Walker Crips Group Annual Report 2016

FY2016 Annual Report · Walker Crips Group

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Annual Report and Accounts 2016

Founded on traditional
values of honesty, fairness
and integrity; committed
to the clients that we serve.
Through acquisitions, we can trace our roots as far back
as the 18th century, making us one of the City of London’s
oldest independent companies.

STRATEGIC REPORT

Highlights
from our year

Assets under management
and administration (£bn)

£4.1bn

(2015: £3.8bn)

1
4

8
3

0
3

0
2

4
1

Total income (£m)

£26.2m

(2015: £23.2m)

2
6
2

2
3
2

2
0
2

7
0
2

9
0
2

▪ Group revenues increased by 13.5% to £26.1 million

(2015: £23.0 million)

▪ Gross profit (net revenues) increased by 15.0% to £17.6 million

(2015: £15.3 million)

▪ Operating profit, before exceptional expenses, up 20.4%

to £0.65 million (2015: £0.54 million)

▪ Exceptional costs of £0.8 million incurred in upgrade of client

information and communication systems

▪ One-off gain of £0.9 million on sale of Euroclear shares

▪ Reported pre-tax profit more than doubled to £0.94 million

(2015: £0.44 million)

▪ Non-broking income as a percentage of total income increased
to 61.8% (2015: 56.3%), reflecting further reduction in reliance
on transaction-driven commission revenue

▪ Discretionary and advisory assets under management increased

by 15.0% to a high of £2.3 billion (2015: £2.0 billion)

▪ Proposed final dividend increased by 8.5% to 1.27 pence per

share (2015: 1.17 pence per share) bringing total dividends for
the year to 1.85 pence per share (2015: 1.70 pence per share)

Strategic report

01 Highlights from our year

02 Walker Crips at a glance

Corporate governance

13 Introduction to governance

14 Board of Directors

Financial statements

36 Independent auditor’s report

41 Consolidated income statement

04 Chairman and Chief Executive statement

16 Directors’ report

42 Consolidated statement of comprehensive income

08 Our business and strategy

10 Key performance indicators

11 Principal risks and uncertainties

12 Sustainability in action

18 Report by the Directors on

corporate governance matters

21 Statement of Directors’ responsibilities

22 Remuneration Committee report

33 Audit Committee report

43 Consolidated statement of financial position

44 Consolidated statement of cash flows

45 Consolidated statement of changes in equity

46 Notes to the accounts

67 Company balance sheet

68 Company statement of cash flows

69 Company statement of changes in equity

70 Notes to the Company accounts

80 Notice of Annual General Meeting

87 Form of proxy

IBC Officers and professional advisers

ANNUAL REPORT AND ACCOUNTS 2016 01

WALKER CRIPS GROUP PLC

STRATEGIC REPORT

Walker Crips
at a glance

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We offer a range of services,
each of which operates in the
UK. Our aim is to offer a full
set of investment and wealth
management services to both
new and existing clients.
The Group is currently organised
into two operating divisions:
Investment Management and
Wealth Management.

e
n
t

Structured Investments
The Structured Investments
market has presented
opportunities to individual
investors and intermediaries to
access pre-packaged (and
bespoke) investment strategies
that can allow tax-efficient
investments for a variety of
different risk and return profiles.

Investment Management division
Investment Management
Alongside Bespoke Discretionary
and Advisory Management we
offer our Actively Managed
Portfolio Service (AMPS) which
provides suitable discretionary
investment management
overseen by our investment
committee, the Investment
Senate. AMPS offers diversified
discretionary modelled portfolios
through “Ready to Invest” (fully
modelled) or “Bespoke” AMPS
(partially tailored). We also offer
models, benchmarked to the FTSE
WMA Indices, called “Alpha: r2”.

This is a business that Walker
Crips entered over five years
ago with a prudent and sensible
approach to the arrangement
and administration of structured
investments and plans.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

Stockbroking
Bespoke Discretionary
▪ We make the investment
decisions according to an
agreed tailored mandate.

Advisory Managed
▪ We provide clients with
investment advice and
oversight of their own
investment decisions.

Advisory
▪ We advise clients as and
when they wish to receive
advice and they make their
own investment decisions.

Execution-only Services
▪ We receive instructions from
clients to execute transactions.

Alternative Investments
Our Alternative Investment
team provides innovative
services and products for limited
groups of sophisticated clients
with specific requirements and
eligible investors.

Investor Immigration (Tier 1)
Portfolios (IIP) serves high net
worth individuals from outside
the UK.

Short Term Lending (STL)
manages large direct mandates
from institutional investors,
giving them exposure to the
UK property market.

Wealth Management division
Wealth Management
A truly integrated service with life stage planning to suit the needs
of our clients.

As an enlightened firm within the private client industry, Walker Crips
includes a holistic wealth management service within its offering.

Since 2005 Walker Crips has had this capability within its Wealth
Management division offering genuine whole of market advice
that includes advisory services on investments, pensions, protection
and financial planning.

The Company offers holistic financial planning complemented
by investment management solutions enabling clients to plan for
their children’s education, increase their tax efficiency, ensure they
achieve the retirement they want and prepare for inheritance tax.
Businesses and business owners also benefit from sound financial
planning to encompass pension and employee benefit schemes,
corporate protection and investments. A strategy can be developed
with clients to help ensure future stability and financial wellbeing.

Pensions
As well as pension management, personal financial planning
and advice, our clients, through our SIPP and SSAS services run
by Ebor Trustees, have access to a wide choice of investments and
retirement options. This provides individuals and companies with
investment flexibility along with tax and business efficiencies.

Self Invested Personal Pension (SIPP)
▪ Designed for individuals looking to control their pension

fund investments.

Small Self Administered Scheme (SSAS)
▪ Designed for company Directors to build a pension fund for their

retirement and to help with the running of their business.

Transactions

134,961

(2015: 129,549)

Revenue-earning
personnel

113

(2015: 106)

Our locations
▪ London (Group Head Office)

▪ Birmingham

▪ Bristol

▪ Inverness

▪ Lincoln

▪ Norwich

▪ Romford

▪ Swansea

▪ Truro

▪ Wymondham

▪ York (Wealth Management Head Office)

UK offices

(2015: 12)

ANNUAL REPORT AND ACCOUNTS 2016 03

WALKER CRIPS GROUP PLC

STRATEGIC REPORT

Chairman and
Chief Executive
statement

David Gelber
Chairman

Rodney FitzGerald
Chief Executive Officer

Performance overview
It is pleasing to report that despite the particularly difficult markets in the
second half of the year a rise in revenue of 13.5% to a record £26.1 million
for the current full year has driven the strong increase in profit before tax and
exceptional items to £0.8 million, an increase of 20% reflecting the continuing
impact of our strategy for growth. After including exceptional costs, profits on
disposal of available-for-sale investments and net investment income, profit
before tax has more than doubled to £0.9 million (2015: £0.4 million).

Dividend/earnings per share
In recognition of this year’s further progress
the Board is recommending an 8.5% increase
in the final dividend to 1.27 pence per share
(2015: 1.17 pence per share) reflecting its
continued confidence in the Group’s
long-term prospects.

Combined with the interim dividend of
0.58 pence per share (2015: 0.53 pence
per share), this makes a total dividend
for the year of 1.85 pence per share
(2015: 1.70 pence per share), an 8.8%

increase, made possible by the 20%
increase in pre-exceptional operating
profit before tax.

The final dividend will be paid on 12 August
2016 to shareholders on the register at the
close of business on 29 July 2016.

Earnings per share for the year was 2.11 pence
(2015: 0.69 pence) which includes the
effect of the one-off gain on sale of our
Euroclear shares.

Strategy
We have continued to advance the delivery of
our strategy for growth and have consolidated
the progress we have made over the previous
three years whilst preserving our healthy
cash balance as a buffer for unforeseen
events which may lie ahead in these
turbulent times.

The delivery of personal investment
management advice remains at the core
of our approach.

In particular, alongside our focus on
growing the discretionary and fee-paying
portion of the business, there have been
opportunities which have been taken to
capitalise on our larger competitors’
reluctance to continue offering the more
regulated and costly advisory component
of our proposition to clients.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

The Company’s
assets under
management have
continued growing
to unprecedented
levels in a climate
in which portfolio
valuations have
been affected
by market
uncertainty.”

Exceptional costs
During the second half of the year our
Executive Directors and investment managers
have, with the assistance of external advisers,
been heavily engaged in a major upgrading
of our systems and our record-keeping to
meet our own rising regulatory standards
and those seen across our sector.

This has led to a significant redefinition
of the way in which we communicate with
our substantial client base with a much
greater use of technology. We are moving
forward to complete this exercise next year.
The outcome is intended to reinforce our
current offering to our clients by first
building and maintaining a deeper
understanding of each client’s circumstances
and thus the suitability of the service being
provided. We are hugely appreciative of
our clients’ understanding throughout this
time-consuming, but important process.
We firmly believe it will underpin our future
prosperity with a stronger foundation to

ensure a Company-wide emphasis on
achieving good client outcomes in a
manner aligned with our culture.

The decline from operating profits last
year to an operating loss this year is due
to: the exceptional costs associated with
these changes and improvements; and,
to some extent, the consequence of
the inevitable diversion away from
new business generation.

Disposal of available-for-sale investment
In December 2015, the Group took the
opportunity of participating in a corporate
buy-back programme and disposed of its
holding of 1,809 shares in Euroclear plc,
a relatively illiquid investment which had
been held since February 2000, for a cash
consideration of £1,017,000, crystallising
a gain on disposal of £942,000.

Operations
Encouragingly, following its acquisition
in March 2015, Barker Poland Asset
Management (BPAM) has made its first
full contribution to our results above
expectation which has helped our stated
aim of materially increasing the proportion
of our revenues earned as fees, rather than
through transaction-driven commissions.
This is a key performance indicator reflecting
the changing shape of the business from
traditional stockbroking to an integrated
investment and wealth management model.

Despite an increase in administrative expenses,
a material proportion of which relate to
the development and growth of acquired
businesses, as well as a 30% increase in our
Financial Services Compensation Scheme
(FSCS) levy and a one-off property cost
provision of £132,000 relating to the change
of ownership and premature forthcoming
termination of the lease of our London
head office, costs were strictly monitored
and headcount largely restricted to incoming
revenue earners and their support teams.
The uncontrollable costs levied by the
FSCS of £402,000 (2015: £310,000) are an
indication of the costs of absorbing a share
of losses incurred by failed competitors.

Investment Management
The Company’s assets under management
have continued growing to unprecedented
levels in a climate in which portfolio valuations
have been affected by market uncertainty
and substantial falls in some sectors of the
FTSE 100 and other major indices.

STRATEGIC REPORT

We recognise the growing importance
of scale which gives clients and market
participants some degree of reassurance
of the security of their assets as well as
confidence in the strength and stability
of the organisation. With total Assets under
Management and Administration (AUMA)
at the year end standing at a high of
£4.1 billion (31 March 2015: £3.8 billion),
despite declines in equity markets, our target
of £5 billion AUMA by 2018 is within reach,
with £10 billion being a potential milestone
over the next ten years.

Discretionary and Advisory assets under
management (AUM) at the year end were
£2.3 billion (31 March 2015: £2.0 billion),
reflecting the inflows from the clients of
new advisers and investment managers
and the longer-term revenue benefits of
our asset gathering strategy alongside
transactional brokerage. Commission
income from broking remained stable,
whilst Investment Management fees
increased by 30.6% to £13.6 million
(2015: £10.4 million).

Gross revenues from the Investment
Management division increased by
14.8% during the period to £23.6 million
(2015: £20.6 million), another marked
improvement and clear demonstration
that the scope for additional expansion
continues to be a realistic prospect.

Further boosts to the ISA regime were provided
by the last budget with the addition to the
ISA product stable of another savings product
called the Lifetime ISA (LISA) and the increase
in the subscription allowance to £20,000 for
April 2017. Investors and savers of all age
groups now have much greater flexibility
ensuring “cradle to grave” access to ISAs,
and the ISA AUM grew by 4.2% to over
£600 million. The forthcoming additional
tax-efficient transferability allowances will
also encourage inherited funds to remain
invested under our management.

The Structured Investments team has
continued to broaden its intermediary client
base and increase assets under management
over the financial year. Our competitive
range of structured investment products
continues to garner strong demand amongst
financial advisers and their clients. With the
addition of new product lines we anticipate
another strong contribution from this key
offering over the coming year.

ANNUAL REPORT AND ACCOUNTS 2016 05

WALKER CRIPS GROUP PLC

STRATEGIC REPORT

Chairman and Chief Executive
statement continued

Wealth Management
Our innovative Wealth Management division,
run from York, continues to be driven by
focused management and a competent team
of advisers, who provide a committed, high
quality service to its widening client base.

Complementing this division and also
operating from York is our Pensions unit
administering Self Invested Personal Pensions
(SIPP) and Small Self Administered Schemes
(SSAS), along with a small number of Funded
Unapproved Retirement Benefit Schemes
(FURBS). Importantly and despite difficult
market conditions AUMA of the combined
divisions (an increasingly significant
measure) increased to £501 million
(2015: £495 million).

Turnover across both divisions remained
stable; however, strong headwinds including
a large increase in regulatory fees, combined
with provision for potential claims and
increased non-recurring costs and investment
in the back and mid-office support functions,
led to a decrease in profitability for this
sector of the business.

Looking ahead there are sound reasons for
optimism with revenue boosted by several
initiatives and a stronger level of work in
progress in the opening weeks of the
new year.

Regulation
Preparations are well underway to meet the
challenges posed by the MiFID II initiative.
We continue to fully support and reinforce
the Financial Conduct Authority (FCA)
guidance on its drive to ensure advice given to
clients by our account executives is suitable

and properly recorded. Our culture of serving
clients in their best interests is well established
in our DNA as we continue to strive to deliver
good customer outcomes.

Statement of financial position
As at 31 March 2016, the Group maintained
a steady level of net assets of £20.6 million
(2015: £20.9 million), including net cash of
£7.2 million (2015: £6.5 million).

Going concern
The Group continues to maintain a robust
financial position. Having conducted detailed
cash flow and working capital forecasts
and appropriate stress-testing on liquidity,
profitability and regulatory capital, taking
account of possible adverse changes in
trading performance, the Board has
sufficient grounds to believe the Group
is well placed to manage its business risks
adequately, and that it will be able to operate
within the level of its current financing
arrangements and regulatory capital limits.
Accordingly, the Board continues to adopt
the going concern basis for the preparation
of the financial statements.

Viability Statement
The Directors have assessed the outlook
of the Company over longer periods than
the twelve months required by the “Going
Concern” statement in accordance with
the 2014 UK Corporate Governance Code.

The Directors’ assessment has been made
with reference to the historic resilience of
the Group, strong cash flows, its current strategy,
the Board’s risk appetite and the Group’s
principal risks and how these are managed.

The assessment relied on the Group’s annual
21 month budget, a three year stress-tested
forecast of profitability, cash flow and regulatory
capital and its Internal Capital Adequacy
Assessment Process (ICAAP) which incorporates
an evaluation of the Group’s principal risks
and uncertainties, including those that would
threaten its business model, future
performance or solvency.

In addition, in light of the decision for Britain
to leave the European Union following the
recent referendum, the Directors have also
considered the impact of this event on its
ability to continue as a going concern as
well as other areas of risk where critical
accounting judgements and estimation
uncertainty have been considered.

Following this assessment, the Directors
have concluded that the Viability Statement
should cover a period of three years. Whilst
the Directors have no reason to believe that
the Group will not be viable over a longer
period from its review of its five year
forecasts, this period has been chosen
because a three year time horizon has
a greater degree of certainty and thus
provides a more appropriate longer-term
outlook in our potentially volatile
investment sector.

Taking account of the Group’s current position
and principal risks, the Directors have a
reasonable expectation that the Group will
be able to continue in operation and meet
its liabilities as they fall due over a period of
at least three years.

1914

1923

1933

The stockbroking
firm of Weddle Beck
& Company was
formed in June
1914, two months
before the start of
World War I.

In the early days of the firm a
brisk arbitrage business was
conducted with Paris and there
was a business venture with the
joint stock banks consisting of
Barclays, Lloyds, Midland and
National Provincial Banks.

In 1933 a department was
established to deal with new
issues. The shares of a number
of established companies were
brought to the stock exchange for
quotation and the firm acted as
official stockbroker to these firms.

Walker Crips is proud of its long and
rich history of more than a century.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

STRATEGIC REPORT

“ Our culture of serving clients in
their best interests is well established
in our DNA as we continue to strive
to deliver good customer outcomes.”

Directors, account executives and staff
After another year of increasing numbers
of revenue generators and the absorption
of their additional investment business,
through transfers of clients and their assets,
we would like to thank all our fellow Directors,
investment managers and advisers, and
members of our operations team for their
continuing hard work and diligence in
shouldering this burden.

Management have worked hard to continue
increasing the level of communication with
our personnel to impart up-to-date
information and encourage feedback whilst
re-emphasising the culture and behaviour
essential to the core values of the Company.
Integrity, courtesy, fairness, diligence,
responsibility and loyalty make it an
appealing firm for prospective clients
and professionals to join.

Annual General Meeting
This year’s Annual General Meeting will be
held at the South Place Hotel, 3 South Place,
London EC2M 2AF on 3 August 2016
at 11.00 a.m.

Outlook
We continue to achieve substantial growth and to refine our strategy and
business model to make further strides towards attaining our long-term
strategic goals.

Against a background of difficult markets, we have striven to set higher regulatory
standards and client service levels as we deliver our strategy for growth.

Trading activity in the opening weeks of the new financial year has been quiet and
your Board correspondingly looks to the immediate future with cautious optimism.

At a macro level the extent of the economic and political instability created by
Brexit is difficult to predict. In addition, at a micro level, we face significant
demands from continuing regulatory initiatives and their associated costs over
the next 18 months. We will monitor diligently the impact of these factors and
will react promptly as we consider appropriate. Nonetheless, despite these
challenges, we consider that it is our emphasis on integrity, service and good
customer outcomes which will drive our public profile and competitive
positioning to deliver underlying stability and growth in the next phase of the
Group’s development.

D. M. Gelber
Chairman
30 June 2016

R. A. FitzGerald FCA
Chief Executive Officer
30 June 2016

1966

1996

2001

2005

2015

By the 1960s Dudley Weddle considered it
would make sense to amalgamate with
another stockbroking firm of a similar size.

Nothing could be more natural, therefore,
than a merger with Walker, Crips and
Company, as the senior partners of both firms
had been friends for some considerable years.
The amalgamation of the two firms was
effected on 28 November 1966 resulting
in Walker, Crips, Weddle, Beck & Company.

Admitted to the
London Stock
Exchange as a fully
listed plc.

Acquisition of Keith,
Bayley, Rogers & Co
stockbroking
business.

Acquisition of London
York group providing
financial planning and
pension management
services.

Acquisition of
Barker Poland Asset
Management
discretionary and
advisory business.

ANNUAL REPORT AND ACCOUNTS 2016 07

WALKER CRIPS GROUP PLC

STRATEGIC REPORT

Our business
and strategy

Walker Crips occupies a special place in the private client investment industry
in the UK. It is a firm of highly skilled people dedicated to serving the full range
of our clients’ wealth management and investment management needs. The
Company is defined by a strong culture based on traditional values that have
been handed down over generations.

Collegiate and
integrated team
We collaborate as a group
of capable individuals to
serve clients together.

Strong culture
of integrity
We attach great importance
to our values of which integrity
is pre-eminent. We strive
to “do the right thing”.

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Working together
to serve our
clients’ needs

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ent

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e of integrity

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Impartial advice
We maintain a transparent and
impartial service in order to
sustain our Advisory capability
and ensure our Discretionary
service is supported by a robust
investment process.

Personalised
approach
We offer a flexible broad
range of services in order to
remain free to act for our
clients as they would wish us
to act for them (suitably).

The market environment
This report looks first in summary at our
business as it is now and then at our strategy
and objectives for the next stage of the
Company’s development.

The UK industry ranges from small firms
with less than £1 billion of assets under
management to large companies with well over
£20 billion. With our corporate independence
and impartiality, we compete with our peers
who aim to direct their clients into services
that suit those firms’ own corporate needs.
Larger competitors are limiting the service
that they offer to clients in order to simplify
their offering at the expense of client choice.

The UK equity markets rose to new highs at
the beginning of our financial year as the
FTSE 100 rose to peaks of over 7,000 during
March, April and May. However, after the

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

summer of 2015 had given rise to increased
uncertainty and rising volatility, equity
markets declined into Q3 2015. The vast
majority of our Investment Management
fees are levied six monthly and were therefore
subject to short-term declines at the valuation
dates. The effect of declines at markets was
pronounced leading into 5 October, as the
FTSE 100 fell to 6,298, and the equity markets
sold off again in January and February 2016
dipping below 5,600. Although the UK equity
market consolidated in a range of 6,000 to
6,400, the market suffered a short-term dip
on 5 April to 6,091. Each of these specific
market moves had a detrimental effect
on the overall fees levied during 2015/16.
Likewise the general market malaise after
August 2015 and again in Q1 2016 led to
decreased activity and lower commission

receipts. Thus profits have been suppressed,
in part, by these factors.

An ongoing repapering programme, as we
strive for well evidenced suitability, also
involved much of the firm’s time and resource
as well as time kindly given by our clients.
Alongside some substantial in-house
IT development, the increasing, but
fundamentally necessary, costs of these
initiatives also weighed on profits.

Against this, however, the inflow of new
AUMA and the arrival of new investment
managers and advisers provided a positive
contribution to revenue and compared
favourably with the growth of our peers
and competitors.

STRATEGIC REPORT

Our vision
To build on the historical private client
business to create a broad financial
services proposition and generate real
shareholder value, by accelerating
growth and profitability.

Our philosophy
To embody the Company’s culture through:

▪ the Company’s leadership and direction;

▪ those who have been with the Company for many
years (already imbued with its core values); and

▪ recent joiners who share the Company’s core values
and bring further acumen and experience.

Our strategy
To achieve profitable growth using a compliant platform to provide a client-centred service that
offers an attractive and compelling proposition incorporating a robust investment process.

Focused acquisition of
Investment Management
and Wealth Management
teams, individuals or entities
Complement or strengthen our existing services
in London, York and the regions.

Attract new clients:

▪ High Net Worth

▪ Mass Affluent

▪ Affluent

Grow total assets

What we did in 2015/2016
▪ Barker Poland Asset Management is established
in the London head office, with retained clients
and staff and improved profitability

▪ Attracted the clients of ten experienced

investment managers

▪ Attracted new clients across the breadth of
the High Net Worth, Affluent and Mass
Affluent segments

Our priorities for 2016/2017
▪ Continued integration of recent joiners

▪ Maintain target growth

Targeted investment
in resources
Expand our range of flexible, transparent and
impartial services using our capability
in technology to develop:

▪ Client offering, services, documents, online

access and communication

▪ Compliance controls, tools and oversight

▪ Efficiency through FOTA (our Finance,

Operations, Technology &
Administration team)

Increase recurring revenues
Discretionary Investment Management

▪ Bespoke portfolios

▪ Model portfolios

Fee-based Advisory Services

What we did in 2015/2016
▪ Discretionary AUM increased by £0.14 billion

to £1.03 billion

▪ Advisory Managed AUM increased by

£0.10 billion to £1.25 billion

Maintain cash and liquid assets as the means
of executing growth strategy

▪ Fees and other non-broking revenue as a

percentage of overall revenue grew to 61.8%

What we did in 2015/2016
▪ Completion of the individual client

repapering programme

Our priorities for 2016/2017
▪ Consolidation of the revenue from new clients,

new investment managers and new AUM

▪ Automated document production, editing

▪ Continued growth of fees versus commission-

and storage capability developed

related revenue

▪ New annual clients Suitability Review process

▪ Preparation of Advisory services ahead

▪ Shift to clean fund units

▪ Maintained balance sheet and available cash

for acquisition and resource

Our priorities for 2016/2017
▪ Complete repapering programme for all clients

▪ Controlled regional growth of the Investment

▪ Enhance and embed the annual clients

Management division

Suitability Review programme

▪ Expand Wealth Management division to other

▪ Embed changes under a new Group Head

parts of UK

of Compliance

▪ Drive developments in compliance monitoring
and oversight through technological advances

of MiFID II

▪ Segmentalisation of client base for appropriate

provision of services and tariffs

▪ Review of fees, charges and tariffs in line with

added value for clients

▪ Refinement of the model investment

management offerings across the Group

ANNUAL REPORT AND ACCOUNTS 2016 09

WALKER CRIPS GROUP PLC

STRATEGIC REPORT

Key performance indicators

The Group’s strategy continues to deliver results and progress. Performance
in 2016 is set out below with data from preceding years. Year-on-year data
is presented on a consistent basis providing measurable indicators. The Board
will continue to monitor these KPIs regularly.

Operational profit before exceptional items (£m)

Gross profit (£m)

£0.65m

(2015: £0.54m)

Revenue (£m)

£26.1m

(2015: £23.0m)

£17.6m

(2015: £15.3m)

New revenue generators (number)

(2015: 14)

5
6
0

4
5
0

7
4
0

1
6
2

0
3
2

7
0
2

Non-broking income proportion (%)

Transaction volume (number)

61.8%

(2015: 56.3%)

134,961

(2015: 129,549)

8
1
6

3
6
5

7
2
5

Growth in total assets (AUMA) (£bn)

Discretionary/Advisory AUM (£bn)

£4.1bn

(2015: £3.8bn)

£2.3bn

(2015: £2.0bn)

1
4

8
3

0
3

Breakdown of total assets (AUMA) (£bn)

Total dividends (pence per share)

Administration

Advisory

Discretionary

4.1

3.8

1,835

1,750

1,155

1,250

859

1,029

3.0

1,595

856

538
14

1.85p

(2015: 1.70p)

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

6
7
1

3
5
1

1
4
1

5
1

4
1

1
6
9
4
3
1

9
4
5
9
2
1

3
1
1
6
2
1

3
2

0
2

3
3
1

5
8
1

0
7
1

7
5
1

STRATEGIC REPORT

No change in risk

Risk decrease

Risk increase

Principal risks and
uncertainties

Risks to the business are reviewed monthly and monitored by the Board-appointed
Risk Management Committee in conjunction with the internal process for
management of capital risk (lCAAP). They are formally reviewed by the
Board annually.

The Group’s risk management policies and procedures are also discussed in
the report by the Directors on corporate governance matters. Financial risks
and their risk management are explained more fully in Note 24.

Risk

Credit risk

Status

Mitigation

– Credit risk assessments of banks and custodians

– Active monitoring of exposures

– Use of credit ratings

Counterparty risk
– Client failure to
settle transaction

– Institutional

settlement default

Conduct risk
– Customer outcomes

– Regulatory

– Reputational

– Annual review of Individual Capital Adequacy Assessment Process

– Several banks are used to hold both clients’ and the firm’s money, with levels being

constantly reviewed

– Daily monitoring of clients’ positions

– External clearing brokers who hold clients’ cash as collateral are limited to one and

provide client asset protection

– Clear and balanced financial promotions, suitable investment advice and

complaints management

– Board oversight and good communications with regulators, compliance monitoring
programme, regulatory development oversight, documented policy and procedures
and continuous staff training and development

– Board oversight, development of staff and training, strong corporate governance
with defined roles, tone from the top setting a fair, positive and ethical culture,
recovery plan, monitoring the Group’s performance relative to competitors

Liquidity risk

– Daily treasury procedures and reconciliation reports to senior management, cash

flow forecasting, only placing deposits with highly credit rated institutions,
experienced management team monitoring settlement performance

Operational risk
– Business disruption

– Fraud

– Outsourcing

– Personnel

– Business and information system recovery plans are approved, tested and maintained

– Senior management oversight, prevention procedures, segregation of duties

between front and back office, system authority and payment limits and system
access controls

– Senior management oversight, due diligence and financial review, appropriate

contracts in place, active relationships and good communication

– Succession and contingency planning, appropriate compensation levels, share

option schemes to incentivise and retain staff and investment in staff

Capital adequacy

– Capital adequacy surplus is maintained well in excess of regulatory requirements.

Material surplus cash balances are always carried

ANNUAL REPORT AND ACCOUNTS 2016 11

WALKER CRIPS GROUP PLC

STRATEGIC REPORT

Sustainability
in action

The Social Responsibility and Safety Committee consisting of two subsidiary
Company Directors and other senior managers, makes recommendations to
the Board on social, environmental and community issues. Whilst recognising
that the Group is a financial services organisation whose primary responsibility
is to maximise investment returns to clients in accordance with their contractual
relationship and stated risk profile and investment objectives, there are non-financial
considerations which may affect the long-term value of the subsidiary companies
and close attention is paid to minimising their environmental impact.

Employees
The Group is committed to delivering a first
class service which meets the expectations
of clients, our regulators and ourselves. Our
employees are critical in delivering these and
ensuring the continued success of the Group.

Walker Crips is an equal opportunities
employer and it is our policy to ensure that
all job applicants and employees are treated
fairly and on merit regardless of their race,
gender, marital status, age, disability,
religious belief or sexual orientation.

Across the Group we have an employee
headcount of 213 of which 88 (41%) are
women. We are keen to create opportunities
for more women to be promoted to senior
roles across the Group.

If any employees become disabled, we will
ensure that proper equipment and conditions
are in place to help them fulfil their function.

Employees are kept informed of the Group’s
strategy, its progress and its performance.
Key issues affecting them are communicated
with compassion through the intranet, email
and face-to-face discussion with line managers.
Management recognises the importance
of a good work-life balance and a culture
of excessive overtime is not encouraged.

Schemes are in place to encourage
professional development at all levels
to ensure that the workforce is engaged
and motivated with a diverse range of
skillsets, experience and backgrounds.

Environment
The Group is committed to the health and
safety of its employees and visitors by ensuring
a safe working environment for motivated,
healthy and happy personnel.

Culture
We are proud of our long history; and
our cultural values of teamwork, honesty,
integrity, fairness and client focus represent
the Company’s DNA upon which our
organisation has flourished.

R. A. FitzGerald FCA
Chief Executive Officer
30 June 2016

“ Management recognises the
importance of a good work-life
balance and a culture of excessive
overtime is not encouraged.”

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

CORPORATE GOVERNANCE

Introduction
to governance

“Our hands-on executive
Board is well placed
to oversee the Group’s
activities.”

David Gelber
Chairman

Dear shareholder,
Good corporate governance is critical to the delivery of value to
the Group’s stakeholders and this section of the report describes
how Walker Crips is governed and managed in the context of the
principles of the UK Corporate Governance Code. The Board is
responsible to shareholders for the overall management and
oversight of the Group and for its long-term success. In particular,
the Board is responsible for agreeing the Group’s strategy,
monitoring financial performance, setting and monitoring the
Group’s risk appetite and maintaining an effective system of
internal controls.

The last year has been busy as usual, ensuring that we are up
to date with industry regulation. I have already referred to the
considerable effort being made to upgrade our systems in order
to serve our clients in a complete and professional manner
more appropriate to their needs and investment objectives.

I welcome the increased focus on culture and behaviour in line
with good principles of conduct. This followed a review of our risk
management processes, including the creation of a conduct risk
framework and policy. The Financial Conduct Authority (FCA)
Principles for Businesses remain our most important benchmarks
and we strive to conduct our business with integrity and put client
interests at the heart of what we do.

An evaluation of the effectiveness of the Board has been conducted
as well as its structure, skill sets and experience. As a result we will
soon be strengthening the Board with the formal appointment of a
Group Compliance Director, Guy Jackson, in August 2016. Guy took
up his executive position in May 2016. The Nomination Committee
was heavily involved in the recruitment process and continues to
review and plan Board succession for the medium and long term.

The Audit Committee, chaired by Robert Elliott, meets frequently
to discuss and review our published results, internal audit reports
and to address any concerns expressed by our external auditor.
A formal tendering process was conducted before appointing
BDO LLP as our new external auditor.

I like to maintain frequent contact with the executive team
outside of Board meetings and I am in regular dialogue with the
Chief Executive who updates me with developments on current
projects and progress towards our objectives. I am also in regular
discussion regarding Board issues with our Senior Independent
Director, Martin Wright.

D. M. Gelber
Chairman
30 June 2016

ANNUAL REPORT AND ACCOUNTS 2016 13

WALKER CRIPS GROUP PLC

CORPORATE GOVERNANCE

Board of Directors

Executive Directors

Mark Rushton
Chief Investment Officer
Mr. Mark Rushton graduated in
1984 with an MA in Law from
Downing College, Cambridge
University. Before joining the
Walker Crips Group Board in
2012, Mark’s previous role had
been at BNP Paribas where he
was Head of Offering for UK
Wealth Management, before
which he lead corporate
development at Fortis. Prior
to 2007, he held senior roles at
Cazenove Capital Management,
UBS and Mitsubishi UFJ
Trust International.

David Hetherton
Wealth Management Director
Mr. David Hetherton serves as
Wealth Management Director
of Walker Crips Group plc. David
began his financial services career
in 1982 as a consultant with
Denison Investments Ltd.
Upon this company’s takeover
by Minet Consultancy Services
in 1990 David was appointed
as a Divisional Director and was
instrumental in developing the
business from loss-making into
a profitable entity.

In January 1998, he took up the
post of Group Managing Director
of the London York Group, which
was subsequently acquired by
Walker Crips Group plc in 2005
when he was also appointed to
his position on the Board. Since
then, he has integrated the
Wealth Management and
Pension Product divisions,
bringing diversity of revenue
to the Group. He further added
to this with the launch of an
in-house SIPP to complement
the well established SSAS offering.

Rodney FitzGerald FCA
Chief Executive Officer
Mr. Rodney FitzGerald serves
as Chief Executive Officer of
Walker Crips Group plc. He is
a mathematics graduate of
Leeds University and qualified
as a Chartered Accountant in
1979 with Hays Allan & Co.
After holding senior financial
positions outside the financial
services sector, he joined
independent stockbrokers
T C Coombs & Co. in 1987
and was appointed to the
Board in 1989. More recently,
he was Finance Director of
MeesPierson ICS Limited,
now ABN AMRO Clearing,
before joining the Board of
Walker Crips Group as Finance
Director in 1999. He was
appointed Chief Executive
Officer in January 2007.

Sean Lam FCPA (Aust.),
Chartered FCSI
Group Managing Director
Mr. Sean Lam graduated in
1991 with a Bachelor of
Commerce degree from the
University of Western Australia,
majoring in accounting and
finance. He commenced his
career as an internal auditor
with Phillip Securities in Singapore
and progressed to become the
Head of Internal Audit.

In 1995, he was appointed
Head of Operations and in
the same year he attained his
professional qualification as
a CPA. In 1999, Walker Crips
Group appointed Sean to the
Board as Development Director,
with overall responsibility for
systems development and
information technology. In 2004,
he was made Chief Operating
Officer, and in 2007, Group
Managing Director. Sean is
a Fellow of CPA Australia,
a member of its European
Council from 2010–2015, and
was President of its European
Region in 2012 and 2013.

He is also a Chartered Fellow
of the Chartered Institute for
Securities & Investment.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

CORPORATE GOVERNANCE

Non-Executive Directors

Martin Wright
Senior Independent Director,
Non-Executive
Mr. Martin Wright was appointed
to the Board in July 1996 as
a Non-Executive Director.
He is a Partner of Charles
Russell Speechlys LLP (Solicitors)
where he is a member of the
Partnership Council. Martin is
a member of the Law Society.
He is also a Non-Executive
Director of a number of
private companies.

Robert Elliott FCA. Cert PFS
Non-Executive Director
Mr. Robert Elliott is a retired
Chartered Accountant, having
joined Garbutt & Elliott in 1957,
qualifying in 1963. After being
appointed as Partner in 1964,
he developed specialist skills in
negotiating corporate finance
acquisitions, disposals and
mergers. Robert retired from
Garbutt & Elliott whilst Senior
Partner in 2002.

He co-founded both G&E
Investment Services Ltd in 1975
and the London York Group of
Companies in 1980. Mr Elliott
was appointed to the Board
as a Non-Executive Director
in April 2005 and in July 2007
he was appointed as Chairman
of the Audit Committee.

David Gelber
Chairman
Mr. David Gelber has served
as Non-Executive Independent
Chairman of the Board of
Walker Crips Group plc since
May 2007.

He served as Group Chief
Operating Officer of ICAP plc
from 1994 to 2005 and
previously held the position
of Chief Operating Officer of
HSBC Global Markets. Prior to
joining HSBC he held senior
trading positions at Citibank,
Chemical Bank and J P Morgan.
He currently serves as a
Non-Executive Director of
IPGL Ltd, an investment holding
company, DDCAP Ltd, an arranger
of Islam-compliant financial
transactions, Extoix LLP, a Frontier
Market investment boutique,
Amadeo Air Four PLC, a
closed-end fund investing in
aircraft leasing and Sheffield
Haworth, an executive
recruitment company. His
previous directorships include
Globeop Financial Services and
eSeclending LLC in Boston.

Hua Min Lim
Non-Executive Director
Mr. Hua Min Lim is the Executive
Chairman of PhillipCapital Group
of Companies and was also
appointed Chairman of IFS
Capital Limited on 20 May 2003.

He began his career holding
senior positions in the Stock
Exchange of Singapore and
the Securities Research Institute.
He has served on a number of
committees and sub-committees
of the Stock Exchange of
Singapore. In 1997, he was
appointed Chairman of the
Stock Exchange of Singapore
(SES) Review Committee, which
is responsible for devising a
conceptual framework to make
Singapore’s capital markets
more globalised, competitive
and robust. For this service, he
was awarded the Public Service
Medal (PBM) in 1999 by the
Singapore Government.
In 2014, he was also awarded
“IBF Distinguished Fellow”
(Securities & Futures), the highest
certification mark bestowed by
The Institute of Banking and
Finance on industry captains
who are the epitome of
professional stature, integrity
and achievement.

Mr Lim joined the Walker Crips
Group Board in March 1993.

ANNUAL REPORT AND ACCOUNTS 2016 15

WALKER CRIPS GROUP PLC

CORPORATE GOVERNANCE

Directors’ report

for the year ended 31 March 2016

The Directors present their annual report on the affairs
of the Group, together with the financial statements
and Auditor’s Report, for the year ended 31 March 2016.

Results and dividends
Results, distributions and retained profits are as follows:

Retained earnings at 1 April
Profit for the year after taxation
Dividends paid

Retained earnings at 31 March

2016
£’000

11,254
795
(657)

11,392

2015
£’000

11,955
257
(958)

11,254

The Directors recommend a final dividend of 1.27 pence per
Ordinary Share to be paid on 12 August 2016 to Ordinary
Shareholders on the register on 29 July 2016.

Capital structure
Details of the Company’s share capital are shown in Note 26.
The Company has one class of Ordinary Share which carries no
right to fixed income. Each share carries the right to one vote at
general meetings of the Company.

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 Company’s
shares that may result in restrictions on the transfer of securities or
on voting rights. Where shares have been issued as consideration
for new clients and investment advisers upon commencement with
the Company, these shares are restricted from sale for periods of
four to six years.

Voting rights of shares held by the trustees of the Company’s Share
Incentive Plan (SIP) are not exercised unless the trustee is directed
to vote by the employee SIP participant.

No person has any special rights of control over the Company’s
share capital and all issued shares are fully paid.

With regard to the appointment and replacement of Directors, the
Company is governed by its Articles of Association, the Combined
Code, the Companies Acts and related legislation. The articles
themselves may be amended by special resolution of the shareholders.

Brief biographies of the Directors eligible and standing for election
at the Annual General Meeting are set out on pages 14 and 15.

Ethical responsibility
Our clients specify any ethical preferences that they have when
we construct their investment portfolios or make individual
recommendations. We actively support the professional institutes
and trade associations of which we are members to promote
a strong ethical code of conduct.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

Employment policy
It is the Group’s policy to give appropriate consideration to applications
for employment from disabled persons, having proper regard
to their particular aptitudes. For the purposes of training, career
development and promotion, disabled staff, including any who
become disabled in the course of their employment, are treated
on equal terms with other employees.

Health and safety policy
The Board has a policy of adopting procedures, appropriate to its
activities, to monitor, maintain and, where relevant, improve health
and safety standards to safeguard the Group’s staff.

None of the Company’s activities involve any significant health and
safety risks. During the year there were no injuries, illnesses or dangerous
occurrences which needed to be reported under the Reporting of
Injuries, Diseases and Dangerous Occurrences Regulations 1995.

Eligible employees can benefit from the Group’s permanent health
insurance scheme in the event of long-term illness preventing them
from carrying out their function.

Ordinary and special business
Resolutions will be placed before the Annual General Meeting to
confer authority on the Company to allot equity securities of up
to an aggregate nominal amount of £851,658 and to authorise
and empower the Company to allot equity securities.

The Companies Act 2006 permits a public company to purchase its
own shares in accordance with powers contained in its Articles of
Association and with the authority of a resolution of shareholders.
The Directors believe that the Company should be authorised
to take advantage of these provisions and, therefore, pursuant to
the power contained in the Company’s Articles of Association, it is
intended to propose a special resolution at the forthcoming Annual
General Meeting to confer authority on the Company to purchase
up to a maximum in aggregate of 10% of the Ordinary Shares of
62/3 pence each in the share capital of the Company at a price or
prices which will not be less than 62/3 pence and which will not be
more than 5% above the average of the middle market quotation
derived from the London Stock Exchange Daily Official List for the
ten business days before the relevant purchase is made.

The authority was given at the last Annual General Meeting of the
Company for a period expiring at the conclusion of the next Annual
General Meeting. It is the Directors’ intention that a resolution for
its renewal will be proposed at each succeeding Annual General
Meeting. The Directors will only make use of the authority when
satisfied that it is in the interest of the Company to do so. Shareholders
should note that any Ordinary Shares purchased by the Company
will either be cancelled and the number of Ordinary Shares in issue
will accordingly be reduced or will be held as treasury shares.

CORPORATE GOVERNANCE

2015
tCO²e
16
248

264

1.43

2016
tCO²e

14
465

479

2.28

Carbon emission reporting

GHG emissions data for the year ended 31 March 2016:

Scope 1 – combustion of fuel
Scope 2 – purchased electricity

Total

Total emissions per employee

The Greenhouse Gas Protocol assessment methodology and
UK Government conversion factors for Company reporting have
been applied to calculate the emissions statistics in relation to
material sources of emissions for which the Group is responsible.

The reporting boundary used for collation of the above data is
consistent with that used for consolidation purposes in the
financial statements.

The following sources of emissions are not deemed to
be material for the purposes of preparing this disclosure:

▪ vehicle use; and

▪ air conditioning.

Substantial shareholdings
As at 31 March 2016, the following interests, excluding those of
Directors, in excess of 3% of the Ordinary Share capital of the
Company were held:

L. W. S. Lim
L. W. Y. Lim
L. W. J. Lim
Miton Group plc
M. J. Sunderland

Number

Percentage

2,700,243
2,700,242
2,700,242
1,718,824
1,176,500

7.1
7.1
7.1
4.5
3.1

Pillar 3 disclosures
The Basel Capital Accord, issued by the Basel Committee on Banking
Supervision, aims to improve the flexibility and risk sensitivity of the
existing Accord. The Accord consists of three mutually reinforcing
pillars. Pillar 3 recommends requirements aimed at enhancing
market discipline through effective disclosure of information to
market participants.

The disclosures can be found on the following website:
www.wcgplc.co.uk.

Auditor
Each of the persons who is a Director at the date of approval of this
annual report confirms that:

▪ so far as the Director is aware, there is no relevant audit

information of which the Company’s auditor is unaware; and

▪ the Director has taken all the steps that he ought to have taken
as a Director in order to make himself aware of any relevant
audit information and to establish that the Company’s auditor
is aware of that information.

This confirmation is given and should be interpreted in accordance
with the provisions of section 418 of the Companies Act 2006.

The Board understand it is Deloitte LLP’s (the Auditors) intention to
resign as the Company’s auditors for commercial reasons following
the giving of their audit report. The Board intend to appoint BDO LLP
as auditors of the Company pursuant to section 489 of the
Companies Act 2006 to fill the casual vacancy arising from the
resignation of the Auditors pending shareholder approval at the
next Annual General Meeting of the Company.

By order of the Board

R. A. FitzGerald FCA
Director
30 June 2016

ANNUAL REPORT AND ACCOUNTS 2016 17

WALKER CRIPS GROUP PLC

CORPORATE GOVERNANCE

Report by the Directors on
corporate governance matters
year ended 31 March 2016

The Company is committed to the Principles of Good
Governance set out in Section 1 of the June 2006 FRC
Combined Code on Corporate Governance by complying
with the Code of Best Practice. Further explanation of
how the principles have been applied is also set out below
and, in connection with Directors’ remuneration, in the
Remuneration Committee Report.

Compliance
With one exception, the Company has been in compliance with
the code provisions set out in the Combined Code on Corporate
Governance issued by the Financial Conduct Authority. The
exception is in regard to the period of appointment within
Non-Executive Directors’ service contracts, which are not for
fixed periods as stated in code A7.2.

The Board of Directors
The Board of Directors currently consists of four Executive and four
Non-Executive Directors. The full Board meets regularly and at least
every alternate month throughout the year.

The Board is provided with appropriate information on a timely
basis to enable it to discharge its duties. It has a formal schedule
of matters reserved to it for decision making, including, inter alia,
developing the future direction of the Group’s business, agreeing

policies and procedures, approving material transactions, business
risk reviews, budgets and borrowings and monitoring the Group’s
progress. Decisions delegated to management are not specifically
listed but are limited to £50,000 in value where financial commitments
are necessary in the daily course of business and £100,000 in value
for investment and capital projects. All subsidiary Boards of Directors
include at least one Main Board Executive Director who serves as
the link between operational decision making by both the Board
Directors and management.

Non-Executive Directors of the plc Company are also Directors
of the Boards of the main operating subsidiary companies which
conduct regulated investment business, thereby playing an active
part in decision making and control at an operating level.

The roles of Chairman and Chief Executive, occupied by D. M. Gelber
and R. A. FitzGerald FCA respectively, are separated and the Board
includes Non-Executive Directors, of whom D. M. Gelber, R. A. Elliott FCA
and M. J. Wright are regarded as independent, and the remaining
Directors believe they provide an objective viewpoint.

The Board has three established Committees: the Audit Committee,
the Nomination Committee and the Remuneration Committee,
all comprised entirely of Non-Executive Directors.

During the year, the Directors, in their capacity as members of the
Board/appropriate Committee, attended the following number
of meetings:

Number of meetings

D. M. Gelber (Non-Executive Chairman)
R. A. FitzGerald (Chief Executive)
S. K. W. Lam
H. M. Lim
M. J. Wright (Non-Executive Senior Independent Director)
R. A. Elliott (Non-Executive Audit Committee Chair)
D. Hetherton
M. J. W. Rushton

Board

Remuneration
Committee

Audit
Committee

Nomination
Committee

6
6
6
—
5
6
6
6

2
n/a
n/a
2
2
n/a
n/a
n/a

3
n/a
n/a
n/a
4
4
n/a
n/a

1
n/a
n/a
—
1
1
n/a
n/a

The Non-Executive Directors also serve and attend Board meetings as Directors of the main regulated subsidiary companies, thereby
playing an active part in decision making and control at an operating level.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

CORPORATE GOVERNANCE

The Company’s procedures for “whistleblowing”, whereby colleagues
may confidentially raise concerns about possible improprieties in
matters of financial reporting or other issues, has been reviewed
by the Board and made available to approved persons and staff.

A satisfactory evaluation of the effectiveness of the Board, its
Directors and Committees has been conducted and reviewed.
This entailed an evaluation of the summarised results of a widely
used questionnaire being benchmarked against the published
results of a cross-section of quoted companies.

M. J. Wright, the Senior Independent Director, has served on the
Board for 20 years since the Company’s full listing on the London
Stock Exchange. The firm of solicitors, The firm of solicitors of which
he is a Partner, Charles Russell Speechlys, provided legal services
to the Group during the year totalling £60,000 (2015: £274,000).
The Board values his continuing contribution, particularly on legal
matters, and has also determined that he is independent and that
it would like him to continue. He will, therefore, be put forward for
re-election to the Board at each Annual General Meeting henceforth,
in accordance with the recommendations of the Higgs Report.

Nomination Committee
The Committee consists of D. M. Gelber, M. J. Wright, R. A. Elliott
and H. M. Lim. It considers and makes recommendations to the
Board for the appointment of Directors. When considering possible
candidates, the Committee evaluates their skill, knowledge,
experience and, in the case of Non-Executives, their independence
and other commitments. The structure of the Board and its
collective experience and skill set are assessed on the appointment
or departure of any Director.

A Nomination Committee meeting was held during the year to
discuss succession planning for the Main Board and key senior
positions at operating subsidiary level.

The growing importance of regulation to the Group has been
reflected by the creation of a new Board role, Group Compliance
Director. A formal recruitment exercise was conducted during the
year which led to the appointment of Guy Jackson in May 2016,
effective from August 2016.

Audit Committee
During the year, the Audit Committee consisted of M. J. Wright,
D. M. Gelber and R. A. Elliott FCA, who is the Committee Chairman.
The Committee’s terms of reference include reviewing the scope
and findings of the external audit, reviewing the plan and findings
of the Internal Audit function, assessing the effectiveness of the
Company’s internal control procedures and the reporting of results.

The Company’s internal and external auditors and the Executive
Directors may attend Committee meetings by invitation. The
Committee has a discussion with the external auditor at least once
a year without Executive Directors being present, to ensure that
there are no unresolved issues of concern. The Audit Committee
met four times during the course of the year and was fully attended.
The auditor disclosed the level of fees received in respect of the
various services provided by its firm in addition to the audit during
the year. It confirmed to the Audit Committee that they did not
believe that the level of non-audit fees had affected its independence.
The Audit Committee’s policy is to use the most appropriate
advisers for non-audit work, taking account of the need to
maintain independence.

During the year, the Company undertook a competitive tender
process for the position of statutory auditor now that the five year
period of the present Audit Partner at Deloitte LLP has been completed.

In August 2010, the Audit Committee approved the outsourcing
of the Internal Audit function to a leading firm of auditors,
Smith & Williamson, whose experience in the financial services
sector provides the Board with additional assurance that an
adequate control framework is in place.

Remuneration Committee
The Remuneration Committee consists of M. J. Wright, H. M. Lim
and its Chairman, D. M. Gelber. The Committee is responsible for
agreeing the remuneration of the Executive Directors and other key
personnel of the Company. The full Board is responsible for agreeing
the remuneration of the Non-Executive Directors. The Chief Executive
attends certain parts of meetings of the Remuneration Committee
by invitation. Further details of the Company’s policies on Directors’
remuneration, service contracts and share options are given in the
Remuneration Committee report.

A staff profit share scheme which enables all employees to share
directly in the future prosperity of the Group has been in operation
for several years. Profit before tax for the current year eligible for
this bonus calculation has fallen below the minimum threshold and,
accordingly, an amount of £nil (2015: £nil) has been allocated to
the scheme for the year being reported. An employee Share Incentive
Plan incentivises employees to join with the Company in making
regular joint purchases of shares in the Company to be held in trust
for a minimum of three years. The Share Incentive Plan replaces
the employee share option schemes previously in operation.

ANNUAL REPORT AND ACCOUNTS 2016 19

WALKER CRIPS GROUP PLC

CORPORATE GOVERNANCE

Report by the Directors on
corporate governance matters continued
year ended 31 March 2016

Non-Executive Directors
Contrary to the recommendations of the Combined Code,
Non-Executive Directors’ contracts do not cover their appointment
for a specified period because, under the Articles of Association,
all Directors are required to retire by rotation and one-third of
the Board is required to seek re-election each year. Re-election
is subject to shareholders’ approval. The terms and conditions
of appointment of Non-Executive Directors, as well as the Audit,
Remuneration and Nomination Committees, are available for
inspection by any person at the Company’s registered office
during normal business hours and at the Annual General Meeting.

Executive Directors
Executive Directors have service contracts of varying lengths,
but maximum compensation for loss of office is limited to
twelve months’ salary in all instances.

Directors’ emoluments are disclosed in the Remuneration
Committee Report.

The Management Committee and Risk Management Committee
The Board has appointed a Management Committee to assist
in the day-to-day management of the Group. The Committee is,
inter alia, responsible for developing plans for implementing the
strategy of the Group and advising on the allocation of personnel
and capital resources. The Risk Management Committee ensures
that all new initiatives, projects and products are formally assessed
and evaluated for the degree of risk exposure and regulatory
capital impact to the Group, so enabling risk strategies of
elimination, mitigation or avoidance to be formulated.

Relations with shareholders
The Board recognises the importance of communications with
shareholders. The Chairman and Chief Executive Statement in this
report and accounts includes a detailed review of the business and
future developments.

The Board uses the Annual General Meeting to communicate with
private and institutional investors and welcomes their participation.
The Chairman aims to ensure that all of the Directors are available
at Annual General Meetings to answer questions. The proxy votes
cast on each resolution proposed at general meetings are disclosed
at those meetings.

Internal control
The Board acknowledges its responsibility for the Group’s system
of internal control and has formalised the process for its review of
internal control (including financial, operational and compliance
controls as well as risk management) and defining the scope and
frequency of reports to be received, both by the Board and the
Audit Committee. There is an ongoing process for identifying,
evaluating and managing the significant risks faced by the Company
and Group. This process has been in operation throughout the year
ended 31 March 2016 and up to the date of approval of the annual
report and accounts and is regularly reviewed by the Board and the
Board is satisfied that it accords with the Turnbull guidance. Due to
the size of the Company and Group there is a simple organisational
and reporting structure. Financial results and other information are
regularly reported to the Board throughout the year. Operations
are monitored closely.

The Directors have reviewed the effectiveness of the Company’s
system of internal control and consider that the controls and
procedures established are appropriate for the Company and
Group. However, any system of internal control can only provide
reasonable, not absolute, assurance against material misstatement
or loss.

The Group operates under a system of internal financial controls
which have been developed and refined to meet its current and
future needs. These include but are not limited to:

▪ the organisational structure and the delegation of authorities

to operational management;

▪ procedures for the review and authorisation of capital investments;

▪ budgets and forecasts which are reviewed by the Board;

▪ the reporting and review of financial results and other

operating information;

▪ accounting and financial reporting policies to ensure

the consistency, integrity and accuracy of the Group’s accounting
records; and

▪ financial and operating controls and procedures which are

in place throughout the organisation and monitored through
various means including routine and special reviews by the
internal auditor.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

CORPORATE GOVERNANCE

Statement of Directors’ responsibilities

year ended 31 March 2016

The Directors are responsible for preparing the annual
report and the financial statements in accordance with
applicable law and regulations.

Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors are required to
prepare the Group financial statements in accordance with applicable
International Financial Reporting Standards (IFRSs) as adopted by
the European Union and have elected to prepare the parent company
financial statements on the same basis. Under company law the
Directors must not approve the accounts unless they are satisfied
that they give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for that period.

In preparing each of the Group and the parent company financial
statements, the Directors are required to:

▪ select suitable accounting policies and then apply them consistently;

▪ make judgements and accounting estimates that are reasonable

and prudent;

▪ state whether they have been prepared in accordance with IFRSs
as adopted by the EU, subject to any material departures disclosed
and explained in the financial statements; and

▪ prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.

In preparing the Group financial statements, International
Accounting Standard 1 requires that Directors:

▪ properly select and apply accounting policies;

▪ present information, including accounting policies, in a

manner that provides relevant, reliable, comparable and
understandable information;

▪ provide additional disclosures when compliance with the

specific requirements in IFRSs are insufficient to enable users
to understand the impact of particular transactions, other events
and conditions on the entity’s financial position and financial
performance; and

▪ make an assessment of the Company’s ability to continue

as a going concern.

The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure
that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.

Responsibility statement
We confirm that to the best of our knowledge:

▪ the Board confirms that the annual report and accounts, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the performance,
strategy and business model of the Company;

▪ the Strategic and Directors’ Report includes a fair review of the
development and performance of the business and the position
of the Company and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face; and

▪ the Annual Report and Financial statements, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group’s position and
performance, business model and strategy.

By order of the Board

R. A. FitzGerald FCA
Director
30 June 2016

ANNUAL REPORT AND ACCOUNTS 2016 21

WALKER CRIPS GROUP PLC

CORPORATE GOVERNANCE

Remuneration Committee report

year ended 31 March 2016

Remuneration report – introduction

This is the Remuneration Committee report for the year ended 31 March 2016. It sets out the remuneration policy and
remuneration details for both the Executive and Non-Executive Directors of the Company. It has been prepared in accordance
with Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 as amended
in August 2013 (referred to below as Schedule 8).

The report is split into three main areas:

▪ the statement by the Chairman of the Remuneration Committee

set out below;

▪ the Annual Report; and

▪ the Policy Report.

The Annual Report of Remuneration provides details on remuneration
in the period. The Policy Report was approved by the shareholders
at the 2014 Annual General Meeting for a period of three years
and is therefore not being put to the shareholders at the 2016 AGM.

A resolution to approve the Annual Report on Remuneration will be
put to this year’s Annual General Meeting to be held on 3 August 2016.

The Companies Act 2006 requires the auditors to report to the
shareholders on certain parts of the Directors’ Remuneration
Report and to state whether, in their opinion, those parts of the
report to be audited have been properly prepared in accordance
with Schedule 8. The parts of the Annual Report on Remuneration
that are subject to audit are indicated in that report. The statement
by the Chairman of the Remuneration Committee and the Policy
Report are not subject to audit.

Annual statement from the Chairman of the Remuneration Committee
This has been a further year of consolidation for the Group, with
our focus remaining upon the implementation of the strategy to
create a full service investment and wealth management group.
Our senior management team has remained stable and basic salaries
were increased marginally. Directors’ bonuses have been paid to
certain Directors based on divisional profitability, as set out below.

This led to a new Directors’ Remuneration Policy that was developed
by the Remuneration Committee which envisaged the introduction
of a Long Term Incentive Plan (“LTIP”) for certain members of the
Executive team.

The Executive team has remained focused on the restructuring of
internal systems referred to in the Chairman and Chief Executive’s
statement. Whilst there has been initial consultation with certain
key shareholders, the introduction of a new LTIP has not yet been
crystallised. It remains the intention of the Remuneration Committee
to formulate a new LTIP to provide certain members of the Executive
team with the opportunity to earn shares subject to the achievement
of stretching performance targets. When that has been done, the
Company will seek approval for a new Directors’ Remuneration
Policy and the LTIP.

D. M. Gelber
Remuneration Committee Chairman
30 June 2016

Although various existing practices have been codified, no material
remuneration policy changes were made in the year to 31 March 2016.
As noted last year, having made significant progress in implementing
Group strategy to restore profitability and refocus the Group, the
Remuneration Committee has reviewed the Company’s remuneration
arrangements to ensure that it maintains appropriate measures
and processes for annual and long-term incentives.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

CORPORATE GOVERNANCE

Annual report on remuneration –
subject to advisory vote by shareholders at the 2016 AGM
This part of the report has been prepared in accordance with Part 3 of Schedule 8 and Listing Rule 9.8.6. In accordance with the regulations,
the annual remuneration report will be put to an advisory shareholder vote at the 2016 AGM.

Remuneration for the year ended 31 March 2016 (audited information)
The table below sets out the remuneration received by the Directors in relation to performance in the year to 31 March 2016 together
with prior year comparisons. To aid transparency to our shareholders, a single figure for the total remuneration due, or which will become
due, to each Director is disclosed.

Fees/
basic salary
£

168,621
166,129

168,261
152,285

109,964
112,448

155,295
153,000

—
—

41,412
40,800

27,435
27,030

Taxable
benefits
£

Personal
pension
contributions
£

Bonus taken
as pension
contribution
£

Bonus
£

Total bonus
£

Long Term
Incentive
Plan
£

1,981
2,634

1,295
1,916

1,375
1,515

1,768
2,691

—
—

16,862
16,613

16,862
27,384

39,106
33,852

10,870
10,710

—
—

—
12,365

—
75,189

—
—

326
—

—
—

326
12,365

—
75,189

—
—

—
13,500

—
—

Share
incentive
plan
matching
share
contribution
£

1,800
1,800

—
—

1,800
1,800

Total
£

189,264
187,176

188,578
183,385

152,571
161,980

169,733
256,890

—
—

43,212
42,600

29,235
28,830

671,348
651,692

6,419
8,756

83,700
88,559

—
87,554

326
—

326
87,554

—
13,500

10,800
10,800

772,593
860,861

Name of Director

Executive
R. A. FitzGerald

S. K. W. Lam

D. Hetherton

M. J. W. Rushton

Non-Executive
H. M. Lim

M. J. Wright

D. M. Gelber

R. A. Elliott

Total

2016
2015

Executives can elect to sacrifice fixed or variable remuneration into a pension scheme of their choice.

ANNUAL REPORT AND ACCOUNTS 2016 23

WALKER CRIPS GROUP PLC

CORPORATE GOVERNANCE

Remuneration Committee report continued

year ended 31 March 2016

Annual report on remuneration continued
Annual bonus for the year ended 31 March 2016
The Group operates a profit sharing pool from which the Executive Directors may receive a discretionary bonus linked to performance.
In addition, the Chief Investment Officer, Mark Rushton, and the Wealth Management Director, David Hetherton, each receive a performance
bonus linked to the profitability of the divisions under their responsibility. All bonuses are paid in cash with no deferred component.

Based on the Group’s results and profitability the Committee has not awarded annual bonuses payable in cash to any of the Executive
Directors, except for an adjustment of £326 relating to the prior year bonus paid to David Hetherton.

Outstanding share awards
There were no share options outstanding and not vested at 31 March 2016.

Deferred bonus
There are no deferred bonus arrangements in place.

Share incentive plan (SIP)
All employees of the Group are eligible to participate in the SIP following six months of service. Employees may use funds from their gross
salary up to 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 Company (Partnership Shares). Partnership Shares are acquired monthly. For every Partnership Share
purchased, the employee receives one matching share. All shares to date awarded under this scheme have been purchased in the market
by the Trustees and it is the intention of the Board to continue this policy in the year to March 2016.

Share schemes under which no awards were made in 2016
Awards under the 2006 Share Option Scheme have been historically granted to Directors but the scheme has expired and no awards are
outstanding for future vesting. Awards have not been made under the Scheme since 2006.

Directors’ shareholding and share interests (audited information)
The interests of the Directors and their connected persons in the share capital of the Company are shown in the table below.

Beneficially
owned at
31 March
2015

Beneficially
owned at
31 March
2016

275,235
422,996
99,734
455,704
713,544
122,502
16,129

285,330
433,222
108,628
465,549
746,311
132,467
16,129

Director

R. A. FitzGerald
S. K. W. Lam
M. J. W. Rushton
R. A. Elliott
D. Hetherton
D. M. Gelber
M. J. Wright

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

CORPORATE GOVERNANCE

Share Incentive Plan
The Company also operates the Walker Crips Group Plc Share Incentive Plan (SIP). Participants in the SIP are entitled to purchase up to a
prescribed number of new Ordinary Shares in the Company at the end of each month. A total of 664,425 (2015: 642,975) new Ordinary
Shares were issued to the 123 employees who participated in the SIP during the year. At 31 March 2016, 2,637,937 shares were held in
the SIP on their behalf. There were no forfeited shares not allocated to any specific employee.

Matching shares awarded to Directors under the Share Incentive Plan are as follows:

Director

R. A. FitzGerald
S. K. W. Lam
M. J. W. Rushton
D. Hetherton
D. M. Gelber
M. J. Wright
R. A. Elliott

31 March
2015

31 March
2016

31,389
29,947
12,277
21,515
30,206
—
28,606

35,669
33,799
16,129
20,680
34,036
—
32,436

Material contracts with Directors
Other related parties include Charles Russell Speechlys, in which M. J. Wright, Non-Executive Director, is a Partner. Charles Russell Speechlys
provides certain legal services to the Group on normal commercial terms and the amount paid and expensed during the year was £60,000
(2015: £274,000).

In addition, commission of £3,965 (2015: £2,600) was earned by the Group from Phillip Securities (HK) Limited (a Phillip Brokerage Pte Limited
company, where H. M. Lim is a shareholder) having dealt on standard commercial terms. Additionally, some custody services are provided
by Phillip Securities Pte Ltd (in Singapore where H. M. Lim is a Director) again all on standard commercial terms.

Total pension entitlements
There are no defined benefit company pension schemes in operation. The Company contributes a percentage of the Executive Directors’
basic salaries into personal pension arrangements of their choice. In addition, salary sacrifice may be exercised in favour of additional
pension contributions.

Death-in-service benefits
Executive Directors are eligible for death-in-service benefit cover which is equal to four times the Director’s fixed remuneration.

Payments within the year to past Directors
There have been no disclosable payments made to Directors after they have left office during the year.

Loss of office payments
There were no loss-of-office payments made in the years ended 31 March 2016 and 31 March 2015.

ANNUAL REPORT AND ACCOUNTS 2016 25

WALKER CRIPS GROUP PLC

CORPORATE GOVERNANCE

Remuneration Committee report continued

year ended 31 March 2016

Annual report on remuneration continued
Percentage increase in the remuneration of the Chief Executive

Chief Executive
– salary
– bonus

Average per employee (£)
– salary
– bonus

2015
£

2016
£

166,129
—

168,621
—

34,285
5,723

35,905
5,988

Change

1.50%
—

4.70%
4.60%

The table above shows the movement in salary and annual bonus for the Chief Executive between the current and previous financial year
compared to that of the average employee. The Committee has chosen this comparator and it feels that the comparison of basic salary
provides a more appropriate reflection of the earnings of the average worker than the movement in the Group’s total wage bill, which is
distorted by movements in the number of employees. More junior staff receive a base salary and, in some cases, pension contributions.
As such a comparison of the movement in benefits for the Chief Executive and the average employee was not considered to be
meaningful and has not been included.

Performance graph
The graph below shows a comparison between the Company’s total shareholder return (TSR) performance compared with the companies
in the FTSE Small Cap Index. The graph compares the value, at 31 March 2016, of £100 invested in Walker Crips Group plc on 31 March 2011
with the value of £100 invested over the same period in the FTSE Small Cap Index. This Index has been chosen to give a comparison with
the average returns that shareholders could have received by investing in a range of other small UK public companies.

After the sale of our asset management and corporate finance subsidiaries, the Group has gradually expanded and has reshaped the business
model into a more profitable one.

Total shareholder return compared to FTSE Small Cap Index

d
e
t
s
e
v
n

0
0
1
£
f
o
e
u
a
v
e
v
i
t
a
u
m
u
C

160

140

120

100

2011

2012

2013

2014

2015

2016

Walker Crips Group plc share price

FTSE Small Cap Index

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

CORPORATE GOVERNANCE

The table below shows the total remuneration figure for the Chief Executive during each of those financial years. The total remuneration
figure includes the annual bonus which was awarded based on performance in those years. No long-term incentive awards were made to
the highest paid Executive Director during the period.

Year ended 31 March

2012

2013

2014

2015

2016

Total remuneration

£174,512

£267,934

£186,769

£187,176

£189,264

Relative importance of the spend on pay
The table below shows the movement in spend on staff costs versus that in dividends.

Staff costs
Dividends paid*

* Excludes special dividends.

2015
£’000

8,841
588

2016
£’000

10,160
657

Increase

14.92%
11.73%

Remuneration Committee governance
The Remuneration Committee is governed by formal terms of reference agreed by the Board. The terms of reference were reviewed during
the year to ensure they continued to accurately reflect the remit of the Committee. The terms of reference of the Remuneration Committee
can be viewed on the Company’s website. All of the Committee members are independent Non-Executive Directors.

The members of the Committee during the last financial year and their attendance at the meetings of the Committee are shown in the
Report by the Directors on Corporate Governance Matters.

None of the Remuneration Committee members has any personal financial interests (other than as shareholders), conflicts of interest
arising from cross directorships or day-to-day involvement in running the business. The Remuneration Committee determines the individual
remuneration packages of each Executive Director. The Chief Executive attends meetings by invitation and assists the Committee in its
deliberations, except when issues relating to his own remuneration are discussed. No Directors are involved in deciding their own remuneration.
The Committee can call for external reports and assistance. Independent legal advice may be sought by the Committee as required.

The Committee reviews the remuneration policy for senior employees below the Board as well as the policy on pay and conditions of
employees throughout the Group. These are considered when determining Executive Directors’ remuneration.

During the period, the Committee met twice and a number of issues were considered and discussed, including but not limited to:

▪ remuneration policy for Executive Directors, including structure and performance criteria for the annual divisional and bonus pool arrangements;

▪ determination of remuneration;

▪ approval of compensation arrangements;

▪ determination of annual incentive payable to Executive Directors in respect of the year to 31 March 2016;

▪ oversight of remuneration arrangements for senior Executives;

▪ review of the Company’s Pillar 3 remuneration disclosures; and

▪ review of the Committee’s terms of reference.

External directorships
None of the Executive Directors held external directorships during the current and prior year.

ANNUAL REPORT AND ACCOUNTS 2016 27

WALKER CRIPS GROUP PLC

CORPORATE GOVERNANCE

Remuneration Committee report continued

year ended 31 March 2016

Annual report on remuneration continued
How the remuneration policy will be applied for the year from 1 April 2016 onwards
The base salary review in 2016 resulted in a decision to award no increase to the salaries of the Executives.

R. A. FitzGerald
S. K. W. Lam
M. J. W. Rushton
D. Hetherton*

* Excludes salary taken as pension.

Salary as at
31 March
2015

Salary as at
31 March
2016

£166,129
£152,285
£153,000
£112,448

£168,621
£168,621
£155,295
£109,964

Fees for the Chairman and Non-Executive Directors
The Company’s approach to setting Non-Executive Directors’ fees is detailed in the Policy Report. These fees are reviewed periodically
by the Board. A summary of current fees for Non-Executive Directors is as follows:

Chairman
Senior Independent Director
Audit Committee Chairman

Year ended
31 March
2016

£41,412
£26,520
£27,435

D. M. Gelber was appointed as Non-Executive Chairman of the Company by a letter agreement dated 11 May 2007 for a term
commencing on 11 May 2007 of not less than two years and thereafter terminable by either party on at least six months’ notice in
writing or otherwise in accordance with the Company’s Articles of Association. His remuneration is now a fee of £41,412 per annum plus
reimbursement of other specific expenses incurred on behalf of the Company.

M. J. Wright, Senior Independent Director, has a letter of appointment dated 9 July 2000 and accepted on 10 July 2000 for a term of not
less than two years commencing on 9 July 2000 and terminable by either party on not less than three months’ notice in writing or
otherwise in accordance with the Company’s Articles of Association. His fees are now £26,520 plus VAT per annum plus expenses. His fees
are payable to Charles Russell Speechlys quarterly in arrears.

H. M. Lim has no formal service agreement with and receives no remuneration from the Company.

R. A. Elliott, Chairman of the Audit Committee, was appointed as a Non-Executive Director on 11 April 2005 by a letter agreement with a
right for him to resign immediately in accordance with the Company’s Articles of Association. The agreement also provides for Mr Elliott’s
re-election each year at the Company’s Annual General Meeting. His remuneration is now £27,435 per annum plus reimbursement of
other specific expenses incurred on behalf of the Company.

The fees were reviewed by the Board and an increase of 1.25% per annum was agreed effective from 1 April 2016.

Directors’ contracts are available for inspection at the Annual General Meeting or on appointment at our London head office.

LTIP for the Chief Investment Officer
The Company has presented details of the LTIP arrangements for the Chief Investment Officer. These were set out in the financial
statements for the year to 31 March 2012. They are summarised briefly in the Policy Report below.

Statement of shareholder voting
At last year’s AGM, the Directors’ Remuneration Report received the following votes from shareholders:
2015 AGM

Votes in favour
Votes cast against
Abstentions

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

14,329,109
81,473
16,077

38.20%
0.20%
—

CORPORATE GOVERNANCE

Policy Report – approved by shareholders at the 2014 AGM

Overview/scope
The Remuneration Committee determines the Group’s policy on remuneration of the Executive Directors and provides an independent
view on the remuneration decisions and recommendations for Executive management within the Group. The Committee’s terms of
reference are available on the Group’s website.

The Committee takes into account the following objectives in determining the Directors’ remuneration policy:

▪ fundamentally, to support the delivery of Walker Crips Group business objectives and corporate values by attracting, retaining and

motivating talented Directors and senior Executives of the calibre to manage the business successfully;

▪ accordingly, to reward and motivate good performance consistent with those objectives; and

▪ to meet the requirements of the FCA Remuneration Code.

The Committee, accordingly, is guided by the following key principles. Directors’ remuneration should:

▪ avoid creating incentives for excessive risk taking, i.e. that exceed tolerated risk levels of Walker Crips Group or its risk appetite; and

▪ align all incentive plans with achievement of the adopted business strategy.

The Remuneration Committee will ensure that all types of remuneration arrangement operated by Walker Crips Group for Walker Crips Group
Directors and Executive management are regularly reviewed and consistent with the general remuneration culture prevalent throughout
the Group.

How the views of shareholders are taken into account
The Committee will regularly compare the Group’s Directors’ remuneration policy with shareholder guidelines and takes account of the
results of shareholder votes on remuneration. If any material changes to the remuneration policy are contemplated, the Chairman will
consult with major shareholders about these in advance.

Consideration of employment conditions elsewhere in the Group
The Group applies a consistent remuneration philosophy for employees at all levels.

The Committee takes account of the aggregate rate of base salary increase for all employees when determining increases in fixed pay
for Directors.

All employees are eligible for a performance-related annual bonus.

ANNUAL REPORT AND ACCOUNTS 2016 29

WALKER CRIPS GROUP PLC

CORPORATE GOVERNANCE

Remuneration Committee report continued

year ended 31 March 2016

Policy Report continued
Future policy table
The following table summarises the key aspects of the Group’s remuneration policy for Executive Directors:

Element

Purpose and link to short and
long-term strategy

Operation, performance measures and periods, deferral and clawback

Maximum opportunity

Total fixed pay

Provides a level of
fixed remuneration
sufficient and
appropriate to
recruit and retain
necessary talent and
(with the balance of
the remuneration
package) to properly
reward the Executive.

Rather than having separate base salary, pension and benefits
components, Executive Directors receive a total fixed pay sum,
which they can receive all in cash, or may choose to “sacrifice”
part of the cash and instead receive part as a pension contribution
and/or fringe benefits such as a car benefit, private medical
insurance, or long-term illness/disability insurance. Executive
Directors can also benefit from life insurance at a level of four
times annual salary. Individual levels of total fixed pay are
reviewed annually, with any increases normally taking place in
April, unless there are exceptional reasons for an increase at
another time of the year. Any increases are generally targeted
at around the general level of salary inflation of the Group, but
may vary from this for exceptional reasons such as a change
in the individual’s role or responsibilities, or a need to bring an
individual’s remuneration to a market competitive level.

Total fixed pay is
benchmarked against
relevant market levels
of aggregate fixed pay
and is targeted to be at
or below the median of
comparable competitors.

Annual
variable pay
(Discretionary)

Rewards annual
Group and personal
performance.

Executive Directors are considered each year for a discretionary
annual variable pay award, which takes into account both Group
and personal performance. The main weighting is on Group
financial performance.

Group performance is assessed primarily by reference to audited
profit before tax after adjusting for one-off items for which credit
cannot be allocated to a Director.

No maximum has been
set but the Committee
will exercise its discretion
responsibly, having
regard to the interests
of shareholders.

Long Term
Incentive Plan
(LTIP)

Agreed as part of
the recruitment of
the CIO. Rewards
achievement of
the long-term
performance
objectives.

Under the terms agreed with him as part of his recruitment, the
Group’s Chief Investment Officer, Mark Rushton (MR), was given
the right to participate in a Long Term Incentive Plan (LTIP). The
terms of the LTIP, under which MR holds shares representing 5%
of the growth in the value of certain core businesses of Walker
Crips Stockbrokers Limited, were disclosed in the annual accounts
for the years to 31 March 2012 and thereafter.

Differences in remuneration for Executive Directors compared to other employees
The approach to remuneration for the Executive Directors is generally consistent with that for employees across the Company as a whole.
However, there are some differences which the Committee believes are necessary to reflect the different responsibilities of employees
across the Company, and the need to recruit, retain and motivate employees in a variety of roles.

Approach to remuneration for new Executive Director appointments
The remuneration package for a new Executive Director would be set in accordance with the terms and any maximum levels of the
Group’s approved remuneration policy in force at the time of appointment.

The Committee may also offer additional cash and/or share-based elements when it considers these to be in the best interests of the
Group and shareholders, for the purpose of replacing awards or potential foreseeable earnings which are forgone by the individual on
becoming an Executive Director. This includes the use of awards made under 9.4.2 of the Listing Rules. In considering any such payments
the Committee would take account of the amount of remuneration foregone and the nature, vesting dates and any performance
requirements attached to the remuneration forgone. Shareholders will be informed of any such payments and the rationale for these.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

CORPORATE GOVERNANCE

For an internal appointment, any deferred pay element awarded in respect of the prior role may be allowed to pay out according
to its terms, adjusted as relevant to take into account the appointment. In addition, ongoing remuneration obligations existing prior
to appointment may be permitted to continue where this is considered to be in the best interests of the Group and shareholders.

For external and internal appointments, the Company may meet certain relocation expenses as appropriate.

Service contracts, letters of appointment and loss of office payments
Service contracts normally continue until the Director’s agreed retirement date or such other date as the parties agree. The service
contracts contain provision for early termination.

A summary of contractual commitments in Directors’ service contracts is as follows:
Provision

Detailed terms

Notice period

Six months or twelve months in the case of R. A. FitzGerald.

Termination payment in the event of termination by
the Company without due notice

Contractual entitlement based upon total fixed pay due in respect of the unexpired
period of contractual notice.

In certain cases of “good leavers”, the Committee may also consider a discretionary
award of annual variable pay, subject to performance, in respect of the portion of
any financial year that the individual has been working with the Company, although
not for the same period of any payment in lieu of notice or “garden leave”.

Change of control

Same terms as above on termination.

Any outstanding share-based entitlements granted to the Executive or other Directors under the Company’s LTIPs or to other Directors
under other share plans will be determined based on the relevant plan rules.

Legacy arrangements
For the avoidance of doubt, the Directors’ remuneration policy includes authority for the Company to honour any commitments entered
into with current or former Directors that have been disclosed to shareholders in previous Remuneration Reports. Details of any payments
to former Directors will be set out in the implementation section of this report as they arise.

Fees policy for the Chairman and other Non-Executive Directors
The following table provides a summary of the key elements of the remuneration for the Board Chairman and other Non-Executive Directors:
Element

Purpose and link to strategy

Operation

Chairman fee

To pay the market competitive
all-inclusive fee that takes account
of the role and responsibilities.

The Board Chairman is paid a single fee for all his responsibilities.
The level of the fee is reviewed periodically by the Committee,
with reference to market levels in comparably sized FTSE
companies, and a recommendation is then made to the
Board (without the Chairman being present).

Non-Executive Director fees

To pay a market competitive basic
fee and supplement for significant
additional responsibilities such as
Committee Chairmanships.

The Non-Executives are paid a basic fee. There are also
supplements for Committee Chairmanships and the
Senior Independent Director.

The fee levels are reviewed periodically by the Chairman
and Executive Directors.

Non-Executive Directors are engaged under letters of appointment as described above; they do not have contracts of service and are not
entitled to compensation on early termination of their appointment other than by reference to their notice period. M. J. Wright’s fees for
his services as a Director are paid to Charles Russell Speechlys where he is a Partner.

ANNUAL REPORT AND ACCOUNTS 2016 31

WALKER CRIPS GROUP PLC

CORPORATE GOVERNANCE

Remuneration Committee report continued

year ended 31 March 2016

Policy Report continued
Compliance with the FCA Remuneration Code
The Committee regularly reviews its remuneration policy’s compliance with the principles of the Remuneration Code of the UK financial
services regulator, as applicable to the Group. The remuneration policy is designed to be consistent with the prudent management of risk
and the sustained, long-term performance of the Group.

Review
Responsibility for the regular review and updating of the Group’s remuneration policy lies with the Chief Executive, subject to sign-off
of any changes by the Remuneration Committee. This will be done at least annually or more frequently where material changes occur.
Walker Crips Group will take into account best practice standards and UK and, where relevant, non-UK regulation and legislation covering:

▪ applicable employment and equality law;

▪ FCA Code of Practice;

▪ tax legislation;

▪ pensions legislation; and

▪ all other regulation that arises.

This document summarises the governance and structure of remuneration arrangements at Walker Crips Group plc, is intended to provide
staff and external regulators with information on these arrangements and does not constitute a contractual document. Existing employment
contracts will, as far as legally possible, be amended to align to this remuneration policy and contracts with new hires will be developed to
align to the provisions. Separate operating documents held for select elements of policy are owned and maintained by Walker Crips Group
HR and queries on the remuneration policies contained within this document should be directed to this function.

The terms of reference for the Remuneration Committee are available on the Company’s website or on request.

Approval
This Directors’ Remuneration Report, including both the policy and annual remuneration report, has been approved by the Board of Directors.

Signed on behalf of the Remuneration Committee

D. M. Gelber
Remuneration Committee Chairman
30 June 2016

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

CORPORATE GOVERNANCE

Audit Committee report

year ended 31 March 2016

Audit Committee Chairman’s statement
There were four formal meetings of the Audit Committee during 2015/16 (2014/15: three). The Committee will review its Terms of Reference
in light of the Statutory Audit Directive due to be effective from 17 June 2017 to assess its impact on the running of the Committee.
The Committee continued its focus on the Group’s information technology and the staffing of its finance department.

Committee members
The current members of the Audit Committee are the independent Non-Executive Directors, Robert Elliott (Chairman), David Gelber
and Martin Wright. The composition of the Committee is reviewed by the Board through its Nomination Committee.

Robert Elliott has acted as Chairman of the Audit Committee since 2007. David Gelber and Martin Wright were members of the
Committee throughout the period under review.

The Board is satisfied that at least one member of the Committee, Robert Elliott, being a Chartered Accountant, has relevant financial
experience and the other members of the Committee have extensive experience of financial matters and of the financial services industry.

Meetings
The Audit Committee maintains a formal schedule of items that are to be considered at each Committee meeting and within the annual
audit cycle, to ensure that its work is in line with the requirements of the Code and all areas of its remit are addressed. The items to be
reviewed are agreed by the Audit Committee Chairman on behalf of his fellow members. Each member has the right to require reports
on additional matters of interest.

The Chief Executive and Finance Director normally attend Audit Committee meetings. At the Committee’s request, other senior management
are invited to present reports as relevant to enable the Committee to discharge its duties. The internal and external auditors are both
invited to and do attend all meetings.

The number of meetings and attendance for the year are on page 18 of the Report by the Directors on Corporate Governance Matters.

Overview of the work undertaken by the Committee during the year
At each of the meetings reports from both the internal auditors and from the external auditor were received and considered.

The annual and interim financial statements were reviewed at the meetings held immediately before their publication.

An Audit Committee Effectiveness Questionnaire has recently been circulated to Members of the Committee, which may result in a number
of proposals to extend the work of the Audit Committee. Further amendment of its terms of reference will also be linked to the finalisation
of the Statutory Audit Directive, mentioned above.

The work of the Committee during the year to 31 March 2016 fell into three main areas:

1. Accounting and financial reporting
The Committee reviewed:

a. the annual and interim financial statements;

b. considered the significant financial reporting policy disclosures and judgements; and

c. considered the continued appropriateness of the preparation of the Annual Financial Statements on a going concern basis.

2. Internal Controls
The Committee reviewed and agreed:

a. the scope of the internal audit work;

b. the regular reports from the internal auditor together with its recommendations and management’s responses to its proposals;

the resources and effectiveness of the internal audit function; and

d. considered the effectiveness of the Audit Committee itself.

ANNUAL REPORT AND ACCOUNTS 2016 33

WALKER CRIPS GROUP PLC

CORPORATE GOVERNANCE

Audit Committee report continued

year ended 31 March 2016

Overview of the work undertaken by the Committee during the year continued
3. External audit
The Committee reviewed and approved:

a. the audit approach and scope of the work to be carried out;

b. the auditor’s reports on its audit findings;

the auditor’s independence and the extent of any non-audit work carried out; and

d. undertook the process of appointing the external auditor for the year to 31 March 2017.

Financial reporting and significant financial judgements
The Committee has decided that the following areas form the principal risks to misstatement of the annual financial statements.

Goodwill impairment
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable
assets and liabilities of a subsidiary or jointly controlled entity at the date of acquisition. Goodwill is initially recognised as an asset at cost
and reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed
in future periods.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the
synergies of the combination. Cash-generating units (CGUs) to which goodwill has been allocated are tested for impairment annually,
or more frequently when there is an indication that the unit may be impaired. On disposal of a subsidiary or jointly controlled entity,
the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

The recoverable amounts of the CGUs are determined from value-in-use calculations. The key assumptions for the value-in-use
calculations are those regarding the discount rates of 12%, growth rates of 2.5% over a five year period and expected changes to
revenues and costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments
of the time value of money and the risks specific to the CGUs.

In addition, valuations of comparable businesses listed on public markets are also a useful guide in forming a judgement on the carrying
value of investments and related goodwill. Underlying tangible net worth is also considered when assessing the carrying value of investments.
Under both methods of evaluation there is material headroom above the level needed to make an impairment charge. The carrying
amount of goodwill at the year end which relates to the London York wealth management business acquired in 2005 and the acquisition
of Barker Poland Asset Management LLP in the prior year was £4.4 million (2015: £4.4 million).

Intangible assets – client relationships amortisation
Acquired client relationships and businesses generating revenue from clients and investment managers are capitalised based on the contractual
consideration paid or committed in order to attract the business or on the expected future cash flows to be generated over the lives of the
assets, discounted at an appropriate discount rate. These costs are amortised on a straight-line basis over their expected useful lives of
three to twenty years.

During the year the Group acquired several investment managers and the business of their clients previously managed by competitors.
By assessing the historic rates of client retention, the ages and succession plans of the investment managers who manage the clients and
the contractual incentives of the investment managers, the Directors consider a life of up to 20 years to be both appropriate and in line
with peers. The closure of client accounts during the year remained low and no advisers were lost to competitors as has also been the case
for the last decade. The main cause of client loss continues to be death, which is recognised as 3% per year. The Committee has taken
note of these factors and concurs that, with life expectancy now acknowledged to be an average of 81 years, a useful life of 20 years is
considered to be conservative.

In respect of both goodwill impairment and intangible assets amortisation, the Committee reviewed management’s accounting papers
which considered key assumptions, peer comparisons and the accounting treatment recommended in line with current guidance and
regulations. The conclusion was reached that the assumptions and judgements used in determining the carrying value of goodwill and
intangible assets were appropriate and reasonable.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

CORPORATE GOVERNANCE

Significant financial judgements
The Committee also reviewed the following significant financial judgements made by management for the year ended 31 March 2016,
including consideration of the external auditor’s view and challenges made by the auditor during their audit, and concluded that the
judgements were reasonable and appropriate:

▪ estimates of provisions in relation to outstanding legal cases, customer complaints or claims (Note 25); and

▪ disclosure of HMRC income tax/NI assessment as a contingent liability (Note 32).

After consideration the Committee concluded that the annual report, taken as a whole, is fair balanced and understandable and that
it provides the necessary information for shareholders to assess the Group’s performance, business model and strategy.

Internal audit
In recent years the provision of internal audit activities has been outsourced to Smith & Williamson LLP. This has brought an improved
focus to the reviews carried out by internal audit. Smith & Williamson have substantial experience both in financial services and in internal
audit procedures. Their knowledge of our industry best practice is of great assistance to the Group.

The internal audit function reports directly to the Audit Committee and its audit plan and scope of work for each year is approved by the
Committee after being appraised by management.

The internal audit reports and its proposals are presented to the Committee. Management’s comments are tabulated and suggested
action is debated and any issues arising are followed through.

During the year, internal audit carried out reviews of procedures around the key risk areas of fraud, client assets, suitability, reputational risk,
counterparty risk and regional offices.

External auditor
The Committee reviews specific reports and best practice suggestions presented to the Committee by the external auditor, Deloitte, at each
meeting. The Committee discusses and acts upon the external auditor’s comments relating to the Group’s risk profile and on the preparation
of the financial statements. The Committee reports any issues directly to the Main Group Board after each meeting.

A review of the external auditor’s independence is carried out each year and any decision on placement of non-audit work with Deloitte
is carefully monitored. Taxation and due diligence work is outsourced to other professional firms.

The Committee agreed in advance the external auditor’s fees shown in Note 10 to the consolidated financial statements and reviewed its
engagement letter. The Chairman and other members of the Committee also hold a meeting with the external auditor, without
management being present, at least once a year.

During the year, the Company undertook a competitive tender process for the position of statutory auditor now that the five-year period
of the present audit partner at Deloitte LLP has been completed. Subsequent to this tender process, the Audit Committee recommended
to the Board that BDO LLP be appointed as the Company’s External Auditors for the Group. Accordingly, resolutions are to be proposed
at the forthcoming AGM for their appointment, and to authorise the Directors to agree their remuneration for the ensuing year.

I would particularly like to thank Deloitte for its professionalism and understanding during the 36 years it, and its predecessor firms, have
been our External Auditors.

Approval
This report in its entirety has been approved by the Committee and the Board of Directors and signed on their behalf by:

R. A. Elliott
Audit Committee Chairman
30 June 2016

ANNUAL REPORT AND ACCOUNTS 2016 35

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Independent auditor’s report

to the members of Walker Crips Group plc

Opinion on
financial
statements of
Walker Crips
Group plc

In our opinion:
▪ the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs

as at 31 March 2016 and of the group’s profit for the year then ended;

▪ the group financial statements have been properly prepared in accordance with International Financial Reporting

Standards (IFRSs) as adopted by the European Union;

▪ the parent company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic
of Ireland”; and

▪ the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and,

as regards the group financial statements, Article 4 of the IAS Regulation.

The financial statements comprise the Consolidated income statement, the Consolidated statement of
comprehensive income, the Consolidated statement of financial position, the Consolidated statement of cash
flows, the Consolidated statement of changes in equity, the Parent company balance sheet and the related
notes 1 to 50. The financial reporting framework that has been applied in the preparation of the group financial
statements is applicable law and IFRSs as adopted by the European Union. The financial reporting framework
that has been applied in the preparation of the parent company financial statements is applicable law and
United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including
FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”.

Separate opinion in
relation to IFRSs as
issued by the IASB

As explained in note 1 to the group financial statements, in addition to complying with its legal obligation to
apply IFRSs as adopted by the European Union, the group has also applied IFRSs as issued by the International
Accounting Standards Board (IASB).

In our opinion the group financial statements comply with IFRSs as issued by the IASB.

Going concern and
the directors’
assessment of the
principal risks that
would threaten
the solvency
or liquidity
of the group

Independence

Our assessment of
risks of material
misstatement

As required by the Listing Rules we have reviewed the directors’ statement regarding the appropriateness of the going
concern basis of accounting contained within Note 2 to the financial statements and the directors’ statement on the
longer-term viability of the group contained within the Chairman and Chief Executive Statement on page 6.

We have nothing material to add or draw attention to in relation to:
▪ the directors’ confirmation on page 6 that they have carried out a robust assessment of the principal risks facing the

group, including those that would threaten its business model, future performance, solvency or liquidity;
▪ the disclosures on page 11 that describe those risks and explain how they are being managed or mitigated;
▪ the directors’ statement in note 2 to the financial statements about whether they considered it appropriate
to adopt the going concern basis of accounting in preparing them and their identification of any material
uncertainties to the group’s ability to continue to do so over a period of at least twelve months from the
date of approval of the financial statements;

▪ the directors’ explanation on page 6 as to how they have assessed the prospects of the group, over what period
they have done so and why they consider that period to be appropriate, and their statement as to whether they
have a reasonable expectation that the group will be able to continue in operation and meet its liabilities as they
fall due over the period of their assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.

We agreed with the directors’ adoption of the going concern basis of accounting and we did not identify any such
material uncertainties. However, because not all future events or conditions can be predicted, this statement is not
a guarantee as to the group’s ability to continue as a going concern. We are required to comply with the Financial
Reporting Council’s Ethical Standards for Auditors and we confirm that we are independent of the group and we
have fulfilled our other ethical responsibilities in accordance with those standards. We also confirm we have not
provided any of the prohibited non-audit services referred to in those standards.

The assessed risks of material misstatement described below are those that had the greatest effect on our audit
strategy, the allocation of resources in the audit and directing the efforts of the engagement team.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

FINANCIAL STATEMENTS

Our assessment of risks of material misstatement continued
Risk

How the scope of our audit responded to the risk

Carrying value and impairment of goodwill
Goodwill of £4,388,000 (2015: £4,388,000) relates to
the group’s Wealth Management division and Barker
Poland Asset Management LLP. The assessment of the
carrying value of this goodwill is a judgemental exercise
which requires estimates concerning the future cash
flows, growth rate and discount rate based on
management’s assessment of the prospects of this
division. These risks are explained further in Note 3 Key
Sources of Estimation Uncertainty and in the disclosures
in Note 15.

Recognition and impairment of client
portfolios intangible
Acquired client lists of £7,992,000 (2015: £6,631,000)
are capitalised on the basis of the expected net
discounted future cash flows over the life of the client list.
This requires an assessment of whether acquisition
consideration represents payment for a client list to
be capitalised or payment for ongoing services to be
expensed, the revenue generating potential of these
clients and their retention. Client lists are amortised over
their expected future lives which requires the exercise of
judgement in determining an appropriate period. These
risks are explained further in Note 3 Key Sources of
Estimation Uncertainty and in the disclosures in Note 16.

Adequacy of provisions for client claims
The group makes provision for client claims based on
management’s assessment of the likelihood of success
of individual cases and taking into account factors such
as the group’s insurance cover and the progress of any
claims referred to the Financial Ombudsman Service.
These provisions amounted to £212,000 (2015: £224,000)
and are disclosed in Note 25.

Accounting for HMRC Claim
A group subsidiary received a claim from HMRC during
the period requiring payment of unpaid PAYE, employers’
National Insurance and interest in relation to the sale of
the group’s former asset management business in March
2012. This has been treated as a contingent liability in
the financial statements and there is a risk that this has
not been properly accounted for. This contingent liability
has been explained further in the disclosure in Note 32
and Note 50.

In considering management’s assumptions regarding their goodwill
impairment assessment, we assessed whether the projections were consistent
with actual historic results achieved and that the business growth rate was
consistent with external data. We benchmarked management’s assumptions
concerning the group’s cost of capital against published peer group data.

In respect of acquisitions in the year, we examined contractual agreements
to assess whether payments represented an intangible.

In considering the adequacy of the impairment assessment performed by the
group, we obtained and tested the useful economic life of the client lists and
their amortisation by validating historic information concerning the retention
of clients. We also benchmarked useful lives against published peer data.

Our work in respect of this provision included agreeing management’s
analysis of claims to relevant correspondence and the complaints register.
We obtained confirmations from the group’s legal advisers concerning the
adequacy of the provisions and examined the contractual arrangements for
insurance cover.

In considering management’s assessment regarding the accounting
treatment of the claim, we obtained all correspondence between HMRC, the
group and its legal representative and assessed the likelihood of the obligation
crystalising. We additionally consulted with our internal taxation specialists on
management’s assessment of the outcome of the claim and independently
circularised the legal firm which is handling the matter for the group.

ANNUAL REPORT AND ACCOUNTS 2016 37

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Independent auditor’s report continued

to the members of Walker Crips Group plc

Last year our report included two other risks which are not included in our report this year:

▪ Accounting for Acquisitions, as shortly before the last year end the group acquired Barker Poland Asset Management LLP. There have

been no acquisitions in the current year; and

▪ Funding of the Short Term Lending Fund. This Fund was liquidated in the current year.

The description of risks above should be read in conjunction with the significant issues considered by the Audit Committee discussed on
pages 33 to 35.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.

Our application
of materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the
economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both
in planning the scope of our audit work and in evaluating the results of our work.

We determined materiality for the group to be £47,000 (2015: £22,000), which is below 5% (2015: 5%) of pre-tax
profit, and below 1% (2015: 1%) of equity.

We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £2,600
(2015: £450), as well as differences below that threshold that, in our view, warranted reporting on qualitative
grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall
presentation of the financial statements.

An overview of the
scope of our audit

Our group audit was scoped by obtaining an understanding of the group and its environment, including group-wide
controls, and assessing the risks of material misstatement at the group level. We focused our group audit scope
primarily on the audit work at the group’s three main locations London, Romford and York, which were subject to a
full scope audit. These locations represent the principal business units and account for all of the group’s net assets,
revenues and profit before tax, which is unchanged from the prior year. They were also selected to provide an
appropriate basis for undertaking audit work to address the risks of material misstatement identified above.
Our audit work on the components was executed at the level lower than group materiality. In addition, we visited
the York branch to confirm our understanding of branch controls, which was previously tested centrally.

Opinion on other
matters prescribed
by the Companies
Act 2006

In our opinion:

▪ the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the

Companies Act 2006; and

▪ the information given in the Strategic Report and the Directors’ Report for the financial year for which the

financial statements are prepared is consistent with the financial statements.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

FINANCIAL STATEMENTS

Matters on which we are required to report by exception

Adequacy of
explanations received
and accounting
records

Under the Companies Act 2006 we are required to report to you if, in our opinion:

▪ we have not received all the information and explanations we require for our audit; or

▪ adequate accounting records have not been kept by the parent company, or returns adequate for our audit

have not been received from branches not visited by us; or

▪ the parent company financial statements are not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

Directors’
remuneration

Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’
remuneration have not been made or the part of the Directors’ Remuneration Report to be audited is not in
agreement with the accounting records and returns. We have nothing to report arising from these matters.

Corporate Governance
Statement

Under the Listing Rules we are also required to review part of the Corporate Governance Statement relating
to the company’s compliance with certain provisions of the UK Corporate Governance Code. We have nothing
to report arising from our review.

Our duty to read other
information in the
Annual Report

Under International Standards on Auditing (UK and Ireland), we are required to report to you if, in our opinion,
information in the annual report is:

▪ materially inconsistent with the information in the audited financial statements; or

▪ apparently materially incorrect based on, or materially inconsistent with, our knowledge of the group acquired

in the course of performing our audit; or

▪ otherwise misleading.

In particular, we are required to consider whether we have identified any inconsistencies between our knowledge
acquired during the audit and the directors’ statement that they consider the annual report is fair, balanced and
understandable and whether the annual report appropriately discloses those matters that we communicated to
the audit committee which we consider should have been disclosed. We confirm that we have not identified any
such inconsistencies or misleading statements.

ANNUAL REPORT AND ACCOUNTS 2016 39

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Independent auditor’s report continued

to the members of Walker Crips Group plc

Matters on which we are required to report by exception continued

Respective
responsibilities of
Directors and auditor

Scope of the audit
of the financial
statements

As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit
and express an opinion on the financial statements in accordance with applicable law and International Standards
on Auditing (UK and Ireland). We also comply with International Standard on Quality Control 1 (UK and Ireland).
Our audit methodology and tools aim to ensure that our quality control procedures are effective, understood and
applied. Our quality controls and systems include our dedicated professional standards review team and
independent partner reviews.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to
give reasonable assurance that the financial statements are free from material misstatement, whether caused
by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group’s
and the parent company’s circumstances and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the directors; and the overall presentation of the
financial statements. In addition, we read all the financial and non-financial information in the annual report to
identify material inconsistencies with the audited financial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the
course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies
we consider the implications for our report.

Oliver Grundy FCA
(Senior statutory auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
London, UK
30 June 2016

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

Consolidated income statement

year ended 31 March 2016

Continuing operations
Revenue
Commission payable

Gross profit
Share of after tax profits of joint ventures

Administrative expenses – other
Administrative expenses – exceptional item

Total administrative expenses

Operating (loss)/profit

Analysed as:
Profit before tax and exceptional item
Administrative expenses – exceptional item

Operating (loss)/profit
Gain on disposal of investment
Investment revenues
Finance costs

Profit before tax
Taxation

Profit for the year attributable to equity holders of the Company

Earnings per share
Basic
Diluted

FINANCIAL STATEMENTS

Notes

2016
£’000

2015
£’000

4
6

8
9
9

14
14

26,070
(8,433)

17,637
10

(16,996)
(778)

22,994
(7,653)

15,341
13

(14,810)
(329)

(17,774)

(15,139)

(127)

215

651
(778)

(127)
942
131
(2)

944
(149)

795

2.11
2.11

544
(329)

215
—
225
(1)

439
(182)

257

0.69
0.68

ANNUAL REPORT AND ACCOUNTS 2016 41

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Consolidated statement of comprehensive income

year ended 31 March 2016

Loss on revaluation of available-for-sale investments taken to equity
Reversal of revaluation of available-for-sale investments
Deferred tax on loss on available-for-sale investments
Reversal of deferred tax charge on revaluation of available-for-sale investments

Net loss recognised directly in equity
Profit for the year

Total comprehensive income for the year attributable to equity holders of the Company

Notes

2016
£’000

—
(959)
—
192

(767)
795

2015
£’000

(88)
—
28
—

(60)
257

197

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

Consolidated statement of financial position

FINANCIAL STATEMENTS

31 March 2016

Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Interest in joint ventures
Available-for-sale investments

Current assets
Trade and other receivables
Trading investments
Cash and cash equivalents

Total assets

Current liabilities
Trade and other payables
Current tax liabilities
Deferred tax liabilities
Bank overdrafts
Shares to be issued

Net current assets

Long-term liability – deferred cash consideration
Long-term liability – shares to be issued
Long-term liability – dilapidation provision

Net assets

Equity
Share capital
Share premium account
Own shares
Retained earnings
Revaluation reserve
Other reserves

Equity attributable to equity holders of the Company

Notes

15
16
17
18
19

20
19
21

22
23

Group
2016
£’000

4,388
7,992
841
28
57

Group
2015
£’000

4,388
6,631
1,110
28
2,417

13,306

14,574

38,799
1,237
7,257

47,293

60,599

(36,424)
(141)
(517)
(77)
(912)

28,332
2,701
6,635

37,668

52,242

(27,537)
(239)
(741)
(134)
(298)

(38,071)

(28,949)

9,222

(1,556)
(218)
(132)

8,719

(1,930)
(453)
—

20,622

20,910

2,595
2,279
(312)
11,392
—
4,668

20,622

2,545
1,988
(312)
11,254
767
4,668

20,910

The financial statements of Walker Crips Group plc (Company registration no: 01432059) were approved by the Board of Directors and
authorised for issue on 30 June 2016.

Signed on behalf of the Board of Directors

R. A. FitzGerald FCA
Director
30 June 2016

ANNUAL REPORT AND ACCOUNTS 2016 43

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Consolidated statement of cash flows

Notes

2016
£’000

2015
£’000

(1,119)
85
(2)
(120)

(1,156)

(247)
1,464
2,044
(810)
(13)
54

2,492

(657)

679
6,501

7,180

7,257
(77)

7,180

3,806
78
(1)
(337)

3,546

(565)
(1,031)
—
(765)
(1,875)
46

(4,190)

(958)

(1,602)
8,103

6,501

6,635
(134)

6,501

year ended 31 March 2016

Operating activities
Cash (used)/generated by operations
Interest received
Interest paid
Tax paid

Net cash (used)/generated by operating activities

Investing activities
Purchase of property, plant and equipment
Net sale/(purchase) of investments held for trading
Net sale proceeds/cost of available-for-sale investments
Consideration paid on acquisition of businesses
Consideration paid on acquisition of subsidiary
Dividends received

Net cash generated/(used) by investing activities

Financing activities
Dividends paid

Net cash used by financing activities

Net increase/(decrease) in cash and cash equivalents
Net cash and cash equivalents at beginning of year

Net cash and cash equivalents at end of year

Cash and cash equivalents
Bank overdrafts

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

FINANCIAL STATEMENTS

Consolidated statement of changes in equity

year ended 31 March 2016

Equity as at 31 March 2014
Revaluation of investment
at fair value
Deferred tax credit to equity
Profit for the year
Dividends paid
Issue of shares on
acquisition of intangibles

Equity as at 31 March 2015
Reversal of revaluation of
available-for-sale investments
Reversal of deferred tax
charge on revaluation of
available-for-sale investments
Profit for the year
Dividends paid
Issue of shares on
acquisition of intangibles

Called up
share capital
£’000

2,515

—
—
—
—

2,545

—

—
—
—

Equity as at 31 March 2016

2,595

Share
premium
£’000

1,818

—
—
—
—

170

1,988

—

—
—
—

291

2,279

Own
shares held
£’000

Capital
redemption
£’000

Other
£’000

Revaluation
£’000

Retained
earnings
£’000

Total equity
£’000

(312)

111

4,557

827

11,955

21,471

—
—
—
—

—

—
—
—
—

—

—
—
—
—

—

(312)

111

4,557

—

—
—
—

—

—
—
—

—

—
—
—

—

(312)

111

4,557

(88)
28
—
—

—

767

—
—
257
(958)

(88)
28
257
(958)

—

200

11,254

20,910

(959)

—

(959)

192
—
—

—

—
795
(657)

192
795
(657)

—

341

11,392

20,622

ANNUAL REPORT AND ACCOUNTS 2016 45

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Notes to the accounts

year ended 31 March 2016

1. General information
Basis of preparation
The consolidated financial statements have been prepared in accordance with IFRS as adopted by the EU. The Company financial
statements are presented on pages 67 to 79.

The financial statements have been prepared on the historical costs basis, except for certain financial instruments that are measured
at fair value. The principal accounting policies adopted are set out below and, unless otherwise stated, have been applied consistently
to all periods presented in the consolidated financial statements.

Standards not affecting the reported results or the financial position
The following new and revised standards and interpretations have been adopted in the current year. Their adoption has not had any significant
impact on the amounts reported in these financial statements but may impact the accounting for future transactions and arrangements:

▪ IFRIC 21 ‘Levies’

New standards and interpretations
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 April 2016
and have not been applied in preparing these consolidated financial statements. None of these are expected to have a significant effect
on the consolidated financial statements of the Group except for IFRS 9 ‘Financial Instruments’, IFRS 15 ‘Revenue from Contracts with
Customers’ and IFRS 16 ‘Leases’. The effective dates of IFRS 9, IFRS 15 and IFRS 16 are not until 2018, 2019 and 2019 respectively;
the Group has therefore decided not to implement these standards early.

2. Significant accounting policies
Basis of consolidation
The Group financial statements consolidate the financial statements of the Company and entities controlled by the Company (its subsidiaries)
made up to 31 March each year. Control is achieved where the Company has the power to govern the financial and operating policies
of an investee entity so as to obtain benefits from its activities.

All intra-Group transactions, 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, plus any costs directly attributable to the business combination.

Interests in joint ventures
A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint
control; that is when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the
parties sharing control.

The Group’s share of the assets, liabilities, income and expenses of jointly controlled entities are accounted for in the consolidated
financial statements under the equity method.

Income from the sale or use of the Group’s share of output of jointly controlled assets, and its share of joint venture expenses are recognised
when it is probable that the economic benefits associated with the transactions will flow to/from the Group and their amount can be
measured accurately.

Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable
assets and liabilities of a subsidiary or jointly controlled entity at the date of acquisition. Goodwill is initially recognised as an asset at cost
and reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed
in future periods.

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the
synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more
frequently when there is an indication that the unit may be impaired. On disposal of a subsidiary or jointly controlled entity, the attributable
amount of goodwill is included in the determination of the profit or loss on disposal.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

FINANCIAL STATEMENTS

2. Significant accounting policies continued
Intangible assets
(a) Client lists
Acquired client lists and businesses generating revenue from clients and investment managers are capitalised based on the expected
future cash flows to be generated over the lives of the assets, discounted at an appropriate discount rate. These costs are amortised
on a straight-line basis over their expected useful lives of three to twenty years.

(b) Unit Trust Management Contracts
Acquired Unit Trust Management Contracts are capitalised as intangible assets based on an estimate of the expected future cash flows
that those contracts will generate over their useful lives of ten years. These costs are amortised on a straight-line basis over their expected
useful lives.

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.

Shares to be issued
Shares to be issued represent the Company’s best estimate of the Ordinary Shares in the Company which are likely to be issued the
following business combinations or the acquisition of client relationships which involve deferred payments in the Company’s shares.
Where shares are due to be issued within a year, the sum is included in current liabilities.

Revenue recognition
Revenue is measured at fair value of the consideration received or receivable and represents gross commissions, interest receivable and
fees in the course of ordinary investment business, net of discounts, VAT and sales-related taxes. Gross commissions on stockbroking
activities are recognised on those transactions whose bargain date falls within the financial year. Interest is recognised as it accrues in
respect of the financial year. Fees earned from managing client deposits and administering ISAs are accrued evenly over the period to
which they relate. Fees in respect of financial services activities are accrued evenly over the period to which they relate. Dividend income
from investments is recognised when the shareholders’ rights to receive payment have been established.

Operating expenses and other charges are provided for in full up to the statement of financial position date on an accruals basis.

Foreign currencies
The individual financial statements of each Group company are presented in Pounds Sterling, which is the functional currency of the
Company 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 re-translation of monetary items, are included in the
consolidated income statement for the period.

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.

ANNUAL REPORT AND ACCOUNTS 2016 47

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

2. Significant accounting policies continued
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never
taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted
by the statement of financial position date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance
sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can
be utilised.

The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that
it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period that the liability is settled or the asset is realised.
Deferred tax is charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and
liabilities 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.

Trade receivables
Trade receivables are predominantly settled within normal market cycles. Trade receivables are recognised initially at fair value
and subsequently at amortised cost using the effective interest method, less any impairment.

Investments
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 investment within the timeframe established by the market concerned, and are initially measured at cost,
including transaction costs, or at fair value, depending on the nature of the instrument held.

Investments are classified as either held-for-trading or available-for-sale, and are measured at subsequent reporting dates at fair value.
Where securities are held for trading purposes, gains and losses arising from changes in fair value are included in net profit or loss for the
period. Depending on the nature of the instrument held, gains and losses arising from changes in fair value of available-for-sale investments
are recognised either in net profit or loss or directly in equity, until the security is disposed of or is determined to be impaired, at which
time the cumulative gain or loss previously recognised in equity is included in the net profit or loss for the period. Impairment losses
recognised in profit or loss for equity investments classified as available-for-sale are not subsequently reversed through profit or loss.

Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that 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 Group after deducting all of its liabilities.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

year ended 31 March 2016Notes to the accounts continuedFINANCIAL STATEMENTS

2. Significant accounting policies continued
Trade payables
Trade payables are recognised at fair value.

Bank overdrafts
Interest-bearing bank overdrafts are recorded at an amount equal to the proceeds received. 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
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

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.

Share-based payments
The Group issues equity-settled share-based payments to certain employees and other personnel. Equity-settled share-based payments
are measured at fair value (excluding the effect of non-market-based vesting conditions) at the date of grant. 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 shares that will eventually vest and adjusted for the effects of non-market-based vesting conditions.

Fair value is measured by use of a binomial model. The expected life used in the model has been adjusted, based on management’s best
estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

Pension costs
The Group contributes to defined contribution personal pension schemes for selected employees. The contribution rate is based on annual
salary and the amount is charged to the income statement on an accrual basis.

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.

Going concern
The Group’s business activities together with the factors likely to affect its future development, performance and position are set out
in the Strategic Report.

In addition, Note 24 to the financial statements includes details of risk management objectives, policies and processes for managing
its capital.

The Group has healthy financial resources together with a long established, well proven and tested business model. As a consequence,
the Directors believe that the Group is well placed to manage its business risks successfully despite the current difficult climate.

After conducting enquiries, the Directors believe that the Company and the Group have adequate resources to continue in existence
for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

ANNUAL REPORT AND ACCOUNTS 2016 49

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

3. Key sources of estimation uncertainty
Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been
allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit
and a discount rate of 12% has been adopted in order to calculate present value. The carrying amount of goodwill at the balance sheet
date was £4.4 million (2015: £4.4 million).

Other intangible assets
Acquired client lists are capitalised based on current fair values. During the year the Company acquired several investment managers and
the business of their clients. By assessing the historic rates of client retention, the ages and succession plans of the investment managers
who manage the clients and the contractual incentives of the investment managers, the Directors consider a life of up to twenty years to
be both appropriate and in line with peers.

4. Revenue
An analysis of the Group’s revenue is as follows:

Stockbroking commission
Fees and other revenue

Investment Management
Wealth Management

Revenue
Net investment revenue

Total income

% of total income

2016
Broking
income
£’000

10,007
—

10,007

38.2

2016
Non-broking
income
£’000

—
13,632

13,632
2,431

16,063
129

16,192

61.8

2016
Total
£’000

10,007
13,632

23,639
2,431

26,070
129

26,199

100.0

2015
Broking
income
£’000

10,152
—

10,152

43.7

2015
Non-broking
income
£’000

—
10,438

10,438
2,404

12,842
224

13,066

56.3

2015
Total
£’000

10,152
10,438

20,590
2,404

22,994
224

23,218

100.0

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

year ended 31 March 2016Notes to the accounts continuedFINANCIAL STATEMENTS

5. Segmental analysis
For management purposes the Group is currently organised into two operating divisions – Investment Management and Wealth Management.
These divisions, both of which conduct business in the United Kingdom only, are the basis on which the Group reports its primary
segment information.

2016

Revenue
External sales

Result
Segment result
Unallocated corporate expenses

Operating loss
Gain on disposal of investments
Investment revenues
Finance costs

Profit before tax
Tax

Profit after tax

2016

Other information
Capital additions
Depreciation
Statement of financial position
Assets
Segment assets
Unallocated corporate assets

Consolidated total assets

Liabilities
Segment liabilities
Unallocated corporate liabilities

Consolidated total liabilities

Investment
Management
£’000

Wealth
Management
£’000

Consolidated
year ended
31 March 2016
£’000

23,639

2,431

26,070

987

165

1,152
(1,279)

(127)
942
131
(2)

944
(149)

795

Investment
Management
£’000

Wealth
Management
£’000

Consolidated
year ended
31 March 2016
£’000

231
497

16
19

247
516

52,131

1,963

39,018

543

54,094
6,505

60,599

39,561
416

39,977

ANNUAL REPORT AND ACCOUNTS 2016 51

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

5. Segmental analysis continued

2015

Revenue
External sales

Result
Segment result
Unallocated corporate expenses

Operating profit
Investment revenues
Finance costs

Profit before tax
Tax

Profit after tax

2015

Other information
Capital additions
Depreciation
Statement of financial position
Assets
Segment assets
Unallocated corporate assets

Consolidated total assets

Liabilities
Segment liabilities
Unallocated corporate liabilities

Consolidated total liabilities

6. Commission payable
Commission payable comprises:

To authorised external agents
To approved persons

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

Investment
Management
£’000

Wealth
Management
£’000

Consolidated
year ended
31 March 2015
£’000

20,590

2,404

22,994

931

338

1,269
(1,054)

215
225
(1)

439
(182)

257

Investment
Management
£’000

Wealth
Management
£’000

Consolidated
year ended
31 March 2015
£’000

552
380

13
16

565
396

44,322

2,074

30,532

615

2016
£’000

27
8,406

8,433

46,396
5,846

52,242

31,147
185

31,332

2015
£’000

39
7,614

7,653

year ended 31 March 2016Notes to the accounts continuedFINANCIAL STATEMENTS

7. Administrative expenses – exceptional item
As a result of its materiality the Directors decided to disclose certain amounts separately in order to present results which are not distorted
by significant non-recurring events.

Short Term Lending Fund winding down costs
Costs incurred on acquisitions
Costs incurred on suitability project

2016
£’000

—
—
778

778

2015
£’000

68
261
—

329

During the period to 31 March 2016, the Group incurred legal and professional adviser costs relating to enhancements made to the
Group’s regulatory control framework in relation to suitability of advice given to clients.

Towards the end of the prior year, a decision was made to wind down our Short Term Lending Fund. All investors received a full return of
the sums invested. Administrative costs associated with the wind down were provided for in the prior year’s results. Prior year acquisition
costs are largely made up of legal and professional costs being incurred and payable on completion of the acquisition of BPAM on
6 March 2015.

8. Gain on disposal of investment
Net gains comprise:

Gain on disposal of investment in Euroclear shares

2016
£’000

942

2015
£’000

—

During the period to 31 March 2016, the Group disposed of its holding of 1,809 shares in Euroclear plc realising a gain of £942,000.

During the period to 31 March 2015, there were no gains or losses on disposal of investments.

Due to their level of materiality and one-off nature, the Board has decided to disclose these items separately.

9. Investment revenues and finance costs
Net investment revenue comprises:

Investment revenue
Interest on bank deposits/fixed income securities
Dividends from equity investment

Finance costs
Interest on bank overdrafts

Net investment revenue (Note 4)

2016
£’000

2015
£’000

77
54

131

(2)

129

179
46

225

(1)

224

ANNUAL REPORT AND ACCOUNTS 2016 53

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

10. Profit for the year
Profit for the year on continuing operations has been arrived at after charging:

Depreciation of property, plant and equipment (see Note 17)
Amortisation of intangibles (see Note 16)
Staff costs (see Note 11)
Auditor’s remuneration
Lease payment

A more detailed analysis of auditor’s remuneration is provided below:

Audit services
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts
The audit of the Company’s subsidiaries pursuant to legislation
Non-audit services
FCA client assets reporting
Reported under AAF 01/06

2016
£’000

516
407
10,161
229
654

2015
£’000

12
148

12
12

184

2016
£’000

12
169

24
24

229

2016
%

5
75

10
10

100

The Audit Committee Report explains how the auditor’s objectivity and independence is safeguarded when non-audit services are
provided by the auditor.

11. Staff costs
Particulars of employee costs (including Directors) are as shown below:

Employee costs during the year amounted to:
Wages and salaries
Social security costs
Other costs

2016
£’000

8,463
921
777

10,161

2015
£’000

396
233
8,841
184
574

2015
%

7
79

7
7

100

2015
£’000

7,368
819
654

8,841

Staff costs do not include commissions payable mainly to self-employed account executives, as these costs are included in total
commissions payable to approved persons disclosed in Note 6. At the end of the year there were 63 self-employed account executives
who were approved persons of the Group (2015: 64).

The monthly average number of staff employed during the year was:

Executive Directors
Approved persons
Other staff

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

2016
Number

2015
Number

4
61
145

210

4
51
129

184

year ended 31 March 2016Notes to the accounts continued12. Taxation
The tax charge is based on the profit for the year of continuing operations and comprises:

UK corporation tax at 20% (2015: 21%)
Overseas tax
Double tax relief
Deferred tax

Corporation tax is calculated at 20% (2015: 21%) 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:

Profit on ordinary activities before tax

Tax on profit on ordinary activities at the standard rate UK corporation tax rate of 20% (2015: 21%)
Effects of:
Tax rate changes
Expenses not deductible for tax purposes
Chargeable gains
Prior year adjustment
Amortisation of intangible assets
Overseas taxes
Non-taxable income
Other

FINANCIAL STATEMENTS

2016
£’000

288
158
(147)
(150)

149

2016
£’000

944

189

(58)
30
(8)
(5)
—
11
(10)
—

149

2015
£’000

239
6
—
(63)

182

2015
£’000

439

13
63
—
—
24
6
(14)
(2)

182

Finance Act 2013 enacted a reduction in the UK corporation tax rate to 20% with effect from 1 April 2015. This reduction in the tax rate
impacted the current tax charge in 2016.

Finance (No. 2) Act 2015 enacted reductions in the UK corporation tax rate to 19% with effect from 1 April 2017 and 18% with effect
from 1 April 2020. These reductions in the tax rate will impact the current tax charge in future periods. A proposed reduction in the 18%
rate to 17% with effect from 1 April 2020 was announced in the March 2016 Budget.

13. Dividends
Amounts recognised as distributions to equity holders in the period:

Final dividend for the year ended 31 March 2015 of 1.17 pence (2014: 1.06 pence) per share
Final special dividend for the year ended 31 March 2015 of £nil (2014: 1.00 pence) per share
Interim dividend for the year ended 31 March 2016 of 0.58 pence (2015: 0.53 pence) per share

Proposed final dividend for the year ended 31 March 2016 of 1.27 pence (2015: 1.17 pence) per share

2016
£’000

439
—
218

657

487

2015
£’000

392
370
196

958

439

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.

ANNUAL REPORT AND ACCOUNTS 2016 55

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

14. 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 £795,000
(2015: £257,000) and on 37,678,525 (2015: 37,017,924) Ordinary Shares of 62/3 pence, being the weighted average number of
Ordinary Shares in issue during the year.

The effect of options granted would be to reduce the reported earnings per share. The calculation of diluted earnings per share is based
on 37,678,525 (2015: 37,629,174) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period
adjusted for the dilutive effect of potential Ordinary Shares.

The calculation of the basic and diluted earnings per share is based on the following data:

Earnings

Earnings for the purpose of basic earnings per share being net profit attributable to equity holders of the parent

Earnings for the purposes of diluted earnings per share

Number of shares

Weighted average number of Ordinary Shares for the purposes of basic earnings per share
Effect of dilutive potential Ordinary Shares:
– Share option schemes

2016
£’000

795

2016

2015
£’000

257

2015

37,678,525 37,017,924

—

611,250

Weighted average number of Ordinary Shares for the purposes of diluted earnings per share

37,678,525 37,629,174

This produced unadjusted basic earnings per share of 2.11 pence (2015: 0.69 pence) and diluted unadjusted earnings per share
of 2.11 pence (2015: 0.68 pence).

15. Goodwill

Cost
At 1 April 2014
Addition: Acquisition of BPAM

At 1 April 2015

At 31 March 2016

At 1 April 2014
Impaired during the year

At 1 April 2015
Impaired during the year

At 31 March 2016

Carrying amount
At 31 March 2016

At 31 March 2015

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

£’000

5,569
1,487

7,056

2,668
—

2,668

4,388

year ended 31 March 2016Notes to the accounts continuedFINANCIAL STATEMENTS

15. Goodwill continued
Goodwill acquired in a business combination or from an intangible asset is allocated, at acquisition, to the cash-generating units (CGUs)
that are expected to benefit from that business combination or intangible asset. Before recognition of impairment losses, the carrying
amount of goodwill has been allocated as follows:

London York CGU
BPAM CGU

2016
£’000

2,901
1,487

4,388

2015
£’000

2,901
1,487

4,388

The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.

The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations
for the London York and BPAM CGUs are those regarding the discount rates of 12%, growth rates of 2.5% and expected changes to
revenues and costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments
of the time value of money and the risks specific to the CGUs.

16. Other intangible assets

Cost
At 1 April 2014
Additions in the year

At 1 April 2015
Additions in the year

At 31 March 2016

Amortisation
At 1 April 2014
Charge for the year

At 1 April 2015
Charge for the year

At 31 March 2016

Carrying amount
At 31 March 2016

At 31 March 2015

Unit trust
management
contracts
£’000

Client lists
£’000

240
—

240

216
24

240
—

240

—

2,198
5,696

7,894
1,768

9,662

1,054
209

1,263
407

1,670

7,992

6,631

Total
£’000

2,438
5,696

8,134
1,768

9,902

1,270
233

1,503
407

1,910

7,992

6,631

The intangible assets are both amortised over their estimated useful lives. “Unit trust management contracts” are amortised over ten years
and “Client lists” are amortised over three to twenty years.

ANNUAL REPORT AND ACCOUNTS 2016 57

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

17. Property, plant and equipment

Cost
At 1 April 2014
Write down
Additions
Acquisition of subsidiary

At 1 April 2015
Additions

At 31 March 2016

Accumulated depreciation
At 1 April 2014
Eliminated on write down of assets
Charge for the year
Acquisition of subsidiary

At 1 April 2015
Charge for the year

At 31 March 2016

Carrying amount
At 31 March 2016

At 31 March 2015

18. Interest in joint ventures

Aggregated amounts relating to joint ventures
Total assets
Total liabilities

Net assets

Group’s share of joint venture’s net assets

Group’s share of:
Revenue

Profit for the period

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

Leasehold
improvements
furniture and
equipment
£’000

Computer
software
£’000

Computer
hardware
£’000

1,004
(49)
365
—

1,320
50

1,370

460
(49)
216
—

627
280

907

463

693

1,670
—
84
—

1,754
106

1,860

1,461
—
98
—

1,559
99

1,658

202

195

589
—
116
172

877
91

968

470
—
82
103

655
137

792

176

222

Total
£’000

3,263
(49)
565
172

3,951
247

4,198

2,391
(49)
396
103

2,841
516

3,357

841

1,110

2016
£’000

2015
£’000

63
(7)

67
(11)

year ended 31 March 2016Notes to the accounts continuedFINANCIAL STATEMENTS

Life policy
investments
£’000

Equity
investments
£’000

—
—
—
—

—
57
—
—

1,122
—
—
(88)

1,034
—
(1,034)
—

—

Qualifying
collective
investment
scheme
£’000

1,282
101
—
—

1,383
—
(1,383)
—

—

Total
£’000

2,404
101
—
(88)

2,417
57
(2,417)
—

19. Investments
Available-for-sale investments

Fair value
At 1 April 2014
Additions in the year
Disposals in the year
Recognised in comprehensive income

At 1 April 2015
Additions in the year
Disposals in the year
Recognised in comprehensive income

At 31 March 2016

Equity investments comprise the Company’s investment in Euroclear plc. The fair value is based upon the Company’s share of net assets
(discounted for market factors) or the underlying share price and volatility which may be subject to some fluctuation from year to year.
During the year to 31 March 2016 the Group disposed of its holding of 1,809 shares in Euroclear plc realising a gain of £942,000 in the
income statement, which includes accumulated gains of £959,000 previously credited to equity. The shares had a fair value of £1,034,000
at the disposal date.

Following the closure and liquidation of the TB Walker Crips Income from Short Term Lending Fund (STLF), a qualifying collective
investment scheme (QCIS), the Group’s holding of 1.383 million units was redeemed and repaid in full (resulting in no gain or loss) with
£1,383,000 being received on 7 September 2015.

Trading investments
Fair value

2016
£’000

2015
£’000

1,237

2,701

Trading investments represent investments in equity securities and bonds that present the Group with opportunity for return through
dividend income, interest and trading gains. The fair values of these securities are based on quoted market prices.

The following provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into
Levels 1 to 3 based on the degree to which the fair value is observable:

▪ Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. The

trading investments fall within this category;

▪ Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). The Group does not hold financial instruments
in this category; and

▪ Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not

based on observable market data (unobservable inputs). The Group’s available-for-sale investments fall within this category.

ANNUAL REPORT AND ACCOUNTS 2016 59

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

20. Other financial assets

Trade and other receivables

Amounts falling due within one year:
Due from clients, brokers and recognised stock exchanges
Loans due from clients
Other debtors
Prepayments and accrued income

21. Cash and cash equivalents

Short-term cash deposits held at bank, repayable on demand with penalty
Cash deposits held at bank, repayable on demand without penalty

2016
£’000

2015
£’000

30,524
—
3,075
5,200

38,799

2016
£’000

2,850
4,407

7,257

21,811
582
1,553
4,386

28,332

2015
£’000

4,710
1,925

6,635

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 2016 was £220,500,000 (2015: £230,200,000).

22. Deferred tax liability

At 1 April 2015
Use of loss brought forward
Credit to the income statement
Credit to the statement of comprehensive income

At 31 March 2016

Revaluation
£’000

Capital
allowances
£’000

(192)
—
—
192

—

(33)
—
18
—

(15)

Short-term
timing
differences
and other
£’000

(516)
(118)
132
—

(502)

Total
£’000

(741)
(118)
150
192

(517)

Finance (No. 2) Act 2015 enacted reductions in the UK corporation tax rate to 19% with effect from 1 April 2017 and 18% with effect
from 1 April 2020. These changes to corporation tax rates impacted the deferred tax charge and closing deferred tax position for 2016.
A reduction in the 18% rate to 17% with effect from 1 April 2020 was announced in the March 2016 Budget but does not impact the
closing deferred tax position for 2015.

23. Bank overdrafts

Bank overdrafts

The borrowings are repayable on demand and are all denominated in Sterling.

2016
£’000

2015
£’000

134

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

year ended 31 March 2016Notes to the accounts continuedFINANCIAL STATEMENTS

24. Financial instruments and risk profile
Financial risk management
Procedures and controls are in place to identify, assess and ultimately control the financial risks faced by the Group arising from its use of
financial instruments. Steps are taken to mitigate identified risks with established and effective procedures and controls, efficient systems
and the adequate training of staff.

The Group’s risk appetite, along with the procedures and controls mentioned above, are laid out in the Group’s Internal Capital Adequacy
Assessment Process document prepared in accordance with the requirements of the Financial Conduct Authority (FCA).

The overall risk appetite for the Group is considered by management to be low, despite operating in a market place where financial risk is
inherent in the core businesses of investment management and financial services.

The Group considers its financial risks arising from its use of financial instruments to fall into three main categories:

(i) credit risk;

(ii) liquidity risk; and

(iii) market risk.

Financial risk management is a central part of the organisation’s strategic management which recognises that an effective risk
management programme can increase a business’ 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
The Group’s credit risk 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 in full when due. 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. The amounts presented in the
statement of financial position are net of allowances for doubtful receivables.

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.

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 approved 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.

ANNUAL REPORT AND ACCOUNTS 2016 61

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

24. Financial instruments and risk profile continued
Financial risk management continued
(i) Credit risk continued
Trade receivables (includes settlement balances) continued
Maximum exposure to credit risk:

Cash
Trade receivables
Loans due from clients

Analysis of trade receivables/loans due from clients:

Neither past due nor impaired
Past due but not impaired

<30 Days
>30 Days
>3 Months

2016
£’000

7,257
30,524
—

37,781

2016
£’000

28,015
2,394
58
57

30,524

2015
£’000

6,635
21,811
582

29,028

2015
£’000

20,199
1,998
45
151

22,393

The tables above represents a worst case scenario of credit risk exposure to the Group at 31 March 2016 and 2015 without taking account
of any collateral held which acts as a credit mitigant. The exposures set out above are based on net carrying amounts as reported in the
statement of financial position.

Concentration of credit risk
In addition, daily risk management procedures to actively monitor disproportionately large trades by a customer or market counterparty
are in place. The financial standing, pattern of trading, type and size of security or instrument traded are amongst the factors taken
into consideration.

(ii) Liquidity risk
Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial liabilities when they fall due.

Historically, sufficient underlying cash has been prevalent in the business for many years as the Group is normally cash-generative. The risk
of unexpected large cash outflows could arise where large amounts are being settled daily of which only a fraction forms the commission
earned by the Company. This could be due to clients settling late or bad deliveries to the market or CREST, also resulting in a payment
delay from the market side.

The Group’s policy with regard to liquidity risk is to carefully monitor balance sheet structure and borrowing limits, including:

▪ monitoring of cash positions on a daily basis;

▪ exercising strict control over the timely settlement of trade debtors; and

▪ exercising strict control over the timely settlement of market debtors and creditors.

The Group holds its cash and cash equivalents spread across a number of highly rated financial institutions. All cash and cash equivalents
are short term highly liquid investments that are readily convertible to known amounts of cash without penalty.

All the regulated Group subsidiaries are subject to the provisions of FCA Liquidity standards if they are within the scope of the rules in the
FCA Handbook chapter IFPRU 7.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

year ended 31 March 2016Notes to the accounts continuedFINANCIAL STATEMENTS

24. Financial instruments and risk profile continued
Financial risk management continued
(ii) Liquidity risk continued
The tables below analyse the Group’s future cash outflows based on the remaining period to the contractual maturity date.

2016

Bank overdrafts
Trade and other payables

2015

Bank overdrafts
Trade and other payables

Less than
1 year
£’000

77
36,424

36,501

Less than
1 year
£’000

134
27,537

27,671

Total
£’000

77
36,424

36,501

Total
£’000

134
27,537

27,671

(iii) Market risk
These relate to price risk on available-for-sale and trading investments and are described in the Audit Committee Report where significant.

Fair value of financial instruments
The fair values of the Group’s financial assets and liabilities are not materially different from their carrying values.

25. Other financial liabilities
Trade and other payables

Amounts owed to clients, brokers and recognised stock exchanges
Other creditors
Accruals and deferred income

2016
£’000

27,473
5,190
3,761

36,424

2015
£’000

20,041
4,927
2,569

27,537

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 13 days (2015: 16 days).

The Directors consider that the carrying amount of trade payables approximates to their fair value.

Other creditors and long-term liabilities
Provisions included in other creditors and long-term liabilities are made up as follows:

At start of year
Additions
Utilisation of provision
Unused amounts reversed during the year

At end of year

2016
Claims/
complaints
£’000

2016
Dilapidations
£’000

224
157
(119)
(50)

212

—
132
—
—

132

2016
Total
£’000

224
289
(119)
(50)

344

These provisions relate to outstanding claims and complaints from third parties which, in the opinion of the Board, need providing for
after taking into account the risks and uncertainties surrounding each claim or complaint.

ANNUAL REPORT AND ACCOUNTS 2016 63

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

26. Called up share capital

Called up, allotted and fully paid
38,924,046 (2015: 38,186,958) Ordinary Shares of 62/3 pence each

2016
£’000

2015
£’000

2,595

2,545

During the year the Company allotted nil Ordinary Shares (2015: nil Ordinary Shares) in connection with the exercise of share options.
The Company received £nil consideration during the year in respect of the exercise of share options (2015: £nil).

During the year 737,088 new Ordinary Shares were issued and allotted to various personnel associated with the Company in order
to meet contractual commitments made by the Company as part of the ongoing expansion of its client base.

The Company 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. No gain or loss has been recognised in the profit and loss account in relation to
these shares.

27. Share-based payments
Share options
The Company has granted market-priced share options to Directors, employees and other approved persons. The vesting period is generally
three years subject to the satisfaction of performance conditions relating to real EPS growth. Further details of the options and performance
conditions are set out in the Directors’ Remuneration Report. The options expire if they remain unexercised after the exercise period has
expired. Furthermore, options are forfeited if the option holder leaves the Company before the options vest. The options are equity settled.

Outstanding at beginning of year
Forfeited/lapsed during the year
Exercised during the year

Outstanding at the end of the year

Exercisable at the end of the year

2016

2015

Weighted
average
exercise
price (in £)

0.78
0.78
—

—

Options

611,250
611,250
—

—

Options

611,250
—
—

611,250

Weighted
average
exercise
price (in £)

0.72
—
—

0.78

The options outstanding at 31 March 2016 had a weighted average remaining contractual life of 0 years (2015: 0.2 years).

LTIP
The Company recognised total expenses of £nil (2015: £nil) and £nil (2015: £nil) related to equity-settled share-based payment transactions.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

year ended 31 March 2016Notes to the accounts continued28. Cash (used)/generated from operations

Operating (loss)/profit for the year
Adjustments for:
Amortisation of intangibles
Share of joint venture income
Depreciation
(Increase)/decrease in debtors
Increase/(decrease) in creditors

Net cash (outflow)/inflow

FINANCIAL STATEMENTS

2016
£’000

(127)

407
(10)
516
(10,467)
8,562

2015
£’000

215

233
(13)
396
18,316
(15,341)

(1,119)

3,806

29. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of £nil (2015: £nil) contracted but not provided for and £104,000 (2015: £104,000)
capital commitments authorised but not contracted for.

Lease commitments
The minimum lease payments under non-cancellable operating leases fall due as follows:

Within one year
Within two to five years

2016
£’000

625
457

2015
£’000

652
1,094

30. Related parties
Directors, employees, related parties and their close family members have dealt on standard commercial terms with the Group.
The commission earned by the Group through such dealings is as follows:

Commissions received from Directors, employees, approved persons and their family

2016
£’000

2015
£’000

168

Other related parties include Charles Russell Speechlys, of which M. J. Wright, Non-Executive Director, is a Partner. Charles Russell Speechlys
provides certain legal services to the Group on normal commercial terms and the amount paid and expensed during the year was £60,000
(2015: £274,000).

In addition, commission of £3,965 (2015: £2,600) was earned by the Group from Phillip Securities (HK) Limited (a Phillip Brokerage Pte Limited
company, where H. M. Lim is a shareholder) having dealt on standard commercial terms. Additionally, some custody services are provided
by Phillip Securities Pte Ltd (in Singapore, where H. M. Lim is a Director), again all on standard commercial terms.

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are
accordingly not disclosed.

Remuneration of the Directors who are the key management personnel of the Group are disclosed fully in the Remuneration
Committee Report.

During the year the Company acquired TBWC Limited for a consideration sum of £1 as part of the winding up of the STLF. TBWC Limited
was subsequently sold for £1 to James Chalmers-Smith and Stephen Simper, Directors of Walker Crips Stockbrokers. This transaction
was conducted at an arm’s length price and was made to facilitate the use of TBWC Limited (now known as OPAL STL Limited) in a new
short-term lending fund structure mandate, with ownership and control outside of the Group. The Group will receive a loan processing
fee from OPAL STL Limited.

ANNUAL REPORT AND ACCOUNTS 2016 65

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

31. Subsidiaries and associates

Group

Trading subsidiaries
Walker Crips Stockbrokers Limited
London York Fund Managers Limited
Walker Crips Wealth Management Limited
Ebor Trustees Limited
Barker Poland Asset Management LLP
TBWC No 1 Limited
TBWC No 2 Limited
TBWC No 3 Limited
Non-trading subsidiaries
Walker Crips Financial Services Limited
G & E Investment Services Limited
Ebor Pensions Management Limited
Investorlink Limited
Walker Cambria Limited
Walker Crips Trustees Limited
W.B. Nominees Limited
WCWB (PEP) Nominees Limited
WCWB (ISA) Nominees Limited
WCWB Nominees Limited
Walker Crips Investment Management Limited
Jointly controlled entities
JWPCreers Wealth Management Limited

Country of
incorporation

Principal activity

Class and percentage
of shares held

Investment management
United Kingdom
Management services
United Kingdom
Financial services advice
United Kingdom
Pensions management
United Kingdom
United Kingdom
Investment management
United Kingdom Short-term lending facilitation
United Kingdom Short-term lending facilitation
United Kingdom Short-term lending facilitation

United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom

Financial services
Holding company
Dormant company
Agency stockbroking
Dormant company
Dormant company
Nominee company
Nominee company
Nominee company
Nominee company
Dormant company

Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Membership 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%

Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%

United Kingdom

Financial services advice

Ordinary Shares 50%

32. Contingent liability
The Group has received an assessment from HMRC to pay a significant sum of Income Tax and National Insurance plus interest. The
assessment relates to moneys apparently paid to two of its former fund managers arising out of their employment with Walker Crips Asset
Managers Limited (WCAM), a former wholly-owned subsidiary of the Group which was sold on 12 April 2012.

The Directors believe that the amount assessed may relate to subsequent payments made to the two WCAM Managers by the purchaser
of WCAM, a transaction in which the Group was not involved. Under the terms of the Sale and Purchase Agreement of 12 March 2012,
the purchaser is considered by the Directors to be ultimately liable for any tax arising in respect of any such payments made to the Manager.

A successful appeal to postpone any tax payable has been made whilst a more detailed investigation is being undertaken. In the opinion
of the Directors, there is insufficient information at the date of these financial statements to allow the Board to conclude that a liability
exists at 31 March 2016. They have therefore made no provision in these financial statements in respect of this matter.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

year ended 31 March 2016Notes to the accounts continuedCompany balance sheet

31 March 2016

Fixed assets
Tangible
Intangible
Investments

Current assets
Debtors
Trading investments
Cash at bank and in hand

Creditors: amounts falling due within one year
Other creditors
Shares to be issued

Net current assets

Total assets less current liabilities

Creditors: amounts falling due after more than one year
Other creditors
Shares to be issued

Net assets

Capital and reserves
Called up share capital
Share premium account
Own shares held
Profit and loss account
Other reserves

Equity shareholders’ funds

FINANCIAL STATEMENTS

Notes

2016
£’000

2015
£’000

36
37
38

41
42

46
46

376
3,953
17,425

21,754

523
518
2,187

3,228

(1,726)
(912)

(2,638)
590

571
2,365
19,842

22,778

138
1,194
1,042

2,374

(1,189)
(298)

(1,487)
887

22,344

23,665

(1,486)
(218)

(1,704)
20,640

2,595
2,279
(312)
11,410
4,668

20,640

(1,720)
(453)

(2,173)
21,492

2,545
1,988
(312)
12,603
4,668

21,492

The financial statements of Walker Crips Group plc (Company registration no: 01432059) were approved by the Board of Directors and
authorised for issue on 30 June 2016.

Signed on behalf of the Board of Directors

R. A. FitzGerald FCA
Director
30 June 2016

ANNUAL REPORT AND ACCOUNTS 2016 67

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Company statement of cash flows

year ended 31 March 2016

Cash flow from operating activities
Loss for the financial year
Adjustments for:
Depreciation
Amortisation
Decrease/(increase) in trading investments
Increase in debtors
Increase in creditors

Net cash generated from/(used by) operating activities

Investing activities
Interest received
Acquisition of subsidiary
Sale of fixed asset investments

Net cash generated from/(used by) investing activities

Financing activities
Dividends paid
Dividends received

Net cash generated used by financing activities

Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

2016
£’000

2015
£’000

(949)

(883)

219
133
676
(465)
425

25
—
1,383

1,408

(502)
200

(302)

1,145
1,042

2,187

149
8
(242)
(3,189)
2,747

(1,410)

37
(2,239)
—

(2,202)

(1,174)
—

(1,174)

(4,786)
5,828

1,042

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

Company statement of changes in equity

FINANCIAL STATEMENTS

year ended 31 March 2016

Equity as at 31 March 2014
Loss for the year
Dividends paid
Issue of shares on acquisition of subsidiary

Equity as at 31 March 2015
Loss for the year
Dividends paid
Issue of shares on acquisition of intangibles

Equity as at 31 March 2016

Called up
share capital
£’000

Share
premium
£’000

Own
shares held
£’000

2,515
—
—
30

2,545
—
—
50

2,595

1,818
—
—
170

1,988
—
—
291

2,279

Other
£’000

4,668
—
—
—

Profit and loss
account
£’000

Total equity
£’000

14,233
(672)
(958)
—

12,603
(536)
(657)
—

22,922
(672)
(958)
200

21,492
(536)
(657)
341

(312)
—
—
—

(312)

4,668

11,410

20,640

ANNUAL REPORT AND ACCOUNTS 2016 69

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Notes to the Company accounts

year ended 31 March 2016

33. Significant accounting policies
The separate financial statements of the 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 102,
the Financial Reporting Standard applicable in the United Kingdom 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 Company’s accounting policies (see Note 34).

The company has adopted FRS 102 in line with the mandatory application date of 1 January 2015 in accordance with the requirements
of section 35 of that standard. The first date at which FRS 102 was applied was 1 April 2014. In accordance with FRS 102 the Company has:

• provided comparative information;

• applied the same accounting policies throughout all periods presented;

• retrospectively applied FRS 102 as required; and

• applied certain optional exemptions and mandatory exceptions as applicable for first time adopters of FRS 102.

The policies applied under the entity’s previous accounting framework are not materially different to FRS 102 and have not impacted on
equity or profit or loss.

The financial statements are presented in the currency of the primary activities of the Company (its functional currency). For the purpose
of the financial statements, the results and financial position are presented in Sterling (£). The principal accounting policies have been
summarised below. They have all been applied consistently throughout the year and the preceding year.

The company has chosen to early adopt the amendments to FRS 102, paragraph 34.22, which revise the disclosure requirements for
financial institutions, specifically in relation to the fair value hierarchy, as presented within Note 43. These amendments were approved
for issue on 3 March 2016 and are otherwise effective for accounting periods beginning on or after 1 January 2017.

Tangible fixed assets
Tangible fixed assets comprise fixtures 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.

Intangible assets
(a) Client lists
Acquired client lists and businesses generating revenue from clients and investment managers are capitalised based on the expected
future cash flows to be generated over the lives of the assets, discounted at an appropriate discount rate. These costs are amortised
on a straight-line basis over their expected useful lives of ten to twenty years.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

FINANCIAL STATEMENTS

33. Significant accounting policies continued
Impairment of non-financial assets
At each balance sheet date, the Group 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 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 more likely than not 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.

Financial instruments
Financial assets and financial liabilities are recognised in the balance sheet when the Group becomes a party to the contractual provisions
of the instrument.

Investments
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 investment within the timeframe established by the market concerned and are initially measured at cost
including transaction costs or at fair value depending on the nature of the instrument held.

Investments are classified as basic financial instruments and are measured at subsequent reporting dates at fair value. Where securities
are held for trading purposes, gains and losses arising from changes in fair value are included in net profit or loss for the period.

Investments in subsidiaries
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.

Valuation of investments
The fair valuation of the Company’s basic financial instrument investments is based upon the underlying market price and volatility which
may be subject to fluctuation from year to year (see Note 44 for further information).

Debtors
Prepayments and accrued income and 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.

ANNUAL REPORT AND ACCOUNTS 2016 71

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Notes to the Company accounts continued

year ended 31 March 2016

33. Significant accounting policies continued
Share-based payments
Shares to be issued represent the Company’s best estimate of the Ordinary Shares in the Company which are likely to be issued following
business combinations or the acquisition of client relationships which involve deferred payments in the Company’s shares. Where shares
are due to be issued within a year, the sum is included in current liabilities.

Fair value is measured by use of a binomial model. The expected life used in the model has been adjusted based upon management’s
best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations.

For employees and account executives of a subsidiary of the Company, the share-based payment is accounted for as a capital contribution
in the respective subsidiary. The subsidiary will then take a charge to its income statement in respect of the share-based payment.

Shares to be issued
The Company had recognised as a liability the sum which has been issued and allotted just after the prior period end to personnel
associated with the Company in order to meet contractual commitments given as part of the recent expansion of its client base.

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.

Going concern
After conducting enquiries, the Directors believe that the 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 Group’s business activities,
together with the factors likely to affect its future development, performance and position, are set out in the Strategic Report.

34. Key sources of estimation uncertainty and judgements
The preparation of financial statements in conformity with generally accepted accounting practice requires management to make
estimates and judgements that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and
liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period.

Intangible assets
Acquired client lists are capitalised based on current fair values. During the year the Company acquired several investment managers and
the business of their clients. By assessing the historic rates of client retention, the ages and succession plans of the investment managers
who manage the clients and the contractual incentives of the investment managers, the Directors consider a life of up to twenty years to
be both appropriate and in line with peers.

35. Profit for the year
As permitted by section 408 of the Companies Act 2006 the Company has elected not to present its own profit and loss account for the
year. Walker Crips Group plc reported a loss for the financial year of £536,000 (2015: loss of £672,000).

An amount of £12,000 (2015: £12,000) related to the auditor’s remuneration for audit services to the Company.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

36. Tangible fixed assets

Cost
At 1 April 2015
Additions

At 31 March 2016

Accumulated depreciation
At 1 April 2015
Charge for the year

At 31 March 2016

Carrying amount
At 31 March 2016

At 31 March 2015

37. Intangible assets

Cost
At 1 April 2015
Additions

At 31 March 2016

Accumulated depreciation
At 1 April 2015
Charge for the year

At 31 March 2016

Carrying amount
At 31 March 2016

At 31 March 2015

FINANCIAL STATEMENTS

Leasehold
improvements
furniture and
equipment
£’000

Computer
software
£’000

952
24

976

392
215

607

369

560

858
—

858

847
4

851

Client lists
£’000

2,552
1,721

4,273

187
133

320

3,953

2,365

Total
£’000

1,810
24

1,834

1,239
219

1,458

376

571

Total
£’000

2,552
1,721

4,273

187
133

320

3,953

2,365

ANNUAL REPORT AND ACCOUNTS 2016 73

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Notes to the Company accounts continued

year ended 31 March 2016

38. Fixed asset investments

Subsidiary undertakings
Basic financial instrument investments held at fair value

2016
£’000

17,425
—

17,425

2015
£’000

17,425
2,417

19,842

A complete list of subsidiary undertakings can be found in Note 31 to the Group accounts.

Basic financial instruments held at fair value consists of zero investments as at 31 March 2016 (2015: two).

During the year, 1,809 shares in Euroclear plc were disposed of, recognising a loss on disposal in the statement of comprehensive income of
£17,000. In the year to 31 March 2016 the holding was valued based on the underlying share price and volatility. Revaluation gains have
been recognised in previous years and included within the profit and loss account.

The second investment was one of 1.383 million units in the Short Term Lending Fund (STLF), a qualifying collective investment scheme
(QCIS). This was disposed of for £1,383,000. Further details are disclosed in Note 19 to the Group accounts.

39. Debtors

Amounts due from subsidiary undertakings
Deferred tax asset
Prepayments and accrued income
Other debtors

40. Deferred tax asset/(liability)

At 1 April
Use of loss brought forward
Credit/(charge) to the income statement

At 31 March

2016
£’000

127
82
77
237

523

2016
£’000

(122)
(118)
322

2015
£’000

—
—
87
51

138

2015
£’000

(231)
—
109

(122)

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

41. Creditors

Amounts due on acquisition of subsidiary
Accruals and deferred income
Amounts due to subsidiary undertakings
Deferred tax liability (see Note 40)
Amount due to personnel under recruitment contracts

42. Shares to be issued

Amount due to personnel under recruitment contracts/acquisition agreements

FINANCIAL STATEMENTS

2016
£’000

—
416
—
—
1,310

1,726

2016
£’000

912

2015
£’000

13
63
71
122
920

1,189

2015
£’000

298

43. Fair value disclosures
FRS 102 requires a three-level hierarchy disclosure for categorising financial assets and liabilities carried at fair value and requires enhanced
disclosures about fair value measurement. The fair value hierarchy classifies financial assets and liabilities according to the source of inputs
ranked according to availability of observable market prices used in measuring fair value as follows:

Level 1 – The unadjusted quoted price in an active market for identical assets and liabilities that the entity can access at the measurement
date. The Company’s Trading investments fall within this category;

Level 2 – Inputs other than quoted prices included within Level 1 that are observable (i.e. developed using market data) for the asset
or liability, either directly or indirectly. The Company does not hold financial instruments in this category; and

Level 3 – Inputs are unobservable (i.e. for which market data is unavailable) for the asset and liability. The Company’s Basic financial
instruments held at fair value (within Fixed asset investments) fall within this category.

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety should be determined on the
basis of the lowest level input that is significant to the fair value measurement in its entirety.

The categorisation of the company’s investments within the hierarchy is based upon the pricing transparency of the investments and
does not necessarily correspond to the Directors’ perceived risk of the investments. The Company’s investments, held during the year,
in Euroclear plc and the STLF are classified within Level 3 as they have unobservable inputs and are traded infrequently or not at all.

The determination of what constitutes “observable” requires significant judgement by the Directors. The Directors consider observable
data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, provided
by multiple, independent sources that are actively involved in the relevant market.

The following tables analyse within the fair value hierarchy the company’s Investments measured at fair value:

At 31 March 2016

Financial assets held at fair value through profit and loss

At 31 March 2015

Financial assets held at fair value through profit and loss

Level 1
£’000

518

Level 1
£’000

1,194

Level 2
£’000

—

Level 2
£’000

—

Level 3
£’000

—

Level 3
£’000

2,417

Total
£’000

518

Total
£’000

3,611

Determining the fair value of the company’s investments requires judgement and considers factors specific to the Investment.
The valuation policies applied by the Directors are detailed in note 33.

ANNUAL REPORT AND ACCOUNTS 2016 75

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Notes to the Company accounts continued

year ended 31 March 2016

44. Risk management policies
Procedures and controls are in place to identify, assess and ultimately control the financial risks faced by the 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 Company’s risk appetite, along with the procedures and controls mentioned above, are laid out in the Group’s Internal Capital
Adequacy Assessment Process document prepared in accordance with the requirements of the Financial Conduct Authority (FCA).

The overall risk appetite for the Company and for the Group as a whole is considered by management to be low, despite operating
in a market-place where financial risk is inherent in the core businesses of investment management and financial services.

The Group considers its financial risks arising from its use of financial instruments to fall into three main categories:

(i) credit risk;

(ii) liquidity risk; and

(iii) market risk.

Further information on the disclosures and policies carried out by the Company and the Group are made in Note 24 of the consolidated
financial statements.

(i) Credit risk
Maximum exposure to credit risk:

Cash
Other debtors

Analysis of other debtors due from tax authorities and financial institutions:

Neither past due nor impaired
Past due but not impaired

<30 Days
>30 Days
>3 Months

2016
£’000

2,187
237

2,424

2016
£’000

237
—
—
—

237

2015
£’000

1,042
51

1,093

2015
£’000

51
—
—
—

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

FINANCIAL STATEMENTS

44. Risk management policies continued
(ii) Liquidity risk
The tables below analyse the Group’s future cash outflows based on the remaining period to the contractual maturity date:

2016

Other creditors

2016

Within one year
Within two to five years

(iii) Market risk
These relate to price risk on trading investments and are described in the Audit Committee Report where significant.

Fair value of financial instruments
The fair values of the Group’s financial assets and liabilities are not materially different from their carrying values.

45. Called up share capital

Called up, allotted and fully paid
38,924,046 (2015: 38,186,958) Ordinary Shares of 62/3 pence each

2016
£’000

3,212

2016
£’000

1,726
1,486

3,212

2015
£’000

2,909

2015
£’000

1,189
1,720

2,909

2016
£’000

2015
£’000

2,595

2,545

The Company holds 750,000 of its own shares, purchased for 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.

46. Creditors: amounts falling due after more than one year

Amount due to personnel under recruitment contracts
Shares to be issued to personnel under recruitment contracts

2016
£’000

1,486
218

1,704

2015
£’000

1,720
453

2,173

ANNUAL REPORT AND ACCOUNTS 2016 77

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Notes to the Company accounts continued

year ended 31 March 2016

47. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of £nil (2015: £nil) contracted but not provided for and £nil (2015: £nil) capital
commitments authorised but not contracted for.

Lease commitments
The annual commitments under non-cancellable operating leases fall due as follows:

Within one year
Within two to five years

2016
£’000

506
368

2015
£’000

539
923

48. Related party transactions
Key management are those persons having authority and responsibility for planning, controlling and directing the activities of the Group,
or in relation to the Company, the Company. In the opinion of the Board, the Group and the Company’s key management are the Directors
of Walker Crips Group plc. Total compensation to key management personnel is £772,593 (2015: £860,861). Further information can be
found within the Remuneration Committee Report on page 22.

49. First time adoption of FRS 102
These financial statements are Walker Crips Group plc’s first financial statements that comply with FRS 102. The date of transition
to FRS 102 was 1 April 2014.

The transition to FRS 102 has resulted in a small number of changes in accounting policies compared to those used previously.
The following tables describe the differences between the amounts presented previously under UK GAAP and as restated to comply
with FRS 102:

▪ in the Statement of Comprehensive Income and Balance Sheet for the year 31 March 2015 (i.e. comparative information); and

▪ in the opening Balance Sheet (i.e. at 1 April 2014, the date of transition).

Balance Sheet

Capital and reserves
Called up share capital
Share Premium
Own shares held
Other reserves
Revaluation reserve
Profit and loss account

Equity shareholders’ funds

As previously
stated
1 April 2014
£’000

Effect of
transition
1 April 2014
£’000

FRS 102
(as restated)
1 April 2014
£’000

As previously
stated
31 March 2015
£’000

Effect of
transition
31 March 2015
£’000

FRS 102
(as restated)
31 March 2015
£’000

2,515
1,818
(312)
4,668
827
13,406

22,922

—
—
—
—
(827)
827

2,515
1,818
(312)
4,668
—
14,233

2,545
1,988
(312)
4,668
767
11,836

—
—
—
—
(767)
767

2,545
1,988
(312)
4,668
—
12,603

—

22,922

21,492

—

21,492

Effect on the Statement of Comprehensive Income
On transition to FRS 102, the company has recognised transition adjustments to recognise the revaluation of investments treated as basic
financial instruments to become part of the Profit and Loss account. These were previously recognised as Other Comprehensive Income.
This has the effect of increasing the loss in the Profit and Loss Account for the year ended 31 March 2015 to £672,000 (previously £612,000).

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

FINANCIAL STATEMENTS

50. Contingent liability
The Company has received an assessment from HMRC to pay a significant sum of Income Tax and National Insurance plus interest.
The assessment relates to moneys apparently paid to two of its former fund managers arising out of their employment with
Walker Crips Asset Managers Limited (WCAM), a former wholly-owned subsidiary of the group which was sold on 12 April 2012.

The Directors believe that the amount assessed may relate to subsequent payments made to the two WCAM Managers by the purchasers
of WCAM, a transaction in which the Company was not involved. Under the terms of the Sale and Purchase Agreement of 12 March 2012,
the purchaser is considered by the Directors to be ultimately liable for any tax arising in respect of any such payments made to the Manager.

ANNUAL REPORT AND ACCOUNTS 2016 79

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Notice of Annual General Meeting

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to what action you should
take, you are recommended to seek your own financial advice from your stockbroker or other independent adviser authorised under the
Financial Services and Markets Act 2000.

If you have sold or transferred all of your shares in Walker Crips Group plc, please forward this document, together with the accompanying
documents, as soon as possible either to the purchaser or transferee or to the person who arranged the sale or transfer so they can pass
these documents to the person who now holds the shares.

Notice is hereby given that the Annual General Meeting of Walker Crips Group plc (“Walker Crips Group” or the “Company”) will be held
at South Place Hotel, 3 South Place, London, EC2M 2AF on 3 August 2016 at 11:00 a.m. for the following purposes:

As ordinary business
To consider and, if thought fit, to pass the following resolutions which will be proposed as ordinary resolutions:

1. To receive and adopt the Directors’ report and audited financial statements for the year ended 31 March 2016.

To approve the Directors’ remuneration report (excluding the Directors’ remuneration policy set out on pages 29 to 32 of the Directors’
remuneration report) for the year ended 31 March 2016.

3. To declare a final dividend of 1.27 pence per Ordinary Share for the year ended 31 March 2016.

4. To re-elect as a Director Mr David Gelber.

5. To re-elect as a Director Mr Martin Wright.

6. To re-elect as a Director Mr Robert Elliott.

7. To re-elect as a Director Mr Hua Min Lim.

8. To appoint BDO LLP as auditor of the Company until the conclusion of the next meeting at which accounts are laid.

9. To authorise the Directors to set the auditor’s remuneration.

As special business
To consider and, if thought fit, to pass the following resolution which will be proposed as an ordinary resolution:

10. That the authority and power conferred upon the Directors to allot shares or to grant rights to subscribe for or to convert any security
into shares in accordance with Article 12 of the Company’s Articles of Association shall apply until the earlier of the conclusion of the
next Annual General Meeting of the Company or the date falling 15 months from the date of the passing of this resolution and for
that period the Section 551 Amount (as defined in Article 12(B)) shall be £851,658 (equivalent to one third of the Company’s issued
share capital (excluding treasury shares) as at the date of this notice). All previous authorities pursuant to Article 12(B) are revoked,
subject to Article 12(D).

To consider, and if thought fit, pass the following resolutions which will be proposed as special resolutions:

11. That, subject to the passing of Resolution 10, the authority and power conferred upon the Directors to allot equity securities for cash

in accordance with Article 12 of the Company’s Articles of Association shall apply until the earlier of the conclusion of the next Annual
General Meeting of the Company or the date falling 15 months from the date of the passing of this resolution and for that period the
Section 561 Amount (as defined in Article 12(C)) shall be £255,497 (equivalent to 10% of the Company’s issued share capital
(excluding treasury shares) as at the date of this notice). All previous authorities pursuant to Article 12(C) are revoked, subject to
Article 12(D).

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

FINANCIAL STATEMENTS

As special business continued
12. That the Company be and is hereby granted pursuant to section 701 of the Companies Act 2006 general and unconditional authority
to make market purchases (within the meaning of section 693 of the Companies Act 2006) on the London Stock Exchange of Ordinary
Shares of 6²/³ pence each in the capital of the Company (“Ordinary Shares”) provided that:
a)

the maximum aggregate number of Ordinary Shares hereby authorised to be purchased is limited to 10% of the Company’s
issued share capital then in issue;

b) the minimum price which may be paid for any Ordinary Shares is 6²/³ pence per Ordinary Share;
c)

the maximum price (exclusive of expenses) which may be paid for any Ordinary Shares is not more than 5% above the average
of the middle market quotations for the Ordinary Shares (as derived from the London Stock Exchange Daily Official List) for the
ten business days before the purchase is made;

the authority hereby conferred shall expire at the earlier of the conclusion of the next Annual General Meeting of the Company
or the date falling 15 months from the date of the passing of this resolution; and

the Company may make a contract or contracts to purchase Ordinary Shares under the authority hereby conferred prior to the
expiry of such authority which will or may be executed wholly or partly after the expiry of such authority, and may make a purchase
of Ordinary Shares pursuant to any such contract or contracts. This resolution shall confer on the Directors all rights for the
Company to make any such market purchase of the Company’s own shares as are required under the terms of Article 11(B).

13. That the Company be authorised to call a general meeting of the shareholders, other than an Annual General Meeting, on not less

than 14 clear days’ notice.

By order of the Board

Guy J. B. Jackson LLB (Hons)
Secretary
30 June 2016

Walker Crips Group plc
Finsbury Tower, 103–105 Bunhill Row, London EC1Y 8LZ
Reg No. 01432059

ANNUAL REPORT AND ACCOUNTS 2016 81

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Notice of Annual General Meeting continued

Notes on resolutions
The following paragraphs explain, in summary, the Resolutions to be proposed at the Annual General Meeting (the “Meeting”).

Resolution 1: Receipt of the 2016 Report and Accounts
The Directors of the Company must present their report and the annual accounts to the Meeting and shareholders may raise any
questions on the report and accounts under this resolution.

Resolution 2: Approval of the 2016 Directors’ remuneration report
In accordance with section 439 of the Companies Act, shareholders are requested to approve the Directors’ remuneration report (other
than the Directors’ Remuneration Policy set out on pages 29 to 32), which can be found on pages 22 to 32 of the Report and Accounts
for the year ended 31 March 2016. The vote is advisory only and does not affect the actual remuneration paid to an individual Director.

The Directors’ Remuneration Policy is required to be put to shareholders for approval every three years, or earlier if changes to the policy
are proposed, or the advisory vote on the Directors’ remuneration report is not passed. At the 2014 annual general meeting, shareholders
approved the Directors’ remuneration policy. No change is proposed to the Directors’ remuneration policy and it is not otherwise required
to be approved at this year’s Meeting.

Resolution 3: Final dividend
Shareholders are being asked in Resolution 3 to approve a final dividend of 1.27 pence per Ordinary Share for the year ended 31 March 2016.
If you approve the recommended final dividend, this will be paid on 12 August 2016 to all ordinary shareholders who were on the register
of members at the close of business on 29 July 2016.

Resolutions 4 to 7: Re-election of Directors
Mr David Gelber, Mr Martin Wright and Mr Hua Min Lim are retiring because each of them have been Non-Executive Directors for more
than nine years and Mr Robert Elliott is retiring as it is a condition of his letter of appointment as a Non-Executive Director that he retires
at each Annual General Meeting. Mr Gelber, Mr Wright, Mr Lim and Mr Elliott are seeking re-election.

The biographies of the Directors eligible and standing for re-election at the Meeting are set out on pages 14 and 15 in the 2016 Report
and Accounts.

Resolution 8: Appointment of auditor
The Company is required to appoint its auditor at each general meeting at which accounts are laid before the shareholders and is usually
appointed to hold office from the conclusion of an Annual General Meeting until the conclusion of the next Annual General Meeting.

During the year, the Audit Committee engaged in a formal tender process for the external audit of the Company’s financial statements,
full details of which are described in the Audit Committee report on pages 33 to 35 of the 2016 Report and Accounts. Following the
conclusion of this process, the Board proposes the appointment of BDO LLP following recommendation by the Audit Committee which
has considered the circumstances of the change of auditor. Deloitte LLP will therefore not seek re-appointment as the Company’s auditor.

Accordingly, shareholders are being asked in Resolution 8 to approve the appointment of BDO LLP as auditor of the Company from the
conclusion of the Meeting until the conclusion of the next meeting at which accounts are laid.

As outgoing auditor, Deloitte LLP has provided the Company with a statement of circumstances under section 519 of the Companies Act
2006 and a copy of this statement is reproduced below in accordance with section 520 of the Companies Act:

30 June 2016

Dear Sirs

This letter is formal notice of our resignation as auditors of the above company with effect from 30 June 2016.

Yours faithfully

Deloitte LLP

Statement of reasons relating to the resignation of Deloitte LLP as auditors to Walker Crips Group plc.
The company ran an audit tender and we chose not to participate.

Unless the company applies to the court, this statement of reasons is required to be brought to the attention of members or creditors
of the company, must be sent by the company within 14 days to every person entitled under Section 423 of the Companies Act 2006
to be sent copies of the company’s accounts. This is a requirement of Section 520(2) of that Act.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

FINANCIAL STATEMENTS

Resolution 9: Remuneration of the auditor
The resolution also authorises the Directors, in accordance with standard practice, to set the remuneration of the auditor. In accordance
with its terms of reference, the Audit Committee will approve the terms of engagement and the level of audit fees payable by the
Company to the auditor and recommend them to the Board.

Resolution 10: Renewal of the Directors’ authority to allot shares
Resolution will be proposed before the Meeting to confer authority on the Directors to allot shares or grant rights to subscribe for or to
convert any security into shares of up to an aggregate nominal amount of £851,658 (being one third of the Company’s issued share
capital (excluding treasury shares) as at 30 June 2016). This resolution, which is an ordinary resolution, will replace the authority given
to the Directors at the last Annual General Meeting on 31 July 2015.

750,000 shares are held in treasury as at 30 June 2016 (representing approximately 2% of the Company’s issued share capital
(excluding treasury shares) on that date).

The Directors have no present intention to issue new Ordinary Shares. However, the Directors consider it prudent to maintain the flexibility
to take advantage of business opportunities that this authority provides.

This authority will expire on the next Annual General Meeting of the Company or the date falling 15 months from the date of the passing
of the resolution, whichever is the earlier.

Resolution 11: Renewal of the Directors’ authority to disapply pre-emption rights
Resolution will be proposed before the Meeting to confer authority on the Directors to allot equity securities for cash up to an aggregate
nominal amount of £255,497 (being 10% of the Company’s issued share capital (excluding treasury shares) as at 30 June 2016) as if
section 561(1) of the Companies Act 2006 did not apply. This resolution, which is a special resolution, will replace the authority given to
the Directors at the last Annual General Meeting on 31 July 2015.

The Directors have no present intention to make use of this authority and will only do so when satisfied that it is in the interest of the Company.

This authority will expire on the next Annual General Meeting of the Company or the date falling 15 months from the date of the passing
of the resolution, whichever is the earlier.

Resolution 12: Authority for the Company to purchase its own shares
The Companies Act 2006 permits a public company to purchase its own shares in accordance with powers contained in its Articles of
Association and with the authority of a resolution of shareholders. The Directors believe that the Company should be authorised to take
advantage of these provisions and therefore, pursuant to the power contained in the Company’s Articles of Association, it is intended to
propose a special resolution at the Meeting to confer authority on the Company to purchase up to a maximum in aggregate of 10% of
the Ordinary Shares of 6²/³ pence each in the share capital of the Company at a price or prices which will not be less than 6²/³ pence and
not be more than 5% above the average of the middle market quotation derived from the London Stock Exchange Daily Official List for
the ten business days before the relevant purchase is made.

The authority was given at the last Annual General Meeting of the Company for a period expiring at the conclusion of the next Annual
General Meeting. It is the Directors’ intention that a resolution for its renewal will be proposed at each succeeding Annual General Meeting.
The Directors will only make use of the authority when satisfied that it is in the interest of the Company to do so. Shareholders should note
that any Ordinary Shares purchased by the Company will either be cancelled and the number of Ordinary Shares in issue will accordingly
be reduced or will be held as treasury shares.

Shareholders may further note that the total number of warrants and options to subscribe for equity shares in the Company that are
outstanding as at 30 June 2016 is nil.

This authority will expire on the next Annual General Meeting of the Company or the date falling 15 months from the date of the passing
of the resolution, whichever is the earlier.

Resolution 13: Notice period for general meeting
The notice period for general meetings of the Company is 21 days unless shareholders approve a shorter notice period which cannot be
less than 14 clear days. Annual general meetings will continue to be called on at least 21 clear days’ notice.

Resolution 13, which is a special resolution, will enable the Company to call general meetings (other than Annual General Meetings) on
14 clear days’ notice. The Directors believe that this is in the best interests of the shareholders and it is intended that this shorter notice
period would not be used as a matter of routine for such meetings, but only where the flexibility is merited by the business of the meeting
and is thought to be to the advantage of shareholders as a whole.

The approval will be effective until the Company’s Annual General Meeting in 2017 when it is intended that a similar resolution to renew
the authority will be proposed.

ANNUAL REPORT AND ACCOUNTS 2016 83

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Notice of Annual General Meeting continued

Shareholder notes
The following pages provide more detailed information about your voting rights and how you may exercise them.

Entitlement to attend and vote
1.

Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those members
registered on the Company’s register of members at:

▪ 6.00 p.m. on 1 August 2016; or

▪ if this Meeting is adjourned, at 6.00 p.m. on the day two days prior to the adjourned meeting, shall be entitled to attend and vote

at the Meeting.

Appointment of proxies
2.

If you are a member of the Company at the time set out in Note 1 above, you are entitled to appoint a proxy to exercise all or any of
your rights to attend, speak and vote at the Meeting and you should have received a proxy form with this notice of meeting. You can
only appoint a proxy using the procedures set out in these notes and the notes to the proxy form.

A proxy does not need to be a member of the Company but must attend the Meeting to represent you. Details of how to appoint the
Chairman of the Meeting or another person as your proxy using the proxy form are set out in the notes to the proxy form. If you wish
your proxy to speak on your behalf at the Meeting you will need to appoint your own choice of proxy (not the Chairman) and give
your instructions directly to them.

A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the
resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote
(or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting.

Appointment of proxy using hard copy proxy form
6. The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote.

To appoint a proxy using the proxy form, the form must be:

▪ completed and signed;

▪ sent or delivered to Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands, B63 3DA; and

▪ received by Neville Registrars Limited no later than 11:00 a.m. on 1 August 2016.

In the case of a member which is a company, the proxy form must be executed under its common seal or signed on its behalf by an
officer of the Company or an attorney for the Company.

Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or authority)
must be included in with the proxy form.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

FINANCIAL STATEMENTS

Appointment of proxies through CREST
7.

CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for the
Meeting and any adjournment(s) of it by using the procedures described in the CREST Manual (available from https://my.euroclear.
com/euilegal). CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a
voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate
action on their behalf.

In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a CREST Proxy Instruction)
must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s (EUI) specifications and must contain the information
required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the issuer’s
agent ID (7RA11) by 11:00 a.m. on 1 August 2016. For this purpose, the time of receipt will be taken to be the time (as determined by
the timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message
by enquiry to CREST in the manner prescribed by CREST.

CREST members and, where applicable, their CREST sponsors or voting service providers should note that EUI does not make available
special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the
input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST
personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting
service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system
by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are
referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.

The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.

Appointment of proxy by joint members
8.

In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted
by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in
the Company’s register of members in respect of the joint holding (the first-name being the most senior).

Changing proxy instructions
9.

To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the cut off
time for receipt of proxy appointments (see above) also apply in relation to amended instructions; any amended proxy appointment
received after the relevant cut-off time will be disregarded.

Where you have appointed a proxy using the hard-copy proxy form and would like to change the instructions using another hard-copy
proxy form, please contact Neville Registrars Limited on 0121 585 1131.

If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of the
proxies will take precedence.

Termination of proxy appointments
10. In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard copy notice clearly stating your

intention to revoke your proxy appointment to Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands,
B63 3DA. In the case of a member which is a company, the revocation notice must be executed under its common seal or signed on
its behalf by an officer of the Company or an attorney for the Company. Any power of attorney or any other authority under which
the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice.
The revocation notice must be received by Neville Registrars Limited no later than 11:00 a.m. on 1 August 2016.

If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph
directly below, your proxy appointment will remain valid.

Appointment of a proxy does not preclude you from attending the Meeting and voting in person. If you have appointed a proxy and
attend the Meeting in person, your proxy appointment will automatically be terminated.

Corporate representatives
11. A corporation which is a member can appoint one or more corporate representatives who may exercise, on its behalf, all its powers as

a member provided that no more than one corporate representative exercises powers over the same share.

ANNUAL REPORT AND ACCOUNTS 2016 85

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Notice of Annual General Meeting continued

Issued shares and total voting rights
12. As at 30 June 2016 (being the latest practicable day prior to the date of this notice), the Company’s issued share capital comprised
39,074,620 Ordinary Shares of 6²/³ pence each. Each Ordinary Share carries the right to one vote at a general meeting of the Company.
The Company held 750,000 Ordinary Shares in treasury on 30 June 2016 and, therefore, the total number of voting rights in the
Company as at 30 June 2016 is 38,324,620.

Communication
13. You may not use any electronic address provided either in this notice of meeting or any related documents (including the letter with
which this notice of meeting was enclosed and proxy form) to communicate with the Company for any purposes other than those
expressly stated.

Website giving information regarding the Meeting
14. Information regarding the Meeting, including the information required by section 311A of the Companies Act 2006, is available from

www.wcgplc.co.uk.

Questions at the Meeting
15. Under section 319A of the Companies Act 2006, the Company must answer any question you ask relating to the business being dealt
with at the Meeting unless (i) answering the question would interfere unduly with the preparation for the Meeting or involve the disclosure
of confidential information; (ii) the answer has already been given on the Company’s website in the form of an answer to a question;
or (iii) it is undesirable in the interests of the Company or the good order of the Meeting that the question be answered.

Website publication of audit concerns
16. Pursuant to section 527 of the Companies Act 2006, where requested by members meeting the qualification criteria set out in that
section, the Company must publish on its website, a statement setting out any matter that such members propose to raise at the
Meeting relating to either (i) the audit of the Company’s accounts (including the auditor’s report and the conduct of the audit) that
are to be laid before the Meeting or (ii) the circumstances connected with an auditor of the Company ceasing to hold office since the
previous meeting at which the annual account and reports were laid in accordance with section 437 of the Companies Act 2006.

Where the Company is required to publish such a statement on its website:

▪ it may not require the members making the request to pay any expenses incurred by the Company in complying with the request;

▪ it must forward the statement to the Company’s auditor no later than the time the statement is made available on the Company’s

website; and

▪ the statement may be dealt with as part of the business of the Meeting.

Nominated person
17. If you are a person who has been nominated under section 146 of the Companies Act 2006 to enjoy information rights (“Nominated
Person”), you may have a right under an agreement between you and the member of the Company who has nominated you to have
information rights (“Relevant Member”) to be appointed or to have someone else appointed as a proxy for the Meeting. If you either
do not have such a right or if you have such a right but do not wish to exercise it, you may have a right under an agreement between
you and the Relevant Member to give instructions to the Relevant Member as to the exercise of voting rights. Your main point of contact
in terms of your investment in the Company remains the Relevant Member (or, perhaps, your custodian or broker) and you should
continue to contact them (and not the Company) regarding any changes or queries relating to your personal details and your interest
in the Company (including any administrative matters). The only exception to this is where the Company expressly requests a response
from you.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

Form of proxy

FINANCIAL STATEMENTS

For use at the Annual General Meeting (the “Meeting”) of Walker Crips Group plc (the “Company”) to be held at the South Place Hotel,
3 South Place, London, EC2M 2AF on 3 August 2016 at 11:00 a.m. and at any adjournment thereof.

I/We .................................................................................................................................................................................................................................................................................

(name(s) in full) ...................................................................................................................................................................................................... (BLOCK LETTERS PLEASE)

Of (address) ..................................................................................................................................................................................................................................................................

being (a) holder(s) of shares in the above-named Company HEREBY APPOINT (see Note 3):

or failing him (or in the event that no person is named) the Chairman of the Meeting to act as my/our proxy and to vote for me/us on
my/our behalf at the above mentioned Meeting and any adjournment thereof, and I/we desire this proxy to be used as directed below
or, failing any direction(s) as regards the Resolution(s), the proxy will abstain or vote at his discretion.

For

Against

Vote withheld

Enter the number of shares in relation to which your proxy is authorised to vote
or leave blank to authorise your proxy to act in relation to your full entitlement (see Note 4).

Please also mark this box if you are appointing more than one proxy (see Note 5).

The manner in which the proxy is to vote should be indicated by inserting “X” in the box provided:

1) To receive and adopt the Directors’ report and audited financial statements

2) To approve the Directors’ remuneration report

3) To declare a final dividend of 1.27 pence per Ordinary Share

4) To re-elect David Gelber as a Director

5) To re-elect Martin Wright as a Director

6) To re-elect Robert Elliott as a Director

7) To re-elect Hua Min Lim as a Director

8) To appoint BDO LLP as auditor

9) To authorise the Directors to set the remuneration of the auditor

10) To authorise the Directors to allot shares

11) To disapply pre-emption rights*

12) To authorise the Company to make market purchases of its own shares*

13) To authorise the Company to call a general meeting of shareholders on not less than

14 clear days’ notice*

Signed: ................................................................................................................................................................................. Dated: ............................................................................

(for a company see Note 8 to this form of proxy)

* Special resolution

ANNUAL REPORT AND ACCOUNTS 2016 87

WALKER CRIPS GROUP PLC

FINANCIAL STATEMENTS

Form of proxy continued

Notes:
1.

As a member of the Company you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and vote
at a general meeting of the Company. You can only appoint a proxy using the procedures set out in these notes.

Appointment of a proxy does not preclude you from attending the meeting and voting in person. If you have appointed a proxy
and attend the meeting in person, your proxy appointment will automatically be terminated.

A proxy does not need to be a member of the Company but must attend the meeting to represent you. To appoint as your proxy
a person other than the Chairman of the meeting, insert their full name in the space above. If you sign and return this proxy form
with no name inserted in the box, the Chairman of the meeting will be deemed to be your proxy. Where you appoint as your proxy
someone other than the Chairman, you are responsible for ensuring that they attend the meeting and are aware of your voting intentions.
If you wish your proxy to make any comments on your behalf, you will need to appoint someone other than the Chairman and give
them the relevant instructions directly.

If the proxy is being appointed in relation to less than your full voting entitlement, please indicate the number of shares in relation to
which they are authorised to act as your proxy. If left blank your proxy will be deemed to be authorised in respect of your full voting
entitlement (or, if this proxy form has been issued in respect of a designated account for a shareholder, the full voting entitlement for
that designated account).

You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not
appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy you may photocopy your
proxy card or contact Neville Registrars Limited on 0121 585 1131 to obtain an extra proxy card. Please indicate the number of shares
in relation to which they are authorised to act as your proxy (which, in aggregate, should not exceed the number of shares held by you).

To direct your proxy how to vote on the resolutions mark the appropriate box with an ‘X’. To abstain from voting on a resolution, select
the relevant “Vote withheld” box. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation
of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion.
Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting.

7. To appoint a proxy using this form, the form must be:

▪ completed and signed;

▪ sent or delivered to Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands, B63 3DA; and

▪ received by Neville Registrars Limited no later than 11:00 a.m. on 1 August 2016.

In the case of a member which is a company, this proxy form must be executed under its common seal or signed on its behalf by an
officer of the Company or an attorney for the Company.

Any power of attorney or any other authority under which this proxy form is signed (or a duly certified copy of such power or
authority) must be included with the proxy form.

10. CREST members who wish to appoint a proxy or proxies by using the CREST electronic appointment service may do so by using the
procedures described in the CREST Manual. To be valid, the appropriate CREST message, regardless of whether it constitutes the
appointment of a proxy or an amendment to the instructions given to a previously appointed proxy, must be transmitted so as to
be received by our agent Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands, B63 3DA, CREST ID
(7RA11) by 11:00 a.m. on 1 August 2016. See the notes to the notice of meeting for further information on proxy appointment
through CREST.

11. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted
by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in
the Company’s register of members in respect of the joint holding (the first-named being the most senior).

12. If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies

will take precedence.

13. For details of how to change your proxy instructions or revoke your proxy appointment see the notes to the notice of meeting.

14. You may not use any electronic address provided in this proxy form to communicate with the Company for any purposes other than

those expressly stated.

WALKER CRIPS GROUP PLC
ANNUAL REPORT AND ACCOUNTS 2016

Officers and professional advisers

FINANCIAL STATEMENTS

Directors
Executive Directors
R. A. FitzGerald FCA – Chief Executive Officer

S. K. W. Lam FCPA (Aust.), Chartered FCSI – Group Managing Director

D. Hetherton – Wealth Management Director

M. J. W. Rushton – Chief Investment Officer

Non-Executive Directors
D. M. Gelber – Chairman

R. A. Elliott FCA, Cert PFS – Audit Committee Chairman

H. M. Lim

M. J. Wright – Senior Independent Director

Secretary
Guy J. B. Jackson LLB (Hons)

Registered office
Finsbury Tower
103–105 Bunhill Row
London EC1Y 8LZ

Bankers
HSBC Bank plc
London

Solicitors
Charles Russell Speechlys LLP
London

Auditor
Deloitte LLP
London

Registrars
Neville Registrars Limited
18 Laurel Lane
Halesowen
West Midlands B63 3DA

Design Portfolio is committed to planting
trees for every corporate communications
project, in association with Trees for Cities.

Walker Crips Group plc
Finsbury Tower
103–105 Bunhill Row
London EC1Y 8LZ

020 3100 8000
www.wcgplc.co.uk
client.services@wcgplc.co.uk