 234
Total recognised income and expense for
the period attributable to equity holders 884 (923) (113)
Walker Crips Weddle Beck plc
Notes to the accounts
For the six months ended 30 September 2006
1. Basis of preparation and accounting policies
The Group's consolidated accounts are prepared using accounting policies
consistent with International Financial Reporting Standards.
The interim accounts have been prepared on the basis of the accounting policies
and methods of computation set out in the Group's consolidated accounts for the
year ended 31 March 2006. The interim accounts should be read in conjunction
with the Group's audited accounts for the year ended 31 March 2006.
The interim financial information is unaudited and does not constitute statutory
financial statements within the meaning of section 240 of the Companies Act
1985.
The presentation of certain comparative figures has been amended to conform to
the format of recently published financial statements.
The Group's accounts for the year ended 31 March 2006 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 237(2) or (3) of
the Companies Act 1985.
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 profit or loss and is not subsequently reversed in future
periods.
Intangible assets
At each balance sheet date, the Group reviews the carrying amounts of its
intangible assets to determine whether there is any indication that those assets
have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). Where the asset does not generate cash flows that are
independent from other assets, the Group estimates the recoverable amount of the
cash-generating unit to which the assets 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.
Share based compensation
The Group operates a number of share option schemes for employees and account
executives. The charge to the income statement is determined by the fair value
of the options granted at the date of grant and recognised over the vesting
period.
2. Earnings per share
The calculation of basic earnings per share for continuing operations is based
on the post-tax profit for the period of £832,000 (2005 - (£622,000)) and on
11,499,993 (2005 - 10,634,614) ordinary shares of 20p, being the weighted
average number of ordinary shares in issue during the period.
The effect of options granted and commitments to issue shares in respect of
acquisitions would be to reduce the reported earnings per share. The calculation
of diluted earnings per share is based on 11,888,530 (2005 - 10,930,198)
ordinary shares, being the weighted average number of ordinary shares in issue
during the period adjusted for the dilutive potential ordinary shares (being
share option schemes only) .
3. Dividends
The interim dividend of 2.65p per share is payable on the 18 December to
shareholders on the register at the close of business on the 24 November (30
September 2005 : 2.45p). The interim dividend has not been included as a
liability in this interim report.
Walker, Crips Weddle Beck plc
Notes to the accounts (continued)
For the six months ended 30
September 2006
4. Reserves and retained earnings Called up Share Own shares Capital Other Revaluation Retained Total
share premium held Redemption earnings Equity
capital
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2005 2,153 1,337 (173) 111 1,578 862 4,158 10,026
Revaluation of investment at fair 23 23
value
Deferred tax credit (7) (7)
Transfer of realised gain on sale (453) (453)
of available-for-sale investments
Taxation on prior period realised 136 136
gain
Loss for the 6 months ended 30 (622) (622)
September 2004
Total recognised income and expense (301) (622) (923)
for the period
March 2005 final dividend (457) (457)
Fair value adjustment for 37 37
equity-settled share-based payments
Issue of shares 7 30 37
Purchase consideration - issue of 160 1,772 1,932
800,000 shares
At 30 September 2005 2,320 1,367 (173) 111 3,387 561 3,079 10,652
Revaluation of investment at fair 27 27
value
Deferred tax charge (8) (8)
Transfer of realised gain on sale of available (91) (91)
for sale investments
Taxation on prior period realised 26 26
gain
Profit for the 6 months ended 31 856 856
March 2006
Total recognised income and expense (46) 856 810
for the period
September 2005 interim dividend (281) (281)
Fair value adjustment for 50 50
equity-settled share-based payments
Issue of shares 6 29 35
0
At 31 March 2006 2,326 1,396 (173) 111 3,437 515 3,654 1,266
Revaluation of investment at fair 42 42
value
Deferred tax charge 10 10
Profit for the 6 months ended 30 832 832
September 2006
Total recognised income and expense 52 832 884
for the period
March 2006 final dividend (485) (485)
Fair value adjustment for 44 44
equity-settled share-based payments
Issue of shares 10 54 64
At 30 September 2006 2,336 1,450 (173) 111 3,481 567 4,001 11,773
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