TIDMWCW
RNS Number : 3671J
Walker Crips Group plc
20 August 2021
20 August 2021
Walker Crips Group plc
("Walker Crips", the "Company" or the "Group")
Final results for the year ended 31 March 2021
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 2021.
Financial Highlights
Resilience and agility through a challenging year where revenue
and operating profits have been adversely impacted by the low Bank
of England base rates, partially mitigated by higher trading
commissions and business performance, including cost-cutting
initiatives.
-- Total revenues GBP30.3 million (2020: GBP31.4 million).
-- Operating profit GBP22,000 (2020: GBP1,092,000), being
GBP441,000 (2020: GBP717,000) when adjusted for exceptional
items*.
-- Loss before tax GBP114,000 (2020: profit before tax
GBP963,000), being profit before tax GBP305,000 (2020: GBP588,000)
when adjusted for exceptional items*.
-- Adjusted EBITDA GBP2.61 million (2020: GBP2.78 million)**.
-- Underlying cash generated from operations GBP1.08 million (2020: GBP1.85 million)***.
-- Cash and cash equivalents GBP8.86 million (2020: GBP8.61 million).
-- Assets Under Management ("AUM") returned to pre-pandemic
levels, with an increase of 22.2% to GBP3.4 billion from March 2020
(2020: GBP2.8 billion).
-- Proposed final dividend of 0.60 pence per share (2020: nil),
bringing the total dividends for the year to 0.75 pence per share
(2020: 0.60 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 on an IFRS basis. The
Directors present this result as it is a metric widely used by
stakeholders when considering an entity's financial performance. A
full reconciliation is provided in the Finance Director's
Report.
*** Underlying cash generated from operations shows the cash
generated from operations adjusted for lease liability payments
under IFRS 16 and non-cyclical working capital movements. The
Directors consider that this metric helps readers understand the
cash generating performance of the Group. A full reconciliation to
IFRS results is presented in the Finance Director's review..
For further information, please contact:
Walker Crips Group plc Tel: +44 (0)20 3100 8000
Craig Harrison, Media Relations
Four Communications Tel: +44 (0)20 3697 4200
Mark Knight
walkercrips@fourcommunications.com
Singer Capital Markets Tel: +44 (0)20 7496 3000
Will Goode / George Tzimas
Further information on Walker Crips Group is available on the
Company's website: www.walkercrips.co.uk
Chairman's statement
Confident in our continued success
As we publish this report and accounts, we are emerging from
what we all hope will be a once in a lifetime global event. Your
Group has responded strongly to the COVID-19 pandemic and has made
substantial progress in the second half of the year. Whilst I am
disappointed that this did not return the Group to profit for the
full year, substantial progress has been made and I am able to
report that the Group, led by its senior management team, has
embarked on a programme of change to improve operating margins that
will involve increasing revenue generators, streamlining operating
entities and further developing our SaaS services.
Overview of 2020/2021
I was hardly expecting that my first year as Chairman of your
Company would see the world taken into such tumultuous actual and
economic turmoil. Like most businesses, we approached the pandemic
with trepidation and considerable fear of the unknown. However, I
am much relieved to report that we have come through the ordeal
better than I and the Board had, at least at the outset, feared
might be the case.
The onset of the COVID-19 pandemic in the first quarter of the
year, and the subsequent renewal of rigorous lockdowns during the
final quarter, took all businesses into uncharted waters. However,
we reacted rapidly and decisively to the situation. With its robust
IT infrastructure, the Group moved to remote working with relative
ease on 12 March 2020, eleven days before the national lockdown
commenced, providing continuity of service for our clients and
safety and protection for our staff. An immediate review of all
costs and business units was undertaken with a view to finding
efficiencies and savings. Supply contracts were renegotiated and
Management implemented an intensive de-papering exercise. The
Directors across all entities took a voluntary temporary salary
reduction of 20% in the first three months of the financial year.
Employee numbers and certain expense categories were reduced in
anticipation of hard times ahead, the result of which was a net
reduction in operating costs of approximately GBP525,000 for the
year. We placed various staff temporarily on furlough, at full
salary, with most subsequently being restored to full employment.
Once we had assessed the financial impact of the pandemic on the
Group, all Government support received was repaid to HMRC.
Crucially, notwithstanding the lockdown, the Group continued to
operate the business fully across its divisions, while of course
following all Government advice.
In the context of the most uncertain operating conditions for
more than a decade, the Group is reporting a loss before tax of
GBP114,000 for the full year. Notwithstanding the overall loss, the
full year achievement is still an improvement on the loss of
GBP451,000 reported in the Interim Results, reflecting the
turnaround in the second half of the year as markets improved and
the benefits of cost initiatives came through.
The operating profit for the year of GBP22,000 fell well short
of last year's profit of GBP1,092,000, but, given the substantial
impact of the cut in Bank of England base rates (resulting in a
year on year reduction of revenue and profits of some GBP1.4m), as
well as the negative impact of the pandemic on certain business
units, the consolidated result masks a resilient underlying
performance in the core investment management business. Nearly all
business units gained momentum in the second half of the year, and
this has continued beyond the year-end. Executive management is
highly focused on the importance of improving the Group's operating
margins in order to alleviate our sensitivity to base rates.
Although our operating divisions all responded robustly to the
challenge of the pandemic, in some cases market conditions could
not be overridden. This was unfortunately the case with the Walker
Crips Structured Investments ("WCSI") division, where the double
impact of lower interest rates and a decline in dividends paid by
UK companies contributed to the unfavourable environment for
pricing this sector has experienced.
We were disappointed that several advisers from the Wealth
Management division decided to leave us in September 2020 to set up
business independently. The executive team have responded with a
drive for recruitment and rejuvenation, which continues apace with
the hiring of new advisers and the acquisition of a client book
with funds under management. We welcome our new arrivals and look
forward to integrating them into the restrengthened team.
The Group believes that continued investment in technology is
crucial to providing innovative and effective services to our
clients, investment managers and staff. EnOC Technologies Limited's
project to commercialise our technology remains a key limb of our
growth plan.
Strategy
We remain confident in the three-pronged strategy of growing our
core business, seeking opportunities in our alternative business
activities and commercialising our technological capabilities.
The pandemic demonstrated the resilience of the core investment
management business, though this has been significantly offset by
the impact of the cut in base rates. The Wealth Management business
has rebounded from adviser and client losses during the year with a
new, aggressive recruitment strategy. Our alternative business
activities provide diversification and growth opportunities, and
the Group's seamless transition to working from home more than
justified our focus on technology.
Dividend
Our aim is always to reward shareholders for their continued
support, and the Board did not take the decision, in March 2020, to
withdraw the final dividend lightly. Given the greater visibility
on the impact of the pandemic and the improvement in operating
performance as the year went on, an interim dividend of 0.15 pence
per share was paid. In that light, having taken into account the
Group's plans for more profitable growth and for improved operating
margins, capital headroom, market outlook and short-term and
long-term cash flow considerations, the Board will recommend for
shareholders' approval at the forthcoming AGM for a final dividend
of 0.60 pence per share (2020: zero) payable on 01 October 2021 to
those shareholders on the register at the close of business on 17
September 2021, with an ex-dividend date of 16 September 2021.
Our Community
We believe that in challenging times, it is important that we
continue to support our chosen charities. In addition to financial
support, we try to do more by using our technology for good,
engaging in technology philanthropy, and using technology as a
catalyst to boost the efforts of those charities, working with them
to design, deploy and maintain those systems.
Our partner charity, www.twiningenterprise.org.uk, has a mission
to combat mental health stigma and to assist people who are
struggling with mental health issues around work. Their goal is to
ensure that everyone with a mental health issue can find employment
and cope with the challenges of working life, to support employers
and raise awareness around mental health in general and to reduce
stigma and discrimination. This is a mission whose work is crucial,
as has been highlighted during this pandemic. We urge you to join
us by signing on to support Twining in their mission, staying
informed of their latest news and activities, and support them
financially by going to www.enoc.pro/community.
Directors, Account Executives and Staff
This is my first Chairman's annual statement. As I noted, I will
happily admit that, whilst I take no pleasure from reporting a
loss, I am relieved that the impact of the unprecedented situation
has not been more severe. I and my colleagues have been impressed
by and proud of the manner in which the team as a whole across the
Group have responded. Specifically, 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 during this
exceptional period of global turmoil. One can only hope that this
is and has been a once in a lifetime experience.
Outlook
Overall, the story this year has been an underlying resilience
shown by the Group, in its management and performance, which bodes
well for the future. The headline numbers do not do justice to the
positive momentum that is developing in several of the operating
divisions and I congratulate our staff and our investment managers
for making this possible. I and the Board remain excited about the
Group's prospects.
M. J. Wright
Chairman
20 August 2021
CEO's statement
Innovating and adapting during challenging times
Our three-pronged strategy continues to give direction to the
Group, whilst the world and the financial markets look to recover
from the pandemic.
Reflection
Before I report on the Group's performance, I wish to highlight
the continuing tragedy of the pandemic and remember our fellow
citizens who lost their lives to it. Many have lost family and
friends, and we send our heartfelt condolences, recognising that in
all the analyses of financial impact, above all it is the human
cost that is hardest to bear. I am proud of how our workforce
responded to this crisis, how we kept the Group functioning
normally, and how we continued to engage with our clients, ensuring
that they did not suffer any interruption in quality of service
during a very difficult period. Everyone played their part,
demonstrated patience and tenacity, and got on with the business at
hand.
Turning now to the Group's performance over the past year,
considering where we stood and the uncertainty that we all faced
twelve months ago, I am pleased with the outcome for the year
ending 31 March 2021. More details of financial performance are
provided in the Group Finance Director's Report.
The Investment Management division has had a good year
considering the reduction in interest income left us with a
significant revenue gap of GBP1.4 million to recover from new
initiatives and other existing areas. We have been adjusting and
organising our firm, putting it on a firmer footing, reviewing all
areas of our business and improving operating margins and
profitability, so that the business is less sensitive in the future
to the dual risk of a simultaneous fall in asset values and a
decline in interest receivable. We remain focussed on this effort,
improving the revenue-growth capability of existing businesses,
generating greater profitability from revenue-growth opportunities,
while improving control, and the reduction, of our cost-base.
The Wealth Management division has been pursuing a controlled
aggressive growth strategy. We are pleased to have a number of
highly experienced financial planners recently join us, deepening
our product knowledge and expanding our service offering,
complementing our existing team so that we can better serve our
clients together. We are also looking forward to the opening of our
new branch in Southampton in late summer.
Our growth plans for the Structured Investments division were
delayed by the extreme market conditions for product pricing
referred to in the Chairman's Statement. However, some normality
has since returned to pricing conditions and the competitive
pressures of the last year have prompted a shake-up in the
industry. Having withstood the pressures of the past year, we
believe that we are well placed to capitalise on increased activity
and resume our growth path.
We are also developing plans to simplify the Group through the
consolidation of the number of regulated entities and streamlining
the management structure.
Our technology company, EnOC Technologies, was launched in
December 2019 with the Senior Managers & Certification Regime
("SM&CR") system. Since then, EnOC has reached out far beyond
the boundaries of the Group, collaborating with counterparties in
Singapore and Malaysia on technology initiatives. The Group has
also embarked on our vision to 'simplify and digitise', using the
EnOC Pro Platform to create technologies that will transform
processes, create greater efficiencies, reduce the use of paper,
provide better services to our clients, and reduce costs.
With the commencement of the Senior Managers & Certification
Regime, the responsibility for the assessment and approval of
'certificated individuals' transferred from the FCA to the senior
managers of FCA regulated companies. Under this Regime, our senior
managers are directly responsible for the assessment of our
'certificated individuals' as being fit and proper to carry out
their roles and functions. I am pleased with how management
embraced these new responsibilities and the robust and effective
approach now embedded in our business. A tremendous amount of work
was invested into the appraisal, review and feedback process, and
an SM&CR panel was established as the review body for
certificated individuals' fitness and propriety under SM&CR,
reporting directly into the Board.
The SM&CR appraisal, review and feedback process has been a
valuable and continuing process, informing our leadership team
regarding our corporate culture, that culture is not just reliant
on the 'tone from the top', but that it must also be evidenced with
'music from the sides'.
The world has irreversibly changed, over the past eighteen
months, the way we work, communicate, engage, trade, teach and
learn. Our ability as individuals and collectively as a people to
adapt, learn and change was crucial. As a species, we probably
adopted more technology in one year, than we would have done in ten
regular years. Our Group must continue to adapt and innovate, and
our dependence on technology will only increase. We will continue
to prioritise and invest in developing our own technology, continue
to create and innovate for ourselves and our clients.
As a Group, we continue to support www.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 enoc.pro/community.
I wish to add to the words of our Chairman, my personal thanks
to our staff and investment managers for their unwavering
commitment to our clients, and to our leadership team for their
dedication, advice and candour. And I thank our shareholders for
their patience and continued support.
As I conclude, I wish to reiterate our mission; to make
investment rewarding for our clients, our shareholders and our
staff and giving our customers a fair deal. We support our
investment managers and our staff by being a technology-driven
financial services company.
S. K. W. Lam
Chief Executive Officer
20 August 2021
Chief Investment Officer's analysis
Managing change at warp speed
With government and regulatory interventions worldwide,
economies and, in turn, financial markets, have shown resilience to
recover to near-pre-pandemic levels.
Big Government is Here to Stay
Having extended and enlarged former President Trump's stimulus
programmes, President Biden is cementing the government's position
as the driving force behind the economy, something which was
necessitated by the pandemic but is increasingly becoming the norm
around the world. Collectively, US stimulus programmes have already
exceeded $5 trillion in spending, equivalent to about 23% of GDP.
These included a total of $3,200 in direct payments given to most
US citizens. Further infrastructure and stimulus programmes on a
similar scale are still being debated in Congress. The
"NextGenerationEU" recovery fund is not quite on the same scale
but, at EUR750 billion, it would still represent about 7% of this
year's GDP. We also know, from the British government's own
estimates, that government borrowing this year is likely to reach
10% of GDP, following on from last year's post-second world war
record of 14.5%.
This represents a major departure in fiscal policy for much of
the western world, and has been made possible by the confluence of
several monetary, economic and political trends. For a start,
central banks have spent the past decade proving to politicians
that they can suppress government borrowing costs by purchasing
mindboggling amounts of government bonds. Having been sceptical
coming out of the Credit Crunch, politicians of all stripes now
feel more assured that they have an open cheque book; the only
question is what to use it for.
The Virus Won't Go Away
What will the "return-to-normal" look like, and will it even
look normal? Not all the economic data recently has conformed to
the expectation of a booming, once-in-a-century rebound unleashed
by government spending, accumulated savings and the pent-up desire
to consume. Instead, it's been more a case of "two steps forward,
one step back".
China's economy was the first to lose some momentum, as the
central bank acted early to tighten interest rates and the cost of
financing. The Chinese government, meanwhile, reined in borrowing
by heavily-indebted local authorities to fund infrastructure
projects. The US has been a bigger surprise, with several hiccups
in the recent economic data despite March's awe-inspiring stimulus
programme. Most disappointing has been the slow pace at which the
US economy has created jobs: expectations for 1-2 million new jobs
a month were dashed early on in the year and, though recent data
has improved, the US is still short of the level needed to replace
the 10 million-or-so jobs displaced by the pandemic. It's a similar
story in the UK, where consumer spending has underwhelmed, and
business activity in both services and manufacturing has tapered
off earlier than expected.
So far, then, the reopening has turned out to be a tad
disappointing. What is to blame? It seems that the most likely
culprit is - still - the virus. Surveys in the UK suggest that many
people have yet to become comfortable visiting shops and enjoying
indoor services. A hefty proportion of people are still avoiding
crowded public places, and households are likely to remain
cautious, given the ongoing procession of variants. Old vaccines
might provide a decent level of protection against new variants,
but "decent" is still not a risk that everyone wants to run.
Markets Had a "Good" Pandemic
You can't argue with the fact that, going into the pandemic, the
value of the world's stock markets was at an all-time high of $89
trillion and, at the time of writing, they are valued at $117
trillion. The market's staying power, despite all-time high
valuations, is prompting some strategists to reassess their
investment rationales. The new thinking goes that the pandemic has
forced companies into a once-in-a-century frenzy of capital
expenditure as they retool for the post-pandemic world. As a result
of this, the post-pandemic world will be more productive, and
productivity is the magic ingredient that boosts economic growth,
allowing company profits to settle at permanently higher levels.
This will break the cycle of muted economic growth caused by ageing
populations, heavy debt burdens and a decade of corporate
under-investment.
But you don't have to argue that "this time it's different" in
order to explain asset prices - a more prosaic explanation is that
bond markets have been explicitly supported by $300 billion a month
globally in asset purchases by central banks, and that government
stimulus money has found its way into equity markets. Data on US
household net worth tells us what markets have long since figured
out: the pandemic has made the average consumer wealthier. The
poorest half of US households saw aggregate household net worth
jump by 36% during the first year of the pandemic, equivalent to an
increase of about $700 billion spread across 64 million households.
That's not far off the $850 billion the US government spent sending
stimulus checks to citizens over the same period. Wealthier
households did even better, with gains driven by the boom in house
prices and the rally in the stock market.
How did we do?
The Investment Management division adjusted rapidly to the new
working environment and was able, during the course of the year, to
largely overcome the negative impact of the initial decline in
market prices. The managers promptly contacted their clients,
despite the obstructions that the various lockdowns imposed on
communications, maintaining relationships and providing important
reassurance at a vital time. As a result, very few clients felt
compelled to exit capital markets completely despite the extreme
volatility and uncertainty.
Assisted by a regular supply of pandemic-inspired investment
ideas in the weekly Patricians meetings, managers were able to
reposition portfolios where necessary or hold on to existing
investments where there was a sufficient prospect of recovery. It
was a testament to the professionalism and competence of our
managers that they were able to overcome the twin disadvantages of
holding a relatively high proportion of UK-domiciled assets and a
bias towards dividend income across their client mandates. As a
result, I am delighted to report that our clients have generally
seen a substantial recovery in portfolio values from the lows
of last year and, in many cases, portfolio values are now above
pre-pandemic levels.
In addition, management instigated a project to track and
apportion overheads within the Investment Management division, in
fine detail, to individual business units. This has revealed a
number of areas for improvement in operating margins and various
projects have been identified that will contribute to this goal.
For example, the Investment Management division's model portfolio
service, operating under the Service First brand, was centralised
and upgraded, related commercial terms were improved and its
investment process is now managed directly by the Investment
Senate. The Service First models will also be used to spearhead the
firm's ESG product strategy.
The profitability analysis also highlighted more clearly the
elements of the Investment Management cost-base that will require
Management action if operating margins are to improve materially.
In particular, the recruitment of investment managers in the future
will involve more focused due diligence and evaluation with regard
to business models, associated regulatory risks, likely overhead
usage and the potential for future organic revenue growth. The
challenge is all the more acute because, across the industry,
recruitment opportunities have grown scarcer with employers
increasing the length of notice periods and using more restrictive
covenants to prevent departures.
Some base level of regulatory flux is becoming the norm for the
financial services industry, and attention within the industry is
now firmly focused on the impact of Environment, Social and
Governance (ESG) regulations on advisory and investment processes.
Prior to the UK's departure from the EU, the EU had proposed
changes to the MiFID II suitability rules to ensure that investors'
ESG preferences would be taken into consideration. These rules
require providers of investment management services to measure
clients' ESG preferences and take them into account within the
advisory and investment process. Complications and risks arise due
to the low levels of ESG related data on investments presently
available, and a lack of standardisation in the approaches used to
rate ESG considerations.
Chris Darbyshire
Chief Investment Officer
20 August 2021
Finance Director's review
Resilience and agility through a challenging year
The strength of our underlying business model shone through
amidst a challenging year for our revenues.
Financial performance
The reduction of interest rates meant coming into the year we
knew our operating revenues would be depleted significantly. In the
event, the year on year interest reduction was GBP1.4 million
(2021: GBP0.9 million vs 2020: GBP2.3 million), which had a direct
GBP for GBP impact on our reported revenue, operating profit and
cash generation. In light of this, the business and financial focus
has been revenue generation, cost reduction and cash management. So
how did we perform? Taking each in turn:
Total revenue
Total revenue reduced by 3.5% to GBP30.3 million (2020: GBP31.4
million), but excluding the interest impact, it rose by 1.0% or
GBP0.3 million. The increase came from strong performances in our
trading and arbitrage activities. Commission income from trading
increased by 11% to GBP9 million and the arbitrage desk, including
recovery of the mark to market losses reported last year, delivered
a 250% increase in gross income to GBP1 million. Management fee
income, being a factor of market values, was 2.2% down from last
year, or GBP0.4 million, but it is encouraging to see levels
returning to pre-pandemic heights in the last quarter and
continuing in the first quarter of the new financial year. A major
disappointment was our structured investments activity, which
experienced a difficult year and ended 39% down (GBP0.7 million)
from last year. Revenues from our investor immigration business
also reduced by GBP0.1 million, reflecting the pandemic's
curtailment of international travel and migration.
Overall, with increased trading commissions, reduction in
interest turn and the market driven downturn in fee revenue, the
mix between broking and non-broking income saw a shift towards
broking income in the year. It accounted for 29.7% (2020: 25.7%) in
the year.
Cost reduction
Administrative expenses, excluding exceptional items, reduced by
GBP652,000 (as noted in the Chairman's statement, GBP525,000 of
this was as a direct result of Management led cost reduction
measures), or 3.1%, during the year, notwithstanding a significant
year on year increase in regulatory costs of GBP233,000. The cost
reductions principally reflect prompt actions taken to mitigate the
impact of the pandemic. These included Directors' voluntary pay
reductions, reduced salaries following redundancies, placing
discretionary staff recruitment and capital expenditure on hold; an
intense de-papering programme to streamline and further digitise
client and staff communications and the renegotiation of a number
of supplier contracts.
The Group also benefited from lower consumption of staff related
expenses such as travel and subsistence during the lockdown with
most staff working from home. Although the Group initially took
advantage of Government support, as performance improved during the
period all amounts received were repaid in full in the year.
Cash management
The Group's treasury team maintained tight focus on and
management of cash throughout the year, with cash inflow from
operations being GBP1.8million. Underlying cash generated from
operations, principally reflecting the impact of lease liability
payments, non-cyclical working capital movements and exceptional
items (see reconciliation below), was GBP1.08 million (2020:
GBP1.85 million) demonstrating the Group remained strongly cash
positive after satisfying lease liability obligations. After
deducting cash deployed in investing activities and dividends paid,
cash and cash equivalents increased to GBP8.86 million at year-end
(2020: GBP8.61 million).
Financial result and alternative performance measures
The Group's operating profit and loss before tax for the year of
GBP22,000 and GBP114,000, respectively (2020: operating profit and
profit before tax of GBP1,092,000 and GBP963,000, respectively) are
disappointing, but reflect a recovery in the second half of the
year when compared to the operating loss before tax of GBP451,000
in the first half. The annual results include exceptional charges
of GBP419,000 (2020: exceptional income of GBP375,000), reflecting
the drivers of income and costs explained above. Adjusting for
exceptional items (see reconciliation below and further detail in
note 10), the Group's operating profit and profit before tax for
the year are GBP441,000 and GBP305,000, respectively (2020:
GBP717,000 and GBP588,000, respectively) and reflect the resilience
of the Group's core business within the context of a most
challenging year.
The Group's adjusted EBITDA (being EBITDA adjusted for
exceptional items - see reconciliation below) is GBP2.61 million
(2020: GBP2.78 million), which again demonstrates a sound
performance in view of the significant impact of reduced base rates
on the results.
I mentioned earlier that it has been pleasing to see an
improvement in management fee income as markets have recovered.
Total Assets Under Management and Administration ("AUMA") averaged
GBP4.9 billion during the year, compared with GBP5.0 billion in the
previous year, affected by the collapse in equity markets in March
2020 due to the onset of the global pandemic. Discretionary and
Advisory Assets Under Management were similarly impacted by the
market decline, though recovered by end of the year to GBP3.4
billion (2020: GBP2.8 billion). Total AUMA is up 24% from March
2020 levels to GBP5.4 billion (2020: GBP4.3 billion).
Reconciliation of operating profit to operating profit before
exceptional items
2021 2020
GBP'000 GBP'000
--------------------------------------------------- --------- ---------
Operating profit 22 1,092
Exceptional items (note 10) 419 (375)
--------------------------------------------------- --------- ---------
Operating profit before tax and exceptional items 441 717
--------------------------------------------------- --------- ---------
Reconciliation of (loss)/profit before tax to profit before tax
and exceptional items
2021 2020
GBP'000 GBP'000
----------------------------------------- --------- ---------
(Loss)/profit before tax (114) 963
Exceptional items (note 10) 419 (375)
----------------------------------------- --------- ---------
Profit before tax and exceptional items 305 588
----------------------------------------- --------- ---------
Adjusted EBITDA
2021 2020
GBP'000 GBP'000
--------------------------------------------------- --------- ---------
Operating profit 22 1,092
Exceptional items (note 10) 419 (375)
Amortisation / depreciation (note 31) 1,212 1,199
Right-of-use assets depreciation charge (note 31) 961 867
--------------------------------------------------- --------- ---------
Adjusted EBITDA 2,614 2,783
--------------------------------------------------- --------- ---------
Underlying cash generated by the Group
2021 2020
GBP'000 GBP'000
----------------------------------------- --------- ---------
Net cash inflow from operations 1,806 3,483
Working capital (8) (160)
Lease liability payments under IFRS 16 (1,133) (1,101)
Exceptional items (note 10) 419 (375)
----------------------------------------- --------- ---------
Underlying cash generated in the period 1,084 1,847
----------------------------------------- --------- ---------
Divisional performance
The Investment Management division delivered an operating profit
of GBP1.3 million for the year, compared to GBP2.0 million in the
previous year. As noted in the context of the Group's results, this
reflects the significant reduction in interest receivable on
managed deposits, lower income from the structured products
business where the double impact of lower interest rates and a
decline in dividends paid by UK companies contributed to the worst
environment for pricing the sector has seen, and lower management
fee income, mitigated by strong performances in trading commissions
and the arbitrage desk activities.
Looking forward, management is not planning for any reversal in
base rate reductions and therefore remains focused on initiatives
to improve the division's operating margins. Also the prospects for
the structured investments business have improved as competitors
exit this sector together with recent improvement in pricing
conditions. Moreover, the structured investments team was
strengthened before the onset of the pandemic and is positioned to
exploit future opportunities.
The Wealth Management division's progress was hindered by market
conditions and departures of underperforming teams, resulting in
the division reporting an operating loss of GBP127,000 (2020:
operating profit GBP42,000) on revenues of GBP1.6 million (2020:
GBP1.9 million). However, its rejuvenation continues apace with the
hiring of new advisers and the acquisition of a client book with
funds under management and we anticipate continued growth and
improved results in the coming year.
EnOC Technologies Limited ("EnOC") reported an operating loss of
GBP127,000 (2020: GBP29,000) as it continues to invest in its
capabilities and future prospects. Its technology underpins the
Group's delivery platforms whilst it also focuses on external
market opportunities.
Capital resources, liquidity and regulatory capital
The Group's capital structure, comprising solely of equity
capital, provides a stable platform to support growth. At year end,
net assets are GBP22.3 million (2020: GBP22.6 million), reflecting
a small net reduction due to the reported loss after tax and
dividends paid. Liquidity remains strong with cash and cash
equivalents increasing over the year to GBP8.9 million and
testimony to the Group's overall resilience and the early measures
taken to address the pandemic. Regulatory capital at year end,
including audited reserves for the year, is GBP11.738 million
(2020: 11.943 million), comfortably in excess of the Group's
capital requirements as shown in the tables below. The finance team
has also planned for the introduction of the new prudential
regulatory regime.
Regulatory own funds and own funds requirement
Own funds
2021 2020
GBP'000 GBP'000
--------------------------------- --------- ---------
Share capital and share premium 6,651 6,651
Retained earnings 11,260 11,582
Other reserves 4,723 4,723
Less:
Own shares held (312) (312)
Regulatory Adjustments (10,584) (10,701)
--------------------------------- --------- ---------
Total own funds 11,738 11,943
--------------------------------- --------- ---------
Own funds requirement
2021 2020
GBP'000 GBP'000
------------------------------ --------- ---------
Credit risk requirement 1,639 1,490
Market risk requirement 598 387
Operational risk requirement 3,145 3,144
------------------------------ --------- ---------
Total own funds requirement 5,382 5,021
------------------------------ --------- ---------
Regulatory capital surplus 6,356 6,922
------------------------------ --------- ---------
Cover on own funds as a % 218.1% 237.9%
------------------------------ --------- ---------
Dividends
The pandemic has not been without its challenges and the Group
has made an overall loss for the year. However, in view of the
second half performance, strong capital and liquidity position,
balanced reward to our people and confident financial outlook, it
is right to reward our shareholders for their support. I fully
support the Board's recommendation to pay a final dividend of 0.60
pence per share on 1 October 2021 for those members on the
shareholders' register on 17 September 2021. Including the interim
dividend of 0.15 pence per share (2020: 0.60 pence per share), the
total dividend for the year is 0.75 pence per share (2020: 0.60
pence per share).
Sanath Dandeniya
Finance Director
20 August 2021
Consolidated income statement
year ended 31 March 2021
2021 2020
Note GBP'000 GBP'000
------------------------------------------ ----- ---------- ----------
Revenue 5 30,348 31,422
Commissions and fees paid 7 (9,702) (9,771)
Share of associate/joint venture after
tax profit/(loss) 8 66 (11)
------------------------------------------ ----- ---------- ----------
Gross profit 20,712 21,640
Administrative expenses 9 (20,271) (20,923)
Exceptional items 10 (419) 375
------------------------------------------ ----- ---------- ----------
Operating profit 22 1,092
Investment revenue 11 10 76
Finance costs 12 (146) (205)
------------------------------------------ ----- ---------- ----------
(Loss)/profit before tax (114) 963
Taxation 14 (144) (245)
------------------------------------------ ----- ---------- ----------
(Loss)/profit for the year attributable
to equity holders of the Parent Company (258) 718
------------------------------------------ ----- ---------- ----------
(Loss)/earnings per share
------------------------------------------ ----- ---------- ----------
Basic and diluted 16 (0.61)p 1.69p
------------------------------------------ ----- ---------- ----------
Consolidated statement of comprehensive income
year ended 31 March 2021
2021 2020
GBP'000 GBP'000
------------------------------------------------------- --------- --------
(Loss)/profit for the year (258) 718
------------------------------------------------------- --------- --------
Total comprehensive (loss)/income for the year
attributable to equity holders of the Parent Company (258) 718
------------------------------------------------------- --------- --------
Consolidated statement of financial position
as at 31 March 2021
Group Group
2021 2020
Note GBP'000 GBP'000
----------------------------------------- ----- ---------- ----------
Non-current assets
Goodwill 17 4,388 4,388
Other intangible assets 18 6,566 6,701
Property, plant and equipment 19 1,477 2,330
Right-of-use asset 20 3,612 4,362
Investment in associate/joint venture 8 2 -
Investments - fair value through profit
or loss 21 37 51
----------------------------------------- ----- ---------- ----------
16,082 17,832
----------------------------------------- ----- ---------- ----------
Current assets
Trade and other receivables 22 49,098 24,515
Investments - fair value through profit
or loss 21 920 638
Cash and cash equivalents 23 8,855 8,609
----------------------------------------- ----- ---------- ----------
58,873 33,762
----------------------------------------- ----- ---------- ----------
Total assets 74,955 51,594
----------------------------------------- ----- ---------- ----------
Current liabilities
Trade and other payables 26 (47,395) (22,750)
Current tax liabilities (123) (424)
Deferred tax liabilities 24 (400) (335)
Provisions 27 (205) (178)
Lease liabilities 28 (946) (969)
----------------------------------------- ----- ---------- ----------
(49,069) (24,656)
----------------------------------------- ----- ---------- ----------
Net current assets 9,804 9,106
----------------------------------------- ----- ---------- ----------
Long-term liabilities
Deferred cash consideration 36 (33) (15)
Lease liabilities 28 (2,856) (3,620)
Dilapidation provision 27 (675) (659)
----------------------------------------- ----- ---------- ----------
(3,564) (4,294)
----------------------------------------- ----- ---------- ----------
Net assets 22,322 22,644
----------------------------------------- ----- ---------- ----------
Equity
Share capital 29 2,888 2,888
Share premium account 29 3,763 3,763
Own shares 30 (312) (312)
Retained earnings 30 11,260 11,582
Other reserves 30 4,723 4,723
----------------------------------------- ----- ---------- ----------
Equity attributable to equity holders
of the Parent Company 22,322 22,644
----------------------------------------- ----- ---------- ----------
The financial statements of Walker Crips Group plc (Company
registration no: 01432059) were approved by the Board of Directors
and authorised for issue on 20 August 2021.
Signed on behalf of the Board of Directors
S Dandeniya FCCA
Director
20 August 2021
Consolidated statement of cash flows
year ended 31 March 2021
2021 2020
Note GBP'000 GBP'000
Operating activities
Cash generated from operations 31 1,806 3,483
Tax (paid)/received (379) 18
------------------------------------------------- ----- -------- ---------
Net cash generated from operating activities 1,427 3,501
------------------------------------------------- ----- -------- ---------
Investing activities
Purchase of property, plant and equipment (24) (321)
Sale of investments held for trading 78 101
Consideration paid on acquisition of client
lists (100) (21)
Consideration paid on acquisition of subsidiary - (1)
Dividends received 11 8 17
Dividends received from associate investment 8 64 -
Interest received 2 48
------------------------------------------------- ----- -------- ---------
Net cash generated from/(used in) investing
activities 28 (177)
------------------------------------------------- ----- -------- ---------
Financing activities
Dividends paid (64) (396)
Interest paid (12) (7)
Repayment of lease liabilities* (999) (944)
Repayment of lease interest* (134) (157)
------------------------------------------------- ----- -------- ---------
Net cash used in financing activities (1,209) (1,504)
------------------------------------------------- ----- -------- ---------
Net increase in cash and cash equivalents 246 1,820
Net cash and cash equivalents at beginning
of period 8,609 6,789
------------------------------------------------- ----- -------- ---------
Net cash and cash equivalents at end of
period 8,855 8,609
------------------------------------------------- ----- -------- ---------
* Total repayment of lease liabilities under IFRS 16 in the
period was GBP1,133,000 (2020: 1,101,000)
Consolidated statement of changes in equity
year ended 31 March 2021
Share Own
Share premium shares Capital Retained Total
capital account held redemption Other earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ --------- --------- --------- ----------- --------- ---------- ---------
Equity as at 31 March 2019 2,888 3,763 (312) 111 4,612 10,659 21,721
------------------------------------ --------- --------- --------- ----------- --------- ---------- ---------
Comprehensive income for
the year - - - - - 718 718
------------------------------------ --------- --------- --------- ----------- --------- ---------- ---------
Effect of adoption of IFRS
16 - - - - - 601 601
------------------------------------ --------- --------- --------- ----------- --------- ---------- ---------
Total comprehensive income
for the year - - - - - 1,319 1,319
------------------------------------ --------- --------- --------- ----------- --------- ---------- ---------
Contributions by and distributions
to owners
Dividends paid - - - - - (396) (396)
------------------------------------ --------- --------- --------- ----------- --------- ---------- ---------
Total contributions by and
distributions to owners - - - - - (396) (396)
------------------------------------ --------- --------- --------- ----------- --------- ---------- ---------
Equity as at 31 March 2020 2,888 3,763 (312) 111 4,612 11,582 22,644
------------------------------------ --------- --------- --------- ----------- --------- ---------- ---------
Comprehensive loss for the
year - - - - - (258) (258)
------------------------------------ --------- --------- --------- ----------- --------- ---------- ---------
Total comprehensive loss
for the year - - - - - (258) (258)
------------------------------------ --------- --------- --------- ----------- --------- ---------- ---------
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 11,260 22,322
------------------------------------ --------- --------- --------- ----------- --------- ---------- ---------
Notes to the accounts
year ended 31 March 2021
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 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 consolidated financial statements are presented in GBP
sterling (GBP). 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.
Going concern
The financial statements of the Group have been prepared on a
going concern basis. At 31 March 2021, the Group had net assets of
GBP22.3 million (2020: GBP22.6 million), net current assets of
GBP9.8 million (2020: GBP9.1 million) and cash and cash equivalents
of GBP8.9 million (2020: GBP8.6 million). The Group reported an
operating profit of GBP22,000 for the year ended 31 March 2021
(2020: GBP1,092,000), inclusive of exceptional expense of
GBP419,000 (2020: exceptional income of GBP375,000), and net cash
inflows from operating activities of GBP1.8 million (2020: GBP3.5
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 taken into
account the following:
-- The Group's three year base case projections based on current
strategy, trading performance, expected future profitability,
liquidity, capital solvency and dividend policy.
-- 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 2021, a period of significant
uncertainty, and the projections over the next three years.
Key assumptions that the Directors have made in preparing the
base case cash flow forecasts are that:
-- Revenues reflect the impact of (i) continued low base rates
of 10 basis points on income for managing client deposits and (ii)
no further significant impact from the pandemic other than what is
already known. The base case assumption is for the FTSE 100 index
to remain at the lower 7000 range for a large part of the next 12
months. The total revenue is expected to increase by 5% next year
with fee income, helped by the recovering financial markets, and a
conservative new fee expectation from the joiners to our Wealth
team. Years two and three growth expectation set conservatively at
2%.
-- Base case costs prudently reflect only the actions Management has taken to date.
-- Expected benefits from the planned consolidation of a number
of regulated entities and streamlining the management structure not
included in the forecast at this stage.
Key stress scenarios that the Directors have considered
include:
-- A 'bear stress scenario': representing a further 10% fall in
income compared to the base case scenario in the reporting periods
ending 31 March 2022 and 31 March 2023.
-- A remote 'severe or reverse stress scenario': representing a
20% fall in commission income and 15% fall in fee income compared
to the base case for each forecast period.
-- Both stress scenarios assume no mitigating actions.
Liquidity and regulatory capital resource requirements exceed
the minimum thresholds in both the base and bear scenarios.
However, 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 September 2022. The Directors
consider this scenario to be remote in view of the prudence built
into the base case planning and that further mitigations available
to the Directors are not reflected therein. Such mitigating actions
within Management control include reduction in proprietary risk
positions, delayed capital expenditure, further reductions in
discretionary spend and additional reduction in employee headcount.
Other mitigating actions which may be possible include seeking
shareholder support, sale of assets and stronger cost
reductions.
Following the assessment of the Group's financial position and
its ability to meet its obligations as and when they fall due,
including the financial implications of the pandemic, the Directors
are not aware of any material uncertainties that cast significant
doubt on the Group's ability to continue as a going concern.
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 Positions.
The Group does not expect standards yet to be adopted by the
newly-formed and independent 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.
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
re-measurement 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/joint venture
A joint venture is a contractual arrangement whereby the Group
and other parties undertake an economic activity that is subject to
joint control; that is when the strategic financial and operating
policy decisions relating to the activities require the unanimous
consent of the parties sharing control.
The Group's share of the assets, liabilities, income and
expenses of jointly controlled entities are accounted for in the
consolidated financial statements under the equity method.
Following the acquisition of the remaining interest in the former
joint venture, JWPCreers Wealth Management Limited, which is now a
100% owned subsidiary, no assets or liabilities are classified as a
joint venture investment in these Financial Statements.
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 a 33% associate investment in Walker Crips
Property Income Limited ("WCPIL") (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 acquire and the
acquisition-date fair value of any previous equity interest in the
acquire 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 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 or when separate
payments are made to acquire clients' assets by adding teams of
investment managers.
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.
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 licenses
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 Wealth Management 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:
-- the Group's right to receive payment of dividends is established;
-- when it is probable that economic benefits associated with
the dividend will flow to the Group; and
-- the amount of the dividend can be reliably measured.
-- 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, closure or impairment of assets or businesses;
2. corporate transaction and restructuring costs;
3. changes in the fair value of contingent 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 and falls under categories
2, 3 and 4 above. The related tax effect is also quantified and
disclosed in note 14.
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
re-translated at the rates prevailing on the balance sheet date.
Exchange differences arising on the settlement of monetary items,
and on the re-translation 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. Only where 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 exactly 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 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 contacts 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.
De-recognition
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
GBP10 and not greater than GBP150) to acquire Ordinary Shares in
the Parent Company (Partnership Shares). Partnership Shares are
acquired monthly.
In response to mitigate some perceived impacts from the pandemic
on the Group, the matching option was temporarily suspended during
the twelve-month period to 31 March 2021. On 1 April 2021, the
matching option was reinstated to one-half for every Partnership
Share purchased. This arrangement will continue until 31 March
2022. 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 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
recognized 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 is
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 payment 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.
4. Key sources of estimation uncertainty and judgements
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. 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 GBP4.4 million
(2020: GBP4.4 million) as shown in note 17.
Other intangible assets - judgement
Acquired client lists are capitalised based on current fair
values. During the year, one intangible asset, a client list, was
purchased by subsidiary Walker Crips Wealth 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. The
Directors conduct a review of indicators of impairment and also
consider a life of up to twenty years to be both appropriate and in
line with peers.
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. During the year, GBP14,000 of additional
provisions were recognised, including GBP2,000 of interest, giving
a new provision at year-end of GBP675,000.
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 liabilities 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.
5. Revenue
An analysis of the Group's revenue is as follows:
2021 2020
-------- -------- -------- -------- -------- --------
Non- Non-
Broking broking Broking broking
income income Total income income Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- -------- -------- -------- -------- -------- --------
Stockbroking commission 9,009 - 9,009 8,095 - 8,095
Fees and other revenue - 19,733 19,733 - 21,468 21,468
------------------------- -------- -------- -------- -------- -------- --------
Investment Management 9,009 19,733 28,742 8,095 21,468 29,563
Wealth Management,
Financial Planning &
Pensions - 1,606 1,606 - 1,859 1,859
------------------------- -------- -------- -------- -------- -------- --------
Revenue 9,009 21,339 30,348 8,095 23,327 31,422
Investment revenue (see
note 11) - 10 10 - 76 76
------------------------- -------- -------- -------- -------- -------- --------
Total Income 9,009 21,349 30,358 8,095 23,403 31,498
------------------------- -------- -------- -------- -------- -------- --------
% of total income 29.7% 70.3% 100.0% 25.7% 74.3% 100.0%
------------------------- -------- -------- -------- -------- -------- --------
Timing of revenue recognition
The following table presents operating income analysed by the
timing of revenue recognition of the operating segment providing
the service:
Consolidated
year ended
Investment Wealth 31 March
Management Management SaaS 2021
2021 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ----------- ----------- -------- -------------
Revenue from contracts with
customers
Products and services transferred
at a point in time 10,389 161 16 10,566
Products and services transferred
over time 16,393 1,425 - 17,818
Other revenue
Products and services transferred
at a point in time 1,089 20 - 1,109
Products and services transferred
over time 855 - - 855
----------------------------------- ----------- ----------- -------- -------------
28,726 1,606 16 30,348
----------------------------------- ----------- ----------- -------- -------------
Consolidated
year ended
Investment Wealth 31 March
Management Management SaaS 2020
2020 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ----------- ----------- -------- -------------
Revenue from contracts with
customers
Products and services transferred
at a point in time 10,269 410 - 10,679
Products and services transferred
over time 16,706 1,449 1 18,156
Other revenue
Products and services transferred
at a point in time 280 - - 280
Products and services transferred
over time 2,307 - - 2,307
----------------------------------- ----------- ----------- -------- -------------
29,562 1,859 1 31,422
----------------------------------- ----------- ----------- -------- -------------
6. Segmental analysis
For segmental reporting purposes, the Group currently has three
operating segments; Investment Management, being portfolio-based
transaction execution and investment advice; Wealth Management,
being financial planning and pensions administration; and Software
as a Service ("SaaS") comprising provision of regulatory and admin
software to regulated 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 Wealth Management provides advisory and
administrative services to clients in relation to their financial
planning, life insurance, inheritance tax and pension
arrangements.
EnOC Technologies Limited ("EnOC" or "SaaS") provides the
regulatory and admin software, software as a service, to regulated
companies 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.
Consolidated
year ended
Investment Wealth 31 March
Management Management SaaS 2021
2021 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- ----------- -------- -------------
Revenue
Revenue from contracts with
customers 26,782 1,586 16 28,384
Other revenue 1,944 20 - 1,964
-------------------------------- ----------- ----------- -------- -------------
Total revenue 28,726 1,606 16 30,348
-------------------------------- ----------- ----------- -------- -------------
Results
Segment result 1,333 (127) (127) 1,079
Unallocated corporate expenses (1,057)
-------------------------------- ----------- ----------- -------- -------------
22
Investment revenue 10
Finance costs (146)
-------------------------------- ----------- ----------- -------- -------------
Loss before tax (114)
Tax (144)
-------------------------------- ----------- ----------- -------- -------------
Loss after tax (258)
-------------------------------- ----------- ----------- -------- -------------
Consolidated
year ended
Investment Wealth 31 March
Management Management SaaS 2021
2021 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ----------- ----------- -------- -------------
Other information
Capital additions 35 201 - 236
Depreciation 304 71 - 375
Statement of financial positions
Assets
Segment assets 67,297 1,138 369 68,804
Unallocated corporate assets 6,151
----------------------------------- ----------- ----------- -------- -------------
Consolidated total assets 74,955
----------------------------------- ----------- ----------- -------- -------------
Liabilities
Segment liabilities 48,486 328 10 48,824
Unallocated corporate liabilities 3,809
----------------------------------- ----------- ----------- -------- -------------
Consolidated total liabilities 52,633
----------------------------------- ----------- ----------- -------- -------------
Consolidated
year ended
Investment Wealth 31 March
Management Management SaaS 2020
2020 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- ----------- -------- -------------
Revenue
Revenue from contracts with
customers 26,975 1,859 1 28,835
Other revenue 2,587 - - 2,587
-------------------------------- ----------- ----------- -------- -------------
Total revenue 29,562 1,859 1 31,422
-------------------------------- ----------- ----------- -------- -------------
Results
Segment result 2,034 42 (29) 2,047
Unallocated corporate expenses (955)
-------------------------------- ----------- ----------- -------- -------------
1,092
Investment revenue 76
Finance costs (205)
-------------------------------- ----------- ----------- -------- -------------
Profit before tax 963
Tax (245)
-------------------------------- ----------- ----------- -------- -------------
Profit after tax 718
-------------------------------- ----------- ----------- -------- -------------
Consolidated
year ended
Investment Wealth 31 March
Management Management SaaS 2020
2020 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ----------- ----------- -------- -------------
Other information
Capital additions 444 14 109 567
Depreciation 520 70 13 603
Statement of financial positions
Assets
Segment assets 42,473 964 159 43,596
Unallocated corporate assets 7,998
----------------------------------- ----------- ----------- -------- -------------
Consolidated total assets 51,594
----------------------------------- ----------- ----------- -------- -------------
Liabilities
Segment liabilities 23,805 502 216 24,523
Unallocated corporate liabilities 4,427
----------------------------------- ----------- ----------- -------- -------------
Consolidated total liabilities 28,950
----------------------------------- ----------- ----------- -------- -------------
7. Commissions and fees paid
Commissions and fees paid comprises:
2021 2020
GBP'000 GBP'000
------------------------------------ -------- --------
To authorised external agents 63 65
To self-employed certified persons 9,639 9,706
------------------------------------ -------- --------
9,702 9,771
------------------------------------ -------- --------
8. Investment in associate/joint venture
2021 2020
GBP'000 GBP'000
---------------------------------- -------- --------
Brought forward - 44
Disposals - (33)
Share of after-tax profit/(loss) 66 (11)
---------------------------------- -------- --------
Dividends (64) -
---------------------------------- -------- --------
Carried forward 2 -
---------------------------------- -------- --------
Associate
The Group has a 33.33% (2020: 33.33%) interest in its associate,
Walker Crips Property Income Limited ("WCPIL"), a company
incorporated and operating in the United Kingdom. The brought
forward value of the Group's share of net assets in WCPIL was GBP1.
The Board of WCPIL submitted management accounts to 31 March 2021
reporting an after-tax profit of GBP198,000, giving the Group a
GBP66,000 entitlement from which a dividend of GBP64,000 was paid
to the Group in the period.
Joint venture
As reported in the 2020 Annual Report and Accounts, the Group
acquired the remaining interest in the former joint venture,
JWPCreers Wealth Management Limited, which is now a 100% owned
subsidiary and has changed its name to Walker Crips Ventures
Limited.
9. (Loss)/profit for the year
(Loss)/profit for the year on continuing operations has been
arrived at after charging:
2021 2020
GBP'000 GBP'000
---------------------------------------------------- -------- --------
Depreciation of property, plant and equipment (see
note 19) 375 590
Depreciation of right-of-use assets (see note 20) 961 867
Amortisation of intangibles (see note 18) 837 609
Staff costs (see note 13) 12,690 13,268
Recharge of staff costs (710) (581)
Settlement costs 1,148 1,049
Communications 1,195 1,474
Regulatory costs 756 523
Computer expenses 595 642
Other expenses 2,221 2,262
Auditor's remuneration 203 220
---------------------------------------------------- -------- --------
20,271 20,923
---------------------------------------------------- -------- --------
A more detailed analysis of auditor's remuneration is provided
below:
2021 2021 2020 2020
GBP'000 % GBP'000 %
----------------------------------------- -------- ----- -------- -----
Audit services
Fees payable to the Company's
auditor for the audit of its
annual accounts 57 28 60 27
The audit of the Company's subsidiaries
pursuant to legislation - current
year 133 66 145 66
Non-audit services
FCA client assets reporting 13 6 12 6
Interim review - - 3 1
----------------------------------------- -------- ----- -------- -----
203 100 220 100
----------------------------------------- -------- ----- -------- -----
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.
2021 2020
GBP'000 GBP'000
------------------------------------------------- -------- --------
Changes in fair value of deferred consideration 31 (166)
Insurance recovery of historical claim against
the Group - (209)
Reorganisation and other costs 388 -
------------------------------------------------- -------- --------
419 (375)
------------------------------------------------- -------- --------
The change in deferred consideration fair value is the impact of
revaluing, based on latest financial performance, future amounts
due in respect of acquired client relationships.
The prior year insurance recovery was a large receipt recovered
following completion of arbitration proceedings in respect of a
historic claim expensed several years before.
In the current year the Group has incurred professional fees and
other expenses relating to the actions taken in response to the
pandemic, including redundancy costs and those relating to the
Group reorganisation, and a contractual dispute.
11. Investment revenue
Investment revenue comprises:
2021 2020
GBP'000 GBP'000
---------------------------------- -------- --------
Interest on bank deposits 2 59
Dividends from equity investment 8 17
---------------------------------- -------- --------
10 76
---------------------------------- -------- --------
12. Finance costs
Finance costs comprises:
2021 2020
GBP'000 GBP'000
------------------------------------- -------- --------
Interest on lease liabilities (134) (157)
Interest on dilapidation provisions (2) (41)
Interest on overdue liabilities (10) (7)
------------------------------------- -------- --------
(146) (205)
------------------------------------- -------- --------
13. Staff costs
Particulars of employee costs (including Directors) are as shown
below:
2021 2020
GBP'000 GBP'000
------------------------ -------- --------
Wages and salaries 10,643 10,909
Social security costs 1,074 1,182
Share incentive plan 94 239
Other employment costs 879 938
------------------------ -------- --------
12,690 13,268
------------------------ -------- --------
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 40 certified
self-employed account executives (2020: 44).
The average number of staff employed during the year was:
2021 2020
Number Number
---------------------------------- ------- -------
Executive Directors 2 2
Certification and approved Staff 60 60
Other staff 150 156
---------------------------------- ------- -------
212 218
---------------------------------- ------- -------
The table incorporates the new staff classification under Senior
Managers and Certification Regime ("SM&CR").
14. Taxation
The tax charge is based on the loss/profit for the year of
continuing operations and comprises:
2021 2020
GBP'000 GBP'000
------------------------------------------------ -------- --------
UK corporation tax at 19% (2020: 19%) 96 328
Prior year adjustments 111 (16)
Origination and reversal of timing differences
during the current period (63) (67)
------------------------------------------------ -------- --------
144 245
------------------------------------------------ -------- --------
Corporation tax is calculated at 19% (2020: 19%) of the
estimated assessable profit for the year.
The charge for the year can be reconciled to the (loss)/profit
per the income statement as follows:
2021 2020
GBP'000 GBP'000
--------------------------------------------------- -------- --------
(Loss)/profit before tax (114) 963
--------------------------------------------------- -------- --------
Tax on (loss)/profit on ordinary activities at
the standard rate UK corporation tax rate of 19%
(2020: 19%) (22) 183
Effects of:
Tax rate changes for deferred tax - (15)
Expenses not deductible for tax purposes 22 7
Prior year adjustment 111 (1)
Fixed asset differences 63 74
Other (30) (3)
--------------------------------------------------- -------- --------
144 245
--------------------------------------------------- -------- --------
Current tax has been provided at the rate of 19%. A further
reduction in the rate of corporation tax to 17% was due to come
into effect from April 2020, however this planned reduction was
cancelled in March 2020 and on 17 March 2020 the 19% rate was again
substantively enacted. Deferred tax has been provided at 19% (2020:
19%).
The exceptional charge of GBP419,000 (2020: the exceptional
credit of GBP375,000), disclosed separately on the consolidated
income statement, is tax deductible to the value of GBP80,000
(2020: tax chargeable GBP71,000) 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.
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:
2021 2020
GBP'000 GBP'000
------------------------------------------------------ -------- --------
Final dividend for the year ended 31 March 2020 of
0.00p (2019: 0.33p) per share - 142
------------------------------------------------------ -------- --------
Interim dividend for the year ended 31 March 2021 of
0.15p (2020: 0.60p) per share 64 254
------------------------------------------------------ -------- --------
64 396
------------------------------------------------------ -------- --------
Proposed final dividend for the year ended 31 March
2021 of 0.60p (2020: 0.00p) per share 256 -
------------------------------------------------------ -------- --------
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. (Loss)/earnings per share
The calculation of basic (loss)/earnings per share for
continuing operations is based on the post-tax loss for the
financial year of GBP258,000 (2020: post-tax profit of GBP718,000)
and divided by 42,577,328 (2020: 42,577,328) Ordinary Shares of
62/3 pence, being the weighted average number of Ordinary Shares in
issue during the year.
No dilution to (loss)/earnings per share in the current year or
in the prior year.
The calculation of the basic (loss)/earnings per share is based
on the following data:
2021 2020
GBP'000 GBP'000
---------------------------------------------------------- -------- --------
(Loss)/earnings for the purpose of basic (loss)/earnings
per share
being net (loss)/profit attributable to equity
holders of the Parent Company (258) 718
---------------------------------------------------------- -------- --------
Number of shares
2021 2020
Number Number
------------------------------------------------ ----------- -----------
Weighted average number of Ordinary Shares for
the purposes of basic earnings per share 42,577,328 42,577,328
------------------------------------------------ ----------- -----------
This produced basic loss per share of 0.61 pence (2020: basic
earnings per share of 1.69 pence).
17. Goodwill
GBP'000
-------------------------- --------
Cost
At 1 April 2019 7,056
-------------------------- --------
At 1 April 2020 7,056
-------------------------- --------
At 31 March 2021 7,056
-------------------------- --------
Accumulated impairment
At 1 April 2019 2,668
-------------------------- --------
At 1 April 2020 2,668
Impaired during the year -
-------------------------- --------
At 31 March 2021 2,668
-------------------------- --------
Carrying amount
-------------------------- --------
At 31 March 2021 4,388
-------------------------- --------
At 31 March 2020 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:
2021 2020
GBP'000 GBP'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 to 29% for the London
York CGU value-in-use to equal the respective carrying values.
Revenues would need to fall by GBP565,000 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
GBP5.4 million (2020: GBP4.7 million) with headroom, after selling
costs, of GBP1.7 million (2020: GBP0.9 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 being directly based on
observable market data. A 30% decrease in BPAM's profit after tax
would result in potential impairment of GBP11,000.
18. Other intangible assets
Software
licences Client lists Total
GBP'000 GBP'000 GBP'000
---------------------------------------------- --------- ------------- --------
Cost
At 1 April 2019 44 10,524 10,568
Additions in the year - 48 48
---------------------------------------------- --------- ------------- --------
At 1 April 2020 44 10,572 10,616
Reclassification of software as intangibles* 2,783 - 2,783
Additions in the year 56 93 149
---------------------------------------------- --------- ------------- --------
At 31 March 2021 2,883 10,665 13,548
---------------------------------------------- --------- ------------- --------
Amortisation
At 1 April 2019 16 3,290 3,306
Charge for the year 9 600 609
---------------------------------------------- --------- ------------- --------
At 1 April 2020 25 3,890 3,915
Reclassification of software as intangibles* 2,230 - 2,230
Charge for the year 204 633 837
---------------------------------------------- --------- ------------- --------
At 31 March 2021 2,459 4,523 6,982
---------------------------------------------- --------- ------------- --------
Carrying amount
---------------------------------------------- --------- ------------- --------
At 31 March 2021 424 6,142 6,566
---------------------------------------------- --------- ------------- --------
At 31 March 2020 19 6,682 6,701
---------------------------------------------- --------- ------------- --------
* The cost and accumulated depreci4ation of software assets were
reclassified as intangible assets from property, plant and
equipment. There was no impact to the Consolidated Income Statement
in the current or prior years.
The intangible assets are amortised over their estimated useful
lives in order to determine amortisation rates. 'Client lists' are
assessed on a client-by-client basis and are amortised over periods
of three to twenty years and 'Software Licenses' are amortised over
five years. There are no indications that the value attributable to
client lists should be impaired.
19. Property, plant and equipment
Leasehold
improvements,
furniture
and Computer Computer
equipment software hardware Total
Owned fixed assets GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------------- ---------- ---------- --------
Cost
1 April 2019 2,734 2,568 1,359 6,661
Disposal of fully depreciated
assets - (58) - (58)
Additions 99 283 76 458
---------------------------------- --------------- ---------- ---------- --------
1 April 2020 2,833 2,793 1,435 7,061
Reclassification of assets* (121) (10) 126 (5)
Reclassification of software
as intangibles** - (2,783) - (2,783)
Additions 54 - 21 75
---------------------------------- --------------- ---------- ---------- --------
At 31 March 2021 2,766 - 1,582 4,348
---------------------------------- --------------- ---------- ---------- --------
Accumulated depreciation
1 April 2019 880 2,042 1,219 4,141
Reclassification of depreciation
charge on IFRS 16 reclassified
assets - (6) - (6)
Charge for the year 183 265 148 596
---------------------------------- --------------- ---------- ---------- --------
1 April 2020 1,063 2,301 1,367 4,731
Reclassification of assets* 19 (71) 47 (5)
Reclassification of software
as intangibles** - (2,230) - (2,230)
Charge for the year 298 - 77 375
---------------------------------- --------------- ---------- ---------- --------
At 31 March 2021 1,380 - 1,491 2,871
---------------------------------- --------------- ---------- ---------- --------
Carrying amount
---------------------------------- --------------- ---------- ---------- --------
At 31 March 2021 1,386 - 91 1,477
---------------------------------- --------------- ---------- ---------- --------
At 31 March 2020 1,770 492 68 2,330
---------------------------------- --------------- ---------- ---------- --------
* Adjustments were made in the 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.
** The cost and accumulated depreciation of software assets were
reclassified as intangible assets from property, plant and
equipment. There was no impact to the Consolidated Income Statement
in the current or prior years.
20. Right-of-use assets
Computer Computer
Offices software hardware Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- --------- --------- --------
Cost
1 April 2020 4,601 533 95 5,229
Additions - 211 - 211
-------------------------- -------- --------- --------- --------
At 31 March 2021 4,601 744 95 5,440
-------------------------- -------- --------- --------- --------
Accumulated depreciation
1 April 2020 660 187 20 867
Charge for the year 659 282 20 961
-------------------------- -------- --------- --------- --------
At 31 March 2021 1,319 469 40 1,828
-------------------------- -------- --------- --------- --------
Carrying amount
-------------------------- -------- --------- --------- --------
At 31 March 2021 3,282 275 55 3,612
-------------------------- -------- --------- --------- --------
At 31 March 2020 3,941 346 75 4,362
-------------------------- -------- --------- --------- --------
21. Investments - fair value through profit or loss
Non-current asset investments
Investments
at fair
value
through
profit or
loss Total
GBP'000 GBP'000
------------------------------- ------------ --------
At 31 March 2019 51 51
------------------------------- ------------ --------
At 31 March 2020 51 51
------------------------------- ------------ --------
Disposals in the period (11) (11)
------------------------------- ------------ --------
Change in value in the period (3) (3)
------------------------------- ------------ --------
At 31 March 2021 37 37
------------------------------- ------------ --------
The Group's investments include GBP37,000 unregulated collective
investment scheme ("UCIS") investments held in relation to a number
of customer complaints (see note 27 for current provisions made
against customer complaints).
Current asset investments
As at As at
31 March 31 March
2021 2020
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Trading investments
Investments - fair value through profit or loss 920 638
------------------------------------------------- --------- ---------
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.
The following provides an analysis of financial instruments that
are measured subsequent to initial recognition at fair value,
grouped into Levels 1 to 3 based on the degree to which the fair
value is observable:
Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities. The 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
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- -------- -------- --------
At 31 March 2021
Financial assets held at fair
value through profit and loss 920 - 37 957
-------------------------------- -------- -------- -------- --------
At 31 March 2020
Financial assets held at fair
value through profit and loss 638 - 51 689
-------------------------------- -------- -------- -------- --------
Further IFRS 13 disclosures have not been presented here as the
balance represents 1.277% (2020: 1.336%) of total assets. There
were no transfers of investments between any of the Levels of
hierarchy during the year.
22. Trade and other receivables
2021 2020
GBP'000 GBP'000
------------------------------------------------ -------- --------
Amounts falling due within one year:
Due from clients, brokers and recognised stock
exchanges at amortised cost 40,633 16,184
Other debtors at amortised cost 2,447 2,380
Prepayments and accrued income 6,018 5,951
------------------------------------------------ -------- --------
49,098 24,515
------------------------------------------------ -------- --------
23. Cash and cash equivalents
2021 2020
GBP'000 GBP'000
------------------------------------------------- -------- --------
Cash deposits held at bank, repayable on demand
without penalty 8,855 8,609
------------------------------------------------- -------- --------
8,855 8,609
------------------------------------------------- -------- --------
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 2021 was
GBP274,145,000 (2020: GBP305,300,000).
The credit quality of banks holding the Group's cash at 31 March
2021 is analysed below with reference to credit ratings awarded by
Fitch.
2021 2020
GBP'000 GBP'000
------------------------- -------- --------
A+ 5,256 5,221
A - 1,829
AA- 3,337 -
A- 25 1,558
Unrated or held in cash 237 1
------------------------- -------- --------
8,855 8,609
------------------------- -------- --------
24. Deferred tax liability
Short-term
temporary
Capital differences
allowances and other Total
GBP'000 GBP'000 GBP'000
------------------------------- ----------- ------------ --------
At 1 April 2019 13 (330) (317)
Use of loss brought forward - 78 78
Debit to the income statement (78) (18) (96)
------------------------------- ----------- ------------ --------
At 1 April 2020 (65) (270) (335)
------------------------------- ----------- ------------ --------
Use of loss brought forward - 32 32
Debit to the income statement (59) (38) (97)
------------------------------- ----------- ------------ --------
At 31 March 2021 (124) (276) (400)
------------------------------- ----------- ------------ --------
Deferred income tax assets are recognised for tax loss
carry-forwards 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 GBP11,000 (2020:
GBPnil) in respect of losses amounting to GBP58,000 (2020: GBPnil)
that can be carried forward against future taxable income. Losses
amounting to GBPnil (2020: GBPnil) and GBPnil (2020: nil) expire in
2020 and 2021, respectively.
25. Financial instruments and risk profile
Financial risk management
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, efficient systems and the adequate 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 Assessment Process document prepared in accordance
with the requirements of the Financial Conduct Authority ("the
FCA").
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 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:
2021 2020
GBP'000 GBP'000
------------------------- -------- --------
Cash 8,855 8,609
Trade receivables 40,633 16,184
Other debtors 2,447 2,380
Accrued interest income 55 56
------------------------- -------- --------
51,990 27,229
------------------------- -------- --------
An ageing analysis of the Group's financial assets is presented
in the following table:
0-1 2-3 Over 3 Carrying
Current month months months value
At 31 March 2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- -------- -------- -------- -------- ---------
Trade receivables 39,634 932 33 34 40,633
Cash and cash equivalent 8,855 - - - 8,855
Other debtors 2,291 2 24 130 2,447
Accrued interest income 55 - - - 55
-------------------------- -------- -------- -------- -------- ---------
50,835 934 57 164 51,990
-------------------------- -------- -------- -------- -------- ---------
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 aging.
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 2021, 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 twelve 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 is the risk that the Group is unable to meet its
payment obligations associated with its financial liabilities when
they fall 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 large 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'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.
All the regulated Group subsidiaries are subject to the
provisions of FCA Liquidity standards if they are within the scope
of the rules in the FCA Handbook chapter IFPRU 7.
The table below analyses the Group's cash outflow based on the
remaining period to the contractual maturity date.
Less than
1 year Total
2021 GBP'000 GBP'000
-------------------------- ---------- --------
Trade and other payables 47,395 47,395
-------------------------- ---------- --------
47,395 47,395
-------------------------- ---------- --------
2020
Trade and other payables 22,750 22,750
-------------------------- ---------- --------
22,750 22,750
-------------------------- ---------- --------
Future contractual undiscounted cash flows for deferred cash
consideration amounts to GBP46,000, which is within current
liabilities, and GBP33,000, which is within long-term
liabilities.
(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
2021 using closing market prices.
A 10% fall in global equity markets would, in isolation, result
in a pre-tax decrease to net assets of GBP92,000 (2020: GBP63,800).
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
2021 2020
GBP'000 GBP'000
------------------------------------------------- -------- --------
Amounts owed to clients, brokers and recognised
stock exchanges 39,951 15,167
Other creditors 3,059 3,548
Contract liability 28 3
Accrued expenses 4,357 4,032
------------------------------------------------- -------- --------
47,395 22,750
------------------------------------------------- -------- --------
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 14 days (2020: 10 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:
Claims/
complaints Dilapidations Total
GBP'000 GBP'000 GBP'000
-------------------------- ----------- -------------- --------
At start of year 178 659 837
Additions 55 16 71
Utilisation of provision (28) - (28)
-------------------------- ----------- -------------- --------
At 31 March 2021 205 675 880
-------------------------- ----------- -------------- --------
Claims/complaints
These provisions relate to outstanding claims and complaints
from third parties which, in the opinion of the Board, need
providing for after taking into account the risks and uncertainties
surrounding each claim or complaint. The timing of these
settlements is unknown but it is expected that they will be
resolved within twelve months.
Dilapidations
The Group, based on revised estimates, has made an additional
provision of GBP16,000 (including interest) for dilapidations in
connection with acquired leasehold premises (2020: total additional
provision of GBP117,000). These costs are expected to arise at the
end of each respective lease. Provisions for dilapidations payable
on leases after more than one year amounted to GBP675,000.
The Group had six 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 GBP10,000 to GBP530,000 per lease.
28. Lease liabilities
Computer Computer
Offices software hardware Total
Lease liabilities GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------- --------- --------- --------
At 1 April 2020 4,209 306 74 4,589
Additions - 212 - 212
Interest 123 9 2 134
Lease payments (846) (266) (21) (1,133)
------------------- -------- --------- --------- --------
At 31 March 2021 3,486 261 55 3,802
------------------- -------- --------- --------- --------
2021 2020
Lease liabilities profile (statement of financial
position) GBP'000 GBP'000
--------------------------------------------------- -------- --------
Amounts due within one year 946 969
Amounts due after more than one year 2,856 3,620
--------------------------------------------------- -------- --------
3,802 4,589
--------------------------------------------------- -------- --------
2021 2020
Undiscounted lease maturity analysis GBP'000 GBP'000
-------------------------------------- -------- --------
Within one year 1,069 1,099
Between one and two years 266 942
Between two and five years 3,898 2,643
Over five years 65 1,496
-------------------------------------- -------- --------
Total undiscounted lease liabilities 5,298 6,180
-------------------------------------- -------- --------
29. Called-up share capital
2021 2020
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Called-up, allotted and fully paid
43,327,328 (2020: 43,327,328) Ordinary Shares of
62/3p 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:
Share Share
Number of Capital premium Total
shares GBP'000 GBP'000 GBP'000
------------------ ----------- -------- -------- --------
At 1 April 2020 43,327,328 2,888 3,763 6,651
------------------ ----------- -------- -------- --------
At 31 March 2021 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 2021, this totalled GBP22,322,000 (2020:
GBP22,644,000).
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.
Walker Crips Group plc is classified for capital purposes as an
investment management group and performs an Internal Capital
Adequacy Assessment Process ("ICAAP"), which is presented to the
FCA on request. Regulatory capital resources for ICAAP purposes are
calculated in accordance with published rules. These require
certain adjustments to and certain deductions from accounting
capital, the latter largely in respect of intangible assets. The
ICAAP compares regulatory capital resources against regulatory
capital requirements derived using the FCA's Pillar 1 and Pillar 2
methodology.
The Group has adopted the standardised approach to calculating
its Pillar 1 credit risk component and the basic indicator approach
to calculating its operational risk component. Capital management
policy and practices are applied at both Group and entity
level.
In addition to a variety of stress tests performed as part of
the ICAAP process, and daily reporting in respect of treasury
activity, capital levels are monitored and forecast to ensure that
dividends and investment requirements are appropriately managed and
appropriate buffers are kept against adverse business
conditions.
Regulatory capital
No breaches were reported to the FCA during the financial years
ended 31 March 2021 and 2020.
Treasury shares
The Group holds 750,000 of its own shares, purchased for total
cash consideration of GBP312,000. 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 2021 under the following categories:
Own shares held (GBP312,000) (2020:
(GBP312,000)) * the negative balance of the Group's own shares, which
have been bought back and held in treasury.
Retained earnings GBP11,260,000 (2020:
GBP11,582,000) * the net cumulative earnings of the Group, which have
not been paid out as dividends, are retained to be
reinvested in our core, or developing, companies.
Other reserves GBP4,723,000 (2020:
GBP4,723,000) * the cumulative premium on the issue of shares as
deferred consideration for corporate acquisitions
GBP4,612,000 (2020: GBP4,612,000) and
non-distributable reserve into which amounts are
transferred following the redemption or purchase the
Group's own shares GBP111,000 (2020: GBP111,000).
31. Cash generated by operations
2021 2020
GBP'000 GBP'000
------------------------------------------------------ --------- ---------
Operating profit for the year 22 1,092
Adjustments for:
Amortisation of intangibles 837 609
Changes in the fair value of deferred consideration 31 (166)
Net change in fair value of financial instruments
at fair value through profit or loss* (362) 367
Share of associate/joint venture after tax result (66) 11
Depreciation of property, plant and equipment 375 590
Depreciation of right-of-use assets 961 867
(Increase)/decrease in debtors** (24,572) 11,044
Increase/(decrease) in creditors** 24,580 (10,884)
------------------------------------------------------ --------- ---------
Change in working capital as a result of net effects
of acquiring a subsidiary and disposal of a joint
venture
De recognition of joint venture asset now fully
acquired - (44)
Trade and other payables - (12)
Trade and other receivables - 9
------------------------------------------------------ --------- ---------
Net cash inflow 1,806 3,483
------------------------------------------------------ --------- ---------
* Revaluation (profit)/loss on proprietary positions.
** GBP8,000 cash inflow from working capital movement (2020: GBP160,000).
32. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of GBPnil
(2020: GBPnil) contracted but not provided for and GBPnil (2020:
GBPnil) 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:
2021 2020
GBP'000 GBP'000
------------------------------------------------- -------- --------
Commission and fees received from Directors and
their close family members 15 14
------------------------------------------------- -------- --------
Other related parties include Charles Russell Speechlys, of
which M. J. 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 GBP154,000 (2020: GBP84,000).
Commission of GBP7,587 (2020: GBP4,746) was earned by the Group
from Phillip Securities (HK) Limited (a Phillip Brokerage Pte
Limited company, where H. M. Lim is a shareholder) having dealt on
standard commercial terms. Additionally, some custody services are
provided by Phillip Securities Pte Ltd (in Singapore, where H. M.
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 are disclosed in the table below.
2021 2020
GBP'000 GBP'000
--------------------------------------- -------- --------
Key management personnel compensation
Short-term employee benefits 432 446
Post-employment benefits 31 34
Share-based payment - 7
--------------------------------------- -------- --------
463 487
--------------------------------------- -------- --------
34. Contingent liability
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 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.
35. Subsequent events
There are no material events arising after 31 March 2021, which
have an impact on these financial statements.
36. Long-term liabilities - deferred cash consideration
2021 2020
GBP'000 GBP'000
------------------------------------------------------------------ -------- --------
Amounts due to personnel under recruitment contracts/acquisition
agreements 33 15
------------------------------------------------------------------ -------- --------
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. During the year, deferred
consideration of GBP46,000 was reclassified within other creditors
in current liabilities. This liability was a long-term liability of
GBP15,000 in the prior year and was reassessed to a current
liability of GBP46,000 in the current year.
Company balance sheet
as at 31 March 2021
2021 2020
Note GBP'000 GBP'000
------------------------------------------------- ----- -------- --------
Non-current assets
Other intangible assets 41 3,215 3,556
Property, plant and equipment 40 856 1,420
Investments measured at cost less impairment 42 17,775 17,425
------------------------------------------------- ----- -------- --------
21,846 22,401
------------------------------------------------- ----- -------- --------
Current assets
Trade and other receivables 43 759 737
Deferred tax asset 44 74 179
Cash and cash equivalents 359 141
------------------------------------------------- ----- -------- --------
1,192 1,057
------------------------------------------------- ----- -------- --------
Total assets 23,038 23,458
------------------------------------------------- ----- -------- --------
Current liabilities
Trade and other payables 45 (3,162) (2,363)
------------------------------------------------- ----- -------- --------
(3,162) (2,363)
------------------------------------------------- ----- -------- --------
Net current liabilities (1,970) (1,306)
------------------------------------------------- ----- -------- --------
Long-term liabilities
Deferred cash consideration 48 - (15)
Dilapidation provisions 48 - (554)
Landlord contribution to leasehold improvements 48 (335) (398)
------------------------------------------------- ----- -------- --------
(335) (967)
------------------------------------------------- ----- -------- --------
Net assets 19,541 20,128
------------------------------------------------- ----- -------- --------
Equity
Share capital 47 2,888 2,888
Share premium account 47 3,763 3,763
Own shares 47 (312) (312)
Retained earnings 47 8,479 9,066
Other reserves 47 4,723 4,723
------------------------------------------------- ----- -------- --------
Equity attributable to equity holders
of the Company 19,541 20,128
------------------------------------------------- ----- -------- --------
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 loss for
the financial year of GBP523,000 (2020: GBP328,000).
The financial statements of Walker Crips Group plc (Company
registration no: 01432059) were approved by the Board of Directors
and authorised for issue on 20 August 2021.
Signed on behalf of the Board of Directors:
S. S. Dandeniya FCCA
Director
Company statement of changes in equity
year ended 31 March 2021
Called
up Share Own
share premium shares Retained Total
capital account held Other earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ -------- -------- -------- -------- --------- --------
Equity as at 31 March 2019 2,888 3,763 (312) 4,723 9,790 20,852
------------------------------------ -------- -------- -------- -------- --------- --------
Total comprehensive loss
for the period - - - - (328) (328)
------------------------------------ -------- -------- -------- -------- --------- --------
Contributions by and distributions
to owners
Dividends paid - - - - (396) (396)
------------------------------------ -------- -------- -------- -------- --------- --------
Total contributions by and
distributions to owners - - - - (396) (396)
------------------------------------ -------- -------- -------- -------- --------- --------
Equity as at 31 March 2020 2,888 3,763 (312) 4,723 9,066 20,128
------------------------------------ -------- -------- -------- -------- --------- --------
Total comprehensive loss
for the period - - - - (523) (523)
------------------------------------ -------- -------- -------- -------- --------- --------
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) 4,723 8,479 19,541
------------------------------------ -------- -------- -------- -------- --------- --------
Notes to the Company accounts
year ended 31 March 2021
37. 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 38).
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 Sterling (GBP). 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,
has been rigorously 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.
Intangible assets
Client lists
Client lists are recognised when it is probable that future
economic benefits will flow to the Parent Company and the cost of
the asset can be measured reliably whilst the risk and rewards have
also transferred into the Parent Company's ownership.
Intangible assets classified as client lists are recognised when
acquired as part of a business combination or when separate
payments are made to acquire clients' assets by adding teams of
investment managers.
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. 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.
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 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.
38. 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.
Intangible assets
Acquired client lists are capitalised based on current fair
values. 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,
the Directors consider a life of up to twenty years to be both
appropriate and in line with our peers. There were no acquisitions
made in the period to 31 March 2021. Additions in the period relate
to existing client lists and are disclosed in note 41.
39. Loss for the year
Loss for the financial year of GBP523,000 (2020: GBP328,000) is
after an amount of GBP57,000 (2020: GBP60,000) 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:
2021 2020
GBP'000 GBP'000
--------------------------------------------- -------- --------
Employee costs during the year amounted to:
Wages and salaries 147 170
Social security costs 12 14
Other costs 3 4
--------------------------------------------- -------- --------
162 188
--------------------------------------------- -------- --------
In the current year, employee costs are those of the
Non-Executive Directors, a proportion of Executive Directors and
the cost of the Group's profit share scheme. 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:
2021 2020
Number Number
------------------------- ------- -------
Executive Directors 2 2
Non-Executive Directors 4 4
------------------------- ------- -------
6 6
------------------------- ------- -------
40. Property, plant and equipment
Leasehold
improvements,
furniture
and Computer
equipment software Total
GBP'000 GBP'000 GBP'000
----------------------------------- -------------- --------- --------
Cost
At 1 April 2020 2,192 858 3,050
Asset transfers on 1 April 2020 * (518) - (518)
----------------------------------- -------------- --------- --------
At 31 March 2021 1,674 858 2,532
----------------------------------- -------------- --------- --------
Amortisation
At 1 April 2020 772 858 1,630
Asset transfers on 1 April 2020 * (106) - (106)
Charge for the year 152 - 152
----------------------------------- -------------- --------- --------
At 31 March 2021 818 858 1,676
----------------------------------- -------------- --------- --------
Net book value
----------------------------------- -------------- --------- --------
At 31 March 2021 856 - 856
----------------------------------- -------------- --------- --------
At 31 March 2020 1,420 - 1,420
----------------------------------- -------------- --------- --------
* The cost and accumulated depreciation of leasehold property
dilapidation assets and liabilities were transferred on 1 April
2020 to subsidiary Walker Crips Investment Management Limited to
reflect the real obligation of the subsidiary to pay for the future
works. The adjustment had no impact on the financial performance or
position of the Group, in the current year or prior periods, due to
the fact that Walker Crips Investment Management Limited is a
wholly owned subsidiary.
41. Other intangible assets
Client lists Total
GBP'000 GBP'000
--------------------- ------------- --------
Cost
At 1 April 2020 5,076 5,076
--------------------- ------------- --------
At 31 March 2021 5,076 5,076
--------------------- ------------- --------
Amortisation
At 1 April 2020 1,520 1,520
Charge for the year 341 341
--------------------- ------------- --------
At 31 March 2021 1,861 1,861
--------------------- ------------- --------
Net book value
--------------------- ------------- --------
At 31 March 2021 3,215 3,215
--------------------- ------------- --------
At 31 March 2020 3,556 3,556
--------------------- ------------- --------
42. Investments measured at cost less impairment
2021 2020
GBP'000 GBP'000
------------------------- -------- --------
Subsidiary undertakings 17,775 17,425
------------------------- -------- --------
During the year, the Company subscribed to a further 349,999 new
shares in its subsidiary EnOC Technologies Limited, a 100% owned
subsidiary, for consideration of GBP349,999.
A complete list of subsidiary undertakings can be found in note
53.
43. Trade and other receivables
2021 2020
GBP'000 GBP'000
------------------------------------ -------- --------
Amounts owed by group undertakings 751 436
Prepayments and accrued income 8 8
Other debtors - 293
------------------------------------ -------- --------
759 737
------------------------------------ -------- --------
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. The
deferred tax asset is presented separately in note 44.
44. Deferred taxation
2021 2020
GBP'000 GBP'000
----------------------------------------- -------- --------
At 1 April 179 224
Use of Group Relief (40) (86)
(Charge)/credit to the income statement (65) 41
----------------------------------------- -------- --------
At 31 March 74 179
----------------------------------------- -------- --------
A further reduction in the rate of corporation tax to 17% was
due to come into effect from April 2020, however this planned
reduction was cancelled in March 2020 and on 17 March 2020 the 19%
rate was again substantively enacted. Deferred tax has been
provided at 19% (2020: 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
2021 2020
GBP'000 GBP'000
---------------------------------------- -------- --------
Accruals and deferred income 142 99
Amounts due to subsidiary undertakings 2,730 2,195
Other creditors 290 69
---------------------------------------- -------- --------
3,162 2,363
---------------------------------------- -------- --------
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 Assessment Process document prepared in accordance
with the requirements of the Financial Conduct Authority
("FCA").
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 market-place 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 are made in note 25 of the
consolidated financial statements.
(i) Credit risk
Maximum exposure to credit risk:
2021 2020
GBP'000 GBP'000
---------------- -------- --------
Cash 359 141
Other debtors - 293
---------------- -------- --------
As at 31 March 359 434
---------------- -------- --------
The credit quality of banks holding the Group's cash at 31 March
2021 is analysed below with reference to credit ratings awarded by
Fitch.
2021 2020
GBP'000 GBP'000
---------------- -------- --------
A - 11
A+ 359 -
AA- - 130
---------------- -------- --------
As at 31 March 359 141
---------------- -------- --------
Analysis of other debtors due from financial institutions:
2021 2020
GBP'000 GBP'000
------------------------------------ ------------ --------- --------
Neither past due, nor impaired - 293
Amounts past due, but not impaired < 30 Days - -
> 30 Days - -
> 3 months - -
------------------------------------ ------------ --------- --------
- 293
----------------------------------------------------------- --------
(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:
2021 2020
GBP'000 GBP'000
---------------------------------------- -------- --------
Creditors due within one year 3,162 2,363
Creditors due after more than one year - 569
---------------------------------------- -------- --------
As at 31 March 3,162 2,932
---------------------------------------- -------- --------
2021 2020
GBP'000 GBP'000
---------------------------- -------- --------
Within one year 3,162 2,363
Within two to five years - 15
After more than five years - 554
---------------------------- -------- --------
As at 31 March 3,162 2,932
---------------------------- -------- --------
(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
2021 2020
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Called-up, allotted and fully paid
43,327,328 (2020: 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 2021 or the
prior year.
The Parent Company holds 750,000 of its own shares, purchased
for a total cash consideration of GBP312,000. 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:
Share Share
Number capital premium Total
of shares GBP'000 GBP'000 GBP'000
------------------ ----------- -------- -------- --------
At 1 April 2020 43,327,328 2,888 3,763 6,651
------------------ ----------- -------- -------- --------
At 31 March 2021 43,327,328 2,888 3,763 6,651
------------------ ----------- -------- -------- --------
Walker Crips is classified for capital purposes as an Investment
Management group and performs an Internal Capital Adequacy
Assessment Process ("ICAAP"), which is presented to the FCA on
request. Regulatory capital resources for ICAAP purposes are
calculated in accordance with published rules. These require
certain adjustments to and certain deductions from accounting
capital, the latter largely in respect of intangible assets. The
ICAAP compares regulatory capital resources against regulatory
capital requirements derived using the FCA's Pillar 1 and Pillar 2
methodology. The Group has adopted the standardised approach to
calculating its Pillar 1 credit risk component and the basic
indicator approach to calculating its operational risk component.
Capital management policy and practices are applied at both Group
and entity level.
In addition to a variety of stress tests performed as part of
the ICAAP process, and daily reporting in respect of treasury
activity, capital levels are monitored and forecast to ensure that
dividends and investment requirements are appropriately managed and
appropriate buffers are kept against adverse business
conditions.
Apart from share capital and share premium, the Parent Company
holds reserves at 31 March 2021 under the following categories:
Own shares held (GBP312,000) (2020:
(GBP312,000)) * the negative balance of the Parent Company's own
shares that have been bought back and held in
treasury.
Retained earnings GBP8,479,000 (2020:
GBP9,066,000) * 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 GBP4,723,000 (2020:
GBP4,723,000) * the cumulative premium on the issue of shares as
deferred consideration for corporate acquisitions
GBP4,612,000 (2020: GBP4,612,000) and
non-distributable reserve into which amounts are
transferred following the redemption or purchase the
Group's own shares GBP111,000 (2020: GBP111,000).
48. Creditors: amounts falling due after more than one year
2021 2020
GBP'000 GBP'000
------------------------------------------------- -------- --------
Dilapidation provision - 554
Landlord contribution to leasehold improvements 335 398
Deferred cash consideration - 15
------------------------------------------------- -------- --------
335 967
------------------------------------------------- -------- --------
The cost and accumulated depreciation of leasehold property
dilapidation assets and liabilities were transferred on 1 April
2020 to subsidiary Walker Crips Investment Management Limited to
reflect the real obligation of the subsidiary to pay for the future
works. The adjustment had no impact on the financial performance or
position of the Group, in the current year or prior periods, due to
the fact that Walker Crips Investment Management Limited is a
wholly owned subsidiary.
During the year, deferred consideration of GBP46,000 was
reclassified within other creditors in current liabilities. This
liability was a long-term liability of GBP15,000 in the prior year
and was reassessed to a current liability of GBP46,000 in the
current year.
49. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of GBPnil
(2020: GBPnil) contracted but not provided for and GBPnil (2020:
GBPnil) capital commitments authorised but not contracted for.
Lease commitments
The annual commitments under non-cancellable operating leases
fall due as follows:
2021 2020
GBP'000 GBP'000
-------------------------- --------- --------
Within one year - 765
Within two to five years - 2,616
More than five years - 1,390
-------------------------- --------- --------
As part of a review of Group-wide assets and lease commitments,
it was the view of the Directors that the lease commitments
previously disclosed in this Company in fact belong in the
Company's subsidiary Walker Crips Investment Management Limited.
This is reflected in the individual company accounts of the
subsidiary. The resulting adjustment to this disclosure has had no
impact on profit or loss in either entity.
50. 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 GBP463,000
(2020: GBP487,000).
51. 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.
52. Subsequent events
There are no material events arising after 31 March 2021, which
have an impact on these financial statements.
53. Subsidiaries and associates
Principal place Class and percentage
of business Principal activity of shares held
Group
--------------------------------- ---------------- ---------------------- ---------------------
Trading subsidiaries
--------------------------------- ---------------- ---------------------- ---------------------
Walker Crips Investment United Kingdom Investment management Ordinary Shares
Management Limited(1) 100%
--------------------------------- ---------------- ---------------------- ---------------------
London York Fund Managers United Kingdom Management services Ordinary Shares
Limited(3) 100%
--------------------------------- ---------------- ---------------------- ---------------------
Walker Crips Wealth Management United Kingdom Financial services Ordinary Shares
Limited(3) advice 100%
--------------------------------- ---------------- ---------------------- ---------------------
Ebor Trustees Limited(3) United Kingdom Pensions management Ordinary Shares
100%
--------------------------------- ---------------- ---------------------- ---------------------
EnOC Technologies Limited(1) United Kingdom Financial regulation Ordinary Shares
and other software 100%
--------------------------------- ---------------- ---------------------- ---------------------
Barker Poland Asset Management United Kingdom Investment management Membership 100%
LLP(1)
--------------------------------- ---------------- ---------------------- ---------------------
Non-trading subsidiaries
--------------------------------- ---------------- ---------------------- ---------------------
Walker Crips Financial United Kingdom Financial services Ordinary Shares
Services Limited(1) 100%
--------------------------------- ---------------- ---------------------- ---------------------
G & E Investment Services United Kingdom Holding company Ordinary Shares
Limited(3) 100%
--------------------------------- ---------------- ---------------------- ---------------------
Ebor Pensions Management United Kingdom Dormant company Ordinary Shares
Limited(3) 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(2) United Kingdom Nominee company Ordinary Shares
100%
--------------------------------- ---------------- ---------------------- ---------------------
WCWB (PEP) Nominees Limited(2) United Kingdom Nominee company Ordinary Shares
100%
--------------------------------- ---------------- ---------------------- ---------------------
WCWB (ISA) Nominees Limited(2) United Kingdom Nominee company Ordinary Shares
100%
--------------------------------- ---------------- ---------------------- ---------------------
WCWB Nominees Limited(2) United Kingdom Nominee company Ordinary Shares
100%
--------------------------------- ---------------- ---------------------- ---------------------
Walker Crips Consultants United Kingdom Dormant company Ordinary Shares
Limited(1) 100%
--------------------------------- ---------------- ---------------------- ---------------------
Walker Crips Ventures Limited(3) United Kingdom Financial services Ordinary Shares
advice 100%
--------------------------------- ---------------- ---------------------- ---------------------
Associate
--------------------------------- ---------------- ---------------------- ---------------------
Walker Crips Property Income United Kingdom Holding company Ordinary Shares
Limited(1) 33.3%
--------------------------------- ---------------- ---------------------- ---------------------
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FR UROSRASUWUAR
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