REG - Walker Crips Group - Final results for the year ended 31 March 2023
31/07/2023 18:30
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RNS Number : 8089H Walker Crips Group plc 31 July 2023
31 July 2023
Walker Crips Group plc
("Walker Crips", the "Company" or the "Group")
Final results for the year ended 31 March 2023
Walker Crips Group plc, the investment management and wealth management
services, pensions administration and regulation technology Group, announces
audited results for the year ended 31 March 2023.
Financial highlights
A challenging year in the face of headwinds but we maintain our focus on the
key drivers of revenue generation, cost management, cash conversion, and
operational and financial resilience, including making important investments
in our people and technology.
· Total revenues decreased 3.7% to £31.6 million (2022: £32.8
million).
· Operating profit increased 200.5% to £625,000 (2022: £208,000 -
restated****), albeit fell 36.8% to £1,179,000 (2022: £1,866,000) when
adjusted for operational exceptional items*.
· Profit before tax increased 206.8% to £632,000 (2022: £206,000
- restated), though fell 32.7% to £1,186,000 (2022: £1,761,000) when
adjusted for total exceptional items*.
· Adjusted EBITDA decreased 16.7% to £3.25 million (2022: £3.90
million)**.
· Underlying cash generated from operations improved 174.4% to
£3.36 million (2022: £1.23 million - restated)***.
· Cash and cash equivalents of £13.14 million (2022: £11.11
million).
· Assets Under Management ("AUM") decreased by 13.9% to £3.1
billion (2022: £3.6 billion)
· Proposed final dividend of 0.25 pence per share (2022: 1.20 pence
per share), bringing the total dividends for the year to 0.50 pence per share
(2022: 1.50 pence per share).
* Exceptional items are disclosed in note 10 to the accounts and a
full reconciliation to IFRS results is presented in the Finance Director's
review.
** Adjusted EBITDA represents earnings before interest, taxation,
depreciation and amortisation, and exceptional items. The Directors present
this result as it is a metric widely used by stakeholders when considering an
entity's financial performance. A full reconciliation to IFRS results is
provided in the Finance Director's review.
*** Underlying cash generated from operations represents the cash generated
from operations adjusted for lease liability payments under IFRS 16,
non-cyclical working capital movements and operational exceptional items. The
Directors consider that this metric helps readers understand the cash
generating performance of the Group. A full reconciliation to the IFRS results
is provided in the Finance Director's review.
**** As explained in the Finance Director's review and note 38 of the
accounts, the prior year results have been restated to correct an error
regarding the recording of an obligation to HMRC in respect of stamp duty
reserve tax.
For further information, please contact:
Walker Crips Group plc Tel: +44 (0)20 3100 8000
Craig Harrison, Media Relations
Four Agency
Jonathan Atkins Tel: +44 (0)20 3920 0555
walkercrips@four.agency
Singer Capital Markets Tel: +44 (0)20 7496 3000
Justin McKeegan / Jalini Kalaravy
Further information on Walker Crips Group is available on the Company's
website: www.walkercrips.co.uk
Chairman's statement
"Although pleasing to report a year-on-year improvement in IFRS profitability,
the underlying business has experienced reduced trading commissions, lower
management fees, and increased costs in the challenging and uncertain economic
conditions we faced during the year. We continue to focus on investing in our
people and technology to drive the key initiatives that improve our working
environment, customer service and ultimately operating margins and
profitability, including fully embracing regulatory change and preparations
for the new Consumer Duty regulation."
Martin Wright
Chairman
The Group continues to be profitable despite challenging economic conditions
in the UK and across the world. The aftermath of the pandemic, the unprovoked
war in Ukraine and the uncertain UK political arena have contributed to supply
shortages and heightened demand leading to substantial inflation and the
consequent increased cost of living. In response, the BoE has raised UK base
rates 13 times since December 2021 when the base rate stood at 0.1% to its
current level of 5%. We have benefited from the continued strong performance
of our structured investments business and a substantial increase in the
Group's revenues from managing clients' trading cash in the higher interest
rate environment. However, these positive contributions have not fully offset
the decline in commissions and management fees experienced by our investment
management business in the last financial year, with Average Assets under
Management and Administration having fallen by 6.4% to £5.1 billion. A more
detailed explanation of our results is set out in the Finance Director's
review.
Notwithstanding the pressures reflected in our financial results, I am pleased
to report that the Group has made good operational progress towards completing
previously noted strategic initiatives, particularly improvements in our
regulatory and compliance framework. We have also concluded the material
redress exercise affecting a small number of customers where financial harm
was caused by the inappropriate actions of one of our former self-employed
investment managers, with settlements made post year end and fully provided
for in the results.
It is therefore disappointing once again to report exceptional charges, this
time relating to an historic oversight in failing to account for stamp duty on
trades (Stamp Duty Reserve Tax or SDRT), for which voluntary disclosure has
been made to HMRC and the final quantification exercise remains ongoing, and
intangible asset write downs following the departure of several self-employed
investment manager associates occurring towards our reporting year end. Some
reduction in our investment manager headcount was expected given the tighter
regulatory operating environment (and our determination to ensure we stay
within it) and our deliberate curtailing of certain higher risk investment
services. Nevertheless, we are disappointed to part company with certain of
our long-standing colleagues and we wish them well in their future pursuits.
The SDRT obligation has arisen over a number of years due to a failure in our
procedures and controls. The Board is determined to minimise the risk of such
events recurring. The strengthening of our second and third lines of defence
in recent years is an important step in this aim, and this will now be
complemented by a critical review of key transaction reporting controls, risk
indicators, use of systems and exception reporting. This will be completed
over the coming months. In addition, we have concluded that strengthening our
senior management team to address these important issues is a priority and a
search will begin soon. As this issue is material and has arisen over several
years, we have presented restated comparative financial results and statements
of financial position as explained in note 38 and throughout the report and
accounts where applicable.
What does this mean for our future? The higher interest rate environment
provides some economic hedge during the present economic uncertainty and the
strength of our finances means we can and will continue to invest in growth
and further integration of our core businesses, in customer service, and in
margin improvement initiatives that strengthen our customer propositions and
our operating and financial resilience. This also means continued investment
in our people, particularly salary rises and benefits reflective of their
significant and valued contributions to our business and the present upward
cost of living pressures, and as always in technology. We also continue to
strengthen our regulatory and compliance infrastructure, to ensure compliance
with regulation and the consequent reduction in future exposure to expensive
compliance failings like those that have plagued us in recent years.
We also continue, of course, to embrace regulatory change. In that context, we
have made good progress responding to the FCA's new regulatory initiative,
"the Consumer Duty'' which places increased emphasis on delivering good
outcomes for retail customers, a principle close to our heart and our mission.
In his report, our CEO sets out further detail on the initiatives we are
pursuing and importantly our commitment to the environment. I remain
optimistic about the future outlook for the business and its long-term
prospects.
Dividend
Our aim is always to reward our shareholders for their continued support. In
that light, having taken into account the current economic environment and
reported results, the Board will recommend for shareholders' approval at the
forthcoming AGM a reduced final dividend of 0.25 pence per share (2022: 1.20
pence) payable on 6 October 2023 to those shareholders on the register at the
close of business on 22 September 2023, with an ex-dividend date of 21
September 2023.
Directors, Account Executives and staff
I would like to thank my fellow directors, our investment managers and
advisers and all members of staff for their efforts, resilience and continued
commitment to the highest levels of client service, support and diligence.
As noted above we have made significant pay improvements following a
comprehensive benchmarking review. Nevertheless, the business does face
challenges and we will continue to make the necessary changes and investments
that make Walker Crips an attractive place to work and improves the quality,
competencies and bench-strength across our workforce.
Outlook
The Board accepts there are administrative and operational challenges to be
addressed. However, the results continue to demonstrate underlying operational
and financial resilience and your Board's commitment to invest in the Group's
people, technology, growth initiatives and importantly customer services. As
noted above, I remain confident in the outlook for the business and its
longer-term prospects.
Martin Wright
Chairman
31 July 2023
CEO's statement
Innovating, Digitising and Focussing on Customer Outcomes
Sean Lam
Chief Executive Officer
Innovating, Digitising and Focussing on Customer Outcomes
It is a privilege to be working alongside a great group of investment
managers, financial planners, advisers, and staff, who diligently serve our
customers and who value good customer outcomes. The past year has been
dominated by Russia's invasion of Ukraine and the cost-of-living crisis, to
name but two major events that have had far-reaching consequences, affecting
industries and economies worldwide. We witnessed supply chain disruptions,
market volatility, and shifts in consumer behaviour. But our people dug deep,
stayed the course, and continued to support our customers and our Group
through it all.
An important focus over the past year was on the new Consumer Duty regulations
which serves to set higher and clearer standards of consumer protection across
the financial services industry, and requires firms to put customers' needs
first. We must take all reasonable steps to avoid causing foreseeable harm to
customers, enabling them to pursue their financial objectives, and always act
in good faith towards them. As principles, these have of course always been at
the heart of our services, but the detailed application of the new regulations
has required a raft of changes to the way in which we do business. We have
sought, and continue to seek, to put customers first in everything we do and,
if there are any shortfalls in this goal, to learn from those and deliver
ever-improving outcomes for our customers.
It is important to build revenue, manage costs, and improve margins, but as a
regulated firm it is also crucial to have in place a control environment that
oversees our regulatory, operational and governance obligations. Our
Non-Executive Directors provide the Board members with a high level of
challenge and scrutiny, and the firm has in place departments that manage
risk, regulatory and anti-financial crime oversight. The regulatory and
anti-financial crime oversight departments have seen a large increase in
full-time staff headcount, to help us remain updated and compliant with
regulations. We have also created a Self-Initiated Regulatory Review Regime
(SIR) where we select certain topics that are a priority to the FCA and engage
regulatory consultants to independently review our control processes for the
area(s) selected.
In recent years, we have been de-risking our business, ending products or
services where the rewards received does not sufficiently outweigh the risks
taken, like private placings and broker-to-broker transactions. Our strict
approach to regulatory compliance and the embedding of a good regulatory
culture where, "Compliance is Everyone's Responsibility", is very important to
the firm. We strive for Walker Crips to be an attractive workplace where top
quality individuals want to conduct business and embrace our customer centric,
entrepreneurial, technology focused and compliant culture.
We continue to leverage on our own technology, creating bespoke systems that
are appropriate for the business, and we shall drive forward with our
programme of digitisation and enhancements, from onboarding to risk
management, from efficiency initiatives to regulatory compliance.
Group's Performance
Our Investment Management division has had a challenging year, as described in
the Chairman's statement, and we also up-resourced our regulatory teams
especially within compliance, financial crime, and operations with more
specialists to tackle the deluge of regulations, upgrade systems, enhance
change processes and also pay significantly higher salary rises than we ever
did before, to try to counter the cost-of-living crisis that our staff has had
to endure. However, the firm's core investment management business remains
sound and therefore we have invested in business development, to help grow our
customer base and increase assets under management, increasing contribution to
our top line, while managing our costs from here on out. For more information,
please see the section under Business Model and also under Strategy.
Our Structured Investment division continues to grow from strength to
strength, and is a core competency of the firm, providing well-crafted
structured products to customers through financial advisers. We look forward
to adding structured deposits into our suite of products, expanding our
breadth of offering and providing another investment avenue to financial
advisers and our customers. We are pushing on with our plans to simplify and
digitise this business further, making ourselves more efficient and putting
ourselves on a footing where we can achieve greater scale.
Our Financial Planning division has been growing by bringing on highly
experienced Financial Planners, to serve our existing customers, and to take
on new customers. Our Barker Poland Asset Management division continues to
generate steady revenues for the Group. The Financial Planning and the
Pensions divisions are working together to expand our service offerings to
ensure we are anticipating and responding to our customers' needs.
Our teams continue to provide excellent service and support to our customers,
and I thank our people and customers for their commitment to Walker Crips.
Corporate responsibility
If we want our children to see tomorrow, like we saw yesterday, then let's not
destroy today. We must safeguard our planet for our children, and for our
children's children. I wish to reiterate my message from last year, that we
can all do our part in reducing our carbon footprint:
REFUSE - Avoid buying harmful, wasteful or non-recyclable products, e.g.
unnecessary product packaging and single-use plastics. Don't need, don't buy.
Less painful on the pocket too.
REDUCE - Reduce the use of harmful, wasteful, and non-recyclable products so
that fewer of them end up in landfill. Use the minimum required to avoid
unnecessary waste. For example, don't need, don't print. Reduce single-use
plastics, plastic packaging, and Styrofoam cups.
REUSE - Get rid of the "buy and throw-away" mindset. Use what you have as
often, and for as long, as you can.
REPAIR - Try to repair things before tossing them out.
REPURPOSE - If something is no longer useful for its original purpose, think
creatively of ways it can be broken down and reconstituted as something else.
I am a big fan of upcycling!
ROT - Compost if you can, try not to let your trash end up in landfill.
RECYCLE - Make recycling your last step, after going through all the R's
above.
We must purposefully and actively practise the seven "R"s at home and in the
office, so that they become automatic and habitual.
We are committed to sustainability and environmental responsibility because we
recognise the urgent need to address climate change and mitigate our
environmental impact. We also believe that our commitment to sustainable
practices will also present us with opportunities for innovation and cost
efficiencies.
Mental health charity
As a Group, we continue to support twiningenterprise.org.uk, the mental health
charity. In addition to financial support, we also try to use our technology
for good, through technology philanthropy. If you wish to find out more, or
want to support Twining financially, please visit walkercrips.co.uk/community.
Conclusion
We shall continue to make investment rewarding for our customers, our
shareholders and our staff, and to give our customers a fair deal. And we
support our investment advisers and our staff by being a technology-driven
financial services company and providing a safe and enjoyable place to work
and be part of. We are optimistic about the future because we believe that we
have the right strategies, the right talent, and the right mindset to overcome
the challenges and create opportunities. We remain committed to delivering
sustainable growth, creating value for our stakeholders, and making a positive
impact on society.
Sean Lam
Chief Executive Officer
31 July 2023
Finance Director's review
"A challenging year but we maintain our focus on the key drivers of revenue
generation, cost management, cash conversion, and operational and financial
resilience, including important investments in our people and technology."
Sanath Dandeniya
Finance Director
Financial performance
The year to March 2023 was challenging, with the post-pandemic market recovery
dampened by uncertain UK political and other world events, including the
impact of higher inflation and interest rates, and the continuing war in
Ukraine. These are reflected in our results. Market pressures depressed
trading commissions and management fees, and inflationary pressures together
with continued investment in strengthening our regulatory and compliance
functions are increasing our cost base. These impacts were partially mitigated
by significantly improved margins on administering clients trading cash
balances in the rising interest rate environment, and the continued strong
performance of our structured products business leading to an overall
improvement in the reported gross margin.
As referenced in the Chairman's statement, we have also incurred material
exceptional charges, one of which has led to us present restated comparative
results, and I comment on these in more detail later in this report.
The outcome is that although reporting an improved Group profit before tax of
£632,000 (2022: £206,000 - as restated), when adjusted for exceptional
items, there has been a marked year on year reduction in reported pre-tax,
pre-exceptional profits of £1,186,000 (2022: £1,761,000). Further
explanation of these headline results is provided below.
Against this background, Management continues to focus on revenue generation,
cost management, cash conversion, and operational and financial resilience.
However, like others, we continue to face significant upward cost pressures,
particularly regarding workforce remuneration. In a tight and competitive
labour market we are seeing increased mobility and naturally must compete in
retaining and attracting key talent and supporting our most value-adding
people in response to the cost-of-living challenges they face. Investment in
our people is therefore a positive and important step in ensuring Walker Crips
remains an attractive place to be. Further, our focus on strengthened
regulatory compliance, including implementation of the MIFIDPRU remuneration
requirements, together with the Board's conscious de-risking decision that has
led to a cessation of certain services, has meant we have recently parted
company with a number of our associates, with its consequent impact on future
revenues. We remain positive and committed to our strategy with a number of
key initiatives expected to bear fruit in the coming year.
Total revenue
Total revenue decreased by 3.7% to £31.6 million (2022: £32.8 million).
Revenue generation, whilst one of our key objectives, has been stifled by the
political and macro-economic environment and its impact on market confidence.
In terms of how this affects our business, there are two key impacts. One is
that our management fees are based upon market values therefore the reduction
in the overall value of the market will have a proportionate effect on our
asset-based fee income. And secondly, the market uncertainty leading to lower
trading volumes and proportionally reducing our commission income. A segmented
analysis of revenues is provided in notes 5 and 6
Assets under management and administration fell by 8.2% to £5 billion and, in
turn, management fee income saw a fall of 8.3% to £17.7 million, down £1.6
million from last year. Overall commission income saw a decrease of 25.9% to
£6 million, down £2.1 million from last year. The shortfall in fee and
commission income was partly offset by our Structured Investment business,
which continues to perform well with income increasing by 11.4% from the
previous year to £3.9m and, on the back of increased interest rates, higher
revenues on managing clients' trading cash funds which contributed an
additional £2.5m. Our arbitrage dealing desk also made a positive but lower
contribution of £97,000 (2022: £419,000) as profitability was impacted by
mark to market unrealised losses on certain positions, within risk limits,
spanning the year-end. Our Tier1 business, which is now closed for new
investors, recorded a 20% fall in income to £778,000 (2022: £979,000) and
this trend is expected to continue as the business line is wound down.
Barker Poland Asset Management continued to be a valuable contributor, having
a relatively stable year although fee income still fell by 4.6% to £2.2
million (2022: £2.3 million) compared to last year. Our Financial Planning
division continued to grow revenues and its client base from the continued
recruitment drive reported last year. This division saw overall income up by
5.1% from last year to £1.9 million (2022: £1.8 million) and income growth
has continued post year end.
As a result of changes in revenue lines, and more specifically the drop in
transaction volumes impacting trading commission, coupled with higher revenues
on managing clients' trading cash balances, broking income fell to 18.9% of
revenues, from 24.5% in 2022. Our gross operating margin also increased to
76.6% from 72.5% in 2022, demonstrating the benefits of the continued trend
away from self-employed to employed investment professionals which is key,
albeit longer term, transition as part of Management's plans to improve
margins. Consistent with these trends and initiatives, the commission and
fees 'paid away' decreased by 20.3% from last year, but partially offset by
higher salaries and staff related costs. Adjusting for the positive impact of
increased revenues on managing clients' trading cash balances, our reported
gross margin has improved to 74.2% (2022: 71.6%).
As noted above, we recently parted company with five self-employed investment
managers. The impact on the reported results for the year was to record an
exceptional charge of £423,000 reflecting the write down of attributable
intangible asset balances (see note 10), and the estimated reduction the
projected reported gross margin for the coming year is £0.9 million. The full
impact of this is factored into our going concern and cash forecasting models.
Expenses
Administrative expenses, excluding exceptional items, salaries, depreciation
and amortisation, increased by 3.5% in the year, with a general increase in a
number of areas offset by favourable spend variances on trade settlement,
irrecoverable VAT, and FCA fees and levies. Salary costs, owing to a
combination of investment in advisors, upskilling and pay rises, saw an
increase of 7.8%, and the current cost of living crisis triggered by the
rising inflation will see this increase further next year. The Board is
fully committed to retaining and supporting our loyal and committed workforce
and this is reflected in salary increases awarded for the coming year.
Given trends in workforce mobility, Management reviewed the useful economic
life of intangible assets linked to self-employed investment managers. Based
upon updated experience and review of the contractual arrangements in place
the estimated useful lives were shortened which resulted in £133,000 of
additional amortisation expensed in the year, which is not treated as an
exceptional item. Management will keep trends in workforce mobility and its
impact on the amortisation of intangible assets under review.
The Group is again reporting operating exceptional costs this year totalling
£554,000 (2022: £1,658,000 - as restated), noting they relate to two matters
quite distinct to those reported in the prior year (see note 10). First, as
explained in the Chairman's Report, a system and monitoring issue relating to
stamp duty reserve tax ("SDRT") was recently discovered which, following
initial investigation, was voluntarily disclosed to HMRC. Communications with
HMRC and our work to quantify the obligation continue, but we presently
estimate the cost of repayment, potential penalties, and related costs to be
£878,000. The second exceptional item is the write down of the remaining
unamortised intangible asset in respect of departing self-employed associates
which amounted to £423,000.Due to the materiality of the SDRT obligation and
the fact that it arose over a number of years, we have concluded that
prior-year reported results should be restated to correct this fundamental
error and more accurately reflect associated costs. Accordingly, charges of
£131,000 and £118,000 have now been recorded as exceptional items in the
current and prior year respectively, with the balance of the provision
reflected as a reduction in the previously reported 31 March 2021 reserves.
The matter has only recently been identified and so the provision remains our
current best estimate, to be adjusted as the matter, including discussions
with HMRC, is finalised. As work to quantify the cost remains ongoing, we have
addressed our present understanding of the estimation uncertainty by including
an allowance for an 80% deterioration in the estimated cost in our going
concern and viability stress testing. The actions we are taking to address the
weaknesses in the control environment are explained in the Chairman's
Statement.
Regarding exceptional items, we have now settled the material redress
obligation we reported last year.
Cash management
The Group remains cash generative and recorded a cash inflow from operations
of £3.5 million (2022: £4.2 million), generally reflecting the poorer
trading conditions experienced this year. However, the underlying cash
generated from operations, principally reflecting the impact of lease
liability payments, non-cyclical working capital movements and cash flows from
exceptional items (see adjacent reconciliation) showed a significant
year-on-year improvement to £3.4 million (2022: £1.2 million - as restated)
Underlying cash generation was greatly helped by the renegotiation of our
London office lease, which included a new rent-free period that reduced lease
payments by £561,000 compared to the previous year, and £922,000 in cash
generated from our proprietary trading activity, which saw our investments on
the statement of financial position also reduce to £1,276,000 (2022:
£1,647,000).
After deducting cash deployed in investing activities and dividends paid, cash
and cash equivalents increased to £13.1 million at year-end (2022: £11.1
million) As noted previously, since year end we have settled the redress
obligations reported in the previous year, at a net of insurance cash outlay
of £0.7 million.
Financial result and alternative performance measures
The Group reported operating profit and profit before tax for the year of
£625,000 and £632,000, respectively (2022: £208,000 and £206,000 - as
restated, respectively).
Adjusting for exceptional items (see adjacent reconciliations and further
detail in note 10), the Group's operating profit and profit before tax for the
year are £1.18 million and £1.19 million respectively (2022: £1.87 million
and £1.76 million, respectively). The Group's adjusted EBITDA (being EBITDA
adjusted for exceptional items - see adjacent reconciliation) is £3.3 million
(2022: £3.9 million), a decrease of 16.7%.
Explanations for the reported results have been provided earlier and,
notwithstanding the lower reported pre-exceptional operating profitability
consistent with market and inflationary pressures, and the SDRT obligation,
Management are pleased with the Group's financial resilience which allows it
to remain focused on the Group's strategic priorities as further explained in
the Chairman's and CEO's respective reports.
Total Assets Under Management and Administration ("AUMA") averaged £5.1
billion during the year (2022: £5.6 billion). The drop in AUMA values is
caused by a combination of stagnant market, clients withdrawing funds for
alternative deployment, and some attrition in the client base. Discretionary
and Advisory Assets Under Management fell by 13.9% year on year to £3.1
billion (2022: £3.6 billion).
Reconciliation of operating profit/(loss) to operating profit before 2023
exceptional items
£'000 2022
(restated)
£'000
Operating profit/(loss) 625 208 *
Operating exceptional items (note 10) 554 1,658 *
Operating profit before exceptional items 1,179 1,866
Reconciliation of profit/(loss) before tax to profit before tax and total 2023
exceptional items
£'000 2022
(restated)
£'000
Profit/(loss) before tax 632 206 *
Total exceptional items (note 10) 554 1,555 *
Profit before tax and exceptional items 1,186 1,761
Adjusted EBITDA 2023
£'000 2022
(restated)
£'000
Operating profit/(loss) 625 208 *
Operating exceptional items (note 10) 554 1,658 *
Amortisation/depreciation (note 31) 1,299 1,165
Right-of-use assets depreciation charge (note 31) 771 873
Adjusted EBITDA 3,249 3,904
Underlying cash generated from operations 2023
£'000 2022
(restated)
£'000
Net cash inflow from operations 4,285 4,217
Working capital (note 31) (590) (2,374) *
Lease liability payments under IFRS 16 (note 31) (332) (1,052)
Cash outflow on operating exceptional items (note 10) - 435
Underlying cash generated in the period 3,363 1,226
* The restatement of the 2022 figures are explained in note 38
Divisional performance
The Investment Management division, including exceptional costs, delivered an
operating profit of £1.55 million for the year, compared to £1.04 million
(as restated) in the previous year. Adjusting for exceptional items, the
division reported an operating profit of £2.12 million (2022: £2.7 million -
as restated). The division was adversely affected by the lower fee and
commission income generated in the year, partially offset by higher retained
margin on the administration of clients' trading cash balances, and
inflationary cost pressures. On a positive note, notwithstanding the impact
of parting company with certain self-employed associates, the division
continues to focus on growing its client and income base and since year end
has made two new key business development hires with benefits expected to
emerge in the next financial year. The Structured Investments business, having
delivered two very successful years, is expected to continue to grow and
generate income and margins for the division. The impact of the Consumer Duty
regulation, with the Group standardising its charges across all similar client
groups, on a standalone basis, is expected to be an overall net positive.
On 1 April, the Investment Management division transferred internally
generated intellectual property in relation to a proprietary web-based
software system to its subsidiary EnOC Technologies Limited ("EnOC"). The
transfer allows EnOC staff to take on the costs and obligations of developing
and maintaining the system and package it to be marketed both within the Group
for its continued use, as well as marketing it externally. The move does not
impact the Investment Management division's functionality as EnOC will
continue to support the division and its growth plans. Reflecting the change,
there will be an impact on future internal recharges between EnOC and the
division.
The Financial Planning division continued to increase its adviser base with
several key hires in the year and more in the pipeline. The division saw a
5.1% increase in total revenue, but presently reports a loss reflecting the
continued investment in the new financial planners and advisers and time for
the client base to build up.
Our tech arm, EnOC, reported an operating loss of £128,000 (2022: £102,000).
EnOC's tech capabilities are integral to the Group's operational efficiencies,
deploying cloud solutions to the business and we continue to invest in its
capabilities and prospects.
Capital resources, liquidity and regulatory capital
The Group's capital structure, consisting solely of equity capital, provides a
stable platform to support the Group's strategic plan and initiatives. At year
end, net assets are £21.2 million (2022: £21.4 million - as restated; 2021:
£21.7 million - as restated), reflecting a net decrease of £0.2 million
(2022: reduction of £0.3 million - as restated, due to the reported profit
after tax, less dividends paid. Liquidity remains strong with cash and cash
equivalents increasing over the year to £13.1 million (2022: £11.1 million).
Regulatory capital at year end, including audited reserves for the year, is
£12.4 million (2022: £11.5 million - as restated), comfortably in excess of
the Group's capital requirements for both Pillar 1 and Pillar 2, as shown in
the tables below.
Regulatory own funds and own funds requirements 2023
£'000 2022
(restated)
£'000
Own funds
Share capital 2,888 2,888
Share premium 3,763 3,763
Retained earnings 10,104 * 10,303
Other reserves 4,723 4,723
Less:
Own shares held (312) (312)
Regulatory adjustments (8,678) (9,804)
Total own funds 12,488 11,561
Total own funds requirement (4,854) (4,676)
Regulatory capital surplus 7,634 6,885
Cover on own funds as a % 257.3% 247.3%
Pillar 2 requirement (7,227) (7,014)
Regulatory capital surplus 5,261 4,547
Cover on own funds as a % 172.8% 164.8%
* The restatement of the 2022 figures is explained in note 38
Dividends
In view of the Group's financial performance, capital and liquidity position,
the Board recommends a final dividend of 0.25 pence per share to be paid on 6
October 2023 for those members on the shareholders' register on 22 September
2023, the ex-dividend date being 21 September 2023. Including the interim
dividend of 0.25 pence per share (2022: 0.30 pence per share), the total
dividend paid and proposed in respect of the year is 0.50 pence per share
(2022: 1.50 pence per share).
Sanath Dandeniya
Finance Director
31 July 2023
Consolidated income statement
year ended 31 March 2023
Note 2023 As restated
£'000 2022
£'000
Revenue 5 31,612 32,820
Commissions and fees paid 7 (7,264) (9,110)
Share of associate after tax profit 8 - 57
Gross profit 24,348 23,767
Administrative expenses 9 (23,169) (21,901)
Exceptional items 10 (554) (1,658) *
Operating profit 625 208
Investment revenue 11 95 9
Finance costs 12 (88) (114)
Exceptional item - Profit on disposal of associate investment 10 - 103
Profit before tax 632 206
Taxation 14 (214) (151)
Profit for the year attributable to equity holders of the Parent Company 418 55
Earnings per share
Basic and diluted 16 0.98p 0.13p *
* The restatement of the 2022 figures is explained in note 38
The following Accounting Policies and Notes form part of these financial
statements.
Consolidated statement of comprehensive income
year ended 31 March 2023
2023 As restated
£'000 2022
£'000
Profit for the year 418 55 *
Total comprehensive income for the year attributable to equity holders of the 418 55 *
Parent Company
* The restatement of the 2022 figures are explained in note 38.
The following Accounting Policies and Notes form part of these financial
statements.
Consolidated statement of financial position
as at 31 March 2023
Note 2023 As restated As restated
£'000 2022 2021
£'000 £'000
Non-current assets
Goodwill 17 4,388 4,388 4,388
Other intangible assets 18 4,648 5,752 6,566
Property, plant and equipment 19 989 1,169 1,477
Right-of-use asset 20 2,340 2,597 3,612
Investment in associate - - 2
Investments - fair value through profit or loss - - 37
Total non-current assets 12,365 13,906 16,082
Current assets
Trade and other receivables 22 36,301 50,003 49,098
Investments - fair value through profit or loss 21 1,276 1,647 920
Cash and cash equivalents 23 13,138 11,113 8,855
Total current assets 50,715 62,763 58,873
Total assets 63,080 76,669 74,955
Current liabilities
Trade and other payables 26 (36,849) (49,625) (47,395)
Current tax liabilities (269) (132) (123)
Deferred tax liabilities 24 (371) (414) (400)
Provisions 27 (878) (1,884) * (834)*
Lease liabilities 28 (341) (245) (946)
Deferred cash consideration 36 (94) (89) -
Total current liabilities (38,802) (52,389) (49,698)
Net current assets 11,913 10,437 9,175
Long-term liabilities
Deferred cash consideration 36 (71) (29) (33)
Lease liabilities 28 (2,389) (2,300) (2,856)
Provision 27 (652) (586) (675)
Total non-current liabilities (3,112) (2,915) (3,564)
Net assets 21,166 21,365 21,693
Equity
Share capital 29 2,888 2,888 2,888
Share premium account 29 3,763 3,763 3,763
Own shares 30 (312) (312) (312)
Retained earnings 30 10,104 10,303* 10,631*
Other reserves 30 4,723 4,723 4,723
Equity attributable to equity holders of the Parent Company 21,166 21,365 21,693
* The restatement of the 2022 figures is explained in note 38
The following Accounting Policies and Notes form part of these financial
statements.
The financial statements of Walker Crips Group plc (Company registration no.
01432059) were approved by the Board of Directors and authorised for issue on
31 July 2023.
Signed on behalf of the Board of Directors
Sanath Dandeniya FCCA
Director
31 July 2023
Consolidated statement of cash flows
year ended 31 March 2023
Note 2023 2022
£'000 £'000
Operating activities
Cash generated from operations 31 3,539 4,217
Tax paid (120) (120)
Net cash generated from operating activities 3,419 4,097
Investing activities
Purchase of property, plant and equipment (150) (119)
Purchase of investments held for trading (205) (342)
Consideration paid on acquisition of intangibles (183) (93)
Consideration paid on acquisition of client lists - -
Consideration received on sale of associate - 105
Dividends received 11 47 9
Dividends received from associate investment 8 - 57
Interest received 11 48 -
Net cash used in investing activities (443) (383)
Financing activities
Dividends paid 15 (617) (383)
Interest paid 12 (2) (21)
Repayment of lease liabilities ** (246) (959)
Repayment of lease interest ** (86) (93)
Net cash used in financing activities (951) (1,456)
Net increase in cash and cash equivalents 2,025 2,258
Net cash and cash equivalents at beginning of period 11,113 8,855
Net cash and cash equivalents at end of period 13,138 11,113
** Total repayment of lease liabilities under IFRS 16 in the period was
£332,000 (2022: £1,052,000)
The following Accounting Policies and Notes form part of these financial
statements.
Consolidated statement of changes in equity
year ended 31 March 2023
Share Share Own Capital Other Retained Total
capital premium shares redemption £'000 earnings equity
£'000 account held £'000 £'000 £'000
£'000 £'000
Equity as at 31 March 2020 2,888 3,763 (312) 111 4,612 11,110 * 22,172
Comprehensive loss for the year - as restated (415) * (415)
Total comprehensive loss for the year - as restated (415) * (415)
Contributions by and distributions to owners
Dividends paid (64) (64)
Total contributions by and distributions to owners (64) (64)
Equity as at 31 March 2021 2,888 3,763 (312) 111 4,612 10,631 21,693
Comprehensive income for the year - as restated - - - - - 55 * 55
Total comprehensive income for the year - as restated - - - - - 55 * 55
Contributions by and distributions to owners
Dividends paid - - - - - (383) (383)
Total contributions by and distributions to owners - - - - - (383) (383)
Equity as at 31 March 2022 2,888 3,763 (312) 111 4,612 10,303 21,365
Comprehensive income for the year - - - - - 418 418
Total comprehensive income for the year - - - - - 418 418
Contributions by and distributions to owners
Dividends paid - - - - - (617) (617)
Total contributions by and distributions to owners - - - - - (617) (617)
Equity as at 31 March 2023 2,888 3,763 (312) 111 4,612 10,104 21,166
* The restatement of the 2022 and 2021 figures are explained in note 38
The following Accounting Policies and Notes form part of these financial
statements.
Notes to the accounts
year ended 31 March 2023
1. General information
Walker Crips Group plc ("the Company") is the Parent Company of the Walker
Crips group of companies ("the Company"). The Company is a public limited
company incorporated in the United Kingdom under the Companies Act 2006 and
listed on the London Stock Exchange. The Group is registered in England and
Wales. The address of the registered office is Old Change House, 128 Queen
Victoria Street, London EC4V 4BJ.
The significant accounting policies have been disclosed below. The accounting
policies for the Group and the Company are consistent unless otherwise stated.
2. Basis of preparation
The consolidated financial statements have been prepared in accordance with
UK-adopted international accounting standards in conformity with the
requirements of the Companies Act 2006.
The principal accounting policies adopted in the preparation of the
consolidated financial statements are set out in note 3. The policies have
been consistently applied to all the years presented, unless otherwise stated.
The Group financial statements are presented earlier in this announcement.
The consolidated financial statements are presented in GBP Sterling (£).
Amounts shown are rounded to the nearest thousand, unless stated otherwise.
The consolidated financial statements have been prepared on the historical
cost basis, except for certain financial instruments that are measured at fair
value, and are presented in Pounds Sterling, which is the currency of the
primary economic environment in which the Group operates. The principal
accounting policies adopted are set out below and have been applied
consistently to all periods presented in the consolidated financial
statements.
The preparation of financial statements requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in
the process of applying the Group's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the consolidated financial statements, are
disclosed in note 4.
As explained in note 38, the Group has identified an obligation in respect of
stamp duty reserve tax which has arisen over a number of years and was not
identified due to a procedures and controls failure. In view of the
significance of this amount, prior year results have been restated to correct
this error.
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning on or after 1
January 2023:
• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice
Statement 2);
• Definition of Accounting Estimates (Amendments to IAS 8); and
• Deferred Tax Related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12).
The following amendments are effective for the period beginning on or after 1
January 2024:
• IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback)
• IAS 1 Presentation of Financial Statements (Amendment - Classification of
Liabilities as Current or Non-current)
• IAS 1 Presentation of Financial Statements (Amendment - Non-current
Liabilities with Covenants)
The Group is currently assessing the impact of these new accounting standards
and amendments. The Group does not believe that the amendments to IAS 1 will
have a significant impact on the classification of its liabilities, as it does
not have convertible debt instruments.
The Group does not expect any other standards issued by the IASB, but not yet
effective, to have a material impact on the Group.
Going concern
The financial statements of the Group have been prepared on a going concern
basis. At 31 March 2023, the Group had net assets of £21.2 million (2022:
£21.4 million - as restated), net current assets of £11.9 million (2022:
£10.4 million - as restated) and cash and cash equivalents of £13.1 million
(2022: £11.1 million). The Group reported an operating profit of £625,000
for the year ended 31 March 2023 (2022: £208,000 - as restated), inclusive of
operating exceptional expense of £554,000 (2022: £1,658,000 - as restated),
and net cash inflows from operating activities of £3.4 million (2022: £4.1
million).
The Directors consider the going concern basis to be appropriate following
their assessment of the Group's financial position and its ability to meet its
obligations as and when they fall due. In making the going concern assessment
the Directors have considered:
● The Group's three-year base case projections based on current
strategy, trading performance, expected future profitability, liquidity,
capital solvency and dividend policy.
● The outcome of stress scenarios applied to the Group's base case
projections prior to deployment of management actions.
● The principal risks facing the Group and its systems of risk
management and internal control.
● The Group's ability to generate positive operating cash flow
during the year to 31 March 2023 and projected future cash flows.
Key assumptions that the Directors have made in preparing the base case
projections are:
● Management fees and trading commissions growth of 2% having
adjusted for expected client attrition in respect of the recent self-employed
investment manager departures (see Finance Director's review)
● UK base rates increasing to 6% over the remainder of 2023 and then
reducing over the next 24 months to 3%.
● Inflation embedded into the first year based on known salary
awards and latest experience, then running at 5% thereafter.
Key stress scenarios that the Directors have then considered include:
● A "bear stress scenario": representing a 10% reduction in
management fees and trading commissions, with the consequent reduction in
revenue sharing based costs, compared to the base case in the reporting
periods ending 31 March 2025 and 31 March 2026.
● A "severe stress scenario": representing a 15% fall in management
fees and trading commissions and UK base rates 1% (absolute) lower compared to
the base case in the reporting periods ending 31 March 2025 and 31 March 2026,
together with an 80% deterioration in the SDRT obligation provision with an
estimated expectation to settled in December 2023.
Liquidity and regulatory capital resource requirements exceed the minimum
thresholds in both the base case and bear scenarios. In the severe stress
scenario, although the Group has positive liquidity throughout the period, the
negative impact on our prudential capital ratio is such that it is projected
to fall below the regulatory requirement in June 2025. Were the interest rate
stress also to be applied to the bear scenario a regulatory capital shortfall
is projected to occur in September 2025. The Directors consider these
scenarios to be remote in view of the prudence built into the base case
projections and that further mitigations available to the Directors are not
reflected therein. Such mitigating actions within Management's control include
reduction in proprietary risk positions, delayed capital expenditure, further
reductions in discretionary spend, not paying planned dividends and reductions
in employee headcount. Other mitigating actions may include disposal of
businesses, stronger cost reductions and potential to seek shareholder
support.
Based on the assessment of the Group's financial position and its ability to
meet its obligations as and when they fall due, the Directors do not consider
there are material uncertainties that cast significant doubt on the Group's
ability to continue as a going concern in the twelve-month period from the
date of approval of the Annual Report and Accounts. However, set out in note
38 are the uncertainties related to the provision made to settle unpaid stamp
duty.
Standards and interpretations affecting the reported results or the financial
position
The accounting standards adopted are consistent with those of the previous
financial year. Amendments to existing IFRS standards did not have a material
impact on the Group's Consolidated Income Statement or the Statement of
Financial Position.
The Group does not expect standards yet to be adopted by the UK endorsement
body ("UKEB") to have a material impact in future years.
3. Significant accounting policies
Basis of consolidation
The Group financial statements consolidate the financial statements of the
Group and companies controlled by the Group (its subsidiaries) made up to 31
March each year. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its powers to direct relevant
activities of the entity. Subsidiaries are fully consolidated from the date on
which control is obtained and no longer consolidated from the date that
control ceases; their results are in the consolidated financial statements up
to the date that control ceases.
Entities where the interest is 49% or less are assessed for potential
treatment as a Group company against the control tests outlined in IFRS 10,
being power over the investee, exposure or rights to variable returns and
power over the investee to affect the amount of investors' returns. At the
reporting date there were no entities where the Group had an interest below
49%.
All intercompany balances, income and expenses are eliminated on
consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method.
The cost of the acquisition is measured at the aggregate of the fair values,
at the date of exchange, of assets given, liabilities incurred or assumed, and
equity instruments issued by the Group in exchange for control of the
acquiree. The acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3 Business
Combinations are recognised at their fair value at the acquisition date.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date
carrying value of the acquirer's previously held equity interest in the
acquiree is re-measured to fair value at the acquisition date; any gains or
losses arising from such remeasurement are recognised in profit or loss.
Contingent consideration is classified either as equity or as a financial
liability. Amounts classified as a financial liability are subsequently
remeasured to fair value, with changes in fair value recognised in profit or
loss.
Interests in associate
An associate is an entity in which the Group has significant influence, but
not control or joint control. The Group uses the equity method of accounting
by which the equity investment is initially recorded at cost and subsequently
adjusted to reflect the investor's share of the net assets of the associate.
The Group has no associate investments. The Group's 33% associate investment
in Walker Crips Property Income Limited ("WCPIL") was disposed of in the
previous year (see note 8).
Intangible assets
(a) Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess
of the consideration transferred, the amount of any non-controlling interest
in the acquiree and the acquisition-date fair value of any previous equity
interest in the acquiree over the fair value of the identifiable net assets
acquired. If the total of consideration transferred, non-controlling interest
recognised and previously held interest measured at fair value is less than
the fair value of the net assets of the subsidiary acquired, in the case of a
bargain purchase, the difference is recognised directly in the income
statement.
Goodwill is initially recognised as an asset at cost and is subsequently
measured at cost less any accumulated impairment losses. Goodwill is not
amortised but is reviewed for impairment at least annually. Any impairment is
recognised immediately in profit or loss and is not subsequently reversed in
future periods.
For the purpose of impairment testing, goodwill acquired in a business
combination is allocated to each of the cash generating units ("CGUs"), or
groups of CGUs, that is expected to benefit from the synergies of the
combination. Each unit or group of units to which the goodwill is allocated
represents the lowest level within the entity at which the goodwill is
monitored for internal management purposes. Goodwill is monitored at the
operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if
events or changes in circumstances indicate a potential impairment. The
carrying value of the CGU containing the goodwill is compared to the
recoverable amount, which is the higher of value-in-use and the fair value
less costs of disposal. Any impairment is recognised immediately as an expense
and is not subsequently reversed.
(b) Client lists
Client lists are recognised when it is probable that future economic benefits
will flow to the Group and the cost of the asset can be measured reliably
whilst the risk and rewards have also transferred into the Group's ownership.
Intangible assets classified as client lists are recognised when acquired as
part of a business combination, when separate payments are made to acquire
clients' assets by adding teams of investment managers, or when acquiring the
ownership of client relationships from retiring in-house self-employed
investment managers.
Some client list acquisitions are linked to business combination acquisitions
such as those related to the historical acquisition of Barker Poland Asset
Management LLP and others are related to the purchase of client lists related
to individual investment manager or investment management team
recruitment-related costs.
The cost of acquired client lists and businesses generating revenue from
clients and investment managers are capitalised. These costs are amortised on
a straight-line basis over their expected useful lives of three to twenty
years at inception. The amortisation period and amortisation method for
intangible assets are reviewed at least each financial year end. All
intangible assets have a finite useful life.
In the current financial year, the estimated useful economic lives of all
client lists associated with self-employed investment managers were revised so
that no client list was amortised for periods longer than six years from 1
April 2022.
Amortisation of intangible fixed assets is included within administrative
expenses in the consolidated income statement.
At each statement of financial position 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.
(c) Software licences
Computer software which is not an integral part of the related hardware is
recognised as an intangible asset when the Group is expected to benefit from
future use of the software and the costs are reliably measured and amortised
using the straight-line method over a useful life of up to five years.
Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not
ready to use are not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for
the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair value less
costs of disposal and value-in-use. For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are largely
independent cash inflows (cash-generating units). Prior impairments of
non-financial assets (other than goodwill) are reviewed for possible reversal
at each reporting date.
Own shares held
Own shares consist of treasury shares which are recognised at cost as a
deduction from equity shareholders' funds. Subsequent consideration received
for the sale of treasury shares is also recognised in equity with any
difference being taken to retained earnings. No gain or loss is recognised on
sale of treasury shares.
Revenues recognised under IFRS 15
Revenue from contracts with customers:
● Gross commissions on stockbroking activities are recognised on
those transactions whose trade date falls within the financial year, with the
execution of the trade being the performance obligation at that point in time.
● In Walker Crips Investment Management fees earned from managing
various types of client portfolios are accrued daily over the period to which
they relate with the performance obligation fulfilled over the same period.
● Fees in respect of financial services activities of Walker Crips
Financial Planning are accrued evenly over the period to which they relate
with the performance obligation fulfilled over the same period.
● Fees earned from structured investments are recognised on the date
the underlying security of the structured investment is traded and settled,
with the execution of the trade being the performance obligation at that point
in time.
● Fees earned from software offering, Software as a Service
("SaaS"), are accrued evenly over the period to which they relate with the
performance obligation fulfilled over the same period.
Other incomes:
● Interest is recognised as it accrues in respect of the financial
year.
● Dividend income is recognised when:
o The Group's right to receive payment of dividends is established;
o When it is probable that economic benefits associated with the dividend
will flow to the Group;
o The amount of the dividend can be reliably measured; and
● Gains or losses arising on disposal of trading book instruments
and changes in fair value of securities held for trading purposes are both
recognised in profit and loss.
The Group does not have any long-term contract assets in relation to customers
of any fixed and/or considerable lengths of time which require the recognition
of financing costs or incomes in relation to them.
Operating expenses
Operating expenses and other charges are provided for in full up to the
statement of financial position date on an accruals basis.
Exceptional items
To assist in understanding its underlying performance, the Group identifies
certain items of pre-tax income and expenditure and discloses them separately
in the Consolidated income statement.
Such items include:
1. profits or losses on disposal or closure of businesses;
2. corporate transaction and restructuring costs;
3. changes in the fair value of contingent non-cash consideration; and
4. non-recurring items considered individually for classification as
exceptional by virtue of their nature or size.
The separate disclosure of these items allows a clearer understanding of the
Group's trading performance on a consistent and comparable basis, together
with an understanding of the effect of non-recurring or large individual
transactions upon the overall profitability of the Group. The exceptional
items arising in the current period are explained in note 10.
Deferred income
Income received from clients in respect of future periods to the transaction
or reporting date are classified as deferred income within creditors until
such time as value has been received by the client.
Foreign currencies
The individual financial statements of each of the Group's companies are
presented in Pounds Sterling, which is the functional currency of the Group
and the presentation currency of the consolidated financial statements.
In preparing the financial statements of the individual companies,
transactions in currencies other than the entity's functional currency
(foreign currencies) are recorded at the rates of exchange prevailing on the
dates of the transactions. At each statement of financial position date,
monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the balance sheet date. Exchange
differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are included in the consolidated income
statement for the period.
Where consideration is received in advance of revenue being recognised, the
date of the transaction reflects the date the consideration is received.
Property, plant and equipment
Fixtures and equipment are stated at historical cost less accumulated
depreciation and provision for any impairment. Depreciation is charged so as
to write-off the cost or valuation of assets over their estimated useful lives
using the straight-line method on the following bases:
Computer hardware 33( 1)/(3)% per
annum on cost
Computer software between 20% and
33( 1)/(3)% per annum on cost
Leasehold improvements over the term of the lease
Furniture and equipment 33( 1)/(3)% per annum on cost
Right-of-use assets held under contractual arrangements are depreciated over
the lengths of their respective contractual terms, as prescribed under IFRS
16.
The gain or loss on the disposal or retirement of an asset is determined as
the difference between the sales proceeds and the carrying amount of the asset
and is recognised in income. The residual values and estimated useful life of
items within property, plant and equipment are reviewed at least at each
financial year end. Any shortfalls in carrying value are impaired immediately
through profit or loss.
Taxation
The tax expense for the period comprises current and deferred tax.
Tax is recognised in the income statement, except to the extent that it
relates to items recognised directly in equity. In this case the tax is also
recognised directly in other comprehensive income or directly in equity,
respectively.
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the end of the reporting period in the
countries where the Company's subsidiaries and associates operate and generate
taxable income. Management periodically evaluates positions taken in tax
returns with respect to situations in which applicable tax regulation is
subject to interpretation. It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary
differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. However, the
deferred tax is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business combination that, at
the time of the transaction, affects neither accounting nor taxable profit or
loss. Deferred income tax is determined using tax rates (and laws) that have
been enacted, or substantially enacted, by the end of the reporting period and
are expected to apply when the related deferred income tax asset is realised,
or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is
probable that future taxable profit will be available against which the
temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable temporary differences
arising from investments in subsidiaries, associates and joint arrangements,
except for deferred income tax liability where the timing of the reversal of
the temporary difference is controlled by the Group and it is probable that
the temporary difference will not reverse in the foreseeable future.
Generally, the Group is unable to control the reversal of the temporary
difference for associates, unless there is an agreement in place that gives
the Group the ability to control the reversal of the temporary difference not
recognised.
Deferred income tax assets are recognised on deductible temporary differences
arising from investments in subsidiaries, associates and joint arrangements
only to the extent that it is probable the temporary difference will reverse
in the future and there is sufficient taxable profit available against which
the temporary difference can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax
liabilities, and when the deferred income tax assets and liabilities relate to
income taxes levied by the same taxation authority on either the taxable
entity or different taxable entities where there is an intention to settle the
balances on a net basis.
Financial assets and liabilities
Financial assets and liabilities are recognised in the Consolidated Statement
of Financial Position when the Group becomes a party to the contractual
provisions of the instrument.
At initial recognition, the Group measures a financial asset or financial
liability at its fair value plus or minus transaction costs. Transaction costs
of financial assets and financial liabilities carried at fair value through
profit or loss ("FVTPL") are expensed in the income statement. Immediately
after initial recognition, an expected credit loss allowance ("ECL") is
recognised for financial assets measured at amortised cost, which results in
an accounting loss being recognised in profit or loss when an asset is newly
originated.
The Group does not use hedge accounting.
a) Financial assets
Classification and subsequent measurement
The Group classifies its financial assets in the following measurement
categories:
● Fair value through profit or loss ("FVTPL");
● Fair value through other comprehensive income ("FVTOCI"); or
● Amortised cost.
Financial assets are classified as current or non-current depending on the
contractual timing for recovery of the asset. The classification depends on
the purpose for which the financial assets were acquired. Management
determines the classification of its financial assets at initial recognition.
(i) Debt instruments
Classification and subsequent measurement of debt instruments depend on:
● the Group's business model for managing the asset; and
● the cash flow characteristics of the asset.
Business model: The business model reflects how the Group manages the assets
in order to generate cash flows. That is, whether the Group's objective is
solely to collect the contractual cash flows from the assets, to collect both
the contractual cash flows and cash flows arising from the sale of assets, or
solely or mainly to collect cash flows arising from the sale of assets.
Factors considered by the Group include past experience on how the contractual
cash flows for these assets were collected, how the assets' performance is
evaluated, and how risks are assessed and managed.
Cash flow characteristics of the asset: Where the business model is to hold
assets to collect contractual cash flows, the Group assesses whether the
financial instruments' contractual cash flows represent solely payments of
principal and interest ("the SPPI test"). In making this assessment, the Group
considers whether the contractual cash flows are consistent with a basic
lending instrument.
Based on these factors, the Group classifies its debt instruments into one of
two measurement categories:
Amortised cost: Assets that are held for collection of contractual cash flows
where those cash flows represent solely payments of principal and interest
("SPPI"), and that are not designated at FVTPL, are measured at amortised
cost. Amortised cost is the amount at which the financial asset is measured at
initial recognition minus the principal repayments, plus or minus the
cumulative amortisation, using the effective interest rate method, of any
difference between that initial amount and the maturity amount, adjusted by
any ECL recognised. The effective interest rate is the rate that discounts
estimated future cash payments or receipts through the expected life of the
financial asset to the gross carrying amount. Interest income from these
financial assets is included within investment revenues using the effective
interest rate method.
Fair value through profit or loss ("FVTPL"): Assets that do not meet the
criteria for amortised cost or fair value through other comprehensive income
("FVTOCI") are measured at fair value through profit or loss.
Reclassification
The Group reclassifies debt instruments when and only when its business model
for managing those assets changes. The reclassification takes place from the
start of the first reporting period following the change.
Impairment
The Group assesses on a forward-looking basis the expected credit loss ("ECL")
associated with its debt instruments held at amortised cost. The Group
recognises a loss allowance for such losses at each reporting date. On initial
recognition, the Group recognises a 12-month ECL. At the reporting date, if
there has been a significant increase in credit risk, the loss allowance is
revised to the lifetime expected credit loss.
The measurement of ECL reflects:
● an unbiased and probability weighted amount that is determined by
evaluating a range of possible outcomes;
● the time value of money; and
● reasonable and supportable information that is available without
undue cost or effort at the reporting date about past events, current
conditions and forecasts of future economic conditions.
The Group adopts the simplified approach to trade receivables and contract
assets, which allows entities to recognise lifetime expected losses on all
assets, without the need to identify significant increases in credit risk
(i.e. no distinction is needed between 12-month and lifetime expected credit
losses).
(ii) Equity instruments
Investments are recognised and derecognised on a trade date basis where a
purchase or sale of an investment is under a contract whose terms require
delivery of the instrument within the timeframe established by the market
concerned, and are initially measured at fair value.
The Group subsequently measures all equity investments at fair value through
profit and loss. Changes in the fair value of financial assets at FVTPL are
recognised in revenue within the Consolidated Income Statement.
(iii) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with
financial institutions, other short-term, highly liquid investments with
original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of
changes in value. Bank overdrafts are shown within current liabilities in the
statement of financial position.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from
the financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
b) Financial liabilities
Classification and subsequent measurement
Financial liabilities are classified and subsequently measured at amortised
cost.
Financial liabilities are derecognised when they are extinguished.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities.
Trade payables
Trade payables are classified at amortised cost. Due to their short-term
nature, their carrying amount is considered to be the same as their fair
value.
Bank overdrafts
Interest-bearing bank overdrafts are initially measured at fair value and
shown within current liabilities. Finance charges are accounted for on an
accrual basis in profit or loss using the effective interest rate method and
are added to the carrying amount of the instrument to the extent that they are
not settled in the period in which they arise.
Equity instruments
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds.
Where any Group company purchases the Company's equity share capital (treasury
shares), the consideration paid, including any directly attributable
incremental costs (net of income taxes) is deducted from equity attributable
to the Company's equity holders, until the shares are cancelled or reissued.
Where such shares are subsequently reissued, any consideration received, net
of any directly attributable incremental transaction costs and the related
income tax effects, is included in equity attributable to the Company's equity
holders.
Share Incentive Plan ("SIP")
The Group has an incentive policy to encourage all members of staff to
participate in the ownership and future prosperity of the Group. All employees
can participate in the SIP following three months of service. Employees may
contribute a maximum of 10% of their gross salary in regular monthly payments
(being not less than £10 and not greater than £150) to acquire Ordinary
Shares in the Parent Company (Partnership Shares). Partnership Shares are
acquired monthly.
The matching option was reinstated to one-to-one from 1 April 2023 from the
previous one-half for every Partnership Share purchased. All shares awarded
under this scheme have been purchased in the market by the Trustees of the
SIP.
Provisions
Provisions for environmental restoration, restructuring costs and legal claims
are recognised when the Group has a present legal or constructive obligation
as a result of past events, it is probable that an outflow of resources will
be required to settle the obligation, and the amount has been reliably
estimated. Restructuring provisions comprise lease termination penalties and
employee termination payments. Provisions are not recognised for future
operating losses.
Provisions are measured at the present value of the expenditures expected to
be required to settle the obligation, using a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific
to the obligation. The increase in the provision due to the passage of time is
recognised as an interest expense.
Long-term liabilities - deferred cash and shares consideration
Amounts payable to personnel under recruitment contracts in respect of the
client relationships, which transfer to the Group, are treated as long-term
liabilities if the due date for payment of cash consideration is beyond the
period of one year after the year-end date. The value of shares in all cases
is derived by a formula based on the value of client assets received in
conjunction with the prevailing share price at the date of issue which in turn
determines the number of shares issuable.
Pension costs
The Group contributes to defined contribution personal pension schemes for
selected employees. For defined contribution schemes, the Group pays
contributions to publicly or privately administered pension insurance plans on
a mandatory, contractual or voluntary basis. The Group has no further payment
obligations once the contributions have been paid. The contributions are
recognised as employee benefit expenses when they are due. Prepaid
contributions are recognised as an asset to the extent that a cash refund or a
reduction in the future payments is available. The contribution rate is based
on annual salary and the amount is charged to the income statement on an
accrual basis.
Dividends paid
Equity dividends are recognised when they become legally payable. Dividend
distribution to the Company's shareholders is recognised as a liability in the
Group's financial statements in the period in which the dividends are approved
by the Company's shareholders. There is no requirement to pay dividends unless
approved by the shareholders by way of written resolution where there is
sufficient cash to meet current liabilities, and without detriment of any
financial covenants, if applicable.
Leases
The Group leases various offices, software and equipment that are recognised
under IFRS 16. The Group's lease contracts are typically made for fixed
periods of 2 to 10 years and extension and termination options enabling
maximise operational flexibility are included in a number of property and
software leases across the Group.
All leases are accounted for by recognising a right-of-use asset and a lease
liability except for:
● Leases of low value assets; and
● Leases with a duration of 12 months or less.
Payments associated with short-term leases and leases of low-value assets are
recognised on a straight-line basis as an expense in profit or loss.
Short-term leases are leases with a lease term of 12 months or less. Low-value
assets comprise IT equipment and small items of office furniture.
Leases are recognised as a right-of-use asset and a corresponding liability at
the date at which the leased asset is available for use by the Group. Each
lease payment is allocated between the liability and finance cost. The finance
cost is charged to profit or loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability
for each period. The right-of-use assets are depreciated over the shorter of
the asset's useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of the
following lease payments:
● fixed payments (including in-substance fixed payments), less any
lease incentives receivable;
● variable lease payments that are based on an index or a rate;
● amounts expected to be payable by the lessee under residual value
guarantees;
● the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option; and
● payments of penalties for terminating the lease, if the lease term
reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be readily determined, which is generally the case
for leases held by the Group, the lessee's incremental borrowing rate is used.
To determine the incremental borrowing rate, the Group:
● where possible, uses recent third-party financing received by the
individual lessee as a starting point, adjust to reflect changes in financing
conditions since third-party financing was received;
● uses a build-up approach that starts with a risk-free interest
rate adjusted for credit risk for leases held by the Group, which does not
have recent third-party financing; and
● make adjustments specific to the lease, for example term, country,
currency and security.
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit and loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability
for each period.
Right-of-use assets are measured at cost comprising the following:
● the amount of the initial measurement of lease liability;
● any lease payments made at or before the commencement date less
any lease incentives received;
● any initial direct costs; and
● restoration costs.
Right-of-use assets are depreciated over the shorter of the lease term and the
useful economic life of the underlying asset on a straight-line basis.
The Group does not have any leasing activities acting as a lessor.
Earnings per share
Basic earnings per share is calculated by dividing:
● the profit attributable to owners of the Company, excluding any
costs of servicing equity other than ordinary shares;
● by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares
issued during the year and excluding treasury shares (note 16).
There are currently no obligations present that could have a dilutive effect
on ordinary shares.
Share-based payments
Share-based payments are remuneration payments to selected employees that take
the form of an award of shares in Walker Crips Group plc. Employees are not
able to exercise such awards in full until a period of two to five years,
based on the terms of each individual award (the vesting period).
Equity-settled share-based payments to employees are measured at fair value of
the equity instruments at the date of grant. The fair value excludes the
effect of non-market-based vesting conditions. Details regarding the
determination of the fair value of equity-settled share-based transactions are
set out in note 37.
As the share-based payment awards are for fully paid free shares, fair value
is measured as the market value of the shares at each grant date.
The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based
on the Group's estimate of the number of shares that will eventually vest. At
each reporting date, the Group revises its estimate of the shares expected to
vest as a result of the effect of non-market based vesting conditions. The
impact of the revision of the original estimates, if any, is recognised in the
Income Statement such that the cumulative expense reflects the revised
estimate.
4. Key sources of estimation uncertainty and judgements
The Group makes certain estimates and assumptions regarding the future.
Estimates and judgements are continually evaluated based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions. The estimates
and assumptions that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial
year are discussed below.
Impairment of goodwill - estimation and judgement
Determining whether goodwill is impaired requires an estimation of the fair
value less costs to sell and the value-in-use of the cash-generating units to
which goodwill has been allocated. The fair value less costs to sell involves
estimation of values based on the application of earnings multiples and
comparison to similar transactions. The value-in-use calculation requires the
entity to estimate the future cash flows expected to arise from the
cash-generating unit and apply a discount rate in order to calculate present
value. The assumptions used and inputs involve judgements and create
estimation uncertainty. These assumptions have been stress-tested as described
in note 17. The carrying amount of goodwill at the balance sheet date was
£4.4 million (2022: £4.4 million) as shown in note 17.
Other intangible assets - judgement
Acquired client lists are capitalised based on current fair values. During the
year, two intangible asset client lists were purchased by subsidiary Walker
Crips Investment Management Limited. When the Group purchases client
relationships from other corporate entities, a judgement is made as to whether
the transaction should be accounted for as a business combination, or a
separate purchase of intangible assets. In making this judgement, the Group
assesses the acquiree against the definition of a business combination in IFRS
3. Payments to newly recruited investment managers are capitalised when they
are judged to be made for the acquisition of client relationship intangibles.
The useful lives are estimated by assessing the historic rates of client
retention, the ages and succession plans of the investment managers who manage
the clients and the contractual incentives of the investment managers.
Key assumptions in this regard consist of the following:
1. The continuing going concern of the Company;
2. Life expectancy of clients based on the Office for National Statistics;
3. Succession plans in place for staff and investment managers;
4. Amounts of AUMA are consistent on average;
5. A growth rate of client list AUMA of a conservative 2%; and
6. A discount rate of 12%.
Provisions - estimation and judgement
Provisions are recognised when the Group has a present obligation as a result
of a past event, and it is probable that the Group will be required to settle
that obligation. Provisions are measured at the Directors' best estimate of
the expenditure required to settle the obligation at the statement of
financial position date, and are discounted to present value where the effect
is material.
IFRS 16 "Leases" - estimation and judgement
IFRS 16 requires certain judgements and estimates to be made and those
significant judgements are explained below.
The Group has opted to use single discount rates for leases with reasonably
similar characteristics. The discount rates used have had an impact on the
right-of-use assets' values, lease liabilities on initial recognition and
lease finance costs included within the income statement.
Where a lease includes the option for the Group to extend the lease term, the
Group has exercised the judgement, based on current information, that such
leases will be extended to the full length available, and this is included in
the calculation of the value of the right-of-use assets and lease liabilities
on initial recognition and valuation at the reporting date.
Provision for dilapidations - estimation and judgement
The Group has made provisions for dilapidations under six leases for its
offices. The Group did not enter into any new property leases in the period
but allowed the lapse of two existing lease agreements. The amounts of the
provisions are, where possible, estimated using quotes from professional
building contractors. The property, plant and equipment elements of the
dilapidations are depreciated over the terms of their respective leases. The
obligations in relation to dilapidations are inflated using an estimated rate
of inflation and discounted using appropriate gilt rates to present value. The
change in liability attributable to inflation and discounting is recognised in
interest expense.
Provision for stamp duty liability - estimation and judgement
The Group has identified an obligation in respect of stamp duty reserve tax
which has arisen over a number of years and was not identified due to a
procedures and controls failure. In view of the significance of this amount,
prior year results have been restated (see note 10, 27 and 38).
5. Revenue
An analysis of the Group's revenue is as follows:
2023 2022
Broking Non- Total Broking Non- Total
income broking £'000 income broking £'000
£'000 income £'000 income
£'000 £'000
Stockbroking commission 6,008 - 6,008 8,044 - 8,044
Fees and other revenue * - 23,665 23,665 - 22,931 22,931
Investment Management 6,008 23,665 29,673 8,044 22,931 30,975
Wealth Management, 1,939 1,939 1,830 1,845
Financial Planning & Pensions - 15
Revenue 6,008 25,604 31,612 8,059 24,761 32,820
Investment revenue (see note 11) - 95 95 - 9 9
Total income 6,008 25,699 31,707 8,059 24,770 32,829
% of total income 18.9% 81.1% 100.0% 24.5% 75.5% 100.0%
* Includes £3.2 million (2022: 0.8 million) of interest income from managing
client trading cash funds.
Timing of revenue recognition
The following table presents operating income analysed by the timing of
revenue recognition of the operating segment providing the service:
2023 Investment Financial Planning & Wealth SaaS Consolidated
Management Management £'000 year ended
£'000 £'000 31 March
2023
£'000
Revenue from contracts with customers
Products and services transferred at a point in time 10,104 272 16 10,392
Products and services transferred over time 16,295 1,666 - 17,961
Other revenue
Products and services transferred at a point in time 75 1 - 76
Products and services transferred over time 3,183 - - 3,183
29,657 1,939 16 31,612
2022 Investment Financial Planning & Wealth Consolidated
Management Management year ended
£'000 £'000 SaaS 31 March
£'000 2022
£'000
Revenue from contracts with customers
Products and services transferred at a point in time 11,894 260 38 12,192
Products and services transferred over time 17,917 1,585 - 19,502
Other revenue
Products and services transferred at a point in time 404 - - 404
Products and services transferred over time 722 - - 722
30,937 1,845 38 32,820
6. Segmental analysis
For segmental reporting purposes, the Group currently has three operating
segments; Investment Management, being portfolio-based transaction execution
and investment advice; Financial Planning, being financial planning, wealth
management and pensions administration; and Software as a Service ("SaaS")
comprising provision of regulatory and admin software and bespoke cloud
software to companies. Unallocated corporate expenses, assets and liabilities
are not considered to be allocatable accurately, or fairly, under any known
basis of allocation and are therefore disclosed separately.
Walker Crips Investment Management's activities focus predominantly on
investment management of various types of portfolios and asset classes.
Walker Crips Financial Planning provides advisory and administrative services
to clients in relation to their wealth management, financial planning, life
insurance, inheritance tax and pension arrangements.
EnOC Technologies Limited ("EnOC") provides the regulatory and admin software,
Software as a Service ("SaaS"), to their business partners, including all
WCG's regulated entities. Fees payable by subsidiary companies to EnOC have
been eliminated on consolidation and are excluded from segmental analysis.
Revenues between Group entities, and in turn reportable segments, are excluded
from the segmental analysis presented below.
The Group does not derive any revenue from geographical regions outside of the
United Kingdom.
Investment Financial Planning & Wealth SaaS Consolidated
2023 Management Management £'000 year ended
£'000 £'000 31 March
2023
£'000
Revenue
Revenue from contracts with customers 26,399 1,938 16 28,353
Other revenue 3,258 1 - 3,259
Total revenue 29,657 1,939 16 31,612
Results
Segment result 1,553 (310) (128) 1,115
Unallocated corporate expenses (490)
625
Investment revenue 95
Finance costs (88)
Profit before tax 632
Tax (214)
Profit after tax 418
Investment Financial Planning & Wealth SaaS Consolidated
2023 Management Management £'000 year ended
£'000 £'000 31 March
2023
£'000
Other information
Capital additions 368 10 - 378
Depreciation 273 58 - 331
Statement of financial positions
Assets
Segment assets 57,255 1,163 406 58,824
Unallocated corporate assets 4,256
Consolidated total assets 63,080
Liabilities
Segment liabilities 39,546 247 329 40,122
Unallocated corporate liabilities 1,792
Consolidated total liabilities 41,914
Investment Financial Planning & Wealth SaaS Consolidated
2022 - as restated Management Management £'000 year ended
£'000 £'000 31 March
2022
£'000
Revenue
Revenue from contracts with customers 29,811 1,845 38 31,694
Other revenue 1,126 - - 1,126
Total revenue 30,937 1,845 38 32,820
Results
Segment result 1,042 * (258) (102) 682
Unallocated corporate expenses (474)
208
Investment revenue 9
Finance costs (114)
Profit on disposal of associate investment 103
Profit before tax 206
Tax (151)
Profit after tax 55
Investment Financial Planning & Wealth SaaS Consolidated
2022 - as restated Management Management £'000 year ended
£'000 £'000 31 March
2022
£'000
Other information
Capital additions 466 5 - 471
Depreciation 260 43 - 303
Statement of financial positions
Assets
Segment assets 71,823 1,180 ** 393 ** 73,397
Unallocated corporate assets 3,272
Consolidated total assets 76,669
Liabilities
Segment liabilities 52,936 * 248 ** 240 ** 53,424
Unallocated corporate liabilities 1,880
Consolidated total liabilities 55,304
* The restatement of the 2022 figures is explained in note 38
** The prior year disclosed amounts for these segments have been corrected.
The correction is a disclosure matter only, and is not an adjustment that
relates to an accounting error affecting the income statement or balance sheet
in the prior year of the Group or any of its subsidiaries.
7. Commissions and fees paid
Commissions and fees paid comprises:
2023 2022
£'000 £'000
To authorised external agents 3 61
To self-employed certified persons 7,261 9,049
7,264 9,110
8. Investment in associate
2023 2022
£'000 £'000
Brought forward - 2
Share of after-tax profit - 57
Dividends - (57)
Disposals - (2)
Carried forward - -
The Group disposed of its 33.33% interest in its associate, Walker Crips
Property Income Limited ("WCPIL"), in the prior year.
9. Profit for the year
Profit for the year on continuing operations has been arrived at after
charging:
2023 2022
£'000 £'000
Depreciation of property, plant and equipment (see note 19) 331 303
Depreciation of right-of-use assets (see note 20) 771 873
Amortisation of intangibles (see note 18) 970 862
Staff costs (see note 13) 14,475 13,862
Recharge of staff costs (248) (725)
Settlement costs 994 1,143
Communications 1,387 1,260
Computer expenses 831 790
Other expenses 3,442 3,305
Auditor's remuneration 216 223
23,169 21,901
A more detailed analysis of auditor's remuneration is provided below:
2023 2023 2022 2022
£'000 % £'000 %
Audit services
Fees payable to the Company's auditor for the audit of its annual accounts 84 39 51 23
The audit of the Company's subsidiaries pursuant to legislation - current year 119 55 119 53
Non-audit services
FCA client assets reporting 13 6 13 6
AAF Review - - 40 18
216 100 223 100
10. Exceptional items
Certain amounts are disclosed separately in order to present results which are
not distorted by significant items of income and expenditure due to their
nature and materiality.
2023 As restated
£'000 2022
£'000
Exceptional items included within operating profit
Restructuring, redundancy and other costs - 516
Net compensation income - (221)
Financial crime control framework review and remediation - 595
Client redress and associated costs - 650
Change in fair value of deferred consideration - -
SDRT liability to HMRC 131 118 *
Accelerated amortisation 423 -
Operating exceptional items 554 1,658
Other
Profit on disposal of associate investment - (103)
Total exceptional items 554 1,555
In the current year, the following items have been classified as exceptional
items due to their materiality and non-recurring nature. These are:
a) SDRT liability to HMRC resulting from a system monitoring error where
stamp duty was omitted from client contracts. A voluntary disclosure to HMRC
will be made and we presently estimate the cost of repayment, potential
penalties, and related costs, net of tax, to be £878,000. This has been
allocated to the years ending 31 March 2023, 31 March 2022 and prior period.
As the error spans several and is regarded as fundamental, prior reported
results have been restated. Further details of the provision and estimation
uncertainty are included further in note 27. Customers were not adversely
impacted by this error.
b) As explained in the Chairman's Statement and the Finance Director's
Report, during the year, a number of self-employed investment managers with
intangible assets linked to client lists advised their intention to leave the
Group which resulted in the Group changing the useful economic life of each
asset to align with the revised expected timeline of future benefits. This
resulted in an additional £423,000 of amortisation expensed in the current
year.
In the prior year, the Group classified costs relating to restructuring,
redundancy, enhancing the Group's financial crime framework, customer redress
and related costs as exceptional items. Compensation income received under a
confidential settlement agreement and the proceeds from the disposal of the
Group's 33.33% interest in its former associate, Walker Crips Property Income
Limited, were also classified as exceptional items.
* The restatement of the 2022 figures are explained in note 38
11. Investment revenue
Investment revenue comprises:
2023 2022
£'000 £'000
Interest on bank deposits 48 -
Dividends from equity investment 47 9
95 9
12. Finance costs
Finance costs comprises:
2023 2022
£'000 £'000
Interest on lease liabilities (86) (93)
Interest on dilapidation provisions 3 (11)
Interest on overdue liabilities (5) (10)
(88) (114)
13. Staff costs
Particulars of employee costs (including Directors) are as shown
below:
2023 2022
£'000 £'000
Wages and salaries 11,943 11,561
Social security costs 1,262 1,197
Share incentive plan 60 57
Other employment costs 1,210 1,047
14,475 13,862
Staff costs do not include commissions payable mainly to self-employed account
executives, as these costs are included in total commissions payable to
self-employed certified persons disclosed in note 7. At the end of the year
there were 32 certified self-employed account executives (2022: 39).
The average number of staff employed during the year was:
2023 2022
Number Number
Executive Directors 2 2
Certification and approved staff 49 54
Other staff 155 152
206 208
The table incorporates the new staff classification under Senior Managers and
Certification Regime ("SM&CR").
14. Taxation
The tax charge is based on the profit for the year of continuing operations
and comprises:
2023 2022
£'000 £'000
UK corporation tax at 19% (2022: 19%) 228 131
Prior year adjustments (7) (66)
Origination and reversal of timing differences during the current period (46) 86
175 151
Corporation tax is calculated at 19% (2022: 19%) of the estimated assessable
profit for the year.
The charge for the year can be reconciled to the profit per the income
statement as follows:
2023 As restated
£'000 2022
£'000
Profit before tax 632 206 *
Tax on profit on ordinary activities at the standard rate UK corporation tax 120 39 *
rate of 19% (2022: 19%)
Effects of:
Tax rate changes for deferred tax (8) 108
Expenses not deductible for tax purposes 64 21
Prior year adjustment (14) (66)
Fixed asset differences 65 26
Other (13) 23 *
214 151
Current tax has been provided at the rate of 19%. Deferred tax has been
provided at 25% (2022: 25%).
The exceptional charge of £554,000 (2022: £1,555,000 - as restated),
disclosed separately on the consolidated income statement, is tax deductible
to the value of £105,000 (2022: £296,000 - as restated) of corporation tax.
Classifying these credits/costs as exceptional has no effect on the tax
liability.
In the Spring Budget 2021, the Government announced that from 1 April 2023 the
UK corporation tax rate will increase from 19% to 25%. This will have a
consequential effect on the Group's future tax charge.
* The restatement of the 2022 figures is explained in note 38. The above
reconciliation has been updated to present the reconciling items between 19%
of profit before tax to the actual tax charge, based on the prior year
adjustment.
15. Dividends
When determining the level of proposed dividend in any year a number of
factors are taken into account including levels of profitability, future cash
commitments, investment needs, shareholder expectations and prudent buffers
for maintaining an adequate regulatory capital surplus. Amounts recognised as
distributions to equity holders in the period:
2023 2022
£'000 £'000
Final dividend for the year ended 31 March 2022 of 1.20p (2021: 0.60p) per 511 255
share
Interim dividend for the year ended 31 March 2023 of 0.25p (2021: 0.30p) per 106 128
share
617 383
Proposed final dividend for the year ended 31 March 2023 of 0.25p (2022: 106 511
1.20p) per share
The proposed final dividends are subject to approval by shareholders at the
Annual General Meeting and have not been included as liabilities in these
financial statements.
16. Earnings per share
The calculation of basic earnings per share for continuing operations is based
on the post-tax profit for the financial year of £418,000 (2022: £55,000 -
as restated) and divided by 42,577,328 (2022: 42,577,328) Ordinary Shares of
6(2)/(3) pence, being the weighted average number of Ordinary Shares in issue
during the year.
No dilution to earnings per share in the current year or in the prior year.
The calculation of the basic earnings per share is based on the following
data:
As restated
2023 2022
£'000 £'000
Earnings for the purpose of basic earnings per share
being net profit attributable to equity holders of the Parent Company 418 55 *
* The restatement of the 2022 figures are explained in note 38
Number of shares
2023 2022
Number Number
Weighted average number of Ordinary Shares for the purposes of basic earnings 42,577,328 42,577,328
per share
This produced basic earnings per share of 0.98 pence (2022: 0.13 pence - as
restated).
17. Goodwill
£'000
Cost
At 1 April 2021 7,056
At 1 April 2022 7,056
At 31 March 2023 7,056
Accumulated impairment
At 1 April 2021 2,668
At 1 April 2022 2,668
Impaired during the year -
At 31 March 2023 2,668
Carrying amount
At 31 March 2023 4,388
At 31 March 2022 4,388
Goodwill acquired in a business combination is allocated, at acquisition, to
the cash-generating units ("CGUs") that are expected to benefit from that
business combination or intangible asset. The carrying amount of goodwill has
been allocated as follows:
2023 2022
£'000 £'000
London York Fund Managers Limited CGU ("London York") 2,901 2,901
Barker Poland Asset Management LLP CGU ("BPAM") 1,487 1,487
4,388 4,388
The recoverable amounts of the CGUs have been determined based upon
value-in-use calculations for the London York CGU and fair value, less costs
of disposal for the BPAM CGU.
The London York computation was based on discounted five-year cash flow
projections and terminal values. The key assumptions for these calculations
are a pre-tax discount rate of 12%, terminal growth rates of 2% and the
expected changes to revenues and costs during the five-year projection period
based on discussions with senior management, past experience, future
expectations in light of anticipated market and economic conditions,
comparisons with our peers and widely available economic and market forecasts.
The pre-tax discount rate is determined by management based on current market
assessments of the time value of money and risks specific to the London York
CGU. The base value-in-use cash flows were stress tested for an increase in
discount rates to 16% and a 20% fall in net inflows resulting in no
impairment.
The discount rate would need to increase above 17% for the London York CGU
value-in-use to equal the respective carrying values. Revenues would need to
fall by 37.4% per annum in present value terms for the London York CGU
value-in-use to equal the respective carrying values.
The BPAM CGU recoverable amount was assessed, in accordance with IAS 36, by
adopting the higher method of the fair value less cost of disposal to
determine the recoverable amount (as opposed to the lower value-in-use). The
recoverable amount at the year-end calculated for the BPAM CGU, determined by
the fair value less cost of disposal, exceeded that produced by the
value-in-use calculation. The fair value less cost of disposal amounted to
£10 million (2022: £7.8 million) with headroom, after selling costs, of
£6.7 million (2022: £4.2 million) after applying price earnings multiples
based on the average of the Group's and its peers' published results.
Accordingly, this measurement is classified as fair value hierarchy Level 3
having used valuation techniques not based on directly observable market data.
A 27% decrease in BPAM's profit after tax across five years would result in
reducing the headroom to a negligible value.
18. Other intangible assets
Software Client lists Total
licences £'000 £'000
£'000
Cost
At 1 April 2021 2,883 10,665 13,548
Reclassification of assets relating to IFRS 16 (45) - (45)
Additions in the year 61 32 93
At 1 April 2022 2,899 10,697 13,596
Reclassification of assets relating to IFRS 16 (22) - (22)
Additions in the year 45 266 311
At 31 March 2023 2,922 10,963 13,885
Amortisation
At 1 April 2021 2,459 4,523 6,982
Charge for the year 185 677 862
At 1 April 2022 2,644 5,200 7,844
Charge for the year 137 833 970
Charge for the year - exceptional cost (note 10) - 423 423
At 31 March 2023 2,781 6,456 9,237
Carrying amount
At 31 March 2023 141 4,507 4,648
At 31 March 2022 255 5,497 5,752
The intangible assets are amortised over their estimated useful lives in order
to determine amortisation rates. "Client lists" are assessed on an
asset-by-asset basis and are amortised over periods of three to twenty years
and "Software licences" are amortised over five years. During the year an
exercise was undertaken which resulted in modifications to the estimated
useful lives of certain client assets associated with self-employed investment
managers. The result of this exercise is an increased amortisation charge of
£423,000 compared to the prior year.
There are no indications that the value attributable to client lists or
software licences should be further impaired.
19. Property, plant and equipment
Owned fixed assets Leasehold Computer Computer Total
improvement, software hardware £'000
furniture and £'000 £'000
equipment
£'000
Cost
1 April 2021 2,766 - 1,582 4,348
Reclassification of assets * (73) - - (73)
Dilapidation asset reassessment (50) - - (50)
Additions in the year 110 - 8 118
At 1 April 2022 2,753 - 1,590 4,343
Additions in the year 99 - 52 151
At 31 March 2023 2,852 - 1,642 4,494
Accumulated depreciation
1 April 2021 1,380 - 1,491 2,871
Charge for the year 253 - 50 303
1 April 2022 1,633 - 1,541 3,174
Charge for the year 297 - 34 331
At 31 March 2023 1,930 - 1,575 3,505
Carrying amount
At 31 March 2023 922 - 67 989
At 31 March 2022 1,120 - 49 1,169
* Adjustments were made in the prior year to reclassify assets more
appropriately between asset classes. The net impact of these adjustments in
asset costs and accumulated depreciation was nil and did not require changes
or corrections to depreciation policy.
20. Right-of-use assets
Computer Computer
Offices software hardware Total
£'000 £'000 £'000 £'000
Cost
1 April 2022 4,304 899 95 5,298
Additions 346 168 - 514
At 31 March 2023 4,650 1,067 95 5,812
Accumulated depreciation
1 April 2022 1,968 673 60 2,701
Charge for the year 518 233 20 771
At 31 March 2023 2,486 906 80 3,472
Carrying amount
At 31 March 2023 2,164 161 15 2,340
At 31 March 2022 2,336 226 35 2,597
21. Investments - fair value through profit or loss
Non-current asset investments
The Group did not hold any non-current asset investments at the reporting
date.
Current asset investments
As at As at
31 March 31 March
2023 2022
£'000 £'000
Trading investments
Investments - fair value through profit or loss 1,276 1,647
Financial assets at fair value through profit or loss represent investments in
equity securities and collectives 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 and the Group is able to
liquidate these assets at short notice.
The following provides an analysis of financial instruments that are measured
after 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
Group's financial assets held at fair value through profit and loss under
current assets 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 financial assets
held at fair value through profit and loss under non-current assets fall
within this category.
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
At 31 March 2023
Financial assets held at fair value through profit and loss 1,276 - - 1,276
At 31 March 2022
Financial assets held at fair value through profit and loss 1,647 - - 1,647
Further IFRS 13 disclosures have not been presented here as the balance
represents 2.022% (2022: 2.148%) of total assets. There were no transfers of
investments between any of the levels of hierarchy during the year.
22. Trade and other receivables
2023 2022
£'000 £'000
Amounts falling due within one year:
Due from clients, brokers and recognised stock exchanges at amortised cost 28,554 42,898
Other debtors at amortised cost 2,148 1,522
Prepayments and accrued income 5,599 5,583
36,301 50,003
23. Cash and cash equivalents
2023 2022
£'000 £'000
Cash deposits held at bank, repayable on demand without penalty 13,138 11,113
13,138 11,113
Cash and cash equivalents do not include deposits of client monies placed by
the Group with banks and building societies in segregated client bank accounts
(free money and settlement accounts). All such deposits are designated by the
banks and building societies as clients' funds and are not available to
satisfy any liabilities of the Group.
The amount of such net deposits which are not included in the consolidated
statement of financial position at 31 March 2023 was £267,258,000 (2022:
£314,424,000).
The credit quality of banks holding the Group's cash at 31 March 2023 is
analysed below with reference to credit ratings awarded by Fitch.
2023 2022
£'000 £'000
A+ 5,400 7,837
AA- 7,738 2,959
A- - 45
Unrated or held in cash - 272
13,138 11,113
24. Deferred tax liability
Capital Short-term Total
allowances temporary £'000
£'000 differences
and other
£'000
At 1 April 2021 (124) (276) (400)
Use of loss brought forward 119 (170) (51)
Debit to the income statement - 37 37
At 1 April 2022 (5) (409) (414)
Use of loss brought forward - 2 2
Debit to the income statement - 41 41
At 31 March 2023 (5) (366) (371)
Deferred income tax assets are recognised for tax loss carried forward to the
extent that the realisation of the related tax benefit through future taxable
profits is probable. The Group did not recognise deferred income tax assets of
£12,362 (2022: £152) in respect of losses amounting to £65,063 (2022:
£800) that can be carried forward against future taxable income. Losses
amounting to £nil (2022: £nil) and £nil (2022: £nil) expire in 2023 and
2024, respectively.
25. Financial instruments and risk profile
Financial risk management
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated the authority for designing and
operating processes that ensure the effective implementation of the objectives
and policies to the Group's Risk function. The Board receives period reports
from the Group Risk Team through which it reviews the effectiveness of the
processes put in place and the appropriateness of the objectives and policies
it sets. The Group's internal auditors also review the risk management
policies and processes and report their findings to the Audit Committee.
Procedures and controls are in place to identify, assess and ultimately
control the financial risks faced by the Group arising from its use of
financial instruments. Steps are taken to mitigate identified risks with
established and effective procedures and controls, operating systems,
management information and training of staff.
The Group's risk appetite, along with the procedures and controls mentioned
above, are laid out in the Group's Internal capital adequacy and risk
assessment (ICARA).
The overall risk appetite for the Group is considered by Management to be low,
despite operating in a marketplace where financial risk is inherent in
investment management and financial services.
The overall objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group's competitiveness and
flexibility. The Group considers its financial risks arising from its use of
financial instruments to fall into three main categories:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
Financial risk management is a central part of the Group's strategic
management which recognises that an effective risk management programme can
increase a business's chances of success and reduce the possibility of
failure. Continual assessment, monitoring and updating of procedures and
benchmarks are all essential parts of the Group's risk management strategy.
(i) Credit risk management practices
The Group's credit risk is the risk of loss through default by a counterparty
and, accordingly, the Group's definition of default is primarily attributable
to its trade receivables or pledged collateral which is the risk that a
client, market counterparty or recognised stock exchange will be unable to pay
amounts to settle a trade in full when due. Other credit risks, such as free
delivery of securities or cash, are not deemed to be significant. Significant
changes in the economy or a particular sector could result in losses that are
different from those that the Group has provided for at the year-end date.
All financial assets at the year-end were assessed for credit impairment and
no material amounts have arisen having evaluated the age of overdue debtors,
the quality of recourse to third parties and the availability of mitigation
through the disposal of liquid collateral in the form of marketable
securities. The Group's write-off policy is driven by the historic dearth of
instances where material irrecoverable losses have been incurred. Where the
avenues of recourse and mitigation outlined above have not been successful,
the outstanding balance, or residual balance if sale proceeds do not fully
cover an exposure, will be written off.
The Board is responsible for oversight of the Group's credit risk. The Group
accepts a limited exposure to credit risk but aims to mitigate and minimise
the risk through various methods. There is no material concentrated credit
risk as the exposures are spread across a substantial number of clients and
counterparties.
Trade receivables (includes settlement balances)
Settlement risk arises in any situation where a payment of cash or transfer of
a security is made in the expectation of a corresponding delivery of a
security or receipt of cash. Settlement balances arise with clients, market
counterparties and recognised stock exchanges.
In the vast majority of cases, control of the stock purchased will remain with
the Group until client monetary balances are fully settled.
Where there is an absence of securities collateral, clients are usually
required to hold sufficient funds in their managed deposit account prior to
the trade being conducted. Holding significant amounts of client money helps
the Group to manage credit risks arising with clients. Many of our clients
also hold significant amounts of stock and other securities in our nominee
subsidiary company, providing additional security should a specific
transaction fail to be settled and the proceeds of such securities disposed of
can be used to settle all outstanding obligations.
In addition, the client side of settlement balances are normally fully
guaranteed by our commission-sharing certified persons who conduct
transactions and manage the relationships with our mutual clients.
Exposures to market counterparties also arise in the settlement of trades or
when collateral is placed with them to cover open trading positions. Market
counterparties are usually other FCA-regulated firms and are considered
creditworthy, some reliance being placed on the fact that other regulated
firms would be required to meet the stringent capital adequacy requirements of
the FCA.
Maximum exposure to credit risk:
2023 2022
£'000 £'000
Cash 13,138 11,113
Trade receivables 28,554 42,898
Other debtors 2,148 1,522
Accrued interest income 591 108
44,431 55,641
An ageing analysis of the Group's financial assets is presented in the
following table:
Current 0-1 2-3 Over 3 Carrying
At 31 March 2023 £'000 month months months value
£'000 £'000 £'000 £'000
Trade receivables 27,910 555 58 31 28,554
Cash and cash equivalent 13,138 - - - 13,138
Other debtors 2,141 2 - 5 2,148
Accrued interest income 591 - - - 591
43,780 557 58 36 44,431
Expected credit loss
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses using a lifetime expected credit loss provision for trade receivables
and contract assets. To measure expected credit losses on a collective basis,
trade receivables and contract assets are grouped based on similar credit risk
and ageing. The contract assets have similar risk characteristics to the trade
receivables for similar types of contracts.
The Group undertakes a daily assessment of credit risk which includes
monitoring of client and counterparty exposure and credit limits. New clients
are individually assessed for their creditworthiness using external ratings
where available and all institutional relationships are monitored at regular
intervals.
As at 31 March 2023, the Directors of the Company reviewed and assessed the
Group's existing assets for impairment using the IFRS 9 simplified approach to
measuring expected credit losses using a lifetime expected credit loss
provision for trade receivables and contract assets and no additional
impairments have been recognised on application and no material defaults are
anticipated within the next 12 months.
Concentration of credit risk
In addition, daily risk management procedures to actively monitor
disproportionately large trades by a customer or market counterparty are in
place. The financial standing, pattern of trading, type and size of security
or instrument traded are amongst the factors taken into consideration.
(ii) Liquidity risk
Liquidity risk arises from the Group's management of working capital and the
finance charges and principal repayments on its debt instruments. It is the
risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due. The Group's policy is to maintain sufficient
cash to allow it to meet its liabilities when they become due.
Historically, sufficient underlying cash has been prevalent in the business
for many years as the Group is normally cash-generative. The risk of
unexpected large cash outflows could arise where significant amounts are being
settled daily of which only a fraction forms the commission earned by the
Group. This could be due to clients settling late or bad deliveries to the
market or CREST, also resulting in a payment delay from the market side. The
Group also commits in advance to product providers to purchase future
structured product issues at the future market price. The Group then markets
such products in advance of the issue, which under normal business conditions
means there is limited liquidity and market risk at the time of product
launch.
The Group's policy with regard to liquidity risk is to carefully monitor
balance sheet structure and borrowing limits, including:
● monitoring of cash positions on a daily basis;
● exercising strict control over the timely settlement of trade
debtors; and
● exercising strict control over the timely settlement of market
debtors and creditors.
The Group holds its cash and cash equivalents spread across a number of highly
rated financial institutions. All cash and cash equivalents are short-term
highly liquid investments that are readily convertible to known amounts of
cash without penalty.
The Group and its subsidiaries Walker Crips Investment Management Limited and
Barker Poland Asset Management LLP are in scope of the FCA's basic liquid
assets requirements and these are monitored by management on a daily basis.
The table below analyses the Group's cash outflow based on the remaining
period to the contractual maturity date.
2023 Less than Total
1 year £'000
£'000
Trade and other payables 36,849 36,849
36,849 36,849
2022
Trade and other payables - as restated 49,625 * 49,625 *
49,625 * 49,625 *
* The restatement of the 2022 figures is explained in note 38
As at 31 March 2023 the Group had commitments in respect of future structured
product issues of £10 million.
(iii) Market risk
Market risk is the risk that changes in market prices such as foreign exchange
rates or equity prices, on financial assets and liabilities will affect the
Group's results. They relate to price risk on fair value through profit or
loss trading investments and are subject to ongoing monitoring.
Fair value of financial instruments
The fair values of the Group's financial assets and liabilities are not
materially different from their carrying values as they are valued at their
realisable values. The Group's financial assets that are classed as current
asset and non-current asset investments (fair value through profit or loss)
have been revalued at 31 March 2023 using closing market prices.
A 10% fall in the value of trading financial instruments would, in isolation,
result in a pre-tax decrease to net assets of £127,600 (2022: £164,700). A
10% rise would have an equal and opposite effect.
The impact of foreign exchange and interest rate risk is not material and is
therefore not presented.
26. Trade and other payables
2023 2022
£'000 £'000
Amounts owed to clients, brokers and recognised stock exchanges 28,012 42,325
Other creditors 4,028 2,537
Contract liability 9 14
Accrued expenses 4,800 4,749
36,849 49,625
Trade creditors and accruals comprise amounts outstanding for
investment-related transactions, to customers or counterparties, and ongoing
costs. The average credit period taken for purchases in relation to costs is
11 days (2022: 15 days). The Directors consider that the carrying amount of
trade payables approximates to their fair value.
27. Provisions
Provisions included in other current liabilities and long-term liabilities are
made up as follows:
Professional Client Dilapidations Stamp Duty liability and related costs
fees payments £'000 £'000 Total
£'000 £'000 £'000
Provisions falling due within one year
At 1 April 2020 - 178 - 472 * 650
Additions - 55 - 157 * 212
Utilisation of provisions - (28) - - (28)
At 1 April 2021 - 205 - 629 834
Additions 595 650 16 118 * 1,379
Dilapidation provision transferred from more than one year - - 16 - 16
Utilisation of provisions (140) (205) - - (345)
At 1 April 2022 455 650 32 747 1,884
Additions - 96 - 131 227
Reclassification to trade and other payables (90) (746) - - (836)
Release of provisions (20) (20)
Utilisation of provisions (345) - (32) - (377)
- - - 878 878
Provisions falling due after one year
At 1 April 2020 - - 659 - 659
Additions - - 16 - 16
At 1 April 2021 - - 675 - 675
Dilapidation provision transferred to less than one year - - (16) - (16)
Utilisation of provisions - - (77) - (77)
Interest - - 4 - 4
At 1 April 2022 - - 586 - 586
Additions - - 61 - 61
Dilapidation provision transferred to less than one year - - - - -
Utilisation of provisions - - - - -
Interest - - 5 - 5
- - 652 - 652
Total as at 31 March 2023 - - 652 878 1530
The Group, based on revised estimates, made an additional provision of
£66,000 (including interest) for dilapidations in connection with acquired
leasehold premises (2022: total additional provision of £16,000). These costs
are expected to arise at the end of each respective lease.
The Group had five leased properties, all of which had contractual
dilapidation requirements. The dilapidation provisions in relation to these
leases range from net present values as at the year-end of £12,000 to
£557,000 per lease.
As explained in the Chairman's Statement and Finance Director's Report, the
Group identified a control failing which has resulted in a liability to HMRC
in respect of stamp duty reserve tax. The matter has been voluntarily
disclosed to HMRC. The scale of the matter only became apparent subsequent to
the year end and the exercise to fully quantify the liability remains ongoing.
Management have therefore estimated the liability based upon preliminary
review of historic transactions records, categorisation of transactions as
subject to stamp duty reserve tax or not and sample checks of transactions
within those categories. Assumptions have also been applied regarding
potential penalties, interest and costs to complete the exercise. Management
has sought independent professional advice in respect of these matters.
Estimation uncertainty therefore exists in respect of these assumptions and
early stage of the work, and until full sample checks are complete and
discussions concluded with HMRC. Whilst it is therefore not possible to
conclude on the exact range of estimation uncertainty error, a deterioration
in the provision of 80% has been included in the going concern and viability
stress tests pending full resolution of the matter
Provisions made at year end 31 March 2022 and adjustments in the current year
in relation to customer redress (client payments) and associated costs were
transferred to trade and other payables as the outcome of both are nearing
completion and there is certainty over the cost outlay. The customer redress
obligations were settled in full post year end.
* The restatement of the 2022 figures are explained in note 38
28. Lease liabilities
Lease liabilities Offices Computer Computer Total
£'000 software hardware £'000
£'000 £'000
At 1 April 2022 2,337 173 35 2,545
Additions 345 168 - 513
Lease reassessments - - - -
Interest 80 5 1 86
Lease payments (200) (198) (16) (414)
At 31 March 2023 2,562 148 20 2,730
Lease liabilities profile (statement of financial position) 2023 2022
£'000 £'000
Amounts due within one year 341 245
Amounts due after more than one year 2,389 2,300
2,730 2,545
Undiscounted lease maturity analysis 2023 2022
£'000 £'000
Within one year 426 340
Between one and two years 958 491
Between two and five years 1,549 2,058
Over five years - 54
Total undiscounted lease liabilities 2,933 2,943
29. Called-up share capital
2023 2022
£'000 £'000
Called-up, allotted and fully paid
43,327,328 (2021: 43,327,328) Ordinary Shares of 6(2)/(3)p each 2,888 2,888
The Group's Articles were amended in 2010 since when there has been no
authorised share capital. Shareholders have no restrictions on their holdings
except for certain investment managers who were awarded shares in the Group
soon after joining as part of the consideration for their client
relationships. These holdings cannot be sold for a period of four to six years
from commencement date.
The following movements in share capital occurred during the year:
Number of Share Share Total
shares capital premium £'000
£'000 £'000
At 1 April 2022 43,327,328 2,888 3,763 6,651
At 31 March 2023 43,327,328 2,888 3,763 6,651
The Group's capital is defined for accounting purposes as total equity. As at
31 March 2023, this totalled £21,166,000 (2022: £21,365,000 - as restated;
2021: £21,693,000 - as restated).
The Group's objectives when managing capital are to:
● safeguard the Group's ability to continue as a going concern so
that it can continue to provide returns for shareholders and benefits for
other stakeholders;
● maintain a strong capital base to support the development of the
business;
● optimise the distribution of capital across the Group's
subsidiaries, reflecting the requirements of each company;
● strive to make capital freely transferable across the Group where
possible; and
● comply with regulatory requirements at all times.
The Group has been assessed as constituting a MIFIDPRU Investment Firm group
and has been classified as a non-small non-interconnected (non-SNI) Investment
Firm group and performs an Internal Capital Adequacy and Risk Assessment
process (ICARA), which is presented to the FCA on request.
The Group's capital, for accounting purposes, is defined as the total of share
capital, share premium, retained earnings and other reserves. Total capital at
31 March 2023 was £21.2 million (2022: £21.4 million - as restated).
Regulatory capital is derived from the Group's Internal Capital Adequacy and
Risk Assessment ("ICARA"), which is a requirement of the Investment Firm
Prudential Regime ('IFPR'). The ICARA draws on the Group's risk management
process that is embedded within all areas of the Group. The Group's
objectives when managing capital are to comply with the capital requirements
set by the Financial Conduct Authority, to safeguard the Group's ability to
continue as a going concern.
Capital adequacy and the use of regulatory capital are monitored daily by the
Group's management. In addition to a variety of stress tests performed as part
of the ICARA process, and daily reporting in respect of treasury activity,
capital levels are monitored and forecast to ensure that dividends and
investment requirements are managed and appropriate buffers are held against
potential adverse business conditions.
Regulatory capital
No breaches were reported to the FCA during the financial years ended 31 March
2023 and 2022.
Treasury shares
The Group holds 750,000 of its own shares, purchased for total cash
consideration of £312,000. In line with the principles of IAS 32 these
treasury shares have been deducted from equity (note 30). No gain or loss has
been recognised in the income statement in relation to these shares.
30. Reserves
Apart from share capital and share premium, the Group holds reserves at 31
March 2023 under the following categories:
Own shares held (£312,000) (2022: (£312,000)) ● the negative balance of the Group's own shares, which have been
bought back and held in treasury.
Retained earnings £10,104,000 (2022: £10,303,000 - as restated; 2021: £10,631,000 - as ● the net cumulative earnings of the Group, which have not been
restated)
paid out as dividends, are retained to be reinvested in our core, or
developing, companies.
Other reserves £4,723,000 (2022: £4,723,000) ● the cumulative premium on the issue of shares as deferred
consideration for corporate acquisitions £4,612,000 (2022: £4,612,000) and
non-distributable reserve into which amounts are transferred following the
redemption or purchase of the Group's own shares.
31. Cash generated from operations
2023 Restated
£'000 2022
£'000
Operating profit for the year 625 208 *
Adjustments for:
Amortisation of intangibles 1,393 862
Changes in the fair value of deferred consideration - -
Net change in fair value of financial instruments at fair value through profit 575 (347)
or loss****
Share of associate after tax result - (57)
Depreciation of property, plant and equipment 331 303
Depreciation of right-of-use assets** 771 873
Decrease / (increase) in debtors*** 13,662 (915)
(Decrease) / Increase in creditors*** (13,818)* 3,290*
Net cash inflow 3,539 4,217
* The restatement of the 2022 figures is explained in note 38
** Lease liability payments associated with RoU assets
were £332,000 (2022: £1,052,000).
*** Cash outflow from working capital movement of £156,000
(2022: £2,375,000 inflow - as restated)
**** Revaluation loss/(profit) on proprietary positions.
32. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of £nil (2022: £nil)
contracted but not provided for and £nil (2022: £nil) capital commitments
authorised but not contracted for.
33. Related parties
Directors and their close family members have dealt on standard commercial
terms with the Group. The commission and fees earned by the Group included in
revenue through such dealings is as follows:
2023 2022
£'000 £'000
Commission and fees received from Directors and their close family members 20 15
Other related parties include Charles Russell Speechlys, of which Martin
Wright, Chairman, is a Partner. Charles Russell Speechlys provides certain
legal services to the Group on normal commercial terms and the amount paid and
expensed during the year (including the fees paid to the firm for Mr. Wright's
services as Director) was £280,000 (2022: £268,000).
Fees of £9,000 (2022: £30,000) were received by EnOC Technologies Ltd from
CyberQuote Pte Ltd (a company, where Hua Min Lim is a shareholder) for the
service provided on normal commercial terms.
Commission of £7,043 (2022: £4,245) was earned by the Group from Phillip
Securities (HK) Limited (a Phillip Brokerage Pte Limited company, where Hua
Min Lim is a shareholder) having dealt on standard commercial terms.
Additionally, some custody services are provided by Phillip Securities Pte Ltd
(in Singapore, where Hua Min Lim is a Director), again all on standard
commercial terms, both these items being included in revenue. Transactions
between the Group and its subsidiaries, which are related parties, have been
eliminated on consolidation and are accordingly not disclosed. Remuneration of
the Directors who are the key Management personnel of the Group is disclosed
in the table below.
2023 2022
£'000 £'000
Key management personnel compensation
Short-term employee benefits 459 458
Post-employment benefits 32 33
Share-based payment - -
491 491
34. Contingent liabilities
In 2021 a former associate brought a claim against Walker Crips Investment
Management Limited in the Employment Tribunal. A hearing of a preliminary
issue took place in 2022 and the Tribunal found in favour of the company.
The former associate appealed that decision and in 2023, whilst many of the
appeal grounds were not upheld, certain points were referred back to the
Employment Tribunal to reconsider. The company does not consider that the
claims are justified and intends to continue to defend them robustly.
From time to time, the Group receives complaints or undertakes past business
reviews, the outcomes of which remain uncertain and/or cannot be reliably
quantified based upon information available and circumstances falling outside
the Group's control. Accordingly, contingent liabilities arise, the ultimate
impact of which may also depend upon availability of recoveries under the
Group's indemnity insurance and other contractual arrangements. Other than any
cases where a financial obligation is deemed to be probable and thus provision
is made, the Directors presently consider a negative outcome to be remote. As
a result, no further disclosure has been made in these financial statements.
Provisions made remain subject to estimation uncertainty, which may result in
material variations in such estimates as matters are finalised.
35. Subsequent events
There are no material events arising after 31 March 2023, which have an impact
on these financial statements.
36. Deferred cash consideration
2023 2022
£'000 £'000
Due within one year
Amounts due to personnel under recruitment contracts/acquisition agreements 94 89
Due after one year
Amounts due to personnel under recruitment contracts/acquisition agreements 71 29
These amounts are based on fixed contractual terms and the fair value of the
liability approximates carrying value, due to the consistency of the
prevailing market rate of interest when compared to the inception of
liability.
37. Share-based payments
The Group recognised total expenses in the year of £nil (2022: £19,431)
related to equity-settled share-based payment transactions.
No award was made in the financial year and prior year award was forfeited due
to termination of employment.
Share Incentive Plan ("SIP")
Employees who have been employed for longer than three months and are subject
to PAYE are invited to join the SIP. Employees may use funds from their gross
monthly salary (being not less than £10 and not greater than £150) to
purchase ordinary shares in the Group ("Partnership Shares"). In the current
year, for every Partnership Share purchased, the employee received matching
shares at a rate of 50%. The matching option was increased to 100% on 1 April
2023 and will remain at this rate to 31 March 2024. Employees are offered an
annual opportunity to top up contributions to the maximum annual limit of
£1,800 (or 10% of salary, if lower). All shares to date awarded under this
scheme have been purchased in the market at the prevailing share price on a
monthly basis.
38. Prior period adjustments
During the year, the Group discovered errors in how it accounted for Stamp
Duty Reserve Tax ("SDRT") on certain transactions undertaken on behalf of
clients. Following the discovery of this error, the Group undertook an
investigation of the various transactions impacted by the error. This
investigation is ongoing, but based on the latest available information,
management's current estimate of the liability due and payable by the Group is
£878,000, including professional support costs. This amount also includes an
estimate of interest and penalties that HMRC may charge on any amounts due and
is net of taxation.
The error has been corrected by restating each of the affected financial
statement line items for the prior periods.
As the investigation is ongoing, there remains uncertainty surrounding both
the quantum of the liability in respect of the SDRT due, as well as the
interest and penalties that HMRC may charge.
The amounts of the error for the current year and the two preceding financial
years ending 31 March on the following bases:
Current year 2023 Prior year 2022 Prior year 2021 2020 and prior
£ £ £ £
SDRT liability to HMRC (see notes 10 and 28) 131,000 118,000 157,000 472,000
The provision arising in respect of 2022 has been accounted for as a prior
year adjustment and increases the exceptional costs as previously reported in
that year by £118,000 to £1,658,000, with a similar reduction in that year's
previously reported profit and total comprehensive income for the year to
£55,000.
The cumulative provision arising before 1st April 2020 of £472,000 has been
treated as a prior period reduction in previously reported reserves as at 31
March 2020, and together with £157,000 in 2021 and £118,000 attributable to
2022, a reduction of the previously reported reserves as at 31 March 2022 is
shown in the table below.
In the financial highlights, the restated operating loss for the year ended 31
March 2021 of £0.14 million is disclosed. This represents the previously
reported operating profit of £22,000 reduced by the estimated SDRT provision
of £157,000 relating specifically to that year.
Consolidated statement of financial position extract 2021 Change Restated 2022 Restated
£'000 £'000 2021 £'000 Change 2022
£'000 £'000 £'000
Provisions (205) (629) (834) (1,137) (747) (1,884)
Net assets 22,322 (629) 21,693 22,112 (747) 21,365
Retained earnings 11,260 (629) 10,631 11,050 (747) 10,303
Total equity 22,322 (629) 21,693 22,112 (747) 21,365
Company balance sheet
as at 31 March 2023
Note 2023 2022
£'000 £'000
Non-current assets
Investments measured at cost less impairment 42 21,907 21,757
21,907 21,757
Current assets
Trade and other receivables 43 801 758
Deferred tax asset 44 1 -
Cash and cash equivalents 95 335
897 1,093
Total assets 22,804 22,850
Current liabilities
Trade and other payables 45 (3,889) (3,407)
(3,889) (3,407)
Net current assets/(liabilities) (2,992) (2,314)
Net assets 18,915 19,443
Equity
Share capital 47 2,888 2,888
Share premium account 47 3,763 3,763
Own shares 47 (312) (312)
Retained earnings 47 7,853 8,381
Other reserves 47 4,723 4,723
Equity attributable to equity holders of the Company 18,915 19,443
As permitted by section 408 of the Companies Act 2006 the Parent Company has
elected not to present its own profit and loss account for the year. Walker
Crips Group plc reported an after-tax profit for the financial year of
£89,000 (2022: after-tax profit of £285,000).
The financial statements of Walker Crips Group plc (Company registration no.
01432059) were approved by the Board of Directors and authorised for issue on
31 July 2023.
Signed on behalf of the Board of Directors:
Sanath Dandeniya FCCA
Director
Company statement of changes in equity
year ended 31 March 2023
Called up Share Own Other Retained Total
share premium shares £'000 earnings equity
capital account held £'000 £'000
£'000 £'000 £'000
Equity as at 31 March 2021 2,888 3,763 (312) 4,723 8,479 19,541
Total comprehensive income for the period - - - - 285 285
Contributions by and distributions to owners
Dividends paid - - - - (383) (383)
Total contributions by and distributions to owners - - - - (383) (383)
Equity as at 31 March 2022 2,888 3,763 (312) 4,723 8,381 19,443
Total comprehensive income for the period - - - - 89 89
Contributions by and distributions to owners
Dividends paid - - - - (617) (617)
Total contributions by and distributions to owners - - - - (617) (617)
Equity as at 31 March 2023 2,888 3,763 (312) 4,723 7,853 18,915
The following Accounting Policies and Notes form part of these financial
statements.
Notes to the Company accounts
year ended 31 March 2023
39. Significant accounting policies
The separate financial statements of Walker Crips Group plc, the Parent
Company, are presented as required by the Companies Act 2006.
The financial statements have been prepared under the historical cost
convention except for the modification to a fair value basis for certain
financial instruments as specified in the accounting policies below, and in
accordance with Financial Reporting Standard (FRS 102), the Financial
Reporting Standard applicable in the UK and the Republic of Ireland, and the
Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires
the use of certain critical accounting estimates. It also requires Management
to exercise judgement in applying the Parent Company's accounting policies
(see note 40).
The financial statements are presented in the currency of the primary
activities of the Parent Company (its functional currency). For the purpose of
the financial statements, the results and financial position are presented in
GBP Sterling (£). The principal accounting policies have been summarised
below. They have all been applied consistently throughout the year and the
preceding year.
The Parent Company has chosen to adopt the disclosure exemption in relation to
the preparation of a cash flow statement under FRS 102.
Going concern
After conducting enquiries, the Directors believe that the Parent Company has
adequate resources to continue in existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in preparing the
financial statements. The Parent Company's business activities, together with
the factors likely to affect its future development, performance and position,
have been assessed.
Property, plant and equipment
Fixtures and equipment are stated at historical cost less accumulated
depreciation and provision for any impairment. Depreciation is charged so as
to write-off the cost or valuation of assets over their estimated useful lives
using the straight-line method on the following bases:
Computer
hardware
33(1)/(3)% per annum on cost
Computer
software
between 20% and 33(1)/(3)% per annum on cost
Leasehold improvements over the
term of the lease
Furniture and equipment
33(1)/(3)% per annum on cost
The gain or loss on the disposal or retirement of an asset is determined as
the difference between the sales proceeds and the carrying amount of the asset
and is recognised in income. The residual values and estimated useful life of
items within property, plant and equipment are reviewed at least at each
financial year end. Any shortfalls in carrying value are impaired immediately
through profit or loss.
Impairment of non-financial assets
At each reporting date, the Parent Company reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (cash-generating units). If there is an
indication of possible impairment, the recoverable amount of any affected
asset (or group of related assets) is estimated and compared with its carrying
amount. If the estimated recoverable amount is lower, the carrying amount is
reduced to its estimated recoverable amount, and an impairment loss is
recognised immediately in profit or loss.
Taxation
The tax expense represents the sum of the tax currently payable and any
deferred tax.
Current tax, including UK corporation tax and foreign tax, is provided at
amounts expected to be paid or recovered using the tax rates and laws that
have been enacted or substantively enacted by the balance sheet date. Current
tax charges arising on the realisation of revaluation gains recognised in the
statement of comprehensive income are also recorded in this statement.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right
to pay less tax in the future have occurred at the balance sheet date.
A deferred tax asset is regarded as recoverable and therefore recognised only
when, on the basis of all available evidence, it can be regarded as probable
that there will be suitable taxable profits from which the future reversal of
the underlying timing differences can be deducted. Deferred tax assets and
liabilities are not discounted.
Own shares held
Own shares consist of treasury shares which are recognised at cost as a
deduction from equity shareholders' funds. Subsequent consideration received
for the sale of treasury shares is also recognised in equity with any
difference being taken to retained earnings. No gain or loss is recognised on
sale of treasury shares.
Financial instruments
Financial assets and financial liabilities are recognised in the balance sheet
when the Parent Company becomes a party to the contractual provisions of the
instrument. Section 11 of FRS 102 has been applied in classifying financial
instruments depending on the nature of the instrument held.
Revenue
Income consists of profits distribution from Barker Poland Asset Management
LLP, interest received or accrued over time and dividend income recorded when
received.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less, where appropriate,
provisions for impairment.
Debtors
Other debtors are classified as basic financial instruments and measured at
initial recognition at transaction price. Debtors are subsequently measured at
amortised cost using the effective interest rate method. A provision is
established when there is objective evidence that the Group will not be able
to collect all amounts due.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits, together
with other short-term highly liquid investments, which are readily convertible
to a known amount of cash and are subject to an insignificant risk of changes
in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the Parent
Company after deducting all of its liabilities. Equity instruments issued by
the Parent Company are recorded at the proceeds received, net of direct issue
costs.
Leases
Rentals under operating leases are charged on a straight-line basis over the
lease term even if the payments are not made on such a basis. Benefits
received as an incentive to enter into an operating lease are also spread on a
straight-line basis over the lease term.
40. Key sources of estimation uncertainty and judgements
The preparation of financial statements in conformity with generally accepted
accounting practice requires Management to make estimates and judgements that
affect the reported amounts of assets and liabilities as well as the
disclosure of contingent assets and liabilities at the balance sheet date and
the reported amounts of revenues and expenses during the reporting period.
41. Profit for the year
Profit for the financial year of £89,000 (2022: profit of £285,000) is after
an amount of £23,000 (2022: £57,000) related to the auditor's remuneration
for audit services to the Parent Company.
Particulars of employee costs (including Directors) are as shown below.
Employee costs during the year amounted to:
2023 2022
£'000 £'000
Employee costs during the year amounted to:
Wages and salaries 186 175
Social security costs 14 25
Other costs 3 -
203 200
In the current year, employee costs include the costs of the Non-Executive
Directors and a proportion of Executive Directors. The remaining Executive
Directors' employee costs are borne by Walker Crips Investment Management
Limited.
The monthly average number of staff employed during the year was:
2023 2022
Number Number
Executive Directors 2 2
Non-Executive Directors 4 4
6 6
42. Investments measured at cost less impairment
2023 2022
£'000 £'000
Subsidiary undertakings 21,907 21,757
During the year, the Company made an investment of £150,000 in Walker Crips
Financial Planning Limited, an indirect 100% owned subsidiary of the Group.
A complete list of subsidiary undertakings can be found in note 50.
43. Trade and other receivables
2023 2022
£'000 £'000
Amounts owed by Group undertakings 799 758
Prepayments and accrued income - -
Taxation and social security 2 -
801 758
A presentational change was made in this note to exclude the deferred tax
asset from this grouping and to present it in its own line on the face of the
statement of financial position.
44. Deferred taxation
2023 2022
£'000 £'000
At 1 April - 74
Use of Group Relief (29) (14)
Credit/(charge) to the income statement 30 (60)
At 31 March 1 -
Deferred tax has been provided at 25% (2022: 19%).
In the Spring Budget 2021, the Government announced that from 1 April 2023,
the UK corporation tax rate will increase from 19% to 25%. This will have a
consequential effect on the Company's future tax charge.
45. Trade and other payables
2023 2022
£'000 £'000
Accruals and deferred income 99 61
Amounts due to subsidiary undertakings 3,744 3,270
Other creditors 46 76
3,889 3,407
46. Risk management policies
Procedures and controls are in place to identify, assess and ultimately
control the financial risks faced by the Parent Company arising from its use
of financial instruments. Steps are taken to mitigate identified risks with
established and effective procedures and controls, efficient systems and the
adequate training of staff.
The Parent Company's risk appetite, along with the procedures and controls
mentioned above, are laid out in the Group's Internal capital adequacy and
risk assessment (ICARA).
The overall risk appetite for the Parent Company and for the Group as a whole
is considered by Management to be low, despite operating in a marketplace
where financial risk is inherent in the core businesses of investment
management and financial services.
The Group considers its financial risks arising from its use of financial
instruments to fall into three main categories:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
Further information on the disclosures and policies carried out by the Parent
Company and the Group is given in note 25 of the consolidated financial
statements.
(i) Credit risk
Maximum exposure to credit risk:
2023 2022
£'000 £'000
Cash 95 335
Other debtors 799 758
As at 31 March 894 1,093
The credit quality of banks holding the Company's cash at 31 March 2023 is
analysed below with reference to credit ratings awarded by Fitch.
2023 2022
£'000 £'000
A - -
A+ 95 335
AA- - -
As at 31 March 95 335
Analysis of other debtors due from financial institutions:
2023 2022
£'000 £'000
Neither past due, nor impaired 799 758
Amounts past due, but not impaired < 30 days - -
> 30 days - -
> 3 months - -
- -
(ii) Liquidity risk
The tables below analyse the Parent Company's future undiscounted cash
outflows based on the remaining period to the contractual maturity date:
2023 2022
£'000 £'000
Creditors due within one year 3,889 3,407
Creditors due after more than one year - -
As at 31 March 3,889 3,407
2023 2022
£'000 £'000
Within one year 3,889 3,407
Within two to five years - -
After more than five years - -
As at 31 March 3,889 3,407
The Company is in a net liability position, but this is primarily driven by an
intercompany creditor balance with its subsidiary. This is deemed to not
affect liquidity as the subsidiary is 100% owned and controlled by the
Company.
(iii) Market risk
Market risk is the risk that changes in market prices such as foreign exchange
rates or equity prices will affect the Group's income.
These relate to price risk breached on available-for-sale and trading
investments and closely monitored using limits to prevent significant losses.
Fair value of financial instruments
No financial instruments at fair value were held by the Parent Company in the
current or prior financial year.
47. Called-up share capital
2023 2022
£'000 £'000
Called-up, allotted and fully paid
43,327,328 (2021: 43,327,328) Ordinary Shares of 6(2)/(3)p each 2,888 2,888
No new shares were issued in the year to 31 March 2023 or the prior year.
The Parent Company holds 750,000 of its own shares, purchased for a total cash
consideration of £312,000. In line with the principles of FRS 102, section
11, these treasury shares have been deducted from equity. No gain or loss has
been recognised in the profit and loss account in relation to these shares.
The following movements in share capital occurred during the year:
Number Share Share Total
of shares capital premium £'000
£'000 £'000
At 1 April 2022 43,327,328 2,888 3,763 6,651
At 31 March 2023 43,327,328 2,888 3,763 6,651
Apart from share capital and share premium, the Parent Company holds reserves
at 31 March 2023 under the following categories:
Own shares held (£312,000) (2022: (£312,000)) ● the negative balance of the Parent Company's own shares that have
been bought back and held in treasury.
Retained earnings £7,853,000 (2022: £8,381,000) ● the net cumulative earnings of the Parent Company, which have not
paid out as dividends, retained to be reinvested in our core or new business.
Other reserves £4,723,000 (2022: £4,723,000) ● the cumulative premium on the issue of shares as deferred
consideration for corporate acquisitions £4,612,000 (2022: £4,612,000) and
non-distributable reserve into which amounts are transferred following the
redemption or purchase of the Group's own shares.
48. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of £nil (2022: £nil)
contracted but not provided for and £nil (2022: £nil) capital commitments
authorised but not contracted for.
49. Related party transactions
Key Management are those persons having authority and responsibility for
planning, controlling and directing the activities of the Parent Company and
Group. In the opinion of the Board, the Parent Company and Group's key
Management are the Directors of Walker Crips Group plc.
Total compensation to key management personnel is £491,000 (2022: £491,000).
50. Contingent liability
From time to time, the Company receives complaints or undertakes past business
reviews, the outcomes of which remain uncertain and/or cannot be reliably
quantified based upon information available and circumstances falling outside
the Company's control. Accordingly contingent liabilities arise, the ultimate
impact of which may also depend upon availability of recoveries under the
Company's indemnity insurance and other contractual arrangements. Other than
the complaints deemed to be probable, the Directors presently consider a
negative outcome to be remote or a reliable estimate of the amount of a
possible obligation cannot be made. As a result, no disclosure has been made
in these financial statements.
51. Subsequent events
There are no material events arising after 31 March 2023, which have an impact
on these financial statements.
52. Subsidiaries and associates
Principal place of business Principal activity Class and percentage of shares held
Group
Trading subsidiaries
Walker Crips Investment Management Limited(1) United Kingdom Investment management Ordinary Shares 100%
London York Fund Managers Limited(2) United Kingdom Management services Ordinary Shares 100%
Walker Crips Financial Planning Limited (formerly Walker Crips Wealth United Kingdom Financial services advice Ordinary Shares 100%
Management Limited)(2)
Ebor Trustees Limited(2) United Kingdom Pensions management Ordinary Shares 100%
EnOC Technologies Limited(1) United Kingdom Financial regulation and other software Ordinary Shares 100%
Barker Poland Asset Management LLP(1) United Kingdom Investment management Membership 100%
Non-trading subsidiaries
Walker Crips Financial Services Limited(1) United Kingdom Financial services Ordinary Shares 100%
G & E Investment Services Limited(2) United Kingdom Holding company Ordinary Shares 100%
Ebor Pensions Management Limited(2) United Kingdom Dormant company Ordinary Shares 100%
Investorlink Limited(1) United Kingdom Agency stockbroking Ordinary Shares 100%
Walker Cambria Limited(1) United Kingdom Dormant company Ordinary Shares 100%
Walker Crips Trustees Limited(1) United Kingdom Dormant company Ordinary Shares 100%
W.B. Nominees Limited(1) United Kingdom Nominee company Ordinary Shares 100%
WCWB (PEP) Nominees Limited(1) United Kingdom Nominee company Ordinary Shares 100%
WCWB (ISA) Nominees Limited(1) United Kingdom Nominee company Ordinary Shares 100%
WCWB Nominees Limited(1) United Kingdom Nominee company Ordinary Shares 100%
Walker Crips Consultants Limited(1) United Kingdom Dormant company Ordinary Shares 100%
Walker Crips Ventures Limited(1) United Kingdom Financial services advice Ordinary Shares 100%
The registered office for companies and associated undertakings is:
1 Old Change House, 128 Queen Victoria Street, London, England, EC4V 4BJ.
2 Apollo House, Eboracum Way, York, England, YO31 7RE.
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