31 July 2024
Walker Crips Group plc
("Walker Crips", the "Company" or the "Group")
Final results for the year ended 31 March 2024
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 2024.
Financial highlights
● Total revenues broadly flat at £31.57 million (2023: £31.61 million).
● Operating profit declined by 89.9% to £63,000 (2023: £625,000).
● Profit before tax declined by 38.8% to £387,000 (2023: £632,000).
● Adjusting for exceptional items, the Group is reporting an operating loss of £162,000 (2023: operating profit of £1,179,000) and a profit before tax of £162,000 (2023: £1,186,000)*.
● Adjusted EBITDA of £1.77 million (2023: £3.25 million), a decline of 45.4%.**
● Underlying cash generated in the year £2.30 million (2023: £3.36 million), reducing by 31.6%.***
● Cash and cash equivalents of £13.86 million (2023: £13.14 million).
● Assets Under Management ("AUM") decreased by 13.5% to £2.7 billion (2023: £3.1 billion).
● Proposed final dividend of 0.25 pence per share (2023: 0.25 pence per share), bringing the total dividends for the year to 0.50 pence per share (2023: 0.50 pence per share).
* Exceptional items are disclosed in note 9 to the accounts and a full reconciliation to IFRS results is presented in the Finance Director's review.
** Adjusted EBITDA represents earnings before interest, taxation, depreciation and amortisation, and exceptional items. The Directors present this result as it is a metric widely used by stakeholders when considering an entity's financial performance. A full reconciliation to IFRS results is provided in the Finance Director's review.
*** Underlying cash generated from operations represents the cash generated from operations adjusted for lease liability payments under IFRS 16, non-cyclical working capital movements and operational exceptional items. The Directors consider that this metric helps readers understand the cash generating performance of the Group. A full reconciliation to the IFRS results is provided in the Finance Director's review.
For further information, please contact:
| Walker Crips Group plc Craig Harrison, Media Relations
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| Tel: +44 (0)20 3100 8000 |
| Four Agency Jonathan Atkins walkercrips@four.agency
Singer Capital Markets Charles Leigh-Pemberton/Asha Chotai
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Tel: +44 (0)20 3920 0555
Tel: +44 (0)20 7496 3000
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Further information on Walker Crips Group is available on the Company's website: www.walkercrips.co.uk
Chairman's statement
"Our year to 31 March 2024 has been a difficult one. We had a significant year-on-year cost increase, caused in part by high inflation, our compliance transformation project and by recruiting, and maintaining in real terms the salaries paid to staff within our organisation. Staff are our key asset and so it is right we pay market rates to ensure we retain top calibre employees. In our compliance transformation programme, we have learned from past events and are fully committed to ensuring our compliance and risk management follows best practice. This comes with a cost, both in financial terms and senior management time, but we remain committed to ensuring our customers are fully protected and that we deliver good outcomes for them. In addition, achieving best practice has meant losing several investment managers and their related clients. Although we have suffered financially, we believe that this was the right outcome, aligning with the values we uphold.
Looking forward, we are making important investments for growth. We have recruited new financial planners and have now met our targeted staffing levels. We are committed to offering more choice for clients and have hired new business development managers. We have also launched a new structured deposit product.
We are developing a full strategic integrated plan closely linked with our compliance transformation project and we look forward to announcing details of this in the coming months."
Chairman's statement
Our financial year to 31 March 2024 has been a year of continuing challenges. A large part of the year was overshadowed by global conflicts, political uncertainty, high inflation and high interest rates. These external influences coupled with the costs incurred to strengthen our compliance and risk framework significantly affected our results. Inevitably, inflation increased our cost base. In addition, to bring our remuneration levels in line with the market and to negate the impact of the cost-of-living crisis on our staff, we approved what overall was a substantial increase in staff remuneration. Further, rising interest rates impacted our market driven fee and commission income, although this was offset by retaining a share of interest income earned on our own reserves and customer trading cash balances.
In terms of our results, the Group, for the 12-month period to 31 March 2024, is reporting an operating profit of £63,000 (2023: £625,000) and profit before tax of £387,000 (2023: £632,000). Excluding exceptional items, the Group is reporting an operating loss of £162,000 (2023: operating profit of £1,179,000) and profit before tax of £162,000 (2023: £1,186,000). A more detailed explanation of our results is set out in the Finance Director's review.
I have already referenced our compliance and risk framework. Since I took over as Chairman of the Group, I have been making reference to investments that we have been making in this respect, originally specifically on our financial crime framework and, in my statement in our annual report to March 2023 and our interim statement, I noted more generally our strategic initiative to improve our regulatory and compliance framework. This work is still continuing and still requiring considerable investment. During the year, in addition to implementation and embedding changes to reflect the Consumer Duty regime, management has been working with external consultants on a number of high priority projects extending from client assets management specifically, to compliance and risk management generally with the objective of ensuring that our operational and regulatory control environment is fit for purpose and up to date with market best practice.
Last year I noted that we needed to strengthen our senior management team to address some self-identified weaknesses. Previously, we had been minded to recruit once the business was performing better. We have concluded that this is a false economy, unreasonably stretching our senior management and holding back the business. I am therefore pleased to report that we have recently recruited a senior Chief Risk and Compliance Officer, Christian Dougal, to work alongside the CEO and CFO. We believe that his experience and expertise, having worked for nearly thirty years in risk and compliance, will enable the Group finally to move to a robust comprehensive and integrated platform, and to reduce substantially the reliance on external consultants.
Turning to the business operations, the Board fully recognises that the Group must grow to return, at the least, to an acceptable level of profitability. Establishing a robust operational, compliance and risk framework is, of course, an essential prerequisite. Equally we still need to grow the senior executive team, and have further plans so to do.
Our business development team has been working hard in promoting our products and services to the IFA community and new customer groups and we are expecting their good work to translate to new customers and ultimately new revenues. The Board is developing plans to generate new income by way of broadening and improving our offering in a way that will enable us to serve the requirements of existing clients better and more comprehensively as well as attracting new customers and new assets under management. This initiative will go beyond the business-as-usual efforts of our investment managers and beyond the significant gains from our business development initiative. This is likely to involve much greater cooperation between different divisions within the Group.
On a positive note, our York Division, which has been on a recruitment drive, has now recruited their target number of financial advisers. This plan envisages that the anticipated new revenues should now be coming on stream and the division is expected to move to profitability in the coming year. This will pave the way for the division to become self-sufficient at its current levels and to pay back the investment made by the Group. I would like to thank the management team of the York Division and wish them continued good fortune in the coming months.
Our Structured Products division, whilst it had a difficult year with the industry shifting towards deposits, launched a new structured deposit initiative last year, allowing us to expand to a new customer cohort. We are expecting the team to generate new income from this initiative in the coming year.
Finally, the underpayment of Stamp Duty Reserve Tax that I referenced in my 2023 statement has been resolved, following an extensive internal investigation and our tax advisers are in communication with the HMRC to agree the final settlement. The extent of underpayment was lower than we initially estimated last year and the excess, net of professional fees, has been written back to exceptional items in the current year. I am pleased to report that an HMRC case officer has been appointed and we hope to conclude this matter in the coming months.
In addition to our regulatory framework, the FCA's Consumer Duty regulations were high on the list of priorities during the year. A detailed review of our products and services and how they are matched to clients and their needs was carried out during the year. Further details on how we implemented the Duty are contained in the CEO's statement.
Dividend
We aim to reward our shareholders for their continued patience and support. Given the current economic environment and reported results, the Board will recommend for shareholders' approval at the forthcoming AGM a final dividend of 0.25 pence per share (2023: 0.25 pence) payable on 4 October 2024 to those shareholders on the register at the close of business on 20 September 2024, with an ex-dividend date of 19 September 2024.
Directors, Account Executives and staff
I would like to thank my fellow Directors, our investment managers and advisers and all members of staff for their efforts, resilience and continued commitment to the Group. We have had a difficult couple of years, with more work to do this year, but the path to a more robust operating model and business plan is now much clearer.
As announced, our Senior Independent Director, Clive Bouch, resigned and relinquished his role on 27 June 2024. Clive and I had discussed his wish to step down and we are grateful to him for deferring the step by several months. On behalf of the Board, I wish to thank Clive for his considerable contribution to the Group over the last seven years and I wish him all the best with his future endeavours.
Clive's resignation leaves the governance of the Group short of what is required by the UK Corporate Governance Code. The Board is addressing this and, as part of the plans to which I refer, we are in discussions to appoint two new Independent Non-executive Directors. As soon as we are able, we will provide further updates.
Outlook
As you are aware from my previous communications, we have been working to improve our financial crime framework and I am pleased to report that we have successfully completed this work and changes are now embedded to our day-to-day operations. In addition to this, overseen directly by me, with support from independent external advisers and led now by our Chief Risk and Compliance Officer, we are carrying out an extensive review of other areas across our Compliance, Risk, Suitability, Monitoring functions and adoption of Consumer Duty regulation to establish a target future state for risk and compliance. This will be linked to additional business planning and change management resource we are currently putting in place that will enable us to develop a comprehensive and integrated plan for the entire Group. We expect to complete the majority of this work in the financial year 2025.
I anticipate that this programme we have set out to achieve, whilst wholly necessary, will require considerable management time and resource in the coming year.
There is little doubt that we have short-term challenges we need to overcome, and we are committed to this course. We will have another year of high costs and pressure on management to deliver a fit for purpose operational and regulatory framework. Despite these short-term challenges, which I see as an investment, for the reasons described, I remain optimistic about the longer-term future of our Group.
Martin Wright
Chairman
31 July 2024
CEO's statement
Innovating, Digitising and Focusing on Customer Outcomes
This has been a mixed year for us. We have put a great deal of effort into the rolling out of the Consumer Duty (The Duty) regulations, in a manner that I consider has been to the benefit of our customers and the organisation as a whole. The market for our structured products diminished slightly during this financial year, but the team was innovative and launched an additional structured deposit model which is already generating considerable interest. Our financial planning division showed an increased loss, but this was a consequence of our strategy to rebuild the team, and there tends to be a time lag between recruitment and new revenue coming 'on stream'.
As mentioned in the Chairman's Statement, we have struggled with bandwidth at the senior management level. To address this, we have made a number of senior hires, including a new Chief Risk and Compliance Officer. We will continue to review our resource requirements and adjust accordingly. We have also hired for the front office new business development individuals, investment managers and financial planners to service our existing customers, and to grow new revenues. We also believe in the training of young people and our Graduate Trainee and Internship programmes have enabled us to bring new individuals into the industry who could well become the new leaders of the firm in the future. More details on our regulated subsidiaries are mentioned below.
Our Financial Highlights show that our financial performance has not met our initial projections or expectations. Operating profit declined by 89.9% to £63,000 (2023: £625,000) and, adjusting for exceptional items, we are reporting an operating loss of £162,000 (2023: operating profit of £1,179,000). With the additional senior risk and compliance hires and the new front office personnel, we believe that we have in place a plan that will put the business on to a better risk and compliance footing and on to a platform for growth.
We continue to invest in greater digitisation to improve customer facing services such as the provision of better systems to our investment managers, associates, financial planners and IFAs who work with the Group, updating our Client Portal, substantially enhancing our mobile apps, improving the documentation provided to customers, revised and standardised our tariff of fees and commission and simplifying our supplementary tariff.
Consumer Duty
Throughout the past year, we have focused on the implementation of the Consumer Duty (The Duty) regulations which serves to set higher and clearer standards of consumer protection across financial services, and require firms to put customers' needs first. The Duty effectively codifies our fundamental principle of taking all reasonable steps to avoid causing foreseeable harm to customers, enabling them to pursue their financial objectives, and always act in good faith towards them.
We have reviewed all the services that we provide to our customers, clarified the target market of our services, we benchmarked our services to our peers to ensure that we are competitive, we clarified the benefits that our customers are receiving from the services that we provide, we reviewed the cost to the business in providing those services, we also reviewed our fees and commissions and simplified our supplementary tariff and we conducted a value assessment to ensure our customers are receiving what they are paying for. We are particularly mindful of those who may be vulnerable and take extra care in supporting them and delivering the level of service and outcomes that match their needs.
Our review has included the Group's approach to the treatment of cash held by our own or external custodians on customers' behalf, with the objective of ensuring consistency and fairness in relation to the income derived and the cost of managing and protecting customers' assets under our control.
Our delivery strategy has been, for a number of years, to "simplify and digitise", and The Duty has helped push this development further and faster. This has included the simplification of tariffs, the improvement of communication with customers, moving from static customer feedback to regular and continuous based on activity and there is even a smiley-face quick-feedback feature, where appropriate. We have ensured that our documents are clearly written and understood and that our website is written in 'plain language', as was certified by the Plain Language Commission. The Duty has caused a positive mindset change within the Group and has permeated through the organisation, and it is not just top down, but exhibited by all staff.
However, our approach in the implementation of The Duty, the development of new and revised policies and procedures, the streamlining of our tariff, the further simplification of our business, was not wholly acceptable by a number of our self-employed investment management associates who decided to leave us. It is always disappointing to see colleagues whom we've known for a long time leave the Group; nevertheless, we do wish them well.
Divisional performance
Our regulated entities have only a moderate amount of cross-over but over the coming year, the Group executive and our divisional heads will be making greater efforts to have individuals from across divisions collaborating in order to increase the provision of a consolidated approach to engagement with our customers, all the while ensuring that we are providing good outcomes to them.
Our Investment Management division has invested in the building blocks for growth. We have hired specialist business development individuals with a clear mandate to attract new investment portfolios into the business by promoting our products and services to the IFA community and new customer groups such as sportspersons and future investors, through our #WalkerCripsInSports and #WalkerCripsInSchools initiatives. Our team has reviewed our product offering, removed complications, and simplified/streamlined our model portfolio service. We have also re-launched our AIM inheritance tax portfolio service and created a new Gilt portfolio service.
Our Structured Investments division launched a new structured deposit initiative which will allow us to expand into a new group of customers and we have already seen encouraging investment inflows.
Our Financial Planning division continues to grow with highly experienced financial planners (FPs) joining us. In 2021, we were left with two full-time FPs and we embarked on a rebuilding programme and now, in 2024, we have 12 qualified FPs serving our customers. Most of the customers of these new FPs 'followed' them and opened accounts with Walker Crips. Over that period, our AUA within our Financial Planning division grew from £141m to £415m (June 2024).
Barker Poland Asset Management (BPAM) continues to focus on financial planning and discretionary investment management for UK based individuals, providing advice on strategy, tax wrappers and associated tax, retirement, cash flow management, insurance and estate planning. On investments, BPAM runs a range of risk adjusted models containing active and passive funds. It is aiming for a profit of circa £450k from c.£2.4m turnover for the next financial year while keeping focus on reducing costs of funds, and keeping its back office as streamlined as possible. BPAM is also recruiting trainees/juniors with the intention of developing them into advisers over time. It has always placed great emphasis on personal contact, which is one way it seeks to differentiate itself in a highly competitive market space.
Ebor Trustees (Ebor) has been driving to keep its pricing competitive and increasing the adoption of digitised solutions. The division is also preparing its marketing campaign which will take place between October and March 2025, and with a more targeted campaign for Accountants, promoting the benefits of pension platforms and how they may fit into the overall financial plan for customers.
For more information about the financial performance of the Divisions, please refer to the Finance Director's Review.
Corporate responsibility
I wish to reiterate my message from the last few years, that we can all do our part in reducing our carbon footprint:
REFUSE - Avoid buying harmful, wasteful or non-recyclable products
REDUCE - Reduce the use of harmful, wasteful, and non-recyclable products
REUSE - Get rid of the "buy and throw-away" mindset, re-use what you have
REPAIR - Try to repair before tossing them out
REPURPOSE - Upcycle, break down and reconstitute as something else
ROT - Compost if you can
RECYCLE - Make recycling your last step, after going through all the R's above
We are committed to sustainability and environmental responsibility because we recognise the urgent need to address climate change and mitigate our environmental impact. We also believe that our commitment to sustainable practices will also present us with opportunities for innovation and cost efficiencies.
Mental health charity
As a Group, we continue to support twiningenterprise.org.uk, the mental health charity. In addition to financial support, we also try to use our technology for good, through technology philanthropy. If you wish to find out more, or want to support Twining financially, please visit walkercrips.co.uk/community.
Conclusion
I wish to echo our Chairman's thanks to our Audit Committee Chairman and Director, Clive Bouch, who stepped down on 27 June 2024. Clive's attention to detail and thoroughness has been invaluable to the Group. We wish him well.
We shall continue to make investment rewarding for our customers, our shareholders and our staff, and to give our customers a fair deal. We continue to support our investment advisers and our staff by being a technology-driven financial services company. We have had significant challenges, as mentioned in the Chairman's Statement and above, but we are optimistic about the future, with the right strategies, personnel, and the right mindset to overcome the challenges and create opportunities. We remain committed to delivering sustainable growth, creating value for our stakeholders, and making a positive impact on society.
Sean Lam
Chief Executive Officer
31 July 2024
Finance Director's review
The financial year to 31 March 2024 was one of dealing with difficult challenges. Our primary focus during the year was the continuation of the initiatives to improve our compliance and risk management framework including the initial work relating to the financial crime control framework review and remediation that we noted last year. It is a significant undertaking, in terms of management time and the resource required. As described in the Chairman's Statement, the work is ongoing and it is a worthwhile and necessary investment to improve our control environment, customer service and ultimately leading to improve operating margins and profitability in the long run.
Financial performance
The Group's results were impacted by external pressures and internal operational matters that saw trading commissions and management fees impacted negatively, whilst inflationary pressures, together with continued costs and investment in strengthening our regulatory and compliance functions, kept our cost base high. Our performance, as noted in my report last year, was also impacted by five self-employed investment managers and their client base leaving the group during the year. We will see one more self-employed investment manager depart early in the new financial year.
The negative impact of these were somewhat mitigated by interest income from managing customer deposits and the firm's own money, and an exceptional income arising from a lower than expected liability in relation to the previously reported Stamp Duty Reserve Tax (SDRT) underpayment and related professional fees (see note 9).
We are reporting a Group profit before tax of £387,000 (2023: £632,000), reflecting the outcome of challenges noted by the Chairman. Adjusting for exceptional items, there has been a marked decline in year-on-year pre-tax, pre-exceptional profits of £162,000 (2023: £1,186,000). Further explanation of these headline results is provided below.
Notwithstanding the headline results, we did not lose focus on strategic measures to ensure that the Group's underlying performance in the future is strengthened with the hiring of business development managers with a clear mandate to attract new customers and new assets under management. They have had some success already and there is a considerable book of prospects in the pipeline.
We also launched a new structured deposit initiative to help us identify and open new doors for new clients and revenues. During the financial year, we saw the first shoots from this initiative with 152 new clients investing £5.2 million into our opening structured deposit.
We remain cautiously optimistic about the future as we view much of the work in relation to improvements to our compliance and risk management framework, internal controls, financial crime prevention systems, client asset management processes and Consumer Duty implementation as investments which are necessary to protect client and Group assets from which we can reap long-term benefits.
Total revenue
Total revenue, due to a number of variables, decreased by 0.1% to £31.57 million (2023: £31.61 million). The decrease, as I referenced last year, was partly driven by a number of self-employed investment managers exiting the Group at the start of the year, and partly driven by difficult market and uncertain economic pressures depressing trading commissions and management fees, which were offset by higher retention of interest earned on managing customer trading balances.
Total commission income reduced by 17.9% to £4.9 million (2023: £6.0 million). The loss of a number of self-employed investment managers and their clients, and the revenue therein, and persisting market uncertainty were direct causes of the reduction in commission. It is also important to recognise that the Group has been slowly moving away from volume based variable income to more stable fee income, and this is expected to be more prominent next year with the recent tariff alignment exercise conducted by the Investment Management division, which will be in place for a full financial year.
Fee generating client assets fell by 13.5% to £2.7 billion (2023: £3.1 billion). The reduction in these assets naturally resulted in our fee income reducing by 4.9% to £16.9 million, down £0.8 million from last year (2023: £17.7 million). During the year, in conjunction with the Consumer Duty implementation, the Investment Management division standardised its fee tariffs across all its service range thereby removing historical commercial arrangements agreed at customer level. As a result, the division is expected to see its aggregate fee income increasing in the next financial year. This will support our commitment to reduce our reliance on retained interest income.
Our Structured Investment division ended the financial year reporting £3.0 million of gross income, down £0.9 million from last year (2023: £3.9 million). The reduction in reported income is largely down to the structured products industry shifting from structured investments to structured deposits. The team is currently involved in a project to digitise its operations and the outcome of this is expected to create capacity to increase customer engagement and revenue growth. The team's recent product launch is one of their steps in their journey to increase market share in the UK.
Arbitrage business reported a modest increase in contribution to £152,000 for the year (2023: £97,000).
Barker Poland Asset Management saw a 4.4% increase in revenue and reported £2.3 million of gross income (2023: £2.2 million) compared to last year.
Our Financial Planning division, following a successful recruitment drive, saw their income increasing by 26.4% to £2.5 million (2023: £1.9 million), showing great promise and giving optimism for the near future.
Interest income increased by 82.8% to £5.8 million (2023: £3.2 million). This revenue stream does provide the Group with a level of protection against adverse fluctuations of income linked to high interest environments which make asset prices and indices susceptible to stagnation or low growth. The Group is committed to reducing this reliance and has already taken steps towards achieving this objective. It should, however, be noted that there are significant costs associated with managing client assets and money and changes made to Group's business model will take a period of time to be fully effective.
Commissions and fees paid
The aforementioned departure of certain self-employed investment managers also resulted in reducing our income sharing. This saw a reduction of £1.5 million to £5.8 million (2023: £7.3 million), contributing to an increase in our gross operating margin to 81.7% from 77.0% in 2023. At the same time our operating margin reduced to 0.4% (2023: 2.6%), reflecting our higher cost base this year.
Expenses
Administrative expenses, excluding exceptional items, salaries and related staff costs, depreciation and amortisation, increased by 7.9% in the year, with investments made to strengthen our compliance and risk management framework significantly increasing our cost base. This, along with general inflationary increases in a number of areas, was offset by a reduction in FCA fees and levies in the year. Salaries and staff related costs saw a year-on-year increase of 16.8%, with salaries increasing by 15.7% to £15.8 million in the year (2023: £13.7 million), partly due to the current labour market demanding higher pay packages to attract high calibre staff and partly as a result of pay increases awarded to our existing staff to support them through the inflation-driven cost-of-living pressures. The Group, as part of its overall strategy, will continue to search and onboard high-calibre staff to all parts of our business. These, along with the costs of benefits offered to staff, contributed to increasing our related staff costs in the year by 43.1% to £0.8 million (2023: £0.6 million).
I am pleased to report, with support from our tax advisers, and following an extensive internal investigation, we have now completed the issue in relation to the underpayment of SDRT that I reported last year, and our tax advisers are in communication with the HMRC to agree the final settlement. As a result, the Group is reporting an exceptional income totalling £225,000 (2023: exceptional cost of £554,000), being the credit adjustment to reduce the final SDRT liability and professional costs estimate to a more accurate figure (see note 9).
UK inflation has come down from a peak of 11.1% in October 2022, to 3.2% in March 2024 and down to the government CPI target of 2% in May 2024. The 2% inflation target, however, does not translate to a cost reduction, but merely an indication that costs are not increasing from their all-time higher base over a set period. This means that our high-cost base will continue into the future, and as noted in the Chairman's report, we are on a strategic initiative to improve our compliance and risk management framework which will require considerable investment over the next 12 months.
Cash management
The Group remains cash generative and recorded a cash inflow from operations of £0.97 million (2023: £3.5 million), much lower than in the previous year, reflecting low income generation in a period of rising costs, leading to much lower operating profits.
The underlying cash generated from operations, reflecting the impact of lease liability payments, non-cyclical working capital movements and cash flows from exceptional items (see adjacent reconciliation) showed a performance of £2.3 million (2023: £3.4 million). The underlying cash generation compared to last year was lower due to reasons noted above, but it does demonstrate the cash generative nature of the underlying business model.
After deducting cash deployed in investing activities and dividends paid, cash and cash equivalents increased to £13.9 million at year-end (2023: £13.1 million).
Looking forward to next year, we have a number of key priorities with uplifting our compliance and risk management framework and the investment required therein being at the core. We will continue with initiatives to generate more income, as mentioned above in relation to business development and structured deposits. Changes already made to align our fee structure and the output of these ongoing initiatives will place the Group in a good standing to deliver on our commitment to reduce our reliance on retained interest income, which will see some pressure on cash generation, however, our going concern forecast model indicates a modest year on year increase in cash and cash equivalent next year.
Financial result and alternative performance measures
The Group reported operating profit and profit before tax for the year of £63,000 and £387,000, respectively (2023: £625,000 and £632,000).
Adjusting for exceptional items (see below reconciliations and further detail in note 9), the Group made an operating loss of £162,000 for the year (2023: operating profit 1,179,000) and a profit before tax of £162,000 (2023: £1,186,000). The Group's adjusted EBITDA (being EBITDA adjusted for exceptional items - see adjacent reconciliation) is £1.8 million (2023: £3.3 million), not surprisingly a decrease of 45.4%.
Total Assets Under Management and Administration ("AUMA") stood at £4.9 billion at the end the financial year (2023: £5.0 billion). Discretionary and Advisory Assets Under Management fell by 13.5% to £2.7 billion (2023: £3.1 billion). The decrease in AUMA values can be attributed partly to a number of self-employed investment managers and their client base departing the Group and partly to existing customers deploying cash to alternative needs during a period of high inflation and rising costs offset by onboarding new customers. In addition to this and disappointingly, we have also lost a small number of customers as a result of the tariff standardisation exercise that resulted in the removal of historical fee and commission arrangements.
Notwithstanding above and after the completion of our initiative to improve our compliance and risk management framework, with its high calibre staff base and improved systems coupled with revenue generating initiatives in the pipeline, the Group would be ideally placed to propel forward to a profitable landscape.
| Reconciliation of operating profit to operating (loss)/profit before exceptional items | 2024 £'000 | 2023 £'000 |
| Operating profit | 63 | 625 |
| Operating exceptional items (note 9) | (225) | 554 |
| Operating (loss)/profit before exceptional items | (162) | 1,179 |
| Reconciliation of profit before tax to profit before tax and exceptional items | 2024 £'000 | 2024 £'000 |
| Profit before tax | 387 | 632 |
| Total exceptional items (note 9) | (225) | 554 |
| Profit before tax and exceptional items | 162 | 1,186 |
| Adjusted EBITDA | 2024 £'000 | 2023 £'000 |
| Operating profit | 63 | 625 |
| Operating exceptional items (note 9) | (225) | 554 |
| Amortisation/depreciation (note 30) | 1,299 | 1,301 |
| Right-of-use assets depreciation charge (note 30) | 636 | 771 |
| Adjusted EBITDA | 1,773 | 3,251 |
| Underlying cash generated from operations | 2024 £'000 | 2023 £'000 |
| Net cash inflow from operations | 970 | 3,539 |
| Working capital (note 30) | 1,124 | 156 |
| Lease liability payments under IFRS 16 (note 30) | (722) | (332) |
| Cash outflow on operating exceptional items | 928 | - |
| Underlying cash generated in the period | 2,300 | 3,363 |
Divisional performance
The Investment Management division, including exceptional costs, delivered an operating profit of £1.63 million for the year, compared to £1.55 million in the previous year. Adjusting for exceptional items, the division reported an operating profit of £1.41 million (2023: £2.11 million). The division took the brunt of the aforementioned effects of fee and commission revenues, cost of investment in improving our compliance and risk management framework, and inflationary cost pressures. On a positive note, the division has successfully onboarded a new business development team, invested in a number of new salaried investment managers and launched a new structured deposit product, all of which are the necessary ingredients to move the Group to a higher margin operating model.
The Financial Planning division has now successfully completed its recruitment drive to increase its advisor base with several key hires in the year. The division saw its year-on-year income increase by 26.4% to £2.45 million (2023: £1.94 million) however reported an increased loss of £0.63 million (2023: £0.31 million). The advisers onboarded will take time to bring their client base across and operate at full capacity and the division is expected to return to profitability in the coming year.
Our software as a service (SaaS) division, represented by our subsidiary EnOC Technologies Limited (EnOC), has returned an operating loss of £490,000 (2023: £128,000 loss) after removing intercompany revenues. However, standalone performance, including revenue generated from providing its services to Group entities, saw it generate operating profit of £102,000 (see note 6). EnOC benefited from the transfer of intellectual property from the Investment Management division on 1 April 2023, an action intended to allow EnOC the ownership and control of the Group's internally generated intellectual property and to allow it to maintain and develop it with its own staff and dedicated resources, while leasing its services to sister companies.
Capital resources, liquidity and regulatory capital
The Group's capital structure, consisting solely of equity capital, provides a stable platform to support the Group's strategic plan and initiatives. At year end, net assets are £21.3 million (2023: £21.2 million), reflecting a net increase of £0.1 million (2023: £0.2 million net decrease), from reported profit after tax, less dividends paid. Liquidity remains strong with cash and cash equivalents increasing over the year to £13.9 million (2023: £13.1 million). Regulatory capital at year end, including audited reserves for the year, is £13.4 million (2023: £12.4 million), comfortably in excess of the Group's Own Funds (Capital) Threshold Requirement, as shown in the tables below.
| Regulatory own funds and own funds requirements | 2024 £'000 | 2023 £'000 |
| Own funds |
| |
| Share capital | 2,888 | 2,888 |
| Share premium | 3,763 | 3,763 |
| Retained earnings | 10,259 | 10,104 |
| Other reserves | 4,723 | 4,723 |
| Less: |
| |
| Own shares held | (312) | (312) |
| Regulatory adjustments | (7,880) | (8,800) |
| Total own funds | 13,441 | 12,366 |
|
|
| |
| Own funds requirement (OFR) | (5,075) | (4,854) |
|
|
| |
| Regulatory capital surplus over OFR | 8,366 | 7,512 |
| Cover on own funds as a % | 264.8% | 254.8% |
|
|
| |
| Own Funds Threshold Requirement (OFTR) | (7,022) | (7,227) |
| Regulatory capital surplus over OFTR | 6,419 | 5,139 |
| Cover on own funds as a % | 191.4% | 171.1% |
Dividends
In view of the Group's financial performance, capital and liquidity position, the Board recommends a final dividend of 0.25 pence per share to be paid on 4 October 2024 for those members on the shareholders' register on 20 September 2024, the ex-dividend date being 19 September 2024. Including the interim dividend of 0.25 pence per share (2023: 0.25 pence per share), the total dividend paid and proposed in respect of the year is 0.50 pence per share (2023: 0.50 pence per share).
Sanath Dandeniya
Finance Director
31 July 2024
Consolidated income statement
year ended 31 March 2024
| | Note | 2024 £'000 | 2023 £'000 |
| Revenue | 5 | 31,574 | 31,612 |
| Commissions and fees paid | 7 | (5,769) | (7,264) |
| Gross profit | | 25,805 | 24,348 |
| | |
| |
| Administrative expenses | 8 | (25,967) | (23,169) |
| Exceptional items | 9 | 225 | (554) |
| Operating profit | | 63 | 625 |
| | |
| |
| Investment revenue | 10 | 446 | 95 |
| Finance costs | 11 | (122) | (88) |
| Profit before tax | | 387 | 632 |
| Taxation | 13 | (19) | (214) |
| Profit for the year attributable to equity holders of the Parent Company | | 368 | 418 |
| | |
| |
| Earnings per share | |
| |
| Basic and diluted | 15 | 0.86p | 0.98p |
The following Accounting Policies and Notes form part of these financial statements.
Consolidated statement of comprehensive income
year ended 31 March 2024
| | 2024 £'000 | 2023 £'000 |
| Profit for the year | 368 | 418 |
| Total comprehensive income for the year attributable to equity holders of the Parent Company | 368 | 418 |
The following Accounting Policies and Notes form part of these financial statements.
Consolidated statement of financial position
as at 31 March 2024
| | Note | 2024 £'000 | 2023 £'000 |
| Non-current assets | |
| |
| Goodwill | 16 | 4,388 | 4,388 |
| Other intangible assets | 17 | 3,741 | 4,648 |
| Property, plant and equipment | 18 | 815 | 989 |
| Right-of-use asset | 19 | 2,075 | 2,340 |
| Total non-current assets | | 11,019 | 12,365 |
| Current assets | |
| |
| Trade and other receivables | 21 | 31,902 | 36,301 |
| Investments - fair value through profit or loss | 20 | 538 | 1,276 |
| Cash and cash equivalents | 22 | 13,863 | 13,138 |
| Total current assets | | 46,303 | 50,715 |
| Total assets | | 57,322 | 63,080 |
| | |
| |
| Current liabilities | |
| |
| Trade and other payables | 25 | (31,961) | (36,849) |
| Current tax liabilities | | (242) | (269) |
| Deferred tax liabilities | 23 | (260) | (371) |
| Provisions | 26 | (355) | (878) |
| Lease liabilities | 27 | (718) | (341) |
| Deferred cash consideration | 35 | (25) | (94) |
| Total current liabilities | | (33,561) | (38,802) |
| Net current assets | | 12,742 | 11,913 |
| | |
| |
| Long-term liabilities | |
| |
| Deferred cash consideration | 35 | (15) | (71) |
| Lease liabilities | 27 | (1,736) | (2,389) |
| Provision | 26 | (689) | (652) |
| Total non-current liabilities | | (2,440) | (3,112) |
| Net assets | | 21,321 | 21,166 |
| | |
| |
| Equity | |
| |
| Share capital | 28 | 2,888 | 2,888 |
| Share premium account | 28 | 3,763 | 3,763 |
| Own shares | 29 | (312) | (312) |
| Retained earnings | 29 | 10,259 | 10,104 |
| Other reserves | 29 | 4,723 | 4,723 |
| Equity attributable to equity holders of the Parent Company | | 21,321 | 21,166 |
The following Accounting Policies and Notes form part of these financial statements.
The financial statements of Walker Crips Group plc (Company registration no. 01432059) were approved by the Board of Directors and authorised for issue on 31 July 2024.
Signed on behalf of the Board of Directors
Sanath Dandeniya FCCA
Director
31 July 2024
Consolidated statement of cash flows
year ended 31 March 2024
| | Note | 2024 £'000 | 2023 £'000 |
| Operating activities | |
| |
| Cash generated from operations | 30 | 970 | 3,539 |
| Tax paid | | (157) | (120) |
| Net cash generated from operating activities | | 813 | 3,419 |
| Investing activities | |
| |
| Purchase of property, plant and equipment | | (114) | (150) |
| Sale / (Purchase) of investments held for trading | | 642 | (205) |
| Consideration paid on acquisition of intangible assets | | (104) | (183) |
| Dividends received | 10 | 19 | 47 |
| Interest received | 10 | 427 | 48 |
| Net cash generated from/(used in) investing activities | | 870 | (443) |
| Financing activities | |
| |
| Dividends paid | 14 | (213) | (617) |
| Interest paid | 11 | (23) | (2) |
| Repayment of lease liabilities ** | | (623) | (246) |
| Repayment of lease interest ** | | (99) | (86) |
| Net cash used in financing activities | | (958) | (951) |
| Net increase in cash and cash equivalents | | 725 | 2,025 |
| Net cash and cash equivalents at beginning of period | | 13,138 | 11,113 |
| Net cash and cash equivalents at end of period | | 13,863 | 13,138 |
** Total repayment of lease liabilities under IFRS 16 in the period was £722,000 (2023: £332,000)
The following Accounting Policies and Notes form part of these financial statements.
Consolidated statement of changes in equity
year ended 31 March 2024
|
| Share capital £'000 | Share premium account £'000 | Own shares held £'000 | Capital redemption £'000 | Other £'000 | Retained earnings £'000 | Total equity £'000 |
| Equity as at 31 March 2022 | 2,888 | 3,763 | (312) | 111 | 4,612 | 10,303 | 21,365 |
| Comprehensive income for the year | - | - | - | - | - | 418 | 418 |
| Total comprehensive income for the year | - | - | - | - | - | 418 | 418 |
| Contributions by and distributions to owners | | | | | | | |
| Dividends paid | - | - | - | - | - | (617) | (617) |
| Total contributions by and distributions to owners | - | - | - | - | - | (617) | (617) |
| Equity as at 31 March 2023 | 2,888 | 3,763 | (312) | 111 | 4,612 | 10,104 | 21,166 |
| Comprehensive income for the year | - | - | - | - | - | 368 | 368 |
| Total comprehensive income for the year | - | - | - | - | - | 368 | 368 |
| Contributions by and distributions to owners | | | | | | | |
| Dividends paid | - | - | - | - | - | (213) | (213) |
| Total contributions by and distributions to owners | - | - | - | - | - | (213) | (213) |
| Equity as at 31 March 2024 | 2,888 | 3,763 | (312) | 111 | 4,612 | 10,259 | 21,321 |
The following Accounting Policies and Notes form part of these financial statements.
Notes to the accounts
year ended 31 March 2024
1. General information
Walker Crips Group plc ("the Company") is the Parent Company of the Walker Crips group of companies ("the Company"). The Company is a public limited company incorporated in the United Kingdom under the Companies Act 2006 and listed on the London Stock Exchange. The Group is registered in England and Wales. The address of the registered office is Old Change House, 128 Queen Victoria Street, London EC4V 4BJ.
The significant accounting policies have been disclosed below. The accounting policies for the Group and the Company are consistent unless otherwise stated.
2. Basis of preparation
The consolidated financial statements have been prepared in accordance with UK-adopted international accounting standards in conformity with the requirements of the Companies Act 2006.
The principal accounting policies adopted in the preparation of the consolidated financial statements are set out in note 3. The policies have been consistently applied to all the years presented, unless otherwise stated.
The consolidated financial statements are presented in GBP Sterling (£). Amounts shown are rounded to the nearest thousand, unless stated otherwise.
The consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments that are measured at fair value, and are presented in Pounds Sterling, which is the currency of the primary economic environment in which the Group operates. The principal accounting policies adopted are set out below and have been applied consistently to all periods presented in the consolidated financial statements.
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 4.
There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning on or after 1 January 2024:
• IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback).
• IAS 1 Presentation of Financial Statements (Amendment - Classification of Liabilities as Current or Non-current).
• IAS 1 Presentation of Financial Statements (Amendment - Non-current Liabilities with Covenants).
The Group is currently assessing the impact of these new accounting standards and amendments. The Group does not believe that the amendments to IAS 1 will have a significant impact on the classification of its liabilities, as it does not have convertible debt instruments.
The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the Group.
Going concern
The financial statements of the Group have been prepared on a going concern basis. At 31 March 2024, the Group had net assets of £21.3 million (2023: £21.2 million), net current assets of £12.7 million (2023: £11.9 million) and cash and cash equivalents of £13.9 million (2023: £13.1 million). The Group reported an operating profit of £63,000 for the year ended 31 March 2024 (2023: £625,000), inclusive of operating exceptional income of £225,000 (2023: operating exceptional expense of £554,000), and net cash inflows from operating activities of £0.9 million (2023: £3.5 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 considered:
● The Group's three-year base case projections based on current strategy, trading performance, expected future profitability, liquidity, capital solvency and dividend policy.
● The outcome of stress scenarios applied to the Group's base case projections prior to deployment of management actions.
● The principal risks facing the Group and its systems of risk management and internal control.
● The Group's ability to generate positive operating cash flow during the year to 31 March 2024 and projected future cash flows.
Key assumptions that the Directors have made in preparing the base case projections are:
● Trading commission is expected to be flat for the foreseeable future and management fee growth expectation of 2.5% has been set, while also having adjusted for expected client attrition in respect of the recent self-employed investment manager departures (see Finance Director's review).
● UK base rate to remain at 5.25% for a main part of 2024 and see a gradual reduction over the next 24 months to 4%.
● Inflation to remain below 3% for the foreseeable future.
Key stress scenarios that the Directors have then considered include:
● A "bear stress scenario": representing a 10% reduction in management fees, trading commissions, and interest income with the consequent reduction in revenue sharing based costs, compared to the base case in the reporting periods ending 31 March 2025 and 31 March 2026.
● A "severe stress scenario": representing a 20% fall in management fees, trading commissions, and interest income with the consequent reduction in revenue sharing based costs, compared to the base case in the reporting periods ending 31 March 2025 and 31 March 2026.
Liquidity and regulatory capital resource requirements exceed the minimum thresholds in both the base case and bear scenarios. In the severe stress scenario, although the Group has positive liquidity throughout the period, the negative impact on our prudential capital ratio is such that it is projected to fall below the regulatory requirement in February 2026. The Directors consider the severe stress scenario to be remote in view of the prudence built into the base case projections and that further mitigations available to the Directors are not reflected therein. Such mitigating actions within Management's control include reduction in proprietary risk positions, delayed capital expenditure, further reductions in discretionary spend, not paying planned dividends and reductions in employee headcount. Other mitigating actions may include disposal of businesses, stronger cost reductions and potential to seek shareholder support.
Based on the assessment of the Group's financial position and its ability to meet its obligations as and when they fall due, the Directors do not consider there are material uncertainties that cast significant doubt on the Group's ability to continue as a going concern in the 12-month period from the date of approval of the Annual Report and Accounts.
Standards and interpretations affecting the reported results or the financial position
The accounting standards adopted are consistent with those of the previous financial year. Amendments to existing IFRS standards did not have a material impact on the Group's Consolidated Income Statement or the Statement of Financial Position.
The Group does not expect standards yet to be adopted by the UK endorsement body ("UKEB") to have a material impact in future years.
3. Significant accounting policies
Basis of consolidation
The Group financial statements consolidate the financial statements of the Group and companies controlled by the Group (its subsidiaries) made up to 31 March each year. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its powers to direct relevant activities of the entity. Subsidiaries are fully consolidated from the date on which control is obtained and no longer consolidated from the date that control ceases; their results are in the consolidated financial statements up to the date that control ceases.
Entities where the interest is 49% or less are assessed for potential treatment as a Group company against the control tests outlined in IFRS 10, being power over the investee, exposure or rights to variable returns and power over the investee to affect the amount of investors' returns. At the reporting date there were no entities where the Group had an interest below 49%.
All intercompany balances, income and expenses are eliminated on consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree. The acquiree's identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 Business Combinations are recognised at their fair value at the acquisition date.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such remeasurement are recognised in profit or loss.
Contingent consideration is classified either as equity or as a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value, with changes in fair value recognised in profit or loss.
Interests in associate
An associate is an entity in which the Group has significant influence, but not control or joint control. The Group uses the equity method of accounting by which the equity investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the net assets of the associate.
Intangible assets
(a) Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognised directly in the income statement.
Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is not amortised but is reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed in future periods.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units ("CGUs"), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value-in-use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.
(b) Client lists
Client lists are recognised when it is probable that future economic benefits will flow to the Group and the cost of the asset can be measured reliably whilst the risk and rewards have also transferred into the Group's ownership.
Intangible assets classified as client lists are recognised when acquired as part of a business combination, when separate payments are made to acquire clients' assets by adding teams of investment managers, or when acquiring the ownership of client relationships from retiring in-house self-employed investment managers.
Some client list acquisitions are linked to business combination acquisitions such as those related to the historical acquisition of Barker Poland Asset Management LLP and others are related to the purchase of client lists related to an individual investment manager or investment management team recruitment-related costs.
The cost of acquired client lists and businesses generating revenue from clients and investment managers are capitalised. These costs are amortised on a straight-line basis over their expected useful lives of three to 20 years at inception. The amortisation period and amortisation method for intangible assets are reviewed at least each financial year end. All client list intangible assets have a finite useful life. Client lists associated with self-employed investment managers were revised in 2023 so that no client list was amortised for periods longer than six years from 1 April 2022.
Amortisation of intangible fixed assets is included within administrative expenses in the consolidated income statement.
At each statement of financial position date, the Group reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
(c) Software licences
Computer software which is not an integral part of the related hardware is recognised as an intangible asset when the Group is expected to benefit from future use of the software and the costs are reliably measured and amortised using the straight-line method over a useful life of up to five years.
Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date.
Own shares held
Own shares consist of treasury shares which are recognised at cost as a deduction from equity shareholders' funds. Subsequent consideration received for the sale of treasury shares is also recognised in equity with any difference being taken to retained earnings. No gain or loss is recognised on sale of treasury shares.
Revenues recognised under IFRS 15
Revenue from contracts with customers:
● Gross commissions on stockbroking activities are recognised on those transactions whose trade date falls within the financial year, with the execution of the trade being the performance obligation at that point in time.
● Management fees earned from managing various types of client portfolios are accrued daily over the period to which they relate with the performance obligation fulfilled over the same period.
● Fees in respect of financial services activities of Walker Crips Financial Planning are accrued evenly over the period to which they relate with the performance obligation fulfilled over the same period.
● Fees earned from structured investments are recognised on the date the underlying security of the structured investment is traded and settled, with the execution of the trade being the performance obligation at that point in time.
● Fees earned from software offering, Software as a Service ("SaaS"), are accrued evenly over the period to which they relate with the performance obligation fulfilled over the same period.
Other incomes:
● Interest is recognised as it accrues in respect of the financial year.
● Dividend income is recognised when:
o The Group's right to receive payment of dividends is established;
o When it is probable that economic benefits associated with the dividend will flow to the Group;
o The amount of the dividend can be reliably measured; and
● Gains or losses arising on disposal of trading book instruments and changes in fair value of securities held for trading purposes are both recognised in profit and loss.
The Group does not have any long-term contract assets in relation to customers of any fixed and/or considerable lengths of time which require the recognition of financing costs or incomes in relation to them.
Operating expenses
Operating expenses and other charges are provided for in full up to the statement of financial position date on an accruals basis.
Exceptional items
To assist in understanding its underlying performance, the Group identifies certain items of pre-tax income and expenditure and discloses them separately in the Consolidated income statement.
Such items include:
1. profits or losses on disposal or closure of businesses;
2. corporate transaction and restructuring costs;
3. changes in the fair value of contingent non-cash consideration; and
4. non-recurring items considered individually for classification as exceptional by virtue of their nature or size.
The separate disclosure of these items allows a clearer understanding of the Group's trading performance on a consistent and comparable basis, together with an understanding of the effect of non-recurring or large individual transactions upon the overall profitability of the Group. The exceptional items arising in the current period are explained in note 9.
Deferred income
Income received from clients in respect of future periods to the transaction or reporting date are classified as deferred income within creditors until such time as value has been received by the client.
Foreign currencies
The individual financial statements of each of the Group's companies are presented in Pounds Sterling, which is the functional currency of the Group and the presentation currency of the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each statement of financial position date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in the consolidated income statement for the period.
Where consideration is received in advance of revenue being recognised, the date of the transaction reflects the date the consideration is received.
Property, plant and equipment
Fixtures and equipment are stated at historical cost less accumulated depreciation and provision for any impairment. Depreciation is charged so as to write-off the cost or valuation of assets over their estimated useful lives using the straight-line method on the following bases:
Computer hardware 33 1/3% per annum on cost
Computer software between 20% and 33 1/3% per annum on cost
Leasehold improvements over the term of the lease
Furniture and equipment 33 1/3% per annum on cost
Right-of-use assets held under contractual arrangements are depreciated over the lengths of their respective contractual terms, as prescribed under IFRS 16.
The gain or loss on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income. The residual values and estimated useful life of items within property, plant and equipment are reviewed at least at each financial year end. Any shortfalls in carrying value are impaired immediately through profit or loss.
Taxation
The tax expense for the period comprises current and deferred tax.
Tax is recognised in the income statement, except to the extent that it relates to items recognised directly in equity. In this case the tax is also recognised directly in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company's subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted, or substantially enacted, by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, associates and joint arrangements, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Generally, the Group is unable to control the reversal of the temporary difference for associates, unless there is an agreement in place that gives the Group the ability to control the reversal of the temporary difference not recognised.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries, associates and joint arrangements only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Financial assets and liabilities
Financial assets and liabilities are recognised in the Consolidated Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.
At initial recognition, the Group measures a financial asset or financial liability at its fair value plus or minus transaction costs. Transaction costs of financial assets and financial liabilities carried at fair value through profit or loss ("FVTPL") are expensed in the income statement. Immediately after initial recognition, an expected credit loss allowance ("ECL") is recognised for financial assets measured at amortised cost, which results in an accounting loss being recognised in profit or loss when an asset is newly originated.
The Group does not use hedge accounting.
a) Financial assets
Classification and subsequent measurement
The Group classifies its financial assets in the following measurement categories:
● Fair value through profit or loss ("FVTPL");
● Fair value through other comprehensive income ("FVTOCI"); or
● Amortised cost.
Financial assets are classified as current or non-current depending on the contractual timing for recovery of the asset. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
(i) Debt instruments
Classification and subsequent measurement of debt instruments depend on:
● the Group's business model for managing the asset; and
● the cash flow characteristics of the asset.
Business model: The business model reflects how the Group manages the assets in order to generate cash flows. That is, whether the Group's objective is solely to collect the contractual cash flows from the assets, to collect both the contractual cash flows and cash flows arising from the sale of assets, or solely or mainly to collect cash flows arising from the sale of assets. Factors considered by the Group include past experience on how the contractual cash flows for these assets were collected, how the assets' performance is evaluated, and how risks are assessed and managed.
Cash flow characteristics of the asset: Where the business model is to hold assets to collect contractual cash flows, the Group assesses whether the financial instruments' contractual cash flows represent solely payments of principal and interest ("the SPPI test"). In making this assessment, the Group considers whether the contractual cash flows are consistent with a basic lending instrument.
Based on these factors, the Group classifies its debt instruments into one of two measurement categories:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest ("SPPI"), and that are not designated at FVTPL, are measured at amortised cost. Amortised cost is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortisation, using the effective interest rate method, of any difference between that initial amount and the maturity amount, adjusted by any ECL recognised. The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected life of the financial asset to the gross carrying amount. Interest income from these financial assets is included within investment revenues using the effective interest rate method.
Fair value through profit or loss ("FVTPL"): Assets that do not meet the criteria for amortised cost or fair value through other comprehensive income ("FVTOCI") are measured at fair value through profit or loss.
Reclassification
The Group reclassifies debt instruments when and only when its business model for managing those assets changes. The reclassification takes place from the start of the first reporting period following the change.
Impairment
The Group assesses on a forward-looking basis the expected credit loss ("ECL") associated with its debt instruments held at amortised cost. The Group recognises a loss allowance for such losses at each reporting date. On initial recognition, the Group recognises a 12-month ECL. At the reporting date, if there has been a significant increase in credit risk, the loss allowance is revised to the lifetime expected credit loss.
The measurement of ECL reflects:
● an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes;
● the time value of money; and
● reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.
The Group adopts the simplified approach to trade receivables and contract assets, which allows entities to recognise lifetime expected losses on all assets, without the need to identify significant increases in credit risk (i.e. no distinction is needed between 12-month and lifetime expected credit losses).
(ii) Equity instruments
Investments are recognised and derecognised on a trade date basis where a purchase or sale of an investment is under a contract whose terms require delivery of the instrument within the timeframe established by the market concerned, and are initially measured at fair value.
The Group subsequently measures all equity investments at fair value through profit and loss. Changes in the fair value of financial assets at FVTPL are recognised in revenue within the Consolidated Income Statement.
(iii) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts are shown within current liabilities in the statement of financial position.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
b) Financial liabilities
Classification and subsequent measurement
Financial liabilities are classified and subsequently measured at amortised cost.
Financial liabilities are derecognised when they are extinguished.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
Trade payables
Trade payables are classified at amortised cost. Due to their short-term nature, their carrying amount is considered to be the same as their fair value.
Bank overdrafts
Interest-bearing bank overdrafts are initially measured at fair value and shown within current liabilities. Finance charges are accounted for on an accrual basis in profit or loss using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Equity instruments
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Where any Group company purchases the Company's equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company's equity holders, until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company's equity holders.
Share Incentive Plan ("SIP")
The Group has an incentive policy to encourage all members of staff to participate in the ownership and future prosperity of the Group. All employees can participate in the SIP following three months of service. Employees may contribute a maximum of 10% of their gross salary in regular monthly payments (being not less than £10 and not greater than £150) to acquire Ordinary Shares in the Parent Company (Partnership Shares). Partnership Shares are acquired monthly.
The matching option was reinstated to one-to-one from 1 April 2023 from the previous one-half for every Partnership Share purchased. All shares awarded under this scheme have been purchased in the market by the Trustees of the SIP.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the statement of financial position date, and are discounted to present value where the effect is material.
Long-term liabilities - deferred cash and shares consideration
Amounts payable to personnel under recruitment contracts in respect of the client relationships, which transfer to the Group, are treated as long-term liabilities if the due date for payment of cash consideration is beyond the period of one year after the year-end date. The value of shares in all cases is derived by a formula based on the value of client assets received in conjunction with the prevailing share price at the date of issue which in turn determines the number of shares issuable.
Pension costs
The Group contributes to defined contribution personal pension schemes for selected employees. For defined contribution schemes, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expenses when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. The contribution rate is based on annual salary and the amount is charged to the income statement on an accrual basis.
Dividends paid
Equity dividends are recognised when they become legally payable. Dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are approved by the Company's shareholders. There is no requirement to pay dividends unless approved by the shareholders by way of written resolution where there is sufficient cash to meet current liabilities, and without detriment of any financial covenants, if applicable.
Leases
The Group leases various offices, software and equipment that are recognised under IFRS 16. The Group's lease contracts are typically made for fixed periods of two to 10 years and extension and termination options enabling maximise operational flexibility are included in a number of property and software leases across the Group.
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
● Leases of low value assets; and
● Leases with a duration of 12 months or less.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use assets are depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:
● fixed payments (including in-substance fixed payments), less any lease incentives receivable;
● variable lease payments that are based on an index or a rate;
● amounts expected to be payable by the lessee under residual value guarantees;
● the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
● payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases held by the Group, the lessee's incremental borrowing rate is used.
To determine the incremental borrowing rate, the Group:
● where possible, uses recent third-party financing received by the individual lessee as a starting point, adjust to reflect changes in financing conditions since third-party financing was received;
● uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group, which does not have recent third-party financing; and
● make adjustments specific to the lease, for example term, country, currency and security.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit and loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
● the amount of the initial measurement of lease liability;
● any lease payments made at or before the commencement date less any lease incentives received;
● any initial direct costs; and
● restoration costs.
Right-of-use assets are depreciated over the shorter of the lease term and the useful economic life of the underlying asset on a straight-line basis.
The Group does not have any leasing activities acting as a lessor.
Earnings per share
Basic earnings per share is calculated by dividing:
● the profit attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares;
● by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year and excluding treasury shares (note 15).
There are currently no obligations present that could have a dilutive effect on ordinary shares.
Share-based payments
Share-based payments are remuneration payments to selected employees that take the form of an award of shares in Walker Crips Group plc. Employees are not able to exercise such awards in full until a period of two to five years, based on the terms of each individual award (the vesting period).
Equity-settled share-based payments to employees are measured at fair value of the equity instruments at the date of grant. The fair value excludes the effect of non-market-based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 36.
As the share-based payment awards are for fully paid free shares, fair value is measured as the market value of the shares at each grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of the number of shares that will eventually vest. At each reporting date, the Group revises its estimate of the shares expected to vest as a result of the effect of non-market based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the Income Statement such that the cumulative expense reflects the revised estimate.
4. Key sources of estimation uncertainty and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Impairment of goodwill - estimation and judgement
Determining whether goodwill is impaired requires an estimation of the fair value less costs to sell and the value-in-use of the cash-generating units to which goodwill has been allocated. The fair value less costs to sell involves estimation of values based on the application of earnings multiples and comparison to similar transactions. The value-in-use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and apply a discount rate in order to calculate present value. The assumptions used and inputs involve judgements and create estimation uncertainty. These assumptions have been stress-tested as described in note 16. The carrying amount of goodwill at the balance sheet date was £4.4 million (2023: £4.4 million) as shown in note 16.
Other intangible assets - judgement
Acquired client lists are capitalised based on current fair values. 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. 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. There were no new purchases of client lists during the year.
Key assumptions in this regard consist of the following:
1. The continuing going concern of the Company;
2. Life expectancy of clients based on the Office for National Statistics;
3. Succession plans in place for staff and investment managers;
4. Amounts of AUMA are consistent on average;
5. A growth rate of client list AUMA of a conservative 2%; and
6. A discount rate of 12%.
Provisions - estimation and judgement
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors' best estimate of the expenditure required to settle the obligation at the statement of financial position date, and are discounted to present value where the effect is material.
IFRS 16 "Leases" - estimation and judgement
IFRS 16 requires certain judgements and estimates to be made and those significant judgements are explained below.
The Group has opted to use single discount rates for leases with reasonably similar characteristics. The discount rates used have had an impact on the right-of-use assets' values, lease liabilities on initial recognition and lease finance costs included within the income statement.
Where a lease includes the option for the Group to extend the lease term, the Group has exercised the judgement, based on current information, that such leases will be extended to the full length available, and this is included in the calculation of the value of the right-of-use assets and lease liabilities on initial recognition and valuation at the reporting date.
Provision for dilapidations - estimation and judgement
The Group has made provisions for dilapidations under six leases for its offices. The Group entered into one new property lease in the period, which was the renewal of an existing lease that had ended in the period. The amounts of the provisions are, where possible, estimated using quotes from professional building contractors. The property, plant and equipment elements of the dilapidations are depreciated over the terms of their respective leases. The obligations in relation to dilapidations are inflated using an estimated rate of inflation and discounted using appropriate gilt rates to present value. The change in liability attributable to inflation and discounting is recognised in interest expense.
Provision for stamp duty liability - estimation and judgement
The Group, in the previous year, identified an obligation in respect of stamp duty reserve tax which has arisen over a number of years. An initial provision of £878,000 was made in the previous year and subsequently upon management investigation and external tax advice, the liability including professional fees outstanding, is estimated to be £355,000 which is fully provided in the financial statements (see note 26).
5. Revenue
An analysis of the Group's revenue is as follows:
| |
|
| 2024 | | | 2023 |
|
| Broking income £'000 | Non- broking income £'000 | Total £'000 | Broking income £'000 | Non- broking income £'000 | Total £'000 |
| Stockbroking commission | 4,934 | - | 4,934 | 6,008 | - | 6,008 |
| Fees and other revenue * | - | 24,189 | 24,189 | - | 23,665 | 23,665 |
| Investment Management | 4,934 | 24,189 | 29,123 | 6,008 | 23,665 | 29,673 |
| Wealth Management, Financial Planning & Pensions | - | 2,451 | 2,451 | - | 1,939 | 1,939 |
| Revenue | 4,934 | 26,640 | 31,574 | 6,008 | 25,604 | 31,612 |
| Investment revenue (see note 10) | - | 446 | 446 | - | 95 | 95 |
| Total income | 4,934 | 27,086 | 32,020 | 6,008 | 25,699 | 31,707 |
| % of total income | 15.4% | 84.6% | 100.0% | 18.9% | 81.1% | 100.0% |
* Includes £5.8 million (2023: £3.2 million) of interest income from managing client trading cash funds.
Timing of revenue recognition
The following table presents operating income analysed by the timing of revenue recognition of the operating segment providing the service:
| 2024 | Investment Management £'000 | Financial Planning & Wealth Management £'000 | SaaS £'000 | Consolidated year ended 31 March 2024 £'000 |
| Revenue from contracts with customers |
|
|
|
|
| Products and services transferred at a point in time | 8,176 | 408 | 17 | 8,601 |
| Products and services transferred over time | 14,959 | 2,043 | - | 17,002 |
| |
|
|
|
|
| Other revenue |
|
|
|
|
| Products and services transferred at a point in time | 153 | - | - | 153 |
| Products and services transferred over time | 5,818 | - | - | 5,818 |
| | 29,106 | 2,451 | 17 | 31,574 |
| 2023 | Investment Management £'000 | Financial Planning & Wealth Management £'000 |
SaaS £'000 | Consolidated year ended 31 March 2023 £'000 |
| Revenue from contracts with customers | | | | |
| Products and services transferred at a point in time | 10,104 | 272 | 16 | 10,392 |
| Products and services transferred over time | 16,295 | 1,666 | - | 17,961 |
| | | | | |
| Other revenue | | | | |
| Products and services transferred at a point in time | 75 | 1 | - | 76 |
| Products and services transferred over time | 3,183 | - | - | 3,183 |
| | 29,657 | 1,939 | 16 | 31,612 |
6. Segmental analysis
For segmental reporting purposes, the Group currently has three operating segments; Investment Management, being portfolio-based transaction execution and investment advice; Financial Planning, being financial planning, wealth management and pensions administration; and Software as a Service ("SaaS") comprising provision of regulatory and admin software and bespoke cloud software to companies. Unallocated corporate expenses, assets and liabilities are not considered to be allocatable accurately, or fairly, under any known basis of allocation and are therefore disclosed separately.
Walker Crips Investment Management's activities focus predominantly on investment management of various types of portfolios and asset classes.
Walker Crips Financial Planning provides advisory and administrative services to clients in relation to their wealth management, financial planning, life insurance, inheritance tax and pension arrangements.
EnOC Technologies Limited ("EnOC") provides regulatory and admin software to their business partners, including all of the Group'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.
|
2024 | Investment Management £'000 | Financial Planning & Wealth Management £'000 | SaaS £'000 | Consolidated year ended 31 March 2024 £'000 |
| Revenue |
|
|
|
|
| Revenue from contracts with customers | 23,135 | 2,451 | 17 | 25,603 |
| Other revenue | 5,971 | - | - | 5,971 |
| Total revenue | 29,106 | 2,451 | 17 | 31,574 |
| |
|
|
|
|
| Results |
|
|
|
|
| Segment result | 1,632 | (629) | (490) | 513 |
| Unallocated corporate expenses |
|
|
| (450) |
| Operating profit |
|
|
| 63 |
| Investment revenue |
|
|
| 446 |
| Finance costs |
|
|
| (122) |
| Profit before tax |
|
|
| 387 |
| Tax |
|
|
| (19) |
| Profit after tax |
|
|
| 368 |
|
2024 | Investment Management £'000 | Financial Planning & Wealth Management £'000 | SaaS £'000 | Consolidated year ended 31 March 2024 £'000 |
| Other information |
|
|
|
|
| Capital additions | 463 | 24 | - | 487 |
| Depreciation | 261 | 27 | - | 288 |
| |
|
|
|
|
| Statement of financial positions |
|
|
|
|
| Assets |
|
|
|
|
| Segment assets | 54,333 | 1,279 | 406 | 56,018 |
| Unallocated corporate assets |
|
|
| 1,304 |
| Consolidated total assets |
|
|
| 57,322 |
| |
|
|
|
|
| Liabilities |
|
|
|
|
| Segment liabilities | 37,984 | 315 | 242 | 38,541 |
| Unallocated corporate liabilities |
|
|
| (2,540) |
| Consolidated total liabilities |
|
|
| 36,001 |
|
2023 | Investment Management £'000 | Financial Planning & Wealth Management £'000 | SaaS £'000 | Consolidated year ended 31 March 2023 £'000 |
| Revenue | | | | |
| Revenue from contracts with customers | 26,399 | 1,938 | 16 | 28,353 |
| Other revenue | 3,258 | 1 | - | 3,259 |
| Total revenue | 29,657 | 1,939 | 16 | 31,612 |
| | | | | |
| Results | | | | |
| Segment result | 1,553 | (310) | (128) | 1,115 |
| Unallocated corporate expenses | | | | (490) |
| | | | | 625 |
| Investment revenue | | | | 95 |
| Finance costs | | | | (88) |
| Profit before tax | | | | 632 |
| Tax | | | | (214) |
| Profit after tax | | | | 418 |
|
2023 | Investment Management £'000 | Financial Planning & Wealth Management £'000 | SaaS £'000 | Consolidated year ended 31 March 2023 £'000 |
| Other information | | | | |
| Capital additions | 368 | 10 | - | 378 |
| Depreciation | 273 | 58 | - | 331 |
| | | | | |
| Statement of financial positions | | | | |
| Assets | | | | |
| Segment assets | 57,255 | 1,163 | 406 | 58,824 |
| Unallocated corporate assets | | | | 4,256 |
| Consolidated total assets | | | | 63,080 |
| | | | | |
| Liabilities | | | | |
| Segment liabilities | 39,546 | 247 | 329 | 40,122 |
| Unallocated corporate liabilities | | | | 1,792 |
| Consolidated total liabilities | | | | 41,914 |
The following table analyses the above segmental breakdown without cancelling intercompany transactions to show the value of each segment to the Group itself. Since EnOC acquired the intellectual property of the Advance Walkers Online platform on 1 April 2023, it has become a profitable entity, reflecting its value to the Group.
|
2024 | Investment Management £'000 | Financial Planning & Wealth Management £'000 | SaaS £'000 | Consolidated year ended 31 March 2024 £'000 |
| Revenue |
|
|
|
|
| Revenue from contracts with customers | 23,135 | 2,544 | 609 | 26,288 |
| Other revenue | 5,971 | - | - | 5,971 |
| Total revenue | 29,106 | 2,544 | 609 | 32,259 |
| |
|
|
|
|
| Results |
|
|
|
|
| Segment result | 947 | (536) | 102 | 513 |
| Unallocated corporate expenses |
|
|
| (450) |
| |
|
|
| 63 |
| Investment revenue |
|
|
| 446 |
| Finance costs |
|
|
| (122) |
| Profit before tax |
|
|
| 387 |
| Tax |
|
|
| (19) |
| Profit after tax |
|
|
| 368 |
7. Commissions and fees paid
Commissions and fees paid comprises:
|
| 2024 £'000 | 2023 £'000 |
| To authorised external agents | - | 3 |
| To self-employed certified persons | 5,769 | 7,261 |
| | 5,769 | 7,264 |
8. Profit for the year
Profit for the year on continuing operations has been arrived at after charging:
|
| 2024 £'000 | 2023 £'000 |
| Depreciation of property, plant and equipment (see note 18) | 288 | 331 |
| Depreciation of right-of-use assets (see note 19) | 636 | 771 |
| Amortisation of intangibles (see note 17) | 1,011 | 970 |
| Staff costs (see note 12) | 16,898 | 14,475 |
| Recharge of staff costs | (278) | (248) |
| Settlement costs | 1,029 | 994 |
| Communications | 1,385 | 1,387 |
| Computer expenses | 1,000 | 831 |
| Other expenses | 3,736 | 3,442 |
| Auditor's remuneration | 262 | 216 |
| | 25,967 | 23,169 |
A more detailed analysis of auditor's remuneration is provided below:
| | 2024 £'000 | 2024 % | 2023 £'000 | 2023 % |
| Audit services |
|
| | |
| Fees payable to the Company's auditor for the audit of its annual accounts | 113 | 43 | 84 | 39 |
| The audit of the Company's subsidiaries pursuant to legislation - current year | 119 | 45 | 119 | 55 |
| |
|
| | |
| Non-audit services |
|
| | |
| FCA client assets reporting | 30 | 12 | 13 | 6 |
| | 262 | 100 | 216 | 100 |
9. 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.
|
| 2024 £'000 | 2023 £'000 |
| Exceptional items included within operating profit |
| |
| SDRT liability to HMRC | (225) | 131 |
| Accelerated amortisation | - | 423 |
| Total exceptional items | (225) | 554 |
In the current year, the final SDRT liability to HMRC has been disclosed to HMRC, which HMRC is examining. This adjustment reflects the restatement of the final expected liability, net of actual and estimated professional costs.
In the prior year, the following items were classified as exceptional items due to their materiality and non-recurring nature. These were:
a) SDRT liability to HMRC resulting from a system monitoring error where stamp duty was omitted from a small number of client contracts.
b) Amortisation of client list intangible assets of £423,000.
10. Investment revenue
Investment revenue comprises:
|
| 2024 £'000 | 2023 £'000 |
| Interest on bank deposits | 427 | 48 |
| Dividends from equity investment | 19 | 47 |
| | 446 | 95 |
11. Finance costs
Finance costs comprises:
|
| 2024 £'000 | 2023 £'000 |
| Interest on lease liabilities | (99) | (86) |
| Interest on dilapidation provisions | (2) | 3 |
| Interest on overdue liabilities | (21) | (5) |
| | (122) | (88) |
12. Staff costs
Particulars of employee costs (including Directors) are as shown below:
|
| 2024 £'000 | 2023 £'000 |
| Wages and salaries | 13,891 | 11,943 |
| Social security costs | 1,328 | 1,262 |
| Share incentive plan | 43 | 60 |
| Other employment costs | 1,636 | 1,210 |
| | 16,898 | 14,475 |
Staff costs do not include commissions payable, 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 26 certified self-employed account executives (2023: 32).
The average number of staff employed during the year was:
|
| 2024 Number | 2023 Number |
| Executive Directors | 2 | 2 |
| Certification and approved staff | 60 | 49 |
| Other staff | 157 | 155 |
| | 219 | 206 |
The table incorporates the staff classification in accordance with the Senior Managers and Certification Regime ("SM&CR").
13. Taxation
The tax charge is based on the profit for the year of continuing operations and comprises:
| | 2024 £'000 | 2023 £'000 |
| UK corporation tax at 25% (2023: 19%) | 218 | 228 |
| Prior year adjustments | (175) | (7) |
| Origination and reversal of timing differences during the current period | (24) | (46) |
| | 19 | 175 |
Corporation tax is calculated at 25% (2023: 19%) of the estimated assessable profit for the year.
The charge for the year can be reconciled to the profit per the income statement as follows:
| | 2024 £'000 | 2023 £'000 |
| Profit before tax | 387 | 632 |
| Tax on profit on ordinary activities at the standard rate UK corporation tax rate of 25% (2023: 19%) | 97 | 120 |
| |
| |
| Effects of: |
| |
| Tax rate changes for deferred tax | - | (8) |
| Expenses not deductible for tax purposes | 9 | 64 |
| Prior year adjustment * | (175) | (14) |
| Fixed asset differences | 168 | 65 |
| Non-taxable income ** | (93) | - |
| Other | 13 | (13) |
| | 19 | 214 |
* The prior year adjustment only relates to tax disclosure where the Group received capital allowances on capital expenditure that were previously not available due to expenditure recorded in the loss-making parent entity. Since the assets were transferred to a profit-making subsidiary on 1 April 2022, capital allowances claimed with HMRC and deductions received.
** This relates to the above matter where a landlord contribution write-down was incorrectly taxed in prior years, which was subsequently by our tax advisers and reversed, with the credit recognised in the current year.
Current tax has been provided at the rate of 25%. Deferred tax has been provided at 25% (2023: 25%).
The exceptional credit of £225,000 (2023: the exceptional charge of £554,000), disclosed separately on the consolidated income statement, is taxable to the value of £56,250 (2023: tax deductible of £105,000) of corporation tax. Classifying these credits/costs as exceptional has no effect on the tax liability.
14. 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:
| | 2024 £'000 | 2023 £'000 |
| Final dividend for the year ended 31 March 2023 of 0.25p (2022: 1.20p) per share | 107 | 511 |
| Interim dividend for the year ended 31 March 2024 of 0.25p (2023: 0.25p) per share | 106 | 106 |
| | 213 | 617 |
| Proposed final dividend for the year ended 31 March 2024 of 0.25p (2023: 0.25p) per share | 106 | 106 |
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.
15. Earnings per share
The calculation of basic earnings per share for continuing operations is based on the post-tax profit for the financial year of £368,000 (2023: £418,000) and divided by 42,577,328 (2023: 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 earnings per share in the current year or in the prior year.
The calculation of the basic earnings per share is based on the following data:
| |
2024 £'000 |
2023 £'000 |
| Earnings for the purpose of basic earnings per share |
|
|
| being net profit attributable to equity holders of the Parent Company | 368 | 418 |
Number of shares
| | 2024 Number | 2023 Number |
| Weighted average number of Ordinary Shares for the purposes of basic earnings per share | 42,577,328 | 42,577,328 |
This produced basic earnings per share of 0.86 pence (2023: 0.98 pence).
16. Goodwill
| | £'000 |
| Cost | |
| At 1 April 2022 | 7,056 |
| At 1 April 2023 | 7,056 |
| At 31 March 2024 | 7,056 |
| | |
| Accumulated impairment | |
| At 1 April 2022 | 2,668 |
| At 1 April 2023 | 2,668 |
| Impaired during the year | - |
| At 31 March 2024 | 2,668 |
| | |
| Carrying amount | |
| At 31 March 2024 | 4,388 |
| At 31 March 2023 | 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:
|
| 2024 £'000 | 2023 £'000 |
| London York Fund Managers Limited CGU ("London York") | 2,901 | 2,901 |
| Barker Poland Asset Management LLP CGU ("BPAM") | 1,487 | 1,487 |
| | 4,388 | 4,388 |
The recoverable amounts of the CGUs have been determined based upon value-in-use calculations for the London York CGU and fair value, less costs of disposal for the BPAM CGU.
The London York computation was based on discounted five-year cash flow projections and terminal values. The key assumptions for these calculations are a pre-tax discount rate of 12%, terminal growth rates of 2% and the expected changes to revenues and costs during the five-year projection period based on discussions with senior management, past experience, future expectations in light of anticipated market and economic conditions, comparisons with our peers and widely available economic and market forecasts. The pre-tax discount rate is determined by management based on current market assessments of the time value of money and risks specific to the London York CGU. The base value-in-use cash flows were stress tested for an increase in discount rates to 16% and a 20% fall in net inflows resulting in no impairment.
The discount rate would need to increase above 28% for the London York CGU value-in-use to equal the respective carrying values. Revenues would need to fall by 63.7% 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 £13 million (2023: £10 million) with headroom, after selling costs, of £9.8 million (2023: £6.7 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 (Note 20) having used valuation techniques not based on directly observable market data. A 36% decrease in BPAM's profit after tax across five years would result in reducing the headroom to a negligible value.
17. Other intangible assets
| | Software licences £'000 | Client lists £'000 | Total £'000 |
| Cost | | | |
| At 1 April 2022 | 2,899 | 10,697 | 13,596 |
| Reclassification of assets relating to IFRS 16 | (22) | - | (22) |
| Additions in the year | 45 | 266 | 311 |
| At 1 April 2023 | 2,922 | 10,963 | 13,885 |
| Additions in the year | 104 | - | 104 |
| At 31 March 2024 | 3,026 | 10,963 | 13,989 |
| | | | |
| Amortisation | | | |
| At 1 April 2022 | 2,644 | 5,200 | 7,844 |
| Charge for the year | 137 | 833 | 970 |
| Charge for the year - exceptional cost (note 9) | - | 423 | 423 |
| At 1 April 2023 | 2,781 | 6,456 | 9,237 |
| Charge for the year | 100 | 911 | 1,011 |
| At 31 March 2024 | 2,881 | 7,367 | 10,248 |
| | | | |
| Carrying amount | | | |
| At 31 March 2024 | 145 | 3,596 | 3,741 |
| At 31 March 2023 | 141 | 4,507 | 4,648 |
The intangible assets are amortised over their estimated useful lives in order to determine amortisation rates. "Client lists" are assessed on an asset-by-asset basis and are amortised over periods of three to 20 years and "Software licences" are amortised over five years.
There are no indications that the value attributable to client lists or software licences should be further impaired.
18. Property, plant and equipment
| Owned fixed assets | Leasehold improvement, furniture and equipment £'000 | Computer hardware £'000 | Total £'000 |
| Cost | | | |
| At 1 April 2022 | 2,753 | 1,590 | 4,343 |
| Additions in the year | 99 | 52 | 151 |
| At 1 April 2023 | 2,852 | 1,642 | 4,494 |
| Additions in the year | 59 | 55 | 114 |
| At 31 March 2024 | 2,911 | 1,697 | 4,608 |
| | | | |
| Accumulated depreciation | | | |
| 1 April 2022 | 1,633 | 1,541 | 3,174 |
| Charge for the year | 297 | 34 | 331 |
| 1 April 2023 | 1,930 | 1,575 | 3,505 |
| Charge for the year | 258 | 30 | 288 |
| At 31 March 2024 | 2,188 | 1,605 | 3,793 |
| | | | |
| Carrying amount | | | |
| At 31 March 2024 | 723 | 92 | 815 |
| At 31 March 2023 | 922 | 67 | 989 |
19. Right-of-use assets
| |
| Computer | Computer |
|
| | Offices | software | hardware | Total |
| | £'000 | £'000 | £'000 | £'000 |
| Cost | | | | |
| 1 April 2023 | 4,650 | 1,067 | 95 | 5,812 |
| Additions | 100 | 271 | - | 371 |
| At 31 March 2024 | 4,750 | 1,338 | 95 | 6,183 |
| | | | | |
| Accumulated depreciation | | | | |
| 1 April 2023 | 2,486 | 906 | 80 | 3,472 |
| Charge for the year | 480 | 141 | 15 | 636 |
| At 31 March 2024 | 2,966 | 1.047 | 95 | 4,108 |
| | | | | |
| Carrying amount | | | | |
| At 31 March 2024 | 1,784 | 291 | - | 2,075 |
| At 31 March 2023 | 2,164 | 161 | 15 | 2,340 |
20. Investments - fair value through profit or loss
Non-current asset investments
The Group did not hold any non-current asset investments at the reporting date.
Current asset investments
|
| As at 31 March 2024 £'000 | As at 31 March 2023 £'000 |
| Trading investments |
| |
| Investments - fair value through profit or loss | 538 | 1,276 |
Financial assets at fair value through profit or loss represent investments in equity securities and collectives that present the Group with opportunity for return through dividend income, interest and trading gains. The fair values of these securities are based on quoted market prices and the Group is able to liquidate these assets at short notice.
The following provides an analysis of financial instruments that are measured after initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. The Group's financial assets held at fair value through profit and loss under current assets fall within this category;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). The Group does not hold financial instruments in this category; and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). The Group does not hold financial instruments in this category.
|
| Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 |
| At 31 March 2024 |
|
|
|
|
| Financial assets held at fair value through profit and loss | 538 | - | - | 538 |
| At 31 March 2023 | | | | |
| Financial assets held at fair value through profit and loss | 1,276 | - | - | 1,276 |
Further IFRS 13 disclosures have not been presented here as the balance represents 0.939% (2023: 2.022%) of total assets. There were no transfers of investments between any of the levels of hierarchy during the year.
21. Trade and other receivables
|
| 2024 £'000 | 2023 £'000 |
| Amounts falling due within one year: |
| |
| Due from clients, brokers and recognised stock exchanges at amortised cost | 24,630 | 28,554 |
| Other debtors at amortised cost | 1,191 | 2,148 |
| Prepayments and accrued income | 6,081 | 5,599 |
| | 31,902 | 36,301 |
The Group acts as an agent for clients on the trading of their investments. As an agent, the Group only recognises amounts due from or to clients, brokers and recognised stock exchanges as trade receivables and trade payables (see note 25) respectively. As a result, no underlying investments are recognised on the Group's consolidated statement of financial position.
22. Cash and cash equivalents
| | 2024 £'000 | 2023 £'000 |
| Cash deposits held at bank, repayable on demand without penalty | 13,863 | 13,138 |
| | 13,863 | 13,138 |
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 2024 was £213,695,000 (2023: £267,258,000).
The credit quality of banks holding the Group's cash at 31 March 2024 is analysed below with reference to credit ratings awarded by Fitch.
|
| 2024 £'000 | 2023 £'000 |
| A+ | 5,676 | 5,400 |
| AA- | 8,187 | 7,738 |
| | 13,863 | 13,138 |
23. Deferred tax liability
|
| Capital allowances £'000 | Short-term temporary differences and other £'000 | Total £'000 |
| At 1 April 2022 | (5) | (409) | (414) |
| Use of loss brought forward | - | 2 | 2 |
| Debit to the income statement | - | 41 | 41 |
| At 1 April 2023 | (5) | (366) | (371) |
| Use of loss brought forward | - | - | - |
| Debit to the income statement | (2) | 113 | 111 |
| At 31 March 2024 | (7) | (253) | (260) |
Deferred income tax assets are recognised for tax loss carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group did not recognise deferred income tax assets (2023: £12,362) in respect of losses amounting to £nil (2023: £65,063) that can be carried forward against future taxable income.
24. Financial instruments and risk profile
Financial risk management
The Board has overall responsibility for the determination of the Group's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group's Risk function. The Board receives periodic reports from the Group Risk Team through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.
Procedures and controls are in place to identify, assess and ultimately control the financial risks faced by the Group arising from its use of financial instruments. Steps are taken to mitigate identified risks with established and effective procedures and controls, operating systems, management information and training of staff.
The Group's risk appetite, along with the procedures and controls mentioned above, are laid out in the Group's Internal capital adequacy and risk assessment (ICARA).
The overall risk appetite for the Group is considered by Management to be low, despite operating in a marketplace where financial risk is inherent in investment management and financial services.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. The Group considers its financial risks arising from its use of financial instruments to fall into three main categories:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
Financial risk management is a central part of the Group's strategic management which recognises that an effective risk management programme can increase a business's chances of success and reduce the possibility of failure. Continual assessment, monitoring and updating of procedures and benchmarks are all essential parts of the Group's risk management strategy.
(i) Credit risk management practices
The Group's credit risk is the risk of loss through default by a counterparty and, accordingly, the Group's definition of default is primarily attributable to its trade receivables or pledged collateral which is the risk that a client, market counterparty or recognised stock exchange will be unable to pay amounts to settle a trade in full when due. Other credit risks, such as free delivery of securities or cash, are not deemed to be significant. Significant changes in the economy or a particular sector could result in losses that are different from those that the Group has provided for at the year-end date.
All financial assets at the year-end were assessed for credit impairment and no material amounts have arisen having evaluated the age of overdue debtors, the quality of recourse to third parties and the availability of mitigation through the disposal of liquid collateral in the form of marketable securities. The Group's write-off policy is driven by the historic dearth of instances where material irrecoverable losses have been incurred. Where the avenues of recourse and mitigation outlined above have not been successful, the outstanding balance, or residual balance if sale proceeds do not fully cover an exposure, will be written off.
The Board is responsible for oversight of the Group's credit risk. The Group accepts a limited exposure to credit risk but aims to mitigate and minimise the risk through various methods. There is no material concentrated credit risk as the exposures are spread across a substantial number of clients and counterparties.
Trade receivables (includes settlement balances)
Settlement risk arises in any situation where a payment of cash or transfer of a security is made in the expectation of a corresponding delivery of a security or receipt of cash. Settlement balances arise with clients, market counterparties and recognised stock exchanges.
In the vast majority of cases, control of the stock purchased will remain with the Group until client monetary balances are fully settled.
Where there is an absence of securities collateral, clients are usually required to hold sufficient funds in their managed deposit account prior to the trade being conducted. Holding significant amounts of client money helps the Group to manage credit risks arising with clients. Many of our clients also hold significant amounts of stock and other securities in our nominee subsidiary company, providing additional security should a specific transaction fail to be settled and the proceeds of such securities disposed of can be used to settle all outstanding obligations.
In addition, the client side of settlement balances are normally fully guaranteed by our commission-sharing certified persons who conduct transactions and manage the relationships with our mutual clients.
Exposures to market counterparties also arise in the settlement of trades or when collateral is placed with them to cover open trading positions. Market counterparties are usually other FCA-regulated firms and are considered creditworthy, some reliance being placed on the fact that other regulated firms would be required to meet the stringent capital adequacy requirements of the FCA.
Maximum exposure to credit risk:
|
| 2024 £'000 | 2023 £'000 |
| Cash | 13,863 | 13,138 |
| Trade receivables | 24,630 | 28,554 |
| Other debtors | 1,191 | 2,148 |
| Accrued interest income | 767 | 591 |
| | 40,451 | 44,431 |
An ageing analysis of the Group's financial assets is presented in the following table:
|
At 31 March 2024 | Current £'000 | 0-1 month £'000 | 2-3 months £'000 | Over 3 months £'000 | Carrying value £'000 |
| Trade receivables | 22,789 | 1,524 | 51 | 266 | 24,630 |
| Cash and cash equivalent | 13,863 | - | - | - | 13,863 |
| Other debtors | 1,188 | 3 | - | - | 1,191 |
| Accrued interest income | 767 | - | - | - | 767 |
| | 38,607 | 1,527 | 51 | 266 | 40,451 |
Expected credit loss
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit risk and ageing. The contract assets have similar risk characteristics to the trade receivables for similar types of contracts.
The Group undertakes a daily assessment of credit risk which includes monitoring of client and counterparty exposure and credit limits. New clients are individually assessed for their creditworthiness using external ratings where available and all institutional relationships are monitored at regular intervals.
As at 31 March 2024, the Directors of the Company reviewed and assessed the Group's existing assets for impairment using the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets and no additional impairments have been recognised on application and no material defaults are anticipated within the next 12 months.
Concentration of credit risk
In addition, daily risk management procedures to actively monitor disproportionately large trades by a customer or market counterparty are in place. The financial standing, pattern of trading, type and size of security or instrument traded are amongst the factors taken into consideration.
(ii) Liquidity risk
Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group's policy is to maintain sufficient cash to allow it to meet its liabilities when they become due.
Historically, sufficient underlying cash has been prevalent in the business for many years as the Group is normally cash generative. The risk of unexpected large cash outflows could arise where significant amounts are being settled daily of which only a fraction forms the commission earned by the Group. This could be due to clients settling late or bad deliveries to the market or CREST resulting in a payment delay from the market side. The Group also commits in advance to product providers to purchase future structured product issues at the future market price. The Group then markets such products in advance of the issue, which under normal business conditions means there is limited liquidity and market risk at the time of product launch.
The Group's policy with regard to liquidity risk is to carefully monitor balance sheet structure and borrowing limits, including:
● monitoring of cash positions on a daily basis;
● exercising strict control over the timely settlement of trade debtors; and
● exercising strict control over the timely settlement of market debtors and creditors.
The Group holds its cash and cash equivalents spread across a number of highly rated financial institutions. All cash and cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash without penalty.
The Group and its subsidiaries Walker Crips Investment Management Limited and Barker Poland Asset Management LLP are in scope of the FCA's basic liquid assets requirements and these are monitored by management on a daily basis.
The table below analyses the Group's cash outflow based on the remaining period to the contractual maturity date.
| 2024 | Less than 1 year £'000 | Total £'000 |
| Trade and other payables | 31,961 | 31,961 |
| | 31,961 | 31,961 |
| | | |
| 2023 | | |
| Trade and other payables | 36,849 | 36,849 |
| | 36,849 | 36,849 |
As at 31 March 2024 the Group had commitments in respect of future structured product issues of £8.3 million (2023: 10.0 million)
(iii) Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates or equity prices, on financial assets and liabilities will affect the Group's results. They relate to price risk on fair value through profit or loss trading investments and are subject to ongoing monitoring.
Fair value of financial instruments
The fair values of the Group's financial assets and liabilities are not materially different from their carrying values as they are valued at their realisable values. The Group's financial assets that are classed as current asset and non-current asset investments (fair value through profit or loss) have been revalued at 31 March 2024 using closing market prices.
A 10% fall in the value of trading financial instruments would, in isolation, result in a pre-tax decrease to net assets of £53,800 (2023: £127,600). 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.
25. Trade and other payables
| | 2024 £'000 | 2023 £'000 |
| Amounts owed to clients, brokers and recognised stock exchanges | 24,315 | 28,012 |
| Other creditors | 2,704 | 4,028 |
| Contract liability | - | 9 |
| Accrued expenses | 4,942 | 4,800 |
| | 31,961 | 36,849 |
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 9 days (2023: 11 days). The Directors consider that the carrying amount of trade payables approximates to their fair value.
The Group acts as an agent for clients on the trading of their investments. As an agent, the Group only recognises amounts due from or to clients, brokers and recognised stock exchanges as trade receivables and trade payables respectively. As a result, no underlying investments are recognised on the Group's consolidated statement of financial position.
26. Provisions
Provisions included in other current liabilities and long-term liabilities are made up as follows:
|
| Professional fees £'000 | Client payments £'000 | Dilapidations £'000 | Stamp Duty liability and related costs £'000 |
Total £'000 |
| Provisions falling due within one year | | | | | |
| At 1 April 2022 | 455 | 650 | 32 | 747 | 1,884 |
| Additions | - | 96 | - | 131 | 227 |
| Reclassification to trade and other payables | (90) | (746) | - | - | (836) |
| Release of provisions | (20) | | | | (20) |
| Utilisation of provisions | (345) | - | (32) | - | (377) |
| At 1 April 2023 | - | - | - | 878 | 878 |
| Release of provisions | - | - | - | (243) | (243) |
| Utilisation of provisions | - | - | - | (280) | (280) |
|
| - | - | - | 355 | 355 |
| | | | | | |
| Provisions falling due after one year | | | | | |
| At 1 April 2022 | - | - | 586 | - | 586 |
| Additions | - | - | 61 | - | 61 |
| Interest | - | - | 5 | - | 5 |
| At 1 April 2023 | - | - | 652 | - | 652 |
| Additions | - | - | 14 | - | 14 |
| Interest | - | - | 23 | - | 23 |
|
| - | - | 689 | - | 689 |
| Total as at 31 March 2024 | - | - | 689 | 355 | 1,044 |
The Group, based on revised estimates, made an additional provision of £37,000 (including interest) for dilapidations in connection with acquired leasehold premises (2023: total additional provision of £66,000). These costs are expected to arise at the end of each respective lease.
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 £12,000 to £583,000 per lease.
The Group, in the previous year, identified an obligation in respect of stamp duty reserve tax which arose over several years. An initial provision of £878,000 was made in the prior year, and subsequently upon management investigation and external tax advice, the liability including professional fees currently outstanding, is estimated to be £355,000.
27. Lease liabilities
| Lease liabilities | Offices £'000 | Computer software £'000 | Computer hardware £'000 | Total £'000 |
| At 1 April 2023 | 2,562 | 148 | 20 | 2,730 |
| Additions | 100 | 271 | - | 371 |
| Interest | 87 | 12 | - | 99 |
| Lease payments | (506) | (227) | (13) | (746) |
| At 31 March 2024 | 2,243 | 204 | 7 | 2,454 |
| Lease liabilities profile (statement of financial position) | 2024 £'000 | 2023 £'000 |
| Amounts due within one year | 718 | 341 |
| Amounts due after more than one year | 1,736 | 2,389 |
| | 2,454 | 2,730 |
| Undiscounted lease maturity analysis | 2024 £'000 | 2023 £'000 |
| Within one year | 865 | 426 |
| Between one and two years | 847 | 958 |
| Between two and five years | 864 | 1,549 |
| Total undiscounted lease liabilities | 2,576 | 2,933 |
28. Called-up share capital
| | 2024 £'000 | 2023 £'000 |
| Called-up, allotted and fully paid |
| |
| 43,327,328 (2023: 43,327,328) Ordinary Shares of 62/3p each | 2,888 | 2,888 |
There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general provisions of the Articles of Association and prevailing legislation. The Directors are not aware of any agreements between holders of the Group's shares that may result in restrictions on the transfer of securities or on voting rights.
The following movements in share capital occurred during the year:
|
| Number of shares | Share capital £'000 | Share premium £'000 | Total £'000 |
| At 1 April 2023 | 43,327,328 | 2,888 | 3,763 | 6,651 |
| At 31 March 2024 | 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 2024, this totalled £21,321,000 (2023: £21,166,000).
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.
The Group has been assessed as constituting a MIFIDPRU Investment Firm group and has been classified as a non-small non-interconnected (non-SNI) Investment Firm group and performs an Internal Capital Adequacy and Risk Assessment process (ICARA), which is presented to the FCA on request.
The Group's capital, for accounting purposes, is defined as the total of share capital, share premium, retained earnings and other reserves. Total capital at 31 March 2024 was £21.3 million (2023: £21.2 million).
Regulatory capital is derived from the Group's "ICARA", which is a requirement of the Investment Firm Prudential Regime ('IFPR'). The ICARA draws on the Group's risk management process that is embedded within all areas of the Group. The Group's objectives when managing capital are to comply with the capital requirements set by the Financial Conduct Authority, to safeguard the Group's ability to continue as a going concern.
Capital adequacy and the use of regulatory capital are monitored daily by the Group's management. In addition to a variety of stress tests performed as part of the ICARA process, and daily reporting in respect of treasury activity, capital levels are monitored and forecast to ensure that dividends and investment requirements are managed and appropriate buffers are held against potential adverse business conditions.
Regulatory capital
No breaches were reported to the FCA during the financial years ended 31 March 2024 and 2023.
Treasury shares
The Group holds 750,000 of its own shares, purchased for total cash consideration of £312,000. In line with the principles of IAS 32 these treasury shares have been deducted from equity (note 29). No gain or loss has been recognised in the income statement in relation to these shares.
29. Reserves
Apart from share capital and share premium, the Group holds reserves at 31 March 2024 under the following categories:
| Own shares held | (£312,000) (2023: (£312,000)) | ● the negative balance of the Group's own shares, which have been bought back and held in treasury. |
| Retained earnings | £10,259,000 (2023: £10,104,000) | ● the net cumulative earnings of the Group, which have not been |
| Other reserves | £4,723,000 (2023: £4,723,000) | ● the cumulative premium on the issue of shares as deferred consideration for corporate acquisitions £4,612,000 (2023: £4,612,000) and non-distributable reserve into which amounts are transferred following the redemption or purchase of the Group's own shares. |
30. Cash generated from operations
| | 2024 £'000 | 2023 £'000 |
| Operating profit for the year | 63 | 625 |
| Adjustments for: |
| |
| Amortisation of intangibles | 1,011 | 1,393 |
| Net change in fair value of financial instruments at fair value through profit or loss*** | 96 | 575 |
| Depreciation of property, plant and equipment | 288 | 331 |
| Depreciation of right-of-use assets* | 636 | 771 |
| Decrease in debtors** | 4,398 | 13,662 |
| Decrease in creditors** | (5,522) | (13,818) |
| Net cash inflow | 970 | 3,539 |
* Lease liability payments associated with RoU assets were 722,000 (2023: £332,000).
** Cash outflow from working capital movement of £1,124,000 (2023: £156,000)
*** Revaluation profit on proprietary positions.
31. Financial commitments
Capital commitments
At the end of this year and the previous year, there were no capital commitments contracted but not provided for and no capital commitments authorised but not contracted for.
32. 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:
| | 2024 £'000 | 2023 £'000 |
| Commission and fees received from Directors and their close family members | 31 | 20 |
Other related parties include Charles Russell Speechlys, of which Martin Wright, Chairman, was a Partner and remains a consultant. 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 £208,000 (2023: £280,000).
Fees of £9,000 (2023: £9,000) are receivable by EnOC Technologies Ltd from CyberQuote Pte Ltd (a company, where Hua Min Lim is a shareholder) for the service provided on normal commercial terms.
Commission of £19,714 (2023: £7,043) was earned by the Group from Phillip Securities (HK) Limited (a Phillip Brokerage Pte Limited company, where Hua Min Lim is a shareholder) having dealt on standard commercial terms. Additionally, some custody services are provided by Phillip Securities Pte Ltd (in Singapore, where Hua Min Lim is a Director), again all on standard commercial terms, both these items being included in revenue. Transactions between the Group and its subsidiaries, which are related parties, have been eliminated on consolidation and are accordingly not disclosed. Remuneration of the Directors who are the key Management personnel of the Group is disclosed in the table below.
| | 2024 £'000 | 2023 £'000 |
| Key management personnel compensation |
| |
| Short-term employee benefits | 519 | 459 |
| Post-employment benefits | 36 | 32 |
| | 555 | 491 |
33. Contingent liabilities
In 2021 a former associate brought a claim against Walker Crips Investment Management Limited in the Employment Tribunal. A hearing of a preliminary issue took place in 2022 and the Tribunal found in favour of the company. The former associate appealed that decision and in 2023, whilst many of the appeal grounds were not upheld, certain points were referred back to the Employment Tribunal to reconsider. The Company does not consider that the claims are justified and intends to continue to defend them robustly.
From time to time, the Group receives complaints or undertakes past business reviews, the outcomes of which remain uncertain and/or cannot be reliably quantified based upon information available and circumstances falling outside the Group's control. Accordingly, contingent liabilities arise, the ultimate impact of which may also depend upon availability of recoveries under the Group's indemnity insurance and other contractual arrangements. Other than any cases where a financial obligation is deemed to be probable and thus provision is made, the Directors presently consider a negative outcome to be remote. As a result, no further disclosure has been made in these financial statements. Provisions made remain subject to estimation uncertainty, which may result in material variations in such estimates as matters are finalised.
34. Subsequent events
There are no material events arising after 31 March 2024, which have an impact on these financial statements.
35. Deferred cash consideration
| | 2024 £'000 | 2023 £'000 |
| Due within one year |
| |
| Amounts due to personnel under recruitment contracts/acquisition agreements | 25 | 94 |
| |
| |
| Due after one year |
| |
| Amounts due to personnel under recruitment contracts/acquisition agreements | 15 | 71 |
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.
36. Share-based payments
The Group recognised total expenses in the year of £15,000 (2023: £nil) related to equity-settled share-based payment transactions.
No award was made in the financial year and prior year award was forfeited due to termination of employment.
Share Incentive Plan ("SIP")
Employees who have been employed for longer than three months and are subject to PAYE are invited to join the SIP. Employees may use funds from their gross monthly salary (being not less than £10 and not greater than £150) to purchase ordinary shares in the Group ("Partnership Shares"). In the current year, for every Partnership Share purchased, the employee received matching shares at a rate of 100%. The matching option will remain at this rate to 31 March 2025. Employees are offered an annual opportunity to top up contributions to the maximum annual limit of £1,800 (or 10% of salary, if lower). All shares to date awarded under this scheme have been purchased in the market at the prevailing share price on a monthly basis.
Company balance sheet
as at 31 March 2024
| | Note | 2024 £'000 | 2023 £'000 |
| Non-current assets | |
| |
| Investments measured at cost less impairment | 40 | 22,105 | 21,907 |
| | | 22,105 | 21,907 |
| Current assets | |
| |
| Trade and other receivables | 41 | 803 | 801 |
| Deferred tax asset | 42 | - | 1 |
| Cash and cash equivalents | | 176 | 95 |
| | | 979 | 897 |
| Total assets | | 23,084 | 22,804 |
| | |
| |
| Current liabilities | |
| |
| Trade and other payables | 43 | (4,579) | (3,889) |
| | | (4,579) | (3,889) |
| Net current assets/(liabilities) | | (3,600) | (2,992) |
| | |
| |
| Net assets | | 18,505 | 18,915 |
| | |
| |
| Equity | |
| |
| Share capital | 45 | 2,888 | 2,888 |
| Share premium account | 45 | 3,763 | 3,763 |
| Own shares | 45 | (312) | (312) |
| Retained earnings | 45 | 7,443 | 7,853 |
| Other reserves | 45 | 4,723 | 4,723 |
| Equity attributable to equity holders of the Company | | 18,505 | 18,915 |
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 £197,000 (2023: after-tax profit of £89,000).
The financial statements of Walker Crips Group plc (Company registration no. 01432059) were approved by the Board of Directors and authorised for issue on 31 July 2024.
Signed on behalf of the Board of Directors:
Sanath Dandeniya FCCA
Director
Company statement of changes in equity
year ended 31 March 2024
|
| Called up share capital £'000 | Share premium account £'000 | Own shares held £'000 | Other £'000 | Retained earnings £'000 | Total equity £'000 |
| Equity as at 31 March 2022 | 2,888 | 3,763 | (312) | 4,723 | 8,381 | 19,443 |
| Total comprehensive income for the period | - | - | - | - | 89 | 89 |
| Contributions by and distributions to owners | | | | | | |
| Dividends paid | - | - | - | - | (617) | (617) |
| Total contributions by and distributions to owners | - | - | - | - | (617) | (617) |
| Equity as at 31 March 2023 | 2,888 | 3,763 | (312) | 4,723 | 7,853 | 18,915 |
| Total comprehensive loss for the period | - | - | - | - | (197) | (197) |
| Contributions by and distributions to owners | | | | | | |
| Dividends paid | - | - | - | - | (213) | (213) |
| Total contributions by and distributions to owners | - | - | - | - | (213) | (213) |
| Equity as at 31 March 2024 | 2,888 | 3,763 | (312) | 4,723 | 7,443 | 18,505 |
The following Accounting Policies and Notes form part of these financial statements.
Notes to the Company accounts
year ended 31 March 2024
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 GBP Sterling (£). The principal accounting policies have been summarised below. They have all been applied consistently throughout the year and the preceding year.
The Parent Company has chosen to adopt the disclosure exemption in relation to the preparation of a cash flow statement under FRS 102.
Going concern
After conducting enquiries, the Directors believe that the Parent Company has adequate resources to continue in existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. The Parent Company's business activities, together with the factors likely to affect its future development, performance and position, have been assessed.
Property, plant and equipment
Fixtures and equipment are stated at historical cost less accumulated depreciation and provision for any impairment. Depreciation is charged so as to write-off the cost or valuation of assets over their estimated useful lives using the straight-line method on the following bases:
Computer hardware 331/3% per annum on cost
Computer software between 20% and 331/3% per annum on cost
Leasehold improvements over the term of the lease
Furniture and equipment 331/3% per annum on cost
The gain or loss on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in income. The residual values and estimated useful life of items within property, plant and equipment are reviewed at least at each financial year end. Any shortfalls in carrying value are impaired immediately through profit or loss.
Impairment of non-financial assets
At each reporting date, the Parent Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). If there is an indication of possible impairment, the recoverable amount of any affected asset (or group of related assets) is estimated and compared with its carrying amount. If the estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in profit or loss.
Taxation
The tax expense represents the sum of the tax currently payable and any deferred tax.
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Current tax charges arising on the realisation of revaluation gains recognised in the statement of comprehensive income are also recorded in this statement.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date.
A deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as probable that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax assets and liabilities are not discounted.
Own shares held
Own shares consist of treasury shares which are recognised at cost as a deduction from equity shareholders' funds. Subsequent consideration received for the sale of treasury shares is also recognised in equity with any difference being taken to retained earnings. No gain or loss is recognised on sale of treasury shares.
Financial instruments
Financial assets and financial liabilities are recognised in the balance sheet when the Parent Company becomes a party to the contractual provisions of the instrument. Section 11 of FRS 102 has been applied in classifying financial instruments depending on the nature of the instrument held.
Revenue
Income consists of profits distribution from Barker Poland Asset Management LLP, interest received or accrued over time and dividend income recorded when received.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Debtors
Other debtors are classified as basic financial instruments and measured at initial recognition at transaction price. Debtors are subsequently measured at amortised cost using the effective interest rate method. A provision is established when there is objective evidence that the Group will not be able to collect all amounts due.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits, together with other short-term highly liquid investments, which are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Parent Company after deducting all of its liabilities. Equity instruments issued by the Parent Company are recorded at the proceeds received, net of direct issue costs.
Leases
Rentals under operating leases are charged on a straight-line basis over the lease term even if the payments are not made on such a basis. Benefits received as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.
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.
39. Profit for the year
Loss for the financial year of £197,000 (2023: profit of £89,000) is after an amount of £23,000 (2023: £23,000) 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:
| | 2024 £'000 | 2023 £'000 |
| Employee costs during the year amounted to: |
| |
| Wages and salaries | 225 | 186 |
| Social security costs | 16 | 14 |
| Other costs | 4 | 3 |
| | 245 | 203 |
In the current year, employee costs include the costs of the Non-Executive Directors and a proportion of Executive Directors. The remaining Executive Directors' employee costs are borne by Walker Crips Investment Management Limited.
The monthly average number of staff employed during the year was:
| | 2024 Number | 2023 Number |
| Executive Directors | 2 | 2 |
| Non-Executive Directors | 4 | 4 |
| | 6 | 6 |
40. Investments measured at cost less impairment
| | 2024 £'000 | 2023 £'000 |
| Subsidiary undertakings | 22,105 | 21,907 |
During the year, the Company made an investment of £275,000 in Walker Crips Financial Planning Limited and £200,000 into Ebor Trustees Limited, an indirect 100% owned subsidiaries of the Group.
The decline in the net assets of Walker Crips Financial Planning Limited resulted in Walker Crips Group plc, the Company, taking an impairment charge in the current year which is reversed on consolidation. The decline in net assets of Walker Crips Financial Planning is due to the investment put in place to increase its advisor base from two to 12 in a three-year period. The subsidiary is expected to break into profitability in the coming year.
A complete list of subsidiary undertakings can be found in note 50.
41. Trade and other receivables
| | 2024 £'000 | 2023 £'000 |
| Amounts owed by Group undertakings | 803 | 799 |
| Taxation and social security | - | 2 |
| | 803 | 801 |
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.
42. Deferred taxation
| | 2024 £'000 | 2023 £'000 |
| At 1 April | 1 | - |
| Use of Group Relief | (26) | (29) |
| Credit/(charge) to the income statement | 25 | 30 |
| At 31 March | - | 1 |
Deferred tax has been provided at 25% (2023: 25%).
43. Trade and other payables
| | 2024 £'000 | 2023 £'000 |
| Accruals and deferred income | 53 | 99 |
| Amounts due to subsidiary undertakings | 4,479 | 3,744 |
| Other creditors | 47 | 46 |
| | 4,579 | 3,889 |
44. Risk management policies
Procedures and controls are in place to identify, assess and ultimately control the financial risks faced by the Parent Company arising from its use of financial instruments. Steps are taken to mitigate identified risks with established and effective procedures and controls, efficient systems and the adequate training of staff.
The Parent Company's risk appetite, along with the procedures and controls mentioned above, are laid out in the Group's Internal capital adequacy and risk assessment (ICARA).
The overall risk appetite for the Parent Company and for the Group as a whole is considered by Management to be low, despite operating in a marketplace where financial risk is inherent in the core businesses of investment management and financial services.
The Group considers its financial risks arising from its use of financial instruments to fall into three main categories:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
Further information on the disclosures and policies carried out by the Parent Company and the Group is given in note 24 of the consolidated financial statements.
(i) Credit risk
Maximum exposure to credit risk:
| | 2024 £'000 | 2023 £'000 |
| Cash | 176 | 95 |
| Other debtors | 803 | 799 |
| As at 31 March | 979 | 894 |
The credit quality of banks holding the Company's cash at 31 March 2024 is analysed below with reference to credit ratings awarded by Fitch.
| | 2024 £'000 | 2023 £'000 |
| A+ | 176 | 95 |
| As at 31 March | 176 | 95 |
Analysis of other debtors due from financial institutions:
| | | 2024 £'000 | 2023 £'000 |
| Neither past due, nor impaired | | 803 | 799 |
None were past due.
(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:
| | 2024 £'000 | 2023 £'000 |
| Creditors due within one year | 4,579 | 3,889 |
| Creditors due after more than one year | - | - |
| As at 31 March | 4,579 | 3,889 |
| | 2024 £'000 | 2023 £'000 |
| Within one year | 4,579 | 3,889 |
| Within two to five years | - | - |
| After more than five years | - | - |
| As at 31 March | 4,579 | 3,889 |
The Company is in a net liability position, but this is primarily driven by an intercompany creditor balance with its subsidiary. This is deemed to not affect liquidity as the subsidiary is 100% owned and controlled by the Company.
(iii) Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates or equity prices will affect the Group's income.
These relate to price risk breached on available-for-sale and trading investments and closely monitored using limits to prevent significant losses.
Fair value of financial instruments
No financial instruments at fair value were held by the Parent Company in the current or prior financial year.
45. Called-up share capital
| | 2024 £'000 | 2023 £'000 |
| Called-up, allotted and fully paid |
| |
| 43,327,328 (2023: 43,327,328) Ordinary Shares of 62/3p each | 2,888 | 2,888 |
No new shares were issued in the year to 31 March 2024 or the prior year.
The Parent Company holds 750,000 of its own shares, purchased for a total cash consideration of £312,000. In line with the principles of FRS 102, section 11, these treasury shares have been deducted from equity. No gain or loss has been recognised in the profit and loss account in relation to these shares.
The following movements in share capital occurred during the year:
|
| Number of shares | Share capital £'000 | Share premium £'000 | Total £'000 |
| At 1 April 2023 | 43,327,328 | 2,888 | 3,763 | 6,651 |
| At 31 March 2024 | 43,327,328 | 2,888 | 3,763 | 6,651 |
Apart from share capital and share premium, the Parent Company holds reserves at 31 March 2024 under the following categories:
| Own shares held | (£312,000) (2023: (£312,000)) | ● the negative balance of the Parent Company's own shares that have been bought back and held in treasury. |
| Retained earnings | £7,443,000 (2023: £7,853,000) | ● the net cumulative earnings of the Parent Company, which have not paid out as dividends, retained to be reinvested in our core or new business. |
| Other reserves | £4,723,000 (2023: £4,723,000) | ● the cumulative premium on the issue of shares as deferred consideration for corporate acquisitions £4,612,000 (2023: £4,612,000) and non-distributable reserve into which amounts are transferred following the redemption or purchase of the Group's own shares. |
46. Financial commitments
Capital commitments
At the end of this year and the previous year, there were no capital commitments contracted but not provided for and no capital commitments authorised but not contracted for.
47. 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 £555,000 (2023: £491,000).
48. 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.
49. Subsequent events
There are no material events arising after 31 March 2024, which have an impact on these financial statements.
50. Subsidiaries and associates
|
| Principal place of business | Principal activity | Class and percentage of shares held |
| Group | | | |
| Trading subsidiaries | | | |
| Walker Crips Investment Management Limited1 | United Kingdom | Investment management | Ordinary Shares 100% |
| London York Fund Managers Limited2 | United Kingdom | Management services | Ordinary Shares 100% |
| Walker Crips Financial Planning Limited2 | United Kingdom | Financial services advice | Ordinary Shares 100% |
| Ebor Trustees Limited2 | United Kingdom | Pensions management | Ordinary Shares 100% |
| EnOC Technologies Limited1 | United Kingdom | Financial regulation and other software | Ordinary Shares 100% |
| Barker Poland Asset Management LLP1 | United Kingdom | Investment management | Membership 100% |
| | | | |
| Non-trading subsidiaries | | | |
| Walker Crips Financial Services Limited1 | United Kingdom | Financial services | Ordinary Shares 100% |
| G & E Investment Services Limited2 | United Kingdom | Holding company | Ordinary Shares 100% |
| Ebor Pensions Management Limited2 | United Kingdom | Dormant company | Ordinary Shares 100% |
| Investorlink Limited1 | United Kingdom | Agency stockbroking | Ordinary Shares 100% |
| Walker Cambria Limited1 | United Kingdom | Dormant company | Ordinary Shares 100% |
| Walker Crips Trustees Limited1 | United Kingdom | Dormant company | Ordinary Shares 100% |
| W.B. Nominees Limited1 | United Kingdom | Nominee company | Ordinary Shares 100% |
| WCWB (PEP) Nominees Limited1 | United Kingdom | Nominee company | Ordinary Shares 100% |
| WCWB (ISA) Nominees Limited1 | United Kingdom | Nominee company | Ordinary Shares 100% |
| WCWB Nominees Limited1 | United Kingdom | Nominee company | Ordinary Shares 100% |
| Walker Crips Consultants Limited1 | United Kingdom | Dormant company | Ordinary Shares 100% |
| Walker Crips Ventures Limited1 | United Kingdom | Financial services advice | Ordinary Shares 100% |
The registered office for companies and associated undertakings is:
1 Old Change House, 128 Queen Victoria Street, London, England, EC4V 4BJ.
2 Apollo House, Eboracum Way, York, England, YO31 7RE.
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