Walker,Crips,Weddle,Beck PLC 07 June 2005 PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2005 Walker, Crips, Weddle, Beck plc (Code: WCW), the financial services group whose activities cover stockbroking, fund and pension management and corporate finance, today announces preliminary results for the year ended 31 March 2005, the highlights of which are: • Profit before tax of £1,653,000 (2004: £1,071,000), an increase of 54.3% • Turnover of £13,132,000 (2004: £11,492,000), an increase of 14.3% • Non-broking revenue of £4.4m, or 33.5% of group revenue (2004: £3.4m, or 29.6% of group revenue) • Earnings per share of 11p (2004: 7.2p), an increase of 52.8% • Final dividend increased to 4p per share (2004: 3p per share), making 6.35p for the year (2004: 5.25p), an increase of 21.0% • Continued excellent performance from unit trust division with funds under management rising to £52.6m at 31 March 2005 from £18.6m a year before, an increase of 182.8% • Current year started strongly with unit trust funds under management currently totalling £77m, an increase of 46.4% since 31 March 2005 • Acquisition of the London York Group completed on 11 April 2005 Graham Kennedy, Chairman, said: "The current year has started strongly with unit trust funds under management currently totalling £77m, including £12m of London York funds, an increase of 46.4% since 31 March 2005, and we are confident of further growth during the year. Daily volumes for our stockbroking activities show an improvement over last year and our corporate finance and financial services activities also remain strong. The integration of London York is now proceeding and we look forward to benefiting from its first contribution to the group. While it is still early in our year, we believe there are solid grounds for optimism." Michael Sunderland, Chief Executive, said: "The encouraging business levels in the January to March quarter have continued into April and we have a number of exciting initiatives to develop in the year ahead. In particular we look forward to working with David Hetherton and his team at London York. Solid fund management performances from London York and both our Walker Crips UK Growth and Equity Income Funds leave us well placed to introduce and develop further funds under management. The earnings mix for our business during the current year should prove far wider ranging with a continuing shift in emphasis towards fee based revenues." 7 June 2005 For further information, please contact: Walker, Crips, Weddle, Beck plc +44 (0)20 7253 7502 Michael Sunderland, Chief Executive Rodney FitzGerald, Finance Director Steve Bailey, Investment Director Liz Vaughan-Adams (Perception Partners) +44 (0)20 72982220, +44 (0)7979 853802 Further information on Walker, Crips, Weddle, Beck plc is available on the Company's website at www.wcwb.co.uk. CHAIRMAN'S STATEMENT Review of the Year I am delighted to report that your Company has recorded the second highest annual pre-tax profit in its history of £1,653,000 for the year ended 31 March 2005 which also represents an increase of 54.3% over the previous year. This excellent result has been achieved in conjunction with our decision to restructure the business and refocus our strategy on building a broadly based financial services group encompassing stockbroking, fund and pension management and corporate finance. I am pleased to report that non-broking revenues have risen to £4.4m, representing 33.5% of group revenue (2004: £3.4m, or 29.6% of group revenue), demonstrating our move towards fee based revenues. The strong performances from all of the Group's trading activities that we saw in the first half of the year continued into the second half with another particularly impressive contribution from our fund management operations. Progress Unit trust funds under management stood at £52.6m at the year end, an increase of 75.3% from six months ago and an increase of 182.8% from the £18.6m recorded a year before. This far exceeded our internal expectations for the year and was boosted by both retail and institutional interest. In recognition of the strong performance from our fund management division, I am pleased to announce that the highly rated CF Walker Crips UK Growth Fund has been nominated for this year's Investment Week Fund Manager of the Year award. The corporate finance division has also had an exceptional year and is now broker to 25 companies compared with 15 a year before. Our financial services arm continued to make a material contribution to group profitability while our stockbroking activities also increased over the prior year. We have continued to keep a tight grip on costs while placing emphasis on maintaining a strong balance sheet and cash position. This underpins the security we offer our customers while maintaining a significant regulatory capital surplus and enabling us to consider suitable acquisitions. Our remaining investment in the London Stock Exchange yielded a tax-free special dividend of £165,000 which is included in net investment income. Dividend In view of these results and our confidence in the future, the board is recommending a final dividend of 4p per share (2004 - 3p per share). Subject to the dividend now proposed being approved at the Annual General Meeting, payment will be made on 11 July 2005 to shareholders on the register at the close of business on 24 June 2005. Acquisition On 11 April 2005, your Company strengthened its financial services operations by completing the acquisition of G & E Investment Services Limited, known as the London York Group, which offers a broad range of financial services including investment and pension advisory services to both individuals and corporate customers. In addition to its core business, there is also a successful fund of funds division which currently has total assets of £12m. These unit trusts complement our existing fund management operations and take total group funds currently under management from £65m to £77m. One of the main reasons for this acquisition was the expected increase in both the value and range of recurring revenue - in line with our stated aim of becoming less reliant on volume-sensitive income. Since the acquisition was completed in the current year, the financial impact is not reflected in this set of results. In the financial year to 30 September 2004, the London York Group recorded a pre-tax profit of £287,638 on turnover of approximately £2.134m. Board changes On completion of the acquisition of G&E Investment Services Ltd in April, we welcomed David Hetherton and Robert Elliott to the board, respectively as executive and non-executive directors. Executive Directors, Associates and Staff On behalf of the board I thank all of our directors, associates and staff for their continued effort and commitment. We welcome all new associates and account executives who have joined us in our quest for diversified growth. Our commitment to training has also never been higher, as we look to broaden our expertise in all areas of financial services and investment advice. Annual General Meeting The Annual General Meeting will take place at 12 noon on the 8th July 2005. The meeting will be held at Armourers' Hall, 81 Coleman Street, London EC2R 5BJ. Outlook The current year has started strongly with unit trust funds under management currently totalling £77m, including £12m of London York funds, an increase of 46.4% since 31 March 2005, and we are confident of further growth during the year. Daily volumes for our stockbroking activities show an improvement over last year and our corporate finance and financial services activities also remain strong. The integration of London York is now proceeding and we look forward to benefiting from its first contribution to the group. While it is still early in our year, we believe there are solid grounds for optimism. G.N. Kennedy CVO Chairman CHIEF EXECUTIVE'S REPORT The year just ended has proved to be a landmark in terms of the Walker Crips Group establishing itself as a broadly integrated financial services operation. We were particularly pleased to announce the completion of the London York acquisition which significantly increases our presence in the pensions market and extends our fund management activities in unit trusts and wealth management. Stockbroking Division The final three months of the year were particularly busy and contributed in large part to average annual daily bargain volumes increasing to 519 compared with 506 in 2004. Gross stockbroking commission totalled £9.1m for the year, a useful 10.9% increase on last year's £8.2m, this in spite of three trading days lost to bank holidays, reflecting a strong contribution from our associates and branches, all of whom have coped valiantly with the heavy burden of regulatory paperwork now a feature of the financial services industry. I must extend our warmest gratitude to our account executives for their efforts and commitment. Gross profit (after shared commission paid) was 8.8% ahead at £8.7m against £8.0m previously. InvestorLink and our on-line dealing operation INVESTeLINK had another creditable year generating additional revenues outside purely brokerage. Our private clients department was expanded in preparation for client base absorption of certain of our long standing associates who have recently retired. Our more experienced customers made significantly greater use of our facility for trading Contracts for Difference, now a well-established derivative product in UK markets. We have maintained a close control of costs throughout the year reflected by the stability of the total value of our administrative overheads relative to net revenues. We are continually successful in attracting new associates to the Company and have the infrastructure in place to bring quality business that will take advantage of the existing operational gearing. Unit Trust Division This division had an outstanding year under the stewardship of our Investment Director, Stephen Bailey, ably supported by Jan Luthman, our Head of Research and joint Investment Manager. Since my last report in June 2004, unit trust funds under management have risen from just under £20m to the current impressive £77m, including £12m as a result of he London York acquisition and, at the time of writing, the UK Growth Fund had reached £44m due to strong institutional and retail interest after the fund managers were awarded the prestigious Citywire AAA rating for consistently good performance in the year. Corporate Finance Division Our corporate finance department had an extremely busy year and returned record gross fees of £1.3m last year, compared to £0.6m previously, driven by the completion of nineteen new issues and placings, including that of the Islamic Bank of Britain plc, the first newly created bank to be floated on the London market for many years. The department now acts as corporate broker retained by twenty five companies whose shares are traded on the Official List or the AIM market of the London Stock Exchange. Treasury Department Clients and advisers have thought it prudent to retain strong levels of liquidity throughout the year and with interest rates running at a higher level than previously, the division gave a strong performance. Total client and internal deposit balances at the year end stood at £86.2m. PEPs / ISAs / CTF Industry statistics indicated a significantly lower number of ISA subscribers nationally for 2004/2005 but our own experience was more satisfactory with a further 1,080 accounts being opened during the year. Much work was put in to accommodate the Government-launched Child Trust Fund ("CTF") scheme and to date we have processed 547 vouchers and will be exploring further initiatives to attract the many parents who have not as yet started a CTF. Financial Services The division reported further creditable annual profitability and we are now pleased to have four experienced advisers whose knowledge of the pensions market will be of increasing value. We will now be working closely with London York management to develop our position in the pensions market and are presently in the process of making available our internally administered EBOR Self-Invested Personal Pension. Current Year The encouraging business levels in the January to March quarter have continued into April and we have a number of exciting initiatives to develop in the year ahead. In particular we look forward to working with David Hetherton and his team at London York. Solid fund management performances from London York and both our Walker Crips UK Growth and Equity Income Funds leave us well placed to introduce and develop further funds under management. The earnings mix for your business during the current year should prove far wider ranging with a continuing shift in emphasis towards fee based revenues. M.J. Sunderland Chief Executive CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2005 2005 2004 £'000 £'000 (unaudited) Turnover Continuing operations 13,132 11,492 Commission payable (4,416) (3,501) -------- -------- Gross profit 8,716 7,991 --------------------- -------- -------- Operating expenses (7,279) (7,031) Operating expenses - amortisation of goodwill (184) (156) Operating expenses - exceptional items - (52) --------------------- -------- -------- Total operating expenses (7,463) (7,239) -------- -------- Operating profit Continuing operations 1,253 752 Net investment income 391 156 Profit on disposal of fixed asset investments 9 163 -------- -------- Profit on ordinary activities before taxation 1,653 1,071 Tax charge on profit on ordinary activities (488) (328) -------- -------- Profit on ordinary activities after taxation 1,165 743 Dividends paid and proposed (705) (559) -------- -------- Retained profit for the year 460 184 Realised gain on sale of revalued investment 336 390 Retained profit brought forward 2,802 2,228 -------- -------- Retained profit carried forward 3,598 2,802 ======== ======== Earnings per share Basic 11.0p 7.2p Diluted 10.8p 6.9p ======== ======== The results above arise from continuing operations. CONSOLIDATED AND COMPANY BALANCE SHEET AT 31 MARCH 2005 Group Company Group Company 2005 2005 2004 2004 £'000 £'000 £'000 £'000 (unaudited)(unaudited) Fixed assets Intangible 2,145 19 2,274 53 Tangible 296 132 268 268 Investments 619 7,886 1,126 3,973 -------- -------- -------- -------- 3,060 8,037 3,668 4,294 Current assets Investments 276 - 168 168 Debtors 76,928 367 52,360 52,305 Cash at bank and in hand 5,126 1,307 3,207 1,764 -------- -------- -------- -------- 82,330 1,674 55,735 54,237 Creditors: amounts falling due within one year (75,941) (872) (50,504) (50,224) -------- -------- -------- -------- Net current assets 6,389 802 5,231 4,013 -------- -------- -------- -------- Total assets less current liabilities 9,449 8,839 8,899 8,307 Provision for liabilities and charges (350) - - - -------- -------- -------- -------- Net assets 9,099 8,839 8,899 8,307 ======== ======== ======== ======== Capital and reserves Called up share capital 2,153 2,153 2,141 2,141 Share premium account 1,337 1,337 1,265 1,265 Own shares held (173) (173) - - Profit and loss account 3,598 3,338 2,802 2,210 Revaluation reserve 544 544 1,051 1,051 Other reserves 1,640 1,640 1,640 1,640 -------- -------- -------- -------- Equity shareholders' funds 9,099 8,839 8,899 8,307 ======== ======== ======== ======== CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2005 2005 2004 £'000 £'000 (unaudited) Net cash inflow/(outflow) from operating activities 2,570 (326) Returns on investments and servicing of finance 391 156 Taxation (545) (141) Capital expenditure and financial investment 186 442 Acquisition of business (55) - Equity dividends paid (569) (465) ------- ------- Cash inflow/(outflow) before management of liquid resources and financing 1,978 (334) Management of liquid resources (2,261) 288 Financing (89) 71 ------- ------- (Decrease)/increase in cash in the year (372) 25 ======= ======= For the purposes of the cash flow statement in accordance with FRS 1, cash excludes short term cash deposits held at bank, repayable on demand with penalty. Notes 1. On 11 April 2005 the Group completed the acquisition of the entire share capital of G&E Investment Services Limited, the parent company of six trading subsidiaries comprising the London York group of companies, which provide a range of investment, fund management and pension advisory services, for an initial consideration of £1,200,000 in cash and 800,000 ordinary shares in the Company. Deferred consideration of a maximum of £1,600,000 may be satisfied by a further issue of ordinary shares in the Company in April 2008 upon the achievement of certain profit levels. 2. As a result of a group corporate restructure on 6 April 2004 the stock and share broking business of the Company was transferred to Walker Crips Stockbrokers Limited, a new subsidiary of the Company. 3. The financial information set out in the announcement does not constitute the Company's statutory accounts for the years ended 31 March 2005 or 31 March 2004. The financial information for the year ended 31 March 2004 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on these accounts; their report was unqualified and did not contain a statement under s237(2) or (3) Companies Act 1985. The statutory accounts for the year ended 31 March 2005 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. The preliminary announcement has been prepared using the same accounting policies as those applied in the accounts for the year ended 31 March 2004. ENDS This information is provided by RNS The company news service from the London Stock Exchange