Walker Crips Group WCW Half Yearly Report

  Walker Crips Group (WCW) - Half Yearly Report

RNS Number : 8243Q
Walker Crips Group plc
12 November 2012






Walker Crips Group plc



Results for the six months ended 30 September 2012



Walker Crips Group  plc ("Walker Crips",  the "Company" or  the "Group"),  the 
financial services firm with  activities covering stockbroking, portfolio  and 
wealth management  services, today  announces unaudited  results for  the  six 
months ended 30 September 2012 (the "Period").



Highlights



· Disposal of Walker  Crips Asset Managers  Ltd ("WCAM") fund  management 
subsidiary in April 2012 realised  a one-off gain of  in excess of £10m  which 
helped deliver record pre-tax profits of £7.7m (2011: £0.8m) and basic EPS  of 
22.2p (2011: 1.65p)



·  Strategy  to  refocus  and   grow  investment  management  post   WCAM 
implemented and showing encouraging initial results



· Cash balances at Period end up 106% to £7.0m (2011: £3.4m); Net  assets 
at Period end up to £19.9m (31 March 2012: £13.8m)



· Group revenue fell 17% to  £8.8m (2011: £10.7m), primarily as a  result 
of the  disposal of  WCAM but  also due  to weak  trading conditions  for  the 
Group's continuing businesses



· Operating loss  (before exceptional  items) of £0.7m  (2011: profit  of 
£0.8m)



· Interim dividend of 0.47p per share (2011: 0.94p per share)



· Special  interim dividend  of  3p per  share,  the second  such  payout 
following the disposal of WCAM



· Non-broking income  as a proportion  of total income  increased to  65% 
(2011: 61%)



· Post  period  end  disposal  of  Keith,  Bayley,  Rogers,  the  Group's 
corporate finance business



Commenting, David Gelber, Chairman of Walker Crips, said:



"The depressed market conditions of recent years show no signs of abating,  as 
fragile  investor  confidence  stutters  in  the  face  of  Euro  and   market 
uncertainty.  However,  your  Board  is  confident  that  the  Group  is  well 
positioned to benefit from any longer term improvement in market activity.



The Group has been implementing a strategy to refocus and build its investment
management division. This process is now well advanced. We are very encouraged
that twelve advisers, along with their clients, have joined the Company  since 
the beginning of the financial year bringing with them substantial new revenue
streams, most  of which  will take  effect in  the second  half of  the  year. 
Further recruitment is in prospect.



The Group has traded profitably since the  Period end and remains in a  strong 
financial position following receipt of the WCAM disposal proceeds."



For further information, please contact:



Walker Crips Group plc             Tel: +44 (0)20 3100 8000

Rodney FitzGerald, Chief Executive

Geri Jacks, Media Relations
Altium                             Tel: +44 (0)20 7484 4040

Ben Thorne

Tim Richardson



Further information on Walker Crips Group is available on the Company's
website: www.wcgplc.co.uk



Chairman's Statement



The Group  experienced  difficult trading  conditions  over the  Period,  with 
generally  lower  transaction  volumes  in  weaker  equity  markets  impacting 
operating performance.



Disposals



The defining event during the Period was the successful disposal to  Liontrust 
Asset Management of a major portion  of the Group's asset management  business 
(WCAM) which resulted in a one-off gain on disposal of over £10m.



The disposal of WCAM resulted  in a substantial change  to the profile of  the 
Group's stockbroking  business,  including  the  revenue  generated  from  the 
dealing transacted for the funds which were sold. A strategy was put in  place 
for the  refocusing  of  our investment  management  division,  including  the 
recruitment of a new chief investment officer.



As a  result of  the WCAM  disposal, significant  resources are  available  to 
re-invest in the continuing core businesses, with cash balances at the  Period 
end increasing by 106% to £7.0m (2011: £3.4m) and net assets at the Period end
of £19.9m  (31 March  2012: £13.8m).  The first  stage of  this  re-investment 
process was the recruitment from Savoy Asset Management of several  investment 
managers in an agreed process that allowed the smooth transfer of both clients
and investment managers.



To allow shareholders  to share in  the gains generated  by the disposal,  the 
Board has announced the payment of two special interim dividends. The first of
these (4.5p per  share) was  paid on  3 August 2012,  and the  second (3p  per 
share) is scheduled to be paid, along with the interim dividend, on 7 December
2012.



Subsequent to the  Period end, on  1 November 2012  the Company announced  the 
proposed disposal of its corporate finance subsidiary Keith, Bayley, Rogers  & 
Co  Limited  for  an  amount  expected  to  be  approximately  £345,000.   The 
transaction is  conditional  upon  the  approval  of  the  Financial  Services 
Authority.



Trading



It was inevitable, given the disposal of WCAM and the weak trading  conditions 
for the  continuing businesses,  that  Group revenues  would fall  during  the 
Period, as it did, by 17% to £8.8m (2011: £10.7m). Commissions payable in  the 
Period increased by  13% to £3.7m  (2011: £3.3m),  due to an  increase in  the 
proportion of Group revenues with commission sharing arrangements.



Non-broking income as  a proportion of  total income improved  further to  65% 
(2011: 61%) in  line with the  Board's continued desire  to diversify  revenue 
streams and be  less reliant  on volatile commission  revenues. Following  the 
WCAM disposal, approximately  33% of  Group revenue  has been  of a  recurring 
nature.



Administrative expenses (before exceptional items) during the Period decreased
to £5.9m  (2011: £6.6m),  mainly  as a  result of  the  disposal of  the  WCAM 
operations, but  also due  to the  continuation of  cost reduction  exercises. 
Business development  costs in  excess of  £309,000 were  incurred during  the 
Period in implementing  a renewed strategy  for growth in  our remaining  core 
businesses and  which, longer  term, should  result in  significant growth  in 
revenue.



In line with our strategy, efforts have  been made to reduce and minimise  the 
cost base. Despite this  effort, the fall  in net revenues  fed through to  an 
operating loss  (before  exceptional  items)  of  £708,000  (2011:  profit  of 
£793,000). However, the benefits of the steps taken are now being reflected in
the Group's trading  performance, with net  Revenue increasing steadily  since 
May.



Given the  continuing  negative impact  of  global market  conditions  on  the 
trading performance  of some  of the  Group's business  units, the  Board  has 
decided to  write  down the  goodwill  associated with  these  underperforming 
businesses by £1.2m.



Pre tax  profits and  earnings per  share  were boosted  by the  one-off  gain 
obtained from the disposal of WCAM and were £7.7m (2011: £0.8m) and 22.2p  per 
share (2011: 1.65p per share) respectively.



Operations



Gross revenues from the investment management / stockbroking division fell  by 
2% during the first  half to £7.3m (2011:  £7.4m), a satisfactory  performance 
given wider  market conditions.  However, an  increase in  shared revenue  and 
higher expenses resulted in the division recording an operating loss.



The award-winning Walker Crips Structured Investments team continued to  build 
upon its growing reputation in the  intermediary market place with the  launch 
during the Period of several new products which more easily enable experienced
investors to take medium-term positions to meet their investment strategies.



Revenues at  our York-based  financial services  division increased  by 4%  to 
£1.09m (2011:  £1.05m) which,  allied  with sound  cost control,  resulted  in 
profit increasing by 20% to £183,000 (2011: £152,000).



Exceptional items



As part of its cost  reduction plans, the Board  has decided to re-locate  the 
Group's administrative functions to more  cost effective premises in  Romford, 
Essex anticipating  an  annualised saving  of  £400,000 per  annum.  Leasehold 
improvement costs  incurred  for  the current  premises  have  therefore  been 
written down by £210,000 to a level more accurately reflecting their value  in 
use.



During the first half significant legal and other professional fees, amounting
to £174,000,  were  incurred  in pursuing  acquisitions  and  other  corporate 
transactions.



Dividend



An interim dividend of 0.47p per share (2011: 0.94p per share) recognises  the 
difficult trading environment the Group is currently experiencing.  Aggregated 
with the 3p per share special  interim dividend previously announced, means  a 
total distribution of 3.47p per share will be paid on 7 December 2012 to those
shareholders on the register at the close of business on 23 November 2012.



Directors, Account Executives and Staff



On behalf of the Board, I would like once again to thank my fellow  directors, 
all account executives and  members of staff  for their continued  commitment, 
capability and diligence  all of which  continue to make  Walker Crips such  a 
special place.



Outlook



The depressed market conditions of recent  years show no signs of abating,  as 
fragile  investor  confidence  stutters  in  the  face  of  Euro  and   market 
uncertainty.  However,  your  Board  is  confident  that  the  Group  is  well 
positioned to benefit from any longer term improvement in market activity.



The Group has been implementing a strategy to refocus and build its investment
management division. This process is now well advanced. We are very encouraged
that twelve advisers, along with their clients, have joined the Company  since 
the beginning of the financial year bringing with them substantial new revenue
streams, most  of which  will take  effect in  the second  half of  the  year. 
Further recruitment is in prospect.



The Group has traded profitably since the  Period end and remains in a  strong 
financial position following receipt of the WCAM disposal proceeds.





D. M. Gelber

Chairman

12 November 2012







Walker Crips Group plc
Condensed Consolidated Income Statement
For the six months ended 30
September 2012
                                           Unaudited      Unaudited    Audited
                                 Notes Six months to  Six months to    Year to
                                       30 September  30 September  31 March
                                                2012           2011       2012
                                              £'000         £'000     £'000
Continuing operations
Revenue                              2         8,843         10,652     20,306
Commission payable                           (3,660)        (3,248)    (5,735)
Gross profit                                   5,183          7,404     14,571
Share of after tax profit of                       7              1         12
joint venture
Administrative expenses - other              (5,898)        (6,612)   (13,569)
Administrative expenses -            3         (384)              -      (286)
exceptional items
Administrative expenses                      (6,282)        (6,612)   (13,855)
Operating (loss) / profit                    (1,092)            793        728
Analysed as:
Operating (loss) / profit before               (708)            793      1,014
exceptional items
Administrative expenses -            3         (384)              -      (286)
exceptional items
Operating (loss) / profit                    (1,092)            793        728
Loss on disposal of investments     4         (579)              -          -
Gain on disposal of subsidiary       5        10,430              -          -
undertaking
Goodwill impairment charges          6      (1,221)              -          -
Investment revenues                              167             32         46
Finance costs                                    (4)              -        (5)

Profit before tax                              7,701            825        769
Taxation                                         360          (227)      (328)
Profit for the period                                                      
attributable to equity holders
of the company                                 8,061            598        441
Earnings per share                   7
Basic                                         22.20p          1.65p      1.21p
Diluted                                       21.47p          1.61p      1.19p





Walker Crips Group plc
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2012
                                           Unaudited      Unaudited    Audited
                                       Six months to  Six months to    Year to
                                       30 September  30 September  31 March
                                                2012           2011       2012
                                              £'000         £'000     £'000
Profit for the period                          8,061            598        441

Other comprehensive income:
Profit / (loss) on revaluation of                 81            (4)      (484)
available-for-sale investments taken
to equity
Deferred tax on (profit) / loss on              (19)              1        138
available-for-sale investments
Deferred tax on share options                    (3)            (2)        (4)
Total comprehensive income for the
period
                                               8,120            593         91
attributable to equity holders of the
company



Walker Crips Group plc
Condensed Consolidated Statement of Financial Position
As at 30 September 2012
                                  Unaudited               Unaudited    Audited
                         30 September 2012      30 September 2011  31 March
                                                                          2012
                                     £'000                  £'000     £'000
Non current Assets
Goodwill                              2,901                   5,121      5,121
Other intangible assets                 702                     403        346
Property, plant and                     429                     686        660
equipment
Investment in joint                      32                      25         35
ventures
Available for sale                    4,780                   1,179        699
investments
                                      8,844                   7,414      6,861
           
Current Assets
Trade and other                      21,350                  24,570     57,316
receivables
Trading Investments                     265                     657        384
Deferred tax asset                      607                     145        254
Cash and cash                         6,956                   3,378      1,335
equivalents
                                     29,178                  28,750     59,289
Total assets                         38,022                  36,164     66,150
Current liabilities
Trade and other                    (17,691)                (20,920)   (51,591)
payables
Current tax liabilities               (406)                   (639)      (391)
Bank Overdrafts                  -      (407)
                                    -
                                   (18,097)                (21,559)   (52,389)
Net current assets                   11,081                   7,191      6,900
Net assets                           19,925                  14,605     13,761
Equity
Share capital                         2,471                   2,470      2,470
Share premium account                 1,630                   1,626      1,626
Own shares                            (312)                   (312)      (312)
Revaluation reserve                     536                     817        474
Other reserves                        4,667                   4,672      4,670
Retained earnings                    10,933                   5,332      4,833
Equity attributable to
equity holders of the
company                              19,925                  14,605     13,761



Walker Crips Group plc
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 September 2012
                              Unaudited      Unaudited                 Audited
                          Six months to  Six months to                 Year to
                          30 September  30 September          31 March 2012
                                   2012           2011
                                 £'000         £'000                  £'000
Operating activities
Cash generated from /             1,018           (21)                 (1,959)
(used in) operations
Interest received                   140             15                      26
Interest paid                       (4)              -                     (5)
Tax paid                            (4)          (269)                   (592)
                                                                          

Net cash generated from /         1,150          (275)                 (2,530)
(used in) operating
activities
Investing activities
Purchase of property,             (137)           (65)                   (195)
plant and equipment
Purchase of intangible            (425)              -                       -
assets
Net cash received on              5,577              -                       -
disposal of subsidiary
Sale of investments              1,781             63                     336
Dividends received                   38             27                      31
                                                                          

Net cash generated from           6,834             25                     172
investing activities
Financing activities
Proceeds on issue of                  5              -   -
shares
Dividends paid                  (1,961)          (653)                   (995)
                                                                          

Net cash used in                (1,956)          (653)                   (995)
financing activities
                                                                          

                                                                          

Net increase / (decrease)         6,028          (903)                 (3,353)
in cash and cash
equivalents
Net cash and cash                                                          
equivalents at the start
of the period                       928          4,281                   4,281
                                                                          

Net Cash and cash                 6,956          3,378                     928
equivalents at the end of
the period

Cash and cash equivalents         6,956          3,378                   1,335
Bank overdrafts                       -              -                   (407)

                                 6,956          3,378                     928


                             Walker Crips Group plc

Condensed Consolidated Statement Of Changes In Equity

For the six months ended 30 September 2012


             Called   Share    Own    Capital Other Revaluation Retained   Total
                 up premium shares Redemption                   earnings  Equity
              share           held
            capital
            £'000   £'000  £'000      £'000 £'000       £'000    £'000   £'000
Equity as
at 31 March   2,470   1,626  (312)        111 4,563         820    5,387  14,665
2011
Revaluation
of
investment                                                  (4)              (4)
at fair
value
Deferred
tax credit                                                    1                1
to equity
Movement on
deferred
tax on                                          (2)                          (2)
share
options
Profit for
the 6
months                                                               598     598
ended 30
September
2011
Total
recognised
income and                                      (2)         (3)      598     593
expense for
the period
March 2011
final                                                              (653)   (653)
dividend
 Equity as
   at 30      2,470   1,626  (312)        111 4,561         817    5,332  14,605
 September
   2011


Revaluation
of                                                        (480)            (480)
investment
at fair
value
Deferred
tax credit                                                  137              137
to equity
Movement on
deferred
tax on                                          (2)                          (2)
share
options
Profit for
the 6
months                                                             (157)   (157)
ended 31
March 2012
Total
recognised
income and                                      (2)       (343)    (157)   (502)
expense for
the period
September
2011                                                               (342)   (342)
interim
dividend
Equity as
at 31 March   2,470   1,626  (312)        111 4,559         474    4,833  13,761
2012
Revaluation
of
investment                                                   81               81
at fair
value
Deferred
tax credit                                                 (19)             (19)
to equity
Movement on
deferred
tax on                                          (3)                          (3)
share
options
Profit for
the 6
months                                                             8,061   8,061
ended 30
September
2012
Total
recognised
income and                                      (3)          62    8,061   8,120
expense for
the period
March 2012
final                                                              (327)   (327)
dividend
Special                                                          (1,634) (1,634)
dividend
Issue of
shares on         1       4                                                    5
exercise of
options
 Equity as
   at 30      2,471   1,630  (312)        111 4,556         536   10,933  19,925
 September
   2012

Walker Crips Group plc

Notes to the condensed consolidated financial statements

For the six months ended 30 September 2012



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 2012.



The condensed consolidated financial statements should be read in conjunction
with the Group's audited financial statements for the year ended 31 March
2012.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 2012 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.

      

      Going Concern

As the net asset base remains 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 assets belong.

                                      

                                 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 Services 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 2012.



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  Corporate  Financial        Fund
                                               Services                               Total
                      Management    Finance             Management
Revenue
(£'000)
6m to 30 September          7,288        136      1,091         328                   8,843
2012
6m to 30 September          7,409        136      1,050       2,057                  10,652
2011
Year to 31 March 2012      14,005        274      2,062       3,965                  20,306
                                                                     Unallocated  Operating
                                                                                     Profit
Result (£'000)                                                             Costs
6m to 30 September          (668)       (46)        183          40        (601)    (1,092)
2012
6m to 30 September              7       (62)        152       1,127        (431)        793
2011
Year to 31 March 2012       (511)       (94)        213       2,359      (1,239)        728



                3. Administrative expenses - exceptional items



The Group is re-locating a large part of its operations to more cost effective
premises. Leasehold improvement costs incurred for the old lease premises have
therefore been written down during the period to a level more accurately
reflecting their value in use .Additional write down costs amounted to
£210,000 during the period.



Significant legal and professional fees were incurred in the transfer of a
number of investment managers and their clients from Savoy Investment
Management Ltd and other corporate transactions. These amounted to £174,000 in
the period and due to their size and one-off nature, the Board has decided to
disclose them separately.

                                      

    In the prior period, up to the 31 March 2012, the Company had incurred
   substantial non-success based legal & professional fees and other costs
relating to the disposal of a subsidiary, Walker Crips Asset Managers Limited
                                   (WCAM).



4. Loss on disposal of investments

During the period the Group disposed of its entire holding of Liontrust
ordinary shares (received as part consideration on the disposal of WCAM - see
note 5), incurring a loss on disposal of £579,000. Due to its level of
materiality and one-off nature, the Board has decided to disclose this item
separately.



5. Gain on disposal of subsidiary undertaking

On 12 April 2012, the Group completed the disposal of its subsidiary WCAM to
Liontrust Asset Management plc (following FSA and shareholder approval).

6. Goodwill impairment charges

Given the difficulties experienced generally in global markets, and the
continuing negative impact on the trading performance of some of the Group's
business units, the Board has decided to write down the Goodwill associated
with the reduction in the cash generative performance of these businesses.



7. Earnings per share

The calculation of basic earnings per share for continuing operations is based
on the post-tax profit for the period of £8,061,000 (2011 - £598,000) and on
36,311,548 (2011 - 36,301,187) 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. The calculation of diluted earnings per share is
based on 37,553,085 (2011 - 37,114,062) ordinary shares, being the weighted
average number of ordinary shares in issue during the period adjusted for
dilutive potential ordinary shares.



8. Dividends

The interim dividend of 0.47p per share (2011 :0.94p) is payable on 7 December
2012 to shareholders on the register at the close of business on 23 November
2012. The interim dividend has not been included as a liability in this
interim report.



9. Total Income (£'000)



                    Six months Ended   Six months Ended     Year Ended

                   30 September 2012  30 September 2011  31 March 2012
Revenue                         8,843             10,652         20,306
Investment revenues               167                 32             46
                                9,010             10,684         20,352



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 Ended   %   Six months Ended   %     Year Ended   %

Income (£'000) 30 September 2012      30 September 2011      31 March 2012
Broking                    3,172  35              4,123  39          8,080  40
Non-Broking                5,838  65              6,561  61         12,272  60
                           9,010 100             10,684 100         20,352 100





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

12 November 2012



                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


IR BRBDBUDGBGDC -0- Nov/12/2012 07:00 GMT
 
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