Rooted in tradition.
Growing through innovation.
Annual Report and Accounts 2020
Welcome
We have over a hundred years of history in making
investment rewarding for our clients. Walker Crips
predecessors first bought and sold shares for clients
on the London Stock Exchange in 1914.
We motivate our people, employees and self-employed
associates alike; encouraging their individual development
through comprehensive training and endeavours of
outreach. We nurture their best intentions through
encouraging good behaviour, ensuring their motives remain
aligned with the Group’s belief in treating clients fairly.
We continue to thrive as we cultivate our technology
to strengthen our Group, increase efficiency and provide
value for our shareholders.
COVID-19
Some of us have lost family and friends to the virus and to you, we
send our heartfelt condolences. Above all, it is the human cost that
is hardest to bear. In these unprecedented times we played our part
in complying with, and where necessary exceeding, government
advice on containing and limiting the spread of the virus by working
from home, protecting our staff, having in place good technology,
and ensuring that we continue to deliver uninterrupted service to our
clients. Our investment managers, advisors and staff have displayed
tremendous adaptability and tenacity and combined with the
quality of our technology, our transition to working from home was
close to seamless. We are proud of how everyone at Walker Crips
responded to this crisis, how we considered each other, and how
we kept our focus on delivering good service to our clients during
this most difficult time. We have adapted well to this crisis and to
this new normal, and we will come out stronger and better. To our
shareholders and our clients, we wish you well, stay safe, and we
hope to meet you again in person soon.
Sean Lam, Group CEO
Walker Crips Group plc - Annual Report and Accounts 2020
Strategic report
Highlights from our year ended 31 March 2020
The Group reports improved
year-on-year income and profits.
(cid:1) Annual revenues up 3% to £31.4 million (2019: £30.5 million).
(cid:1) Operating profits up 172.5% to £1.09 million (2019: £0.40
million) and up 65% to £0.717 million (2019: £0.434 million)
excluding exceptional items.
(cid:1) Profit before tax up 97% to £963,000 (2019: £489,000) and up
13% to £588,000 (2019: £521,000) excluding exceptional items.
(cid:1) IAS 17 consistent EBITDA up 21% to £1.93 million
(2019: £1.59 million).*
(cid:1) Underlying cash generated from operations increased
by 18.6% to £1.85 million (2019: £1.56 million).*
(cid:1) Cash and cash equivalents increased by £1.8 million
to £8.6 million.
Strategic report
Highlights from our year
ended 31 March 2020
At a glance
Chairman’s statement
Our business and strategy
CEO’s statement
Strategy in action
Key performance indicators
Principal risks
Corporate governance
Board of Directors
Chairman’s commentary on governance
Report by the Directors – on corporate
governance matters
Section 172 (1) statement
Audit Committee report
Remuneration Committee report
Directors’ report
Statement of Directors’ responsibilities
(cid:1) Assets Under Management, with the COVID-19 impact on
Financial statements
01
01
02
04
07
08
10
14
16
18
20
21
26
29
33
43
46
global markets, particularly affecting the final month of the
year, declined by 15% to £2.8 billion (2019: £3.3 billion).
(cid:1) Non-broking income as a percentage of total income increased
to 74.3% (2019: 71.6%).
(cid:1) The pandemic headwinds of lower market levels and lower
interest rates are now negatively impacting income and the
underlying mix.
(cid:1) No final dividend proposed (2019: 0.33 pence) in view
of the pandemic headwinds.
(cid:1) Liquid resources remain strong and we look forward with
confidence to continuing to implement strategic priorities
including ongoing focus on cost control.
*
Fully explained in the Chairman’s statement on pages 4 to 6.
47
54
Independent auditor’s report
Consolidated income statement
Consolidated statement of
comprehensive income
55
Consolidated statement of financial position 56
Consolidated statement of cash flows
57
Consolidated statement of changes in equity 58
59
Notes to the accounts
91
Company balance sheet
92
Company statement of changes in equity
93
Notes to the Company accounts
102
Notice of Annual General Meeting
109
Form of proxy
111
Officers and professional advisers
Walker Crips Group plc - Annual Report and Accounts 2020
02
At a glance
A diversified financial
services group
The Walker Crips Group offers investment management,
wealth management and pensions administration services,
and financial regulation software.
Our model
Our people
The Walker Crips Group operates within the financial services industry
and specialises in providing a range of financial services and financial
products to our customers. Our core business is the provision of investment
management, wealth management, pensions advice, collectives model
portfolios and structured investments. Our second prong is the alternative
investment offering and the third is the provision of technology services.
We believe that, through this three-pronged approach, the Group is
developing a balanced and diversified revenue stream.
(cid:75) Find out more on pages 07 to 09
Our loyal and highly-engaged workforce recognise and embrace the
Group’s ambitions to grow with clients and innovate through technology.
We reward our employees and self-employed associates appropriately,
encouraging individual development and good customer outcomes while
empowering employees to serve clients and realise their potential.
We continue to seek out likeminded individuals to join our cause.
Our diverse business model and culture, both enhanced by technology,
make the Group an exciting place in which to work, develop and grow.
Our culture
Walker Crips started advising clients and dealing in securities in 1914.
We uphold the longstanding traditional values of honesty and integrity,
and we seek to serve our stakeholders: our shareholders, our clients, and
our staff. And we strive to give our customers a fair deal, and to pursue
good customer outcomes.
We are a technology driven financial services company. With our
technology core competency, we strive to innovate, and build systems
that will primarily serve our Investment Managers, our Advisers, our staff,
and our clients. Latterly, through our Software as a Service division, we also
deploy proprietary technology to our business partners.
Our Group
Investment Management
Our purpose is to make investment rewarding
Private Client Department
Our London and York-based Private Client
Department (“PCD”) teams shape our
investment strategy guidelines, providing
both Model Portfolio Services and Bespoke
Discretionary Services to our client base.
Investment Management
Our eclectic collection of professional
Investment Managers and advisers provide
clients with investment expertise and retain
meaningful relationships built on Walker Crips’
106 years of experience. Our collectives model
portfolio business continues to perform steadily
for our clients.
Alternative Investments
Our Alternative Investment solutions provide
innovative services and products for specific
clientele. Our (Tier 1) Investor Visa Programme
serves high net worth individuals as they invest
in the UK, our international equity arbitrage desk
trades on arbitrage opportunities, and our Short-
Term Lending associate manages large direct
mandates from institutional investors lending
into the property sector.
Structured Investments
Specialist products offered by Walker Crips
Structured Investments provide carefully
considered investment opportunities to investors
through professional financial intermediaries.
Our Structured Investment plans are designed to
complement traditional investment strategies,
offering alternative exposure to a wide range of
markets and counterparties.
Wealth Management
Preserving and nurturing client wealth
Advisory
Our Wealth Management team delivers an
individualised approach to financial planning.
As focused independent financial advisers,
Walker Crips Wealth Management provide
guidance on an extensive range of financial
concerns such as life assurance, pre-retirement
planning, at-retirement advice, savings plans,
tax efficient management of investments and
estate planning.
Walker Crips Group plc - Annual Report and Accounts 2020
Strategic report
03
Governance
“As presaged in my commentary
last year, this is our first Annual
Report since the revised UK
Corporate Governance Code
issued by the Financial Reporting
Council (“FRC”) in July 2018 (“the
new Code”) has applied to the
Company and, consequently,
the first occasion for us to
report on how we have complied
with the updated principles in the
new Code (which is available to
view at www.frc.org.uk).”
(cid:75) Find out more on
page 20
Our offices
Walker Crips operates 13 offices
throughout the UK, headed and
staffed by dedicated individuals.
Head office
Branch
Romford (Finance
and Operations)
13
Offices
(cid:1) London (head office)
(cid:1) Birmingham
(cid:1) Bristol
(cid:1) Inverness
(cid:1) Lincoln
(cid:1) Newbury
(cid:1) Northampton
(cid:1) Norwich
(cid:1) Romford
(cid:1) Swansea
(cid:1) Truro
(cid:1) Wymondham
(cid:1) York
Serving clients to better care for their futures
Engineering out complexities
EnOC Technologies
Pensions
Through Self-Invested Personal Pensions
(“SIPP”) and Small Self-Administered Schemes
(“SSAS”), our pensions administration team
assists clients in efficiently exercising control
over their SIPP pension fund investments
and also provides company directors the
infrastructure using SSAS to grow pension
funds for their retirement.
Our Software as a Service division (SaaS)
provides cloud-based regulatory software
to financial services firms. EnOC’s aim is to
close the technology gap between those
who can afford large systems, and those
who cannot, between those who can build
their own systems, and those who do not
have the resources to do so. The EnOC
Pro Platform (www.enoc.pro) will allow for
swift scalability with no expenditure on
infrastructure; and our flagship service,
the SM&CR tool, is an easy-to-use solution
for the Senior Managers & Certification
Regime (“SM&CR”). Our pricing model is
on a subscription basis, without minimum
amounts and without long-term lock-in
contracts, accessible to even the smallest
of companies and scalable to the largest.
Key stats
106 years
Years looking
after our clients
31,485 clients
Clients across the UK
(2019: 30,999)
£31.4m
Total revenue for 2020
(2019: £30.5m)
£4.3bn
Total Assets Under Management
and Administration
(2019: £5.0bn)
Walker Crips Group plc - Annual Report and Accounts 2020
04
Chairman’s statement
Confident in our
continued success
An increase in year-on-year profits for
the Group has been overshadowed by
the tragic and profound impact of the
coronavirus pandemic just before the
year end, forcing the precautionary
suspension of the final dividend.
Nevertheless, the Group’s emphasis
on technology facilitated a rapid and
effective response to the practical
challenges posed by the lockdown.
Overview of 2019/2020
Against a backdrop of largely buoyant market
conditions, most of the Group’s businesses
performed well until the very last month of last
year, and I am pleased to report an increase in
full year profit before tax of £474,000, or 97%
on the prior year. However, the sudden onset
of the pandemic and the terrible effects it has
wrought on the economy and capital markets
has marred what was a reasonably good year
for the Group. With Management’s focus now
firmly on the future, the Group is repositioning
itself for the changes and challenges ahead.
Operating profit for the year of £1.092 million
(2019: £402,000) and profit before tax for
the year of £963,000 (2019: £489,000) both
benefited from the recovery of a longstanding
disputed insurance claim of £209,000 and from
the reassessment of deferred cash consideration
due on acquired client relations of £166,000,
both of which have been reported as exceptional
items. Adjusting for exceptional items, earnings
growth remains strong, with operating profit
increasing by 65% to £717,000 (2019: £434,000)
and profit before tax increasing by 13% to
£588,000 (2019: £521,000). The reconciliation
of these IFRS and alternative performance
measures (“APMs”) can be found in the tables
on page 08.
The reported results this year are also impacted
by the adoption of IFRS 16 ‘Leases’ with effect
from 1 April 2019 and because the modified
retrospective approach is used they are not
comparable to those reported in the prior
year under the previous accounting standard
IAS 17. To provide a meaningful comparison
we have presented an EBITDA based APM,
which reports operating profits before exceptional
items adjusted for depreciation, amortisation
and lease charges for both 2019 and 2020 on
an IAS 17 consistent basis.
On this basis the Group’s EBITDA for the year
increased 21% to £1.93m (2019: £1.59m).
The reconciliations of EBITDA to operating profit
before exceptional items for 2020 and 2019 are
presented on page 8. In the year to 31 March 2022
EBITDA figures will be presented on an IFRS 16
consistent basis.
The encouraging momentum that I reported
in the first half of the year continued in the
second half. Although we experienced a decline
in broking commission for the year of £572,000,
these revenue losses were more than offset by an
increase of £1.35 million in management fees, as
clients continue to switch from commission-based
to fixed fee tariffs.
Total non-broking income, which benefited
from the full-year impact of the rollout of new
tariffs on management fees, the impact of higher
interest rates on managed client deposits, a
continued strong performance in our arbitrage
trading book, notwithstanding a mark to market
loss on year-end positions reflecting market
declines in March 2020, improved Walker Crips
Structured Investments (“WCSI”) results, offset
by lower revenues from short-term lending and
net investment revenue, comprised 74.3% of
Group revenues versus 71.6% in the previous
year. It should be noted, however, that the full
year’s benefit of increased interest margins
on managed deposits arising from previous
base rate rises will be more than reversed
by the two reductions to base rates in March
this year, taking them to historic lows as part
of the Bank of England’s extraordinary response
to the pandemic.
Total Assets Under Management and
Administration (“AUMA”) averaged £5.0 billion
during the year, compared with £5.1 billion for
the previous year, helped by positive market
performance and strong growth from the private
client teams, offset by the loss of a team of
associates (with approximately £240 million
in assets) at the start of the year.
Walker Crips Group plc - Annual Report and Accounts 2020
Strategic report
05
We have navigated the COVID-19
reality by implementing the Group’s
business continuity plan, to protect
the Group’s operations, its clients,
its shareholders and its staff. The
Board of Directors has invested in
technology and infrastructure to
enable the vast majority of staff
to work from home to abide by
government guidelines. Operations
have been smooth and unaffected
by the disruptions thanks to the
Group’s state-of-the-art systems.
Without doubt, the COVID-19 pandemic
caused significant disruption to the financial
services industry and the true financial
impact on the UK and global economy
and, in particular, on the Group is as yet an
unknown. However, it is encouraging to see
the regulated financial services sector has
so far demonstrated good governance,
control, and risk management and mitigation
procedures to limit the overall impact.
It is also encouraging to see the majority
of our clients view this short-term disruption
as an opportunity.
As part of the post-COVID-19 recovery,
the Group plans to implement future cash
generating strategies such as further
expansion of the Group’s Software as a
Service offering and an Investment Manager
recruitment drive. These strategies are now
more important than ever, and the Board
sees revenue-generating expansion as the
best path to recovery and the Group’s future
growth beyond these exceptional times.
As the UK emerges from the lockdown,
we look forward to settling into the new
normality in an improving post-COVID-19
economy and environment, with more
streamlined business processes, to give
the Group the best chance possible of
a quick bounce back.
AUMA were impacted by the collapse in equity
markets in March and ended the year down
14% at £4.3 billion, but have since recovered
along with markets to £4.8 billion by 30 June
2020. Discretionary and Advisory Assets Under
Management were similarly impacted by the
global market decline, ending the year at
£2.8 billion (31 March 2019: £3.3 billion).
I am pleased that the Group
has been able to adjust so well
to the rapid changes in working
practices occurring as a result of
the pandemic and, in the light of
the pandemic, the Group’s focus
on technology has been more
than justified.
Commission paid to self-employed associates
increased by 1.0% during the year, significantly
lower than the 3% growth in revenues, reflecting
the changing mix of revenues towards
other non-sharing parts of the business and
resulting in an improvement in the gross margin
to £21.6 million (31 March 2019: £20.8 million).
Administrative expenses rose by £0.6 million
(2.7%) during the year, significantly lower
than the 3% growth in revenues and
resulting in an improvement in operating profit
margin excluding exceptional items to 2.3%
(31 March 2019: 1.4%). Management focus
on the cost base is paying off, with the growth
in administrative expenses largely accounted
for by an increase in regulatory fees and levies
of £0.3 million, effectively doubling from
the previous year. Following the onset of the
pandemic, Management implemented an
immediate cost-reduction initiative, including
the acceptance of a temporary pay cut by all
Group and subsidiary Directors. Further actions
are being discussed and readied, subject to
developments in market conditions.
At a divisional level, Investment Management
saw a 7.5% increase in fees and other revenues
to £21.5 million (2019: £20 million), offset by
the fall in commission income noted above such
that overall revenues of the division increased by
2.4% year on year to £29.6 million (2019: £28.9
million). There were notably strong performances
by the London and York-based private client
teams. The impact of the pandemic on markets,
and indirectly on fees, has translated into current
fee income falling broadly in line with industry
benchmarks and Management’s expectations.
Encouragingly, commissions have, so far,
been more resilient than originally budgeted.
Management is not budgeting for a rise in base
rates in the foreseeable future and the recent cuts
in base rates are projected to result in a decline in
annual revenues of £1.5 million compared to the
year ended 31 March 2020.
The York-based Wealth Management division
has seen an overall revenue increase of £0.09
million on the previous year. During the year,
two teams within the York division transferred
to the Investment Management division to
gain better operational efficiencies. The Wealth
Management team took full ownership of
the previous joint venture with a local firm of
accountants, JWP Creers, securing over £70,000
of recurring annual revenue and Assets Under
Management of approximately £11 million on
1 April 2019 for a cash consideration of £47,000.
JWP Creers Wealth Management Limited has
changed its name to Walker Crips Ventures
Limited and the trade and operations of the
company were integrated into Walker Crips
Wealth Management Limited.
The Structured Investments team (“WCSI”)
delivered improved revenue in the second half
of the year, following sluggish volumes in the
first half. Market conditions towards the end of
the year were favourable, with rising volatility
prompting an improvement in the product terms
available to clients. For the year as a whole,
revenues, despite some mark to market losses
reported at year end (majority of which have
since been recovered) were up 27.6% to
£1.85 million (2019: £1.45 million). WCSI added
structured deposits to its product line-up, though
market conditions constrained the issuance in
the short term and this was not launched in the
year. WCSI has continued to build its relationships
with leading credit institutions, adding new
issuers during the year and further diversifying
potential credit risk.
The Group’s balance sheet remains stable, with
reported net assets of £22,644,000, up £923,000
from the prior year, including a £601,000 increase
due to the adoption of IFRS 16 on 1 April 2019
(see note 35), profit for the year and the payment
of dividends of £396,000.
The Group’s cash generated by operations
during the year was £3.5 million compared to
an operating cash out-flow of £0.6 million in
the prior year. Adjusting for exceptional items,
the anomalies in the timing of working capital
payments around reporting dates and the
2020 lease liability and interest payments
that are now reported as financing activities
following the adoption of IFRS 16 ‘Leases’
(see above), underlying operating cash generated
improved by 18.6% to £1.85 million (2019: £1.56
million). Reconciliations of the underlying cash
generated APMs to operating cash per the cash
flow statement are presented on page 8. After
cash deployed in investing activities and dividends
paid in the year, cash and cash equivalents
increased a healthy £1.820 million to £8.609
million at year end.
Walker Crips Group plc - Annual Report and Accounts 2020
06
Chairman’s statement (continued)
The continuing negative impact of the pandemic
post year end, both in the form of market
declines and reduced interest margins on
managed deposits noted above, has prompted
a renewed management focus on forecasting
cash flows. The results of these forecasts have
been integrated into the Group’s renewed
corporate strategy, its dividend policy and cost
management initiatives. The balance sheet, cash
generation and liquidity enable us to weather
these market impacts and continue to invest
in our strategic initiatives, as further evidenced
by the stress testing performed in support of
our viability statement (see page 25) and going
concern assessment (see page 59). However, in
view of the present uncertainty and as explained
further below, the Board considers it prudent to
cease the payment of dividends at this time.
Strategy
I am pleased that the Group has been able to
adjust so well to the rapid changes in working
practices occurring as a result of the pandemic
and, in the light of the pandemic, the Group’s
focus on technology has been more than
justified. However, it is still incumbent on
Management to take the Group’s technology
services to the next level, and this is an even
greater focus in the Group’s strategy.
EnOC, our technology subsidiary, was incorporated
in 2018 to deliver our “Software as a Service”
(SaaS) business. EnOC aims to close the
technology gap by engineering out complexities.
During the year, EnOC Pro Platform (www.enoc.
pro) was launched; a cloud service that helps
industry practitioners address the administration
of the new SM&CR regulatory regime. This
service seeks to disrupt the established
regulation technology space by providing a
comprehensive and user-friendly solution on a
low-cost subscription basis. The SaaS business is
now reported as a separate business segment,
though it is too early to report on the traction
and support the product will receive, as financial
services businesses look to streamline and
improve their compliance solutions.
Walker Crips Investment Management (WCIM)
has renewed its corporate strategy with an
emphasis on growing the core investment
management business by organic growth
and attracting new advisers, which is entirely
realistic and appropriate for the times. I note
that the strategy also makes the most of the
talents of its new management team (which
I discuss below).
In line with the strategy of continued investment
in technology, a new back office system was
implemented during the year for Walker Crips
Wealth Management that will streamline
business processes and improve client
communication. The pension management
team, following a full review of SIPP fee tariffs,
now has a fully transparent and competitive
product supported by robust back office systems,
leaving us ideally placed to expand our client
base. The SSAS client book remains consistent
and we expect growth in this market through our
introducers and potential acquisition of smaller
competitors.
Walker Crips Structured Investments recruited
senior staff from major competitors, and built
new relationships with product-providers in
preparation for increased activity. These plans
were delayed temporarily by the very extreme
market conditions for structured products, both
in terms of price levels and increased volatility,
which impacted on the ability of providers to
create products. However, we expect WCSI to
resume a growth path if calmer market conditions
continue to prevail.
Dividend
During the year, the Board approved an interim
dividend of 0.60 pence per share (2019: 0.58
pence per share) payable on 20 December 2019
to those shareholders on the register at the close
of business on 6 December 2019.
With the sudden onset of the coronavirus
pandemic, this year we witnessed a once-in-a-
century event and its terrifying personal and
economic consequences. While the effect on
capital markets has somewhat lessened of late,
the impact of the reduction in base rates creates
increased uncertainties for the Group as it lies
beyond Management’s control. Under these
conditions, with the likelihood of the Group
reporting losses in the short term, Management
has decided to take a conservative approach
to expenses and cash flows for the foreseeable
future. This is absolutely a time for shoring up
the Group’s finances and for resizing costs and
dividend distributions to the expected decline
in revenues and profitability. I am pleased to
be able to say that, leading by example, the
Board and subsidiary Directors have all accepted
voluntary reductions in pay on a temporary basis.
My deepest sympathies go out to those staff
who have lost relatives, friends and loved ones.
Given the extraordinary impact of the pandemic,
the Board has concluded that it would be
inappropriate to recommend a full-year dividend.
The Board will review the Group’s dividend policy
when there is greater clarity about the future
impact of the pandemic.
Our people, culture and governance
By setting the right example at the top,
the Board has prioritised good culture and
conduct across all who represent the Group.
We continue to encourage professionalism and
the right behaviours in all we do. The end result
is a unified emphasis on achieving the right
outcomes for clients. The new Senior Managers &
Certification Regime (“SM&CR”) came into force
on 9 December 2019. We have embraced and
adopted it as part of our culture of accountability
rather than treating it as another regulatory
burden. Indeed, we have already built our own
SM&CR system within our new company, EnOC
Technologies Limited, and have expanded it to
include not just the regulatory requirements,
Walker Crips Group plc - Annual Report and Accounts 2020
but also our internal policies, governance and
controls. Corporate governance and stewardship
as reported against the UK Corporate Governance
regime provides assurance to external parties
who rely on sound management of the business
and its risks.
I would like to thank all my fellow Directors,
investment managers and advisers and members
of staff for their continued commitment to
the highest levels of client service, support and
diligence during the period. Sanath Dandeniya’s
promotion to Group Finance Director has
introduced fresh impetus and innovation in
our finance function and operations. The
appointments of Nick Hansen*, as CEO of Walker
Crips Investment Management, and Chris
Darbyshire, as Chief Investment Officer, have
reinvigorated our main operating subsidiary’s
senior Management and service offerings.
I would like to take this opportunity to thank
Rodney FitzGerald again for his outstanding and
selfless contribution to the Group, both as Group
Finance Director (1999-2019) and Group CEO
(2007-2017), and to wish him well in his retirement.
This will be my final Annual Report since,
as announced at last year’s Annual General
Meeting, I will be stepping down as Chairman
at the forthcoming AGM, having served your
company in this role for the past 13 years.
I have, however, agreed to the Board’s request
to continue as a Non-Executive Director for up
to 12 months, and Martin Wright will take on the
role of Chairman. I would like to pay tribute now
to all our loyal employees and Directors for the
support they have given me during some very
difficult times such as the 2008 financial crisis and
the current COVID-19 pandemic. Walker Crips has
been in existence for well over 100 years and I am
confident we will see the present crisis through and
continue in our prime goal of offering excellent
service to all our clients.
Outlook
I cannot remember a more difficult time
for the Group or, indeed, the investment
Management industry. The improved results
for the year were an important indicator that
the Group was heading in the right direction
before the pandemic hit, and I am pleased that
Management has risen to the current challenge,
and is already taking the difficult decisions that
will support the Group’s continued progress,
its staff and clients.
Liquid resources remain strong despite the
impact of the pandemic and we look forward
with confidence to continuing to implement
strategic priorities.
D. M. Gelber
Chairman
31 July 2020
* Awaiting approval from the FCA.
Strategic report
07
Our business and strategy
A technology driven
financial services company
The Walker Crips Group operates within the financial services
industry and specialises in providing a range of financial
services and financial products to our customers.
The strategy
The model
Walker Crips is first and foremost
a financial services company. We
leverage on our technological
competence to drive our three-
pronged strategy, of core, alternative
and technology services, to position
the Walker Crips Group as a
technology driven financial services
company.
(cid:1) We aim to achieve £10 billion
AUMA by 2026;
(cid:1) We will further develop our Model
Portfolio service offering, as a
complementary service to our
Discretionary Bespoke Portfolio
service;
(cid:1) We will maintain our flexible
approach to investment
management and advice,
offering a broad range of services
that facilitates different clients’
aims and objectives; and
(cid:1) We will continue to hire quality
Investment Managers, Wealth
and Pension Advisers who have
an existing client base.
Our strategy is expanded upon and described
in greater detail on the following pages.
(cid:75) Find out more on pages 08 to 09
To see more of our key performance indicators.
(cid:75) Find out more on pages 14 to 15
Our core business is the provision of investment management, wealth
management, pensions advice, collectives model portfolio and structured
investments. Our second prong is the alternative investment offering and the
third is the provision of technology services. We believe that in the three-pronged
approach, the Group is developing a balanced and diversified revenue stream.
Core Investment
Management &
Advisory Business
Rooted in tradition.
Growing through
innovation.
Software as a
Service (SaaS)
Alternative
Investments
The people
The culture
Walker Crips started advising clients and
dealing in securities in 1914. We uphold the
longstanding traditional values of honesty and
integrity, and we seek to serve our stakeholders:
our shareholders, our clients, and our staff. And
we strive to give our customers a fair deal, and
to pursue good customer outcomes.
Our workforce comprises highly experienced and
qualified specialists in investment management,
financial advice, and pensions advice, as well as
a cohort of new generation members who will
provide continuity into the future, all with a clear
focus on customer engagement and customer
outcomes. Our cadre of dedicated, loyal and
experienced people across our business are
focused on serving our clients.
The Management are proud and privileged to be
working alongside all the members of the Walker
Crips family, and are grateful for all their hard
work and their dedication to our clients and to
the Group.
Walker Crips Group plc - Annual Report and Accounts 2020
08
CEO’s statement
Focusing on our customers
for 106 years
Reconciliation of profit before tax to profit before tax
and exceptional items
Profit before tax
Exceptional items (note 10)
Profit before tax and
exceptional items
2020
£’000
963
(375)
588
2019
£’000
489
32
521
Reconciliation of operating profit to operating profit
before exceptional items
Operating profit
Exceptional items (note 10)
Operating profit before tax
and exceptional items
IAS 17 consistent EBITDA
Operating profit before tax
and exceptional items
Amortisation /
depreciation (note 32)
RoUA depreciation charge*
(note 32)
IAS 17 operating lease
charge (note 35)
2020
£’000
1,092
(375)
717
2019
£’000
402
32
434
2020
£’000
2019
£’000
717
1,199
867
(855)
434
1,151
–
–
IAS 17 consistent EBITDA
1,928
1,585
* Right-of-use assets.
Underlying cash generated by the Group
Net cash inflow / (outflow)
from operations
Working capital (note 32)
Lease liability payments
under IFRS16
Exceptional items
(note 10)
Underlying cash
generated in the period
2020
£’000
3,483
(160)
(1,101)
(375)
2019
£’000
(631)
2,163
–
32
1,847
1,564
Our three-pronged strategy continues to
give direction to the Group whilst the world
and the financial markets look to recover
from the COVID-19 pandemic.
Reflection
We are pleased with the results for the year
ending 31 March 2020, but first, I wish to
address the tragic events caused by the
COVID-19 pandemic. Some of us have lost
family and friends to the virus; to those people
we send our heartfelt condolences, recognising
that in all the analyses of financial impact,
above all it is the human cost that is hardest
to bear. In February, our CIO was already
identifying the epidemic (as it was then) as
a potential game-changer for markets and
businesses in general. We then activated our
business continuity plan on 12 March, ahead of
the government’s lockdown of 23 March, giving
us a head-start in winding down office-based
activities and implementing the working from
home (WFH) regime. The adaptability of our
people and the readiness of our technology
enabled our transition to WFH nearly seamlessly.
I am proud of how our members responded to
this crisis, how we kept the Company functioning
normally, and how we continued to engage with
our clients and ensuring that they did not suffer
any interruption in quality of service during a
potentially chaotic time. Everyone played their
part, demonstrated patience and tenacity, and
got on with the business at hand.
While I am delighted with the way our members
responded to the challenge, we cannot avoid
the fact that our financial performance is a
function of events in capital markets. Absent a
significant improvement in market conditions,
our revenues will be materially impacted for the
current accounting year ending 31 March 2021.
Management has taken swift action to resize
our cost-base, to help mitigate the impact on
earnings of the forecast decline in revenues.
Walker Crips Group plc - Annual Report and Accounts 2020
The Directors of the Group and subsidiary
boards agreed to a 20% temporary reduction
in salary in light of market conditions.
Management is closely monitoring costs, and
will take proportionate action, while continuing
to pursue our strategy to grow the business.
The year ahead
Firstly, I wish to thank David Gelber for his
decade-long service to Walker Crips as Group
Chairman. David has led us with wise counsel
and patient advice. His dedication to the
Company, and tirelessly giving of his time
and support to the executive board, is greatly
valued. Whilst it was his intention to retire at the
forthcoming AGM, we are grateful that he has
agreed to stay on as Non-Executive Director for
up to 12 months. I also wish to thank, in advance,
Martin Wright who will be taking over as Group
Chairman immediately after the AGM. Martin
knows the Company well, and we look forward
to his guidance and counsel as we navigate the
opportunities and the challenges ahead.
Turning now to the Company’s performance
over the past year, and our plans for the future.
Investment Management (WCIM) has had
a good year but it was overshadowed by the
challenges and threats posed by COVID-19.
Nevertheless, the changes made by the new
WCIM leadership team of Nick Hansen, CEO, and
Chris Darbyshire, CIO, have put WCIM on a much
better footing. The combining and enlarging
of the private client department, and the focus
on the associate teams will yield positive results
over the next twelve months. Chris has brought
a wealth of expertise across different asset
classes and provided clear investment strategies.
I am particularly impressed with his market
insights, especially as the COVID-19 crisis evolved.
I know that the business will thrive under his
investment acumen. Nick has bolstered WCIM’s
commercial focus on organic revenue growth, a
strategy aimed at ensuring WCIM is financially
self-sustaining, and we remain committed to
growing our business through attracting the
highest quality investment advisers and network
Strategic report
09
associates and providing them with systems and
services that help reduce the admin burden and
allow them to focus on clients.
The Wealth Management (WCWM) division has
continued to grow, even during these challenging
times. The consistent and uniform process
implemented by Dominic Martin over two years
ago is starting to bear fruit and the fact that it is
scalable, makes me optimistic for what WCWM
will achieve over the next twelve months.
The Pensions team is also weathering the
COVID-19 storm, ably led by Wendy Eastwood,
ensuring that our SSAS and SIPP clients are well
supported and kept in touch with regular updates.
Our collectives team (BPAM) continues to add new
clients and new asset inflows. Geoff Wright and
his team run a tight ship, and they are passionately
focused on good customer outcomes.
I wish to thank the Non-Executive
Directors for keeping the
Executives on the straight and
narrow, Sanath Dandeniya for
holding the purse strings
and for being my sounding board,
and the Directors for
the leadership of their teams.
Historically, our approach toward diversification
has served the Group well. International Equity
Arbitrage generated record profits, Tier 1 Investor
Visa continues its 100% success rate for its clients
since 2013, and Structured Investments is always
in demand by the IFA community. We will seek
out good opportunities to add to this growing list
of successful diversification, to add to the breadth
of our revenue streams.
3-pronged strategy for growth
1. Core Investment Management &
Advisory Business
(cid:1) This is our largest revenue generating
division, providing clients with investment,
wealth, pensions, collectives advice and the
creation of structured investments for clients,
IFAs and counterparties;
(cid:1) We continue to invest significantly in our core
business, always enhancing our systems and
processes to deliver efficiencies, cost savings
and improved services to our Investment
Managers via our in-house developed client
management system thereby enabling them to
provide high quality tailored service to clients;
(cid:1) The profitability for FY20/21 is expected to
be impacted due to lower market volumes
and sustained low, or zero, interest rates;
(cid:1) We continue to grow AUM&A, the
major driver of revenue in the form of
recurring fees;
(cid:1) We have been increasing the creation and
deployment of automated processes, reducing
risk and increasing scalability and efficiency;
(cid:1) We continue to be focused on driving
down non-variable costs and we endeavour
to operate on an OpEx (Operational
Expenditure) rather than a CapEx
(Capital Expenditure) basis;
(cid:1) Our York office has concluded the migration
of our back office systems to a cloud
platform and we have already started
seeing efficiencies which will translate to
improvement in revenues;
(cid:1) Our collectives investment management
team maintained their performance levels
while facing compression of margin pressures;
(cid:1) We continue to look for good quality
investment and wealth managers, either
individually or as teams; and
(cid:1) The business is in strong financial standing,
and we are able to weather the economic
crisis arising from the COVID-19 pandemic.
2. Alternative Investments
(cid:1) This subset of our core investment
management division is where we
create innovative and higher margin
new business lines;
(cid:1) Our Tier 1 (Investor) Visa investment
business continues to perform well,
attracting ultra high net worth individuals
from the Far East to invest in the UK. Our
assessment process is vigorous and thorough
and has provided assurance to the UK Home
Office with 100% success rate since 2013;
(cid:1) Our Short-Term Lending associate increased
its investment mandate from £44 million to
£70 million; and
(cid:1) Our international equity arbitrage business
generates significant returns on our modest
principal trading book.
3. Software as a Service (SaaS)
(cid:1) The EnOC Pro Platform is live and its Senior
Managers & Certification Regime (SM&CR)
tool is being used by our own group of
companies and also by a number of external
companies;
(cid:1) A number of SaaS systems are currently
being developed and the next to be deployed
will be an HR system, which is a logical
extension of the SM&CR tool;
(cid:1) The objective of EnOC is to provide enterprise
level systems to companies of all sizes, from
the very large to the very small. Our pricing
model is on a subscription basis without
minimum amounts and without long-term
lock-in contracts, accessible to even the
smallest of companies and scalable to the
largest. EnOC’s ethos is to close the technology
gap between those who can afford large
systems, and those who cannot, between
those who can build their own systems, and
those who do not have the resources to do so;
removing the barriers to entry;
(cid:1) EnOC was born in the cloud and will remain
a cloud service, for all the benefits it brings
to the service and to our partners; and
(cid:1) We must and we will Create > Innovate >
Rejuvenate > Eliminate > Repeat.
Conclusion
Our core objectives of shareholder value,
customer service, operational effectiveness and
efficiency, remain; and only by emphasising
and investing in technology as the delivery
mechanism will our core objectives be achieved.
COVID-19 has made it startlingly clear how
much we depend on technology.
We have been fortunate that we have been
building our own technology for nearly 20 years,
and that we have been early adopters of cloud-
based technology. We transitioned to an online
workforce overnight with maximum operational
resilience and minimum, or no, risk to clients.
The world has changed significantly over the
past several months and we have shown that
we are able to adapt and change along with it.
Dependence on technology will only increase.
We will prioritise and increase our investment
into the development of our own technology,
continue to innovate and create regulatory and
operational technologies for ourselves, for our
partners and for the industry via the EnOC Pro
Platform www.enoc.pro.
I wish to thank the Non-Executive Directors
for keeping the Executives on the straight and
narrow, Sanath Dandeniya for holding the purse
strings and for being my sounding board, and
the Directors for the leadership of their teams.
And finally, I echo the Chairman’s words, that we
are proud of our Investment Managers, Advisers
and our staff, for their resilience, for their can-do
attitude, but most of all for their unwavering
focus on ensuring that our clients continue to be
well looked after.
Charity
We are pleased to be supporting Twining
Enterprise, the mental health charity. Twining
provides employment support to people with
mental health conditions, which is a great need
at the best of times, but during the COVID-19
pandemic, the demand from people who
need support from Twining has increased
exponentially. Twining provides practical advice
and coaching about finding work, and also
supporting people who are in work but are
facing challenges. They understand that people
with mental health problems face unique work
barriers, preventing them from getting into, and
staying at, work. Twining believes that with the
right support, these barriers can be overcome
and people can enjoy a healthy working life.
The Group, our Investment Managers, Advisers
and staff, support Twining financially, but we
are also very pleased to be able to support
them technologically. Twining is doing a very
good thing, helping people in need, and if
you are also able to support them, please
visit www.twiningenterprise.org.uk.
S. K. W. Lam
Chief Executive Officer
31 July 2020
Walker Crips Group plc - Annual Report and Accounts 2020
10
Strategy in action
Driving our business
Investment Management strategy
Reflection on last year
The year just ended was characterised by asset valuations drifting
higher despite already-weak economic growth being threatened by
protectionist political policies. On one hand, the US-China trade
stand-off worried investors who have become used to decades of
economic growth facilitated by increasing global trade and the ability
of companies to source labour from anywhere in the world. On the other,
the continued heavy involvement of central banks in capital markets
comforts investors with the promise of support for asset prices. The
arrival of the pandemic has brought us closer to the culmination of this
policy, with central banks now unified with governments in providing
simultaneous monetary and fiscal stimulus. Markets have responded
positively again, despite enormous uncertainty about the state of the
economy once it emerges from global lockdowns. Such is the scope
and rapidity of this crisis, however, that investors will soon have to
reckon with whether capital markets can maintain stability as central
banks and governments withdraw their support.
Pandemic headlines have displaced Brexit headlines in the UK, but the
path ahead for the British economy in its relations with the EU is anything
but clear. Absent a U-turn by the government, the prospects for a close
trading relationship appear to have diminished and, overwhelmed by
the pandemic, little progress has been made in negotiations towards
a trade agreement. But this matters less than it did: the significance
of Brexit has been somewhat usurped by the pandemic, which has
precipitated extraordinary political intervention in economies all over the
world. Globalisation has been forced into a full retreat and governments
everywhere have already committed to shoring up any weakness with
fiscal support.
New developments in the sector
The changes wrought by the pandemic have forced investors to reconsider
risk on a sector-by-sector and company-by-company basis, and this
plays well to our strengths in bottom-up equity analysis. In response to
market volatility, we increased the activity of our investment committees,
including our Patricians and Senate forums, and we were able to share
experience and ideas more fluidly as a result. The health of many
traditionally income-yielding industry sectors has been threatened,
and dividend cuts across the UK corporate sector will force some
reconsideration of income-led client mandates in favour of a total return
approach; we are communicating with clients on this issue.
Chris Darbyshire
Chief Investment Officer,
Walker Crips Investment Management Limited
Walker Crips Group plc - Annual Report and Accounts 2020
Strategic report
11
Wealth Management strategy
Reflection on last year
Last year was one of team re-organisation and operations systems
migration. A team was re-allocated to Investment Management,
along with its revenues, as its investment methodology was more
in line with Investment Management. The new operations system
has also been implemented and staff are getting more familiar with
it and efficiencies are already being felt around the business. This new
system is also cloud-based, which is timely because staff and advisers
could still work from home during the COVID-19 lockdown.
The number of new clients being onboarded has been encouraging,
AUM and recurring fees has increased by 20% and post 31 March 2020,
the trend has continued despite the pandemic. The AUM invested in
the Walker Crips Alpha r2 model portfolio has also performed well.
There have been significant inflows and the AUM has exceeded
£90 million, a rise of 12.6%.
Thoughts for the year ahead
The Management team has been engaging with the Group Executive
Board to accelerate the division’s growth both organically and by targeted
acquisitions. We expect this to yield results over the next twelve months.
We will also continue to actively promote our service offerings both within
the Group and externally.
Pensions strategy
Reflection on last year
Last year, we revised our SSAS and SIPP fee tariff, simplifying it by making
it clearer and ensuring that it remains transparent to our clients. We have
also leveraged on the Group’s technology by providing online Portal
access to our SSAS and SIPP clients, improving efficiencies and client
engagement. Recurring revenues have remained consistent and AUM
was £333 million.
We pride ourselves as being reliable pension providers and therefore, we
will continue to assist our clients in consolidating and protecting their
assets through these extraordinary times. COVID-19 has had an impact on
some of our clients and since 23 March, we have been helping them with
rent and loan repayment negotiations.
New opportunities in the sector
The first SSASs were set up around the end of the 1970s. Despite their age,
SSASs are still an innovative product, especially suited for entrepreneurs,
and can offer substantial tax flexibilities and benefits. The ability to pool
members’ funds could mean a SSAS can contemplate larger acquisitions
like commercial property belonging to the sponsoring employer. They can
also offer a loan facility back to the sponsoring employer, which may be
invaluable in managing cash flow. The Management team will be pushing
SSAS initiatives over the next twelve months.
Dominic Martin
Managing Director,
Walker Crips Wealth Management Limited
Wendy Eastwood
Managing Director,
Ebor Trustees Limited
Walker Crips Group plc - Annual Report and Accounts 2020
12
Strategy in action (continued)
Barker Poland Asset Management strategy
Reflection on last year
We have had a strong year. Fee turnover to 31 March 2020 was
£2 million with over 90% of fees are now recurring. We have four advisers,
two of whom are chartered, and a support team of eight. We manage 550
clients with assets under management of £300 million. The vast majority
of our clients are invested in one of our risk adjusted models, managed
using a sophisticated investment dealing and client management
platform, ensuring we maintain a small and efficient back office. We
continue to focus on a combination of financial planning and discretionary
investment management services, as these are the key services demanded
by our clients.
Thoughts for the year ahead
Turning now to the year ending March 2021, we are likely to see some
compression in fees and this will have some impact on profits, not yet
quantifiable so early in the year. In terms of business development, we
have a very competitive and attractive package to offer to clients and
we will be promoting this more actively. We are developing a competitive
adviser structure and a marketing plan, which will require investment, to
grow turnover and profits. The Management team has been engaging with
the Group Executive Board to pursue this aim.
EnOC Technologies Limited strategy
Reflection on last year
Our flagship software, the SM&CR tool, which addresses the Senior
Managers & Certification Regime was deployed and embedded
into the Walker Crips Group in December 2019. The SM&CR tool has
also been adopted by a few external companies and is being used to
comply with their SM&CR obligations. The drive to expand the reach
of www.enoc.pro was progressing well, until the pandemic, and we are
now ready to recommence the business development effort of the
EnOC Pro Platform.
Opportunities in the sector
Having built our solution in the cloud, we can provide clients with setup
within minutes and additional functionality in moments, nullifying their
need for hardware, server space, operating systems, IT support and
maintenance, moving from the Capital Expenditure (“CapEx”) to the
Operational Expenditure (“OpEx”) ‘subscription’ model.
We are also developing and integrating additional tools into the Platform,
enlarging our ecosystem, and expanding our target customer prospects.
EnOC’s mission is to bridge the technology gap, providing enterprise level
systems not just to large businesses but also to the small businesses, at a
low price point of entry, affordable to even the smallest of firms.
Geoff Wright
Managing Director, Barker Poland Asset Management LLP
Sean Lam
Founder & CEO, EnOC Technologies Limited
Walker Crips Group plc - Annual Report and Accounts 2020
13
14
Key performance indicators
Measuring our performance
Performance in 2020 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.
£31.4m
Revenue (million)
(2019: £30.5m)
3% increase in revenue despite political
and market volatility.
.
4
1
3
.
5
0
3
.
5
0
3
£1.09m
Operating profit (million)
(2019: £0.40m)
Increase in Operating profits as the Group
benefits from the full year of new fee tariff
structure and increased trading activity.
+3%
8
1
0
2
9
1
0
2
0
2
0
2
+172.5%
£0.72m
Operating profit before
exceptional items (million)
(2019: £0.43m)
Increase in Operating profits as the Group
benefits from the full year of new fee tariff
structure, increased trading activity and
exceptional items.
1
9
0
.
2
7
0
.
3
4
0
.
68.9%
Gross margin (%)
(2020: £21.6m; 2019: £20.8m)
Year on year improvement in Gross margin
+67.4%
8
1
0
2
9
1
0
2
0
2
0
2
+3.8%
£1.93m
IAS 17 consistent EBITDA (million)
(2019: £1.59m)
IAS 17 consistent EBITDA up 21.4%
to £1.93 million.
8
9
1
.
3
9
1
.
9
5
1
.
£1.85m
Underlying cash generated
(million)
(2019: £1.56m)
Underlying cash generated operations
increased by 18.6% to £1.85 million
9
0
1
.
9
8
0
.
0
4
0
.
8
1
0
2
9
1
0
2
0
2
0
2
.
3
8
6
.
9
8
6
.
2
7
6
8
1
0
2
9
1
0
2
0
2
0
2
9
1
.
5
8
1
.
6
5
1
.
+21.4%
8
1
0
2
9
1
0
2
0
2
0
2
+18.6%
8
1
0
2
9
1
0
2
0
2
0
2
Walker Crips Group plc - Annual Report and Accounts 2020
Strategic report
15
74.3%
Non-broking income proportion
(%)
(2019: 71.6%)
Non-broking income, helped by increased
fees, arbitrage income and interest on
managed deposits, increased to 74.3%
3
.
4
7
.
6
1
7
.
1
4
6
130,509
Transaction volume (number)
(2019: 124,603)
Encouragingly up 5% despite
political and market volatility.
0
8
9
4
3
1
,
9
0
5
0
3
1
,
3
0
6
4
2
1
,
+2.7 percentage points
8
1
0
2
9
1
0
2
0
2
0
2
+4.7%
8
1
0
2
9
1
0
2
0
2
0
2
0.60p
Total dividends (pence per share)
(2019: 0.91p)
The reduction in total dividend payable
reflects the Directors’ decision not to
recommend a final dividend payment
this year.
-34.1%
£2.8bn
Assets Under Management
(2019: £3.3bn)
The Group’s managed client base, whilst
impacted by the COVID-19 pandemic,
remains stable.
7
8
1
.
1
9
0
.
8
1
0
2
9
1
0
2
3
3
.
3
3
.
0
6
0
.
0
2
0
2
8
.
2
£4.3bn
Total assets (AUMA)
(2019: 5.0bn)
Administration
Advisory
Discretionary
1
New revenue generator
(2019: 0)
One revenue generator was hired during the
period in the Structured Investment team.
.
0
5
0
5
7
1
.
0
3
6
1
.
9
3
6
1
.
9
1
0
2
3
.
4
1
4
5
1
.
2
9
.
2
1
.
9
7
4
1
.
0
2
0
2
.
0
5
5
8
6
1
.
2
0
8
1
.
.
4
1
5
1
.
8
1
0
2
4
-15.2%
8
1
0
2
9
1
0
2
0
2
0
2
0
1
8
1
0
2
9
1
0
2
0
2
0
2
Walker Crips Group plc - Annual Report and Accounts 2020
16
Principal risks
Sound risk management
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.
Status
Changes in risk status reflect the change in
values of Pillar 2 capital requirement in the
Group Risk Matrix since the previous financial
year ended 31 March 2019. These changes are
based on assessments by the relevant risk event
owner, of changes to the estimated impact or
likelihood of a particular risk event as part of the
Group Internal Capital Adequacy Assessment
Process (ICAAP), in line with FCA requirements.
Risk appetite
The Group’s risk appetite is defined as both
the amount and type of risk the Group is
prepared to take or retain in the pursuit of
its strategy, as established in the Group
ICAAP. The Group’s description of risk
appetite against each category can be
mapped to the maximum levels of Pillar
2 capital requirement as follows:
Risk appetite
in each category
Maximum Pillar 2
capital requirement
Zero/Low
Low/Medium
Medium
Medium/High
High
Less than £0.5m
£0.5 – £3m
£3m – £5m
£5m – £7m
Greater than £7m
Risk
How it arises
Mitigation
Status
Client risk/Counterparty risk
Client failure to settle
transaction
The risk that a client or market
counterparty will not meet its
obligations to the Group in
accordance with agreed terms
resulting in losses.
Risk appetite: Low/Medium
Status: Decreased
Conduct risk
Customer outcomes
The risk that clients or the wider
market suffer detriment as a
result of inappropriate behaviour
or actions by staff or business
partners.
Risk appetite: Low/Medium
Status: Increased
This risk can arise when a client fails
to pay for a purchase of shares or
to deliver a certificate of ownership
of a stock which has been sold.
A similar exposure also arises if a
market maker fails to complete the
same trade through corresponding
payment or stock delivery.
Daily monitoring of clients’ positions and counterparty
exposures and individual trade limits. Credit assessments
of counterparties and treasury policy to avoid
concentration risk. Credit risk assessments of banks
and custodians, active monitoring of exposures and
use of credit ratings. Using several banks to hold both
clients’ and the firm’s money, with levels being
constantly reviewed.
Significantly reduced client
position exposure limits, in
the year, have decreased the
Group’s exposure to client
settlement obligation failure.
This risk can arise when
representatives of the Group are not
given sufficient training or awareness
of the highest standards of behaviour
central to the services of the Group,
those being honesty, integrity and
fairness.
Clear and balanced financial promotions, suitable
investment advice and complaints management. Board
oversight, development of staff and training, strong
corporate governance with defined roles, ensuring the
tone from the top sets a fair, positive and ethical culture.
Failure to communicate
and embed the Group’s
culture leads to heightened
Conduct Risk under the new
Senior Management and
Certification Regime.
Regulatory risk
The risk of failure to comply with
new or amended regulations
incurring fines and causing
reputational detriment.
Failure by Management to recognise
the scope and impact of new or
amended regulations on the business
model and resources needed to
implement change.
Board oversight, development of staff and training,
strong corporate governance with defined roles, recovery
plan, monitoring the Group’s performance relative
to competitors, compliance monitoring programme,
regulatory development oversight, documented policy
and procedures and regular contact with regulators. Peer
comparison and communication, increased compliance
personnel and early gap analyses conducted.
The continuing regulatory
change backdrop and
COVID-19 and Brexit driven
uncertainties, intensify this risk
across the financial services
industry.
This risk can arise in the stockbroking
business, where large amounts
of trade values are being settled
daily and can lead to a funding
requirement due to a delay in market
delivery or late settlement by clients.
Maintenance of surplus liquid resources cash flow
forecasting, experienced Management team monitoring
settlement performance and liquid financial trading book
that can be realised. Group entities settle intercompany
balances regularly and are not reliant on intragroup
funding.
The potential impact
of COVID-19 on trading
performance across the
sector will present an
additional challenge to the
Group’s liquidity position.
Risk appetite: Zero/Low
Status: Increased
Liquidity risk
Liquidity risk
The risk that the Group is unable
to meet its payment obligations
associated with its financial
liabilities as they fall due.
Risk appetite: Zero/Low
Status: Increased
Walker Crips Group plc - Annual Report and Accounts 2020
Strategic report
17
Risk
Market risk
How it arises
Mitigation
Status
Market risk
The risk of losses arising as a result
of exposure to market movements
in the price of securities, foreign
exchange and interest rates.
This risk can arise when the Group’s
proprietary trading book positions
incur losses on negative price
movement.
Proprietary trading book positions are tightly controlled by
low trading limits and are regularly monitored.
Group’s proprietary positions
saw increased volatility due
to market uncertainty caused
by the COVID-19 pandemic.
Group’s proprietary positions
remain within risk tolerance.
Risk appetite: Low/Medium
Status: Unchanged
Capital adequacy risk
Capital adequacy risk
The risk that the Group’s business
strategy and plans for growth are
not sustainable on the existing
regulatory capital base.
Risk appetite: Low/Medium
Status: Increased
Operational risk
Business disruption
The risk that an internal or external
event (e.g. COVID-19) causes
failure of core business activities
or IT systems supporting them.
Risk appetite: Medium
Status: Increased
Cyber security
The risk of fraudulent action
by internal or external parties
maliciously breaching or misusing
the Group’s internal systems.
Risk appetite: Low/Medium
Status: Increased
Personnel
The risk of losing key staff
and self-employed investment
managers who are the drivers
of significant components
within the Group.
Risk appetite: Zero/Low
Status: Increased
This risk can arise when new
acquisitions, products or initiatives
are embarked upon without
sufficient reference to impact on
regulatory capital adequacy, or
market conditions lead to sustained
falls in revenues that fully erode profit
margins.
The market expectation is one of
prevailing low interest rates with the
risk that interest rates will become
negative. The recent reduction in
base rates has a material negative
impact on profit projections. The
impact is exacerbated if there are
sustained falls in equity market levels.
A significant regulatory capital surplus is maintained
and regularly monitored based on actual performance
and business projections. Surplus cash balances are
also maintained and liquidity requirements carefully
monitored. Regulatory capital requirements and
adequacy are reviewed through the Individual Capital
Adequacy Assessment Process and related stress testing.
New initiatives are examined and stress tested prior to
implementation.
The firm continues to increase its fee-based revenues
and reduce its reliance on transactional broking
commissions. Portfolio management fees are accrued
on a daily basis which reduces the risk of large fee
reductions in a declining\volatile market. Executive
Management is focused on new business initiatives and
cost management.
The combined impact of the
BOE base rate cuts of 0.65% in
March 2020 and the potential
for negative interest rates will
reduce profitability in future
years via the reduced margin
earned on administering client
money deposits.
COVID-19 driven lower
securities market levels and
the potential for reduced
transactional activity will place
increased pressure on fee and
commission revenues.
This risk can arise when our
companies fail to effectively control
or administer the operating systems
at the root of operations, fail to
manage resource requirements
properly or maintain inadequate
security arrangements.
This risk can arise from failure to
implement sufficient controls over
security access to all IT systems.
Business and information system recovery plans are
approved, tested and maintained. Data incident log
records and analyses all unforeseen events to prevent
recurrence. Insurance cover in place for certain causations
(e.g. financial crime and consequential loss).
COVID-19 driven disruption to
business as usual activities has
heightened the potential risk of
operational failure.
Senior Management oversight, in depth Cyber Security
training programme, working from policies and
procedures, encryption and protection software installed,
prevention procedures (including working from home
policies), segregation of duties between front and back
office, system authority and payment limits and system
access controls and heightened employee awareness
based on experience to match the greater risk presented
by recent threats reported in the sector. Insurance cover
in place for certain causations (e.g. Cyber Crime, Data
losses).
Increased external threats
from newer technologies
continue to emerge, alongside
potential internal threats from
extended working from home
arrangements.
This risk can arise from the
failure to reward individuals with
challenging performance targets,
and competitive levels of financial
compensation.
Succession and contingency planning and appropriate
compensation levels to reward and retain staff.
Investment in staff through training, key person insurance
cover and contractual restrictive covenants.
Industry wide pressure
on profitability and
extended working from
home arrangements have
heightened the risk of key staff
and self-employed investment
managers being poached or
seeking alternative roles with
competitors.
Walker Crips Group plc - Annual Report and Accounts 2020
18
Board of Directors
Experienced leadership
and a safe pair of hands
Our Board of Directors invest the expertise and experience
gathered over decades, and the skills and knowledge
gained from their respective institutes, into managing
the Walker Crips Group.
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Sean Lam FCPA (Aust.),
Chartered FCSI
Group Chief Executive Officer
Sanath Dandeniya FCCA
Group Finance Director
David Gelber
Chairman
Experience
Sanath Dandeniya was appointed Group
Finance Director on 30 September 2019.
Sanath, an ACCA qualified accountant,
has over 20 years’ experience in the financial
services sector. He joined the Group in 2016
as Group Financial Controller, promoted to
Finance Director of Walker Crips Investment
Management in November 2018, and then
appointed to the Group Board in 2019 as
Group Finance Director. Sanath is also a
proponent of technology and digital strategies,
and enjoys adopting appropriate technologies
to drive efficiencies and to improve business
effectiveness. Before joining the Group, Sanath
was at Brewin Dolphin for 15 years, the majority
of the time as their Group Financial Controller.
Committee membership
C M Ri
Experience
David Gelber has served as Non-Executive
Independent Chairman of the Board of Walker
Crips Group plc since January 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 JPMorgan. 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
and Amadeo Air Four PLC, a closed-end fund
investing in aircraft leasing. His previous
directorships include Globeop Financial
Services and eSeclending LLC in Boston.
Committee membership
A N R
Experience
Sean is a passionate technologist and innovator,
and has made it his quest to ‘engineer out
complexities’. He was appointed Group Chief
Executive Officer in September 2017. His tenure
with Walker Crips began as Development
Director in 1999 with overall responsibility for
systems development and technology, Chief
Operating Officer and Chief Technology Officer
in 2004, and Group Managing Director in 2007.
He commenced his career with Phillip Securities
in Singapore and was the Head of Internal Audit,
and then Head of Operations in 1995. Sean
graduated in 1991 with a Bachelor of Commerce
from the University of Western Australia
majoring in accounting and finance, and
attained his professional qualification as a CPA
in 1995. Sean is a Fellow of CPA Australia, was
a member of its European Council from 2010
to 2015, and President of its European Region
in 2012 and again in 2013. He is a Chartered
Fellow of the Chartered Institute for Securities
& Investment. Sean is also founder and CEO of
EnOC Technologies, Walker Crips’ new fintech
SaaS company providing regtech to the industry,
with the aim of helping smaller companies close
the technology gap.
Committee membership
M
Walker Crips Group plc - Annual Report and Accounts 2020
Corporate governance
19
Committee key
A Audit Committee
C Compliance Committee
M Management Committee
N Nomination Committee
R Remuneration Committee
Ri Risk Management Committee
Martin Wright
Senior Independent Director,
Non-Executive Director
Experience
Martin Wright was appointed to the Board
in July 1996 as a Non-Executive Director and
was recently appointed Chairman of the
Remuneration Committee. He is a Partner
of Charles Russell Speechlys LLP (Solicitors).
Martin is a member of the Law Society.
He is also a Non-Executive Director of
a number of private companies.
Committee membership
A N R
Clive Bouch FCA
Non-Executive Director
Hua Min Lim
Non-Executive Director
Experience
Clive Bouch was appointed to the Board in
March 2017 and chairs the Audit Committee as
well as being a member of the Nomination and
Remuneration Committees. He currently serves
as an independent Non-Executive Director
of the Steamship Mutual Insurance London
and Bermuda Protection & Indemnity Clubs
where he is a member of the Claims, Finance &
Nomination and Audit & Risk Committees, and
The Ardonagh Group where he chairs the Group
Audit Committee. From 2011 through 2019 Clive
was an independent Non-Executive Director of
Invesco UK Limited where he also chaired the
Audit and Risk Committees. Previously he was
a partner in Arthur Andersen and then Deloitte
where he provided audit and advisory services
to companies in the financial services industry.
He is a Fellow of the Institute of Chartered
Accountants in England and Wales, Chartered
Fellow of the Chartered Institute for Securities
& Investment and a Chartered Insurance
Practitioner.
Committee membership
A N R
Experience
Hua Min Lim is the Executive Chairman of the
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. In 2018, he was named
Businessman of the Year 2017 at the annual
Singapore Business Awards, which is Singapore’s
most prestigious business accolade. He served
as a board member in the Inland Revenue
Authority Singapore from 2004 to 2010. Mr Lim
holds a Bachelor of Science Degree (Honours)
in Chemical Engineering from the University
of Surrey and obtained a Master’s Degree in
Operations Research and Management Studies
from Imperial College, London University. Mr.
Lim joined the Walker Crips Group Board in
March 1993.
Committee membership
N R
Walker Crips Group plc - Annual Report and Accounts 2020
20
Chairman’s commentary on governance
Dear Shareholder
As presaged in my commentary last year, this is our first Annual Report since the revised UK Corporate Governance Code issued by the Financial
Reporting Council (“FRC”) in July 2018 (“the new Code”) has applied to the Company and, consequently, the first occasion for us to report on how we
have complied with the updated principles in the new Code (which is available to view at www.frc.org.uk).
Whilst the detailed report by the Directors on the Group’s governance arrangements as they applied in the year to 31 March 2020 is provided on the
following pages, I feel it again worth highlighting here that the emphasis of the new Code is on:
(cid:1) maintaining positive relationships between the Group, its shareholders and stakeholders;
(cid:1) ensuring that the Group’s policies and practices, and behaviour throughout the business, are aimed at supporting its sustainable success;
(cid:1) the importance of a high-quality Board composition and a focus on diversity; and
(cid:1) remuneration being proportionate to the objective of long-term success;
all of which are intended to achieve higher standards of corporate governance and are totally aligned with our own focus.
Good governance is, however, much more than a matter of simple adherence to the new Code’s principles and other formal guidance; it is a collective
corporate mindset that pervades the entire organisation and firmly embedded in our Group’s culture is a determination to act with integrity and
transparency in promoting the long-term success of the Group and in generating value for our shareholders, while taking proper account of the interests
of all of our other stakeholders.
In the latter regard, this is the first occasion that our reporting includes a separate disclosure about our stakeholders and our approach to engaging with
them, known as the Section 172 Statement, which can be found on pages 26 to 28.
As I approach the end of my tenure as Chairman of the Group, I am confident in saying that my leadership and the support given by my fellow Board
members has been characterised by a commitment to applying robust but sympathetic governance in order to safeguard the interests of the Group and
stakeholders alike and, to that end, supporting and guiding management in the delivery of the Company’s strategy. A key element of that approach has
been fostering the best possible relationships with our clients and in applying the Financial Conduct Authority (“FCA”) Principles for Businesses in such a way
as to ensure we act with complete integrity and exercise due skill in our dealings with clients, treating them fairly and having their best interests at heart.
Allied to my forthcoming retirement as Chairman, Martin Wright will take over as Chairman immediately after the AGM and, at the Board’s request,
I will continue as Non-Executive Director for up to 12 months thereafter.
The new Code also provides that all of the Directors should now be subject to annual re-election and I can confirm that all current members of the Board
will be seeking to be re-elected at the forthcoming Annual General Meeting, as set out in the Notice of that meeting on pages 102 to 108.
D. M. Gelber
Chairman
31 July 2020
Walker Crips Group plc - Annual Report and Accounts 2020
Corporate governance
21
Report by the Directors – on corporate governance matters
year ended 31 March 2020
The Group is committed to the Principles of Good Governance set out in the 2018 UK Corporate Governance Code (“the Code”). This report, together with
the Audit Committee and Remuneration Committee Reports on subsequent pages, explains how the Company has applied the principles of the Code to
the governance of the Group’s affairs.
Compliance
The Board considers that, throughout the year ended 31 March 2020, it has complied in full with the provisions of the Code or has put in place
appropriate alternative arrangements, as explained elsewhere in this report, in accordance with the “comply or explain” guidance in the Code, to take into
account the Company’s circumstances and its voluntary extension of the Code to all subsidiary undertakings as far as has been reasonably practicable.
Board leadership and Company purpose
Business model and strategy
The Group’s business model and supporting strategy are set out on pages 7 to 9 and explain how the Group generates and preserves value
over the long term.
The Board considers and addresses emerging opportunities and risks to the future of the business and the sustainability of the business model by:
(cid:1) continuously monitoring progress by the executive towards the delivery of the Group’s strategic initiatives;
(cid:1) evaluating strategic proposals to ensure that they are aimed at enhancing the business model and generating value for shareholders;
(cid:1) identifying and reviewing existing and emerging business risks and how these are being managed or mitigated, as described on pages 16 to 17; and
(cid:1) undertaking half-yearly assessments of the Group’s prospects and viability and its ability to continue as a going concern, as detailed on pages 25 and 59.
This approach enables the Board directly or through its Committees to provide effective oversight, challenge and guidance to Management in its
successful delivery of the strategy and maintaining the business model.
Culture
The Board fully accepts the importance of ensuring that the culture throughout the Group is aligned with its purpose, values and strategy and monitors
this through continuous dialogue with the Management teams and HR executives.
This is done in a number of ways, including:
(cid:1) regular discussion at Board Meetings on culture and matters of concern to the workforce;
(cid:1) receiving and reviewing any whistleblowing reports and approving remedial actions considered necessary;
(cid:1) monitoring at operating company level absenteeism and employee turnover;
(cid:1) the Audit Committee receiving reports on conduct, including compliance breaches and any instances of fraud; and
(cid:1) the approval of all Group policies regarding conduct, health and safety, human resources and social responsibility, amongst others.
More detailed information on our culture and approach to investing in and rewarding the Group’s workforce can be found in the “Our business” section
on page 07.
Engagement with shareholders
The Board recognises the importance of regular, meaningful, transparent and effective communications with shareholders to which end the Chairman’s
and Chief Executive’s Statements in the Company’s Interim and Annual Reports and Accounts include a detailed review of the business and future
developments and are publicly available on the Company’s website at www.walkercrips.co.uk.
The Chairman and Chief Executive are in frequent contact with the major shareholders, the Lim family, with important factors arising from these
discussions communicated to the Board immediately or by discussion at the subsequent Board Meeting.
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.
More information on how the views of shareholders have been taken into account in the year is contained in the Section 172 Statement on pages 26 to 28.
Shareholders wishing to make contact directly with the Board should email the Company Secretary, in the first instance.
Engagement with other stakeholders
The Board is satisfied that the arrangements in place within the operating subsidiaries are an effective means of engaging with and being cognisant
of the views of the Group’s workforce as has been tested in the final quarter of the year, and since, by the extreme circumstances brought about by the
coronavirus pandemic.
Details of the methods used are also given in the Section 172 Statement on pages 26 to 28 as are the means by which the views of the Group’s other key
stakeholders are considered and taken into account in the Board’s decision-making.
Walker Crips Group plc - Annual Report and Accounts 2020
22
Report by the Directors – on corporate governance matters (continued)
year ended 31 March 2020
Division of responsibilities
Independence of Non-Executive Directors
Throughout the year, the Board comprised six Directors, of whom David Gelber, Martin Wright, Hua Min Lim and Clive Bouch were Non-Executive
Directors.
The Chairman, David Gelber, has served on the Board for more than nine years and will be standing down as Chairman at the forthcoming Annual General
Meeting but, at the Board’s request, will be continuing as a Non-Executive Director for no more than 12 months.
The Senior Independent Director, Martin Wright, who is also a partner of the Group’s solicitor firm, Charles Russell Speechlys LLP, and our Singapore-
based Non-Executive Director, Hua Min Lim, who is also a significant shareholder, have also served on the Board for more than nine years which, under
the Code, are circumstances that could appear to impair their independence. Accordingly, the Board reviews these Directors’ contributions every year
and is satisfied that they remain independent. This is evidenced by the objectivity and critical detachment that underpin their continued provision of
constructive challenge and support to the Executive Directors and Management.
None of the circumstances referred to in the Code apply to Clive Bouch, who is also considered to be independent.
Senior Independent Director
Martin Wright will take over as Chairman at the forthcoming Annual General Meeting and will therefore step down as Senior Independent Director
at that time. Clive Bouch will then become Senior Independent Director, and in this capacity, will continue to provide a sounding board for the Chairman
and serve as an intermediary for the other Directors and shareholders. The Senior Independent Director also leads the appraisal of the performance
of the Chairman through individual discussions with all of the other Directors.
Executive Directors
The Non-Executive Directors have a prime role in the appointment and removal of Executive Directors, which is discharged through their participation
as members of the Nomination Committee. They are also responsible for scrutinising and holding to account the performance of Management and
individual Executive Directors against agreed performance and financial objectives. In addition to this being undertaken as routine business at Board
Meetings, the Chairman meets with the Non-Executive Directors periodically without the Executive Directors present.
The service contracts of Executive Directors limit compensation for loss of office to a maximum of twelve months’ salary.
Division of responsibilities
There is a clear division of responsibilities between the Chairman and Chief Executive and their responsibilities, together with those of the Senior
Independent Director, the Board and its Committees, have been set out in writing, agreed by the Board and are publicly available.
Certain Executive and Non-Executive Directors of the Group are also Directors of the Boards of the main operating companies which conduct regulated
investment business, thereby playing an active part in decision making and control at an operating level.
Governance framework
The Board has three established Committees: the Audit Committee, the Nomination Committee and the Remuneration Committee, the terms of
reference of each of which are available on the Company’s website at www.walkercrips.co.uk. The Chairman of each of these Committees is responsible
for reporting to the Board on how the Committee has discharged its duties. In addition, the Executive Risk Management Committee and the Executive
Compliance Committee provide operational input to the Audit Committee and at Board Meetings.
Matters reserved for the Board
The Board 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. The full list of matters reserved for the Board is available on the Company’s website at www.walkercrips.co.uk.
All operating subsidiaries’ Boards and other Management or operational committees include at least one main Board Executive Director who serves
as the link between the Board and Management on operational decision making.
Board attendance
The following table shows the attendance of the Directors at Board Meetings and as members or invitees at Board Committee Meetings during the year:
Number of meetings
D. M. Gelber (Chairman)
S. K. W. Lam (Chief Executive)
R. A. FitzGerald (Group Finance Director) – retired 30 September 2019
H. M. Lim (Non-Executive Director)2
M. J. Wright (Senior Independent Director, Remuneration Committee Chairman)
C. Bouch (Non-Executive Director, Audit Committee Chairman)
S. S. Dandeniya (Group Finance Director) – appointed 30 September 2019
Board Remuneration
Committee
Audit
Committee
Nomination
Committee
7
7
7
4
0
6
7
3
1
1
n/a
n/a
0
1
1
n/a
6
61
n/a
21
n/a
6
6
31
2
2
n/a
n/a
0
2
2
n/a
1 By invitation.
2 H. M. Lim, who is based in Singapore, is provided the management information packs in advance of each Board Meeting for his comments, which are then relayed to the Board.
Walker Crips Group plc - Annual Report and Accounts 2020
Corporate governance
23
Information and support
The Board is provided with a regular flow of appropriate information to enable it to discharge its duties, in addition to a comprehensive management
information pack for and in advance of Board Meetings.
As indicated by the attendance table above, the Board meets regularly, at least every alternate month, throughout the year. The Company Secretary
attends all Board Meetings and is responsible for advising the Board on corporate governance matters. Both the appointment and the removal of the
Company Secretary are matters reserved for the Board.
Composition, succession and evaluation
Diversity and inclusion
The Board recognises the governance benefits that breadth of perspective and diverse traits deliver. We remain committed to promoting talented
individuals as executives on merit, both internally and through recruitment, with our whole-hearted encouragement supported by accessible training
and regular open communication between Directors and staff.
Nomination Committee
The Committee consists of David Gelber, Martin Wright, Clive Bouch and Hua Min Lim. It considers and makes recommendations to the Board for the
appointment of Directors. The Chairman, David Gelber, has no other significant commitments which affect his ability to carry out his role effectively.
Martin Wright will replace David Gelber as Chairman of the Nomination Committee after the AGM and, similarly, his other commitments will not affect
his ability to carry out this role effectively. 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.
The Committee takes full account of the Board’s policy on diversity in considering any appointments within its remit, which encompass gender, age,
education, disability and ethnicity, and includes the appointment of female members of staff to senior Management roles within the Group.
The Nomination Committee met twice during the year to consider and recommend the appointment of Sanath Dandeniya to the Board as Group
Finance Director in place of Rodney FitzGerald on his retirement, as well as the appointments to the Group’s principal regulated subsidiary, Walker Crips
Investment Management Limited, of Nick Hansen as CEO and Chris Darbyshire as a Director and Chief Investment Officer. Nick Hansen is still subject to
FCA approval.
Board composition and re-election
The Chairman, David Gelber, announced at the 2019 Annual General Meeting his intention to retire at the forthcoming Annual General Meeting. Martin
Wright will be succeeding David Gelber as Chairman. At the Board’s request, David Gelber has agreed to continue as a Non-Executive Director for no
more than 12 months.
In accordance with the Code, all of the Directors are now subject to annual re-election and the Board has decided that all of the current Directors will be
put forward for re-election at the forthcoming AGM.
The specific reasons why each Director’s contribution is, and continues to be important to the Company’s long-term sustainable success are set out in
the Directors’ biographies on pages 18 to 19, which describe the range, depth and complementary nature of their individual skills and experience, the
combination of which provides a balanced and effective Board.
Board effectiveness
The evaluation of the Board, its Directors and Committees is conducted annually by way of questionnaires designed to elicit the views and opinions of
the Directors (and, in the case of the Audit Committee, others who attend its meetings by invitation) on all aspects of the effectiveness of the Board, its
Committees, the Chairman and individual Directors. The results of these evaluations are then reviewed by the Board and the Chairman acts on the results
by identifying and initiating any remedial actions necessary, particularly in relation to any development needs highlighted.
Audit, risk and internal control
Audit Committee
During the year, the Audit Committee consisted of Clive Bouch, who acted as its Chairman throughout, and Martin Wright. When David Gelber steps
down as Board Chairman at the forthcoming Annual General Meeting, he will be appointed as a member of the Audit Committee. When Martin Wright
replaces David Gelber as Board Chairman, he will cease to be a member of the Audit Committee.
Further information about the Audit Committee, its responsibilities and activities during the year can be found in the Audit Committee Report on
pages 29 to 32.
Risk management
The Board is responsible for the identification and robust assessment of the Group’s emerging and principal risks and this is carried out as a continuous
process throughout the year. Details of the principal risks and how they are being managed or mitigated are given on pages 16 to 17.
The Board has been assisted in discharging these responsibilities by the Audit Committee, as well as the Executive Risk Management Committee (“RMC”),
the members of which have been selected based on their experience and skill sets. James Chalmers-Smith, Head of Group Risk, and a Director of Walker
Crips Investment Management Limited, acts as the RMC’s Chairman.
The members of the main Board and operating companies’ boards are responsible for ensuring that adequate systems and controls are in place and that
the businesses operate in accordance with all relevant legal and regulatory requirements. The Executive Directors of each Group company are responsible
for its day-to-day management.
Walker Crips Group plc - Annual Report and Accounts 2020
24
Report by the Directors – on corporate governance matters (continued)
year ended 31 March 2020
Audit, risk and internal control (continued)
Risk management (continued)
The objectives of the RMC are to assist the Group and operating companies’ boards in fulfilling their corporate governance oversight responsibilities by
evaluating, reviewing and reporting on:
(cid:1) risk appetite, strategy and tolerance, including integration with the Group’s culture, values and behaviour; and
(cid:1) the operation of risk management frameworks in the effective mitigation of strategic, operational and external risks.
The RMC 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, thus enabling strategies for the elimination, mitigation or avoidance of risk to be formulated.
Each year the Board conducts a robust assessment of the principal risks facing the Group, including those that threaten its business model, future
performance, solvency and liquidity.
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 Group.
This process has been in operation throughout the year and up to the date of approval of this Annual Report and Accounts and is regularly reviewed by
the Board which is satisfied that it accords with the relevant guidance. Due to the relatively small size of the Group there is a simple organisational and
reporting structure. Financial results, forecasts and projections, and other information, are regularly reported to the Board throughout the year.
The Directors keep the Group’s internal control and risk management systems under review by conducting an annual assessment, involving dialogue with
relevant senior managers, of the effective design and operation of the controls to meet key control objectives and to mitigate key risks. The Directors
consider that the controls and risk management procedures established are appropriate for the Group. However, any system of internal control and risk
management 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:
(cid:1) the organisational structure and the delegation of authorities to operational management;
(cid:1) procedures for the review and authorisation of capital investments;
(cid:1) budgets and forecasts which are reviewed by the Board;
(cid:1) the reporting and review of financial results and other operating information;
(cid:1) accounting and financial reporting policies to ensure the consistency, integrity and accuracy of the Group’s accounting records; and
(cid:1) financial and operating controls and procedures which are in place throughout the Group and monitored through various means including routine and
special reviews by both the external and internal auditors.
Compliance Committee
The Executive Compliance Committee monitors the Group’s compliance with all regulatory and legal matters and considers rule updates and guidance
notes from the FCA, the Financial Ombudsman Service, the Financial Services Compensation Scheme and other UK regulatory bodies.
The Committee is also responsible for interpreting new rules, guidance notes and regulations disseminated by the FCA and other European regulatory
bodies. In the current financial year, the Committee remained engaged with MiFID II, GDPR compliance, and the introduction in December 2019 of the
Senior Managers and Certification Regime, known as SM&CR.
The Committee also ensures all compliance policies, procedures and guidance are adequately and properly implemented. Valentina Kang, Head of Group
Compliance, and a Director of Walker Crips Investment Management Limited, acts as the Compliance Committee’s Chairperson.
Prospects
The Group reported an increase in profitability, compared to last year, an indication that our strategy was starting to yield results. While we are pleased
with the financial results to 31 March 2020, we cannot avoid the fact that our financial performance is a function of events in capital markets. Absent a
significant improvement in market conditions, our revenues will be materially impacted for the current accounting year.
The full impact of COVID-19 on the global economy, on our country and on the Group is still unknown, but Management has taken swift action to resize
our cost-base to help to mitigate the impact on earnings and the forecasted decline in revenues. Management is closely monitoring costs, and will take
proportionate action, while continuing to pursue our strategy to grow the business.
We will enlarge our teams of investment managers, financial planners, advisers, SSAS, SIPP and the private client department. We will continue to seek
alternative investment strategies, and push our technology offering within the Company and externally. We will also continue with our strategy of
focused investment guidance for our investment managers and advisers, led by our CIO.
Walker Crips Group plc - Annual Report and Accounts 2020
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Prospects (continued)
Trading activity for the first quarter (April to June) has improved significantly with commission income up 7% compared to same period last year. While
markets seem to have weathered the storm, and the world has started to settle into the new normal, there could still be further disruptions as a result
of COVID-19, and also protectionist political policies, trade stand-off, and when central banks and governments slow down or cease their stimulus.
And leaving the EU. However, the need to consider investment risk on a sector-by-sector and company-by-company basis, plays well to our strengths in
bottom-up equity analysis. We are able to respond swiftly to market volatility.
The strength of our capital, the skill and experience of our people, places the Group on strong footing. The Management is committed to our strategy and
we have full confidence that the Group will weather the impact from this pandemic, and in the Group’s long-term prospects.
Viability statement
The Group’s operational resilience was tested in March 2020, with the majority of staff switching to remote working in compliance with Government advice.
The Board continue to monitor the impact of staff working remotely and the supply of key services from our external business partners, and is satisfied that
the Group can successfully operate in these conditions for a prolonged period of time, without impairing our service commitment to our clients.
Given the uncertainty caused by the COVID-19 pandemic, the full impact on the global financial markets, and the Group in particular, is not fully
quantifiable at the reporting date. However, the Directors have made assumptions with known facts to date in preparing the five-year-forecast on which
the Directors place reliance in making the viability assessment. Importantly the Directors requested Management to prepare a prudent base case scenario
that assumes base rates remain at 10 basis points and market levels recover from the collapse witnessed in March 2020 to FTSE 5700 range in July 2020,
the former throughout the five-year projections and the latter increasing to FTSE 7000 range in December 2020 and increasing modestly thereon.
Cost savings from actions Management have taken to date were reflected in the base case, but the impact of other cost savings plans delayed until
2022. This base case, following consideration of the principal risks and uncertainties facing the Group, was then subject to stress and reverse stress
scenarios as follows: (i) a ‘bear stress scenario’ with market falls and levels of activity resulting in a reduction in total revenue of 10%. and (ii) a ‘reverse or
severe stress scenario’ where the impact on revenues of further significant falls in global financial markets cause reductions in commission and fee incomes
of 20% and 15% respectively.
In the bear and severe stress scenario the Group has positive liquidity throughout the period. All regulatory prudential requirements are met in the bear
scenario, but the severe scenario impacts our prudential capital ratio such that it potentially falls below the regulatory requirement in June 2022. The
Directors consider the severe stress scenario to be remote in view of the prudence built into the base case planning and that further mitigations available to
the Directors are not reflected therein. Such mitigating actions within Management control include reduction in proprietary risk positions, delayed capital
expenditure, further reductions in discretionary spend and some additional reduction in employee headcount. Other mitigating actions which may be
possible include seeking shareholder support, potential sale of assets and stronger cost reductions.
The Group continues to evaluate the potential risks and opportunities of the UK leaving the European Union. Although there continues to be limited clarity
about the outcome and implications of negotiations, the Directors do not consider any potential impact on clients, our business or the wider investment
management sector will cause the Group to cease to be viable. The Board will continue to monitor developments and take necessary actions to manage
the business risks and ensure continuity of service to our clients.
Taking account of the current financial position, strategic plans, principal risks and the Board’s assessment of the Group’s prospects, 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.
We consider this time frame to remain appropriate in view of our scale, planning cycle and financial resources available, notwithstanding the market
uncertainty caused by the pandemic.
Going concern
The Directors have considered the Group’s ability to continue as a going concern for a period of at least twelve months from the date of approval of the
financial statements and are satisfied that it will be able to operate within the level of its current financing arrangements and regulatory capital limits
imposed by the regulator, the Financial Conduct Authority (“FCA”). Accordingly, the Board continues to adopt the going concern basis for the preparation
of the financial statements. Further details of the Directors’ going concern assessment are provided in note 2 to the financial statements on page 59.
Remuneration
The Company’s remuneration policies and practices are designed to support strategy and promote long-term success.
Information on the remuneration policy and the work of the Remuneration Committee can be found in the Remuneration Committee Report on
pages 33 to 42.
Walker Crips Group plc - Annual Report and Accounts 2020
26
Section 172 (1) statement
year ended 31 March 2020
Introduction
The following statement is designed to provide information about how the Directors have discharged their duties under section 172(1) of the Companies
Act 2006 to promote the success of the Company for the benefit of its members as a whole, having regard for the matters set out in that section
(amongst others).
Our stakeholders
The Directors consider the Company’s and Group’s key stakeholders to be:
(cid:1) Our Investors
Our private, professional and institutional shareholders who rely on us to protect and manage their investment in the Company and generate value
for them;
(cid:1) Our Workforce
Our directly employed staff and our network of self-employed associates;
(cid:1) Our Clients
Those private and professional clients who have entrusted us with providing financial planning advice, managing and safeguarding their investments,
and transactions execution services;
(cid:1) Our Suppliers
The providers of goods and services on which our business relies;
(cid:1) Our Regulators
The bodies which authorise and regulate our activities;
(cid:1) Our Communities and the Environment
The local communities in which we operate and the environment at large.
The arrangements through which the Board has regard for the likely long-term consequences of any decision taken, the interests of those stakeholder
groups in its decision-making and the need to foster good relations with them are set out in the paragraphs below.
The likely consequences of any decision in the long term
The Board is mindful of the long-term implications for the business and its stakeholders that its strategic decisions are likely to have and these implications
are always carefully considered. All proposed courses of action are assessed to ensure they are compliant with the law and regulations, Group risk appetite
and the objective of delivering positive shareholder value. All decision-making is supported by consideration of relevant financial and non-financial analysis
and forecasting.
Our shareholders
The Directors recognise and fully accept their primary duty to act in a way they consider, in good faith, would be most likely to promote the success of the
Company for the benefit of our shareholders as a whole. In discharging this duty, they are mindful of the need to act fairly between shareholders, all of
whom participate in the capital of the Company through a single class of shares in issue to which the same rights attach.
To ensure such fair treatment, and comply with its legal and regulatory duties, the Board does not take any decisions or actions, such as selectively
disclosing confidential or inside information that would provide any shareholder or group of shareholders with unfair advantage or position compared
to the shareholders as a whole.
The means by which the Board and individual Directors engage with shareholders are set out on page 21 of the Report by the Directors on corporate
governance matters.
The interests of our shareholders were considered as part of the Board’s decision-making throughout the year, including with regard to payment of
the interim dividend and in the context of the difficult decision not to recommend a final dividend, more about which is contained in the Chairman’s
Statement on pages 4 to 6.
The Group’s workforce
The Board recognises that, as a services business, our workforce is our greatest asset. Consequently, our recruitment, development and remuneration
structures are designed to support our culture and our people and to reward good conduct and performance at individual and business levels.
Our workforce comprises both directly employed staff and self-employed associates, all of whom are engaged at operating company level.
Accordingly, day-to-day engagement with the workforce is through the Executive Management and HR functions, which report to the operational
boards and to the Audit Committee on a regular basis. Of particular importance is our annual appraisal system, which is used to measure performance,
receive feedback, address two-way concerns and motivate staff. As part of the process, we emphasise the overriding objectives and values of the Group
and our commitment to the long-term success of the business for the benefit of shareholders and the workforce alike.
In addition to encouraging staff to raise any concerns they may have with their line managers, we seek to ensure the effectiveness of our whistleblowing
arrangements and that all staff are conversant with our whistleblowing procedures, which are aimed at promoting good conduct and adherence to
regulations and procedures, the fair treatment of all stakeholders and safety at work.
We also take a positive and pro-active approach to staff development by supporting and sponsoring staff to continue their professional studies and
secure business-related qualifications to enhance their career opportunities and on-the-job capabilities.
Walker Crips Group plc - Annual Report and Accounts 2020
Corporate governance
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The onset of the coronavirus pandemic in the last quarter of the year has tested our ways of ensuring effective engagement with the workforce,
with all but a small skeleton staff at our London, Romford and York offices working from home. The measures taken have included:
(cid:1) HR personnel being in constant contact with the small number of staff who have been quarantined, have shown symptoms of or been diagnosed with
the virus, are self-isolating or shielding, and others who have expressed anxiety during the lockdown;
(cid:1) HR and managers keeping in contact with staff working from home to ensure they have all the equipment they need to do so effectively, whilst also
making time for any home-schooling commitments they may have;
(cid:1) making available the Unum LifeWorks Assistance Program to all employees;
(cid:1) the Group CEO issuing regular video messages providing updates, clear instructions, as well as encouragement and caring, to personnel throughout
the Group; and
(cid:1) a wellbeing survey of all staff, aimed at helping Management to understand their needs whilst working from home over an extended period, the
responses to which were anonymous and were provided by almost 90% of the workforce.
As a consequence of our working from home arrangements, since the year end, we have placed a small number of staff on furlough under the
government’s Coronavirus Job Retention Scheme. In keeping with our principles, those affected have continued to receive their full pay and
their welfare, and return-to-work opportunities, are being kept under constant review.
Clients
The Group’s clients are the reason we exist. At the heart of our business practices is the paramount imperative to foster the best possible relationships
with both our private and professional clients, to ensure that they are treated fairly and that, in advising them and managing their investments, we strive
to achieve the best overall outcome for them.
The Board aims to maintain effective oversight of the Group’s client relationships and the interests of clients are a key factor in our decision-making.
Our compliance function regularly monitors and reports to the Board on various areas of our conduct to ensure that we are providing the best outcomes
for clients. We are always happy to receive feedback from our clients and use this to address any perceived shortcomings and to make improvements
wherever possible. One such improvement made in the year has been to review our Terms of Service and Business, with a focus on making them easier for
clients to read and to find the information particularly important to them.
The security of our clients’ money and investment assets over which we have been given custody is exceptionally important to us and we ensure that we
meet the FCA’s associated rules at all times. As required, we maintain client money and assets separate from the Group’s own holdings. We only deposit
client money with approved banks and our clients’ assets, when registered in the name of one of our nominee companies, are held in trust and are not
under the Group’s ownership.
Suppliers
The suppliers of support services and goods to our business operations are another key element in our ability to deliver value to our shareholders
and clients. We therefore seek to balance the benefits of maintaining strong relationships with key suppliers, with the need to obtain the best value for
money and the service levels we reasonably demand. Our dealings with suppliers are characterised by fairness, transparency and the desire to develop
a mutually beneficial relationship and are subject to high standards of due diligence in their selection.
As disclosed in note 27 to the accounts on page 85, the Group took an average of ten days to settle supplier invoices in the year, which demonstrates
our fair payment practices.
Although the healthy state of the Group’s cash holdings during the year has meant that we have had no need for structural debt finance, we nevertheless
see the providers of our day-to-day banking arrangements as key service suppliers. Accordingly, the Group Finance Director, the Head of Group Risk
and the Group’s Treasury and Payments team are responsible for managing the relationships with our banks and for the Group’s liquidity management
activities.
HSBC is the Group’s primary banker and provides a range of transactional banking, treasury and other services. In addition, HSBC provides the Group’s
main trading subsidiary, Walker Crips Investment Management Limited (WCIM), with an intra-day CREST capital facility, as WCIM’s Crest Settlement
bank, which WCIM relies on to facilitate efficient settlement of a large volume of investment transactions within the CREST securities transfer system.
This intra-day line is capped at £4m, but is raised from time to time, on agreement with HSBC, to facilitate larger transaction settlement primarily in
relation to WCIM’s structured investments business.
Regulators
The Group, containing a number of subsidiaries authorised and regulated by the Financial Conduct Authority (FCA), seeks to operate and interact with
the FCA in an open, positive and cooperative manner at all times.
Engagement with the FCA is primarily through the Group CEO, the Compliance function and the Head of Group Risk. These engagements are reported
into the Board, relevant subsidiary boards, the Group Risk Management Committee, and the Group Compliance Committee, to enable the Group to
ensure at all times it is meeting FCA regulatory expectations, and to assist the regulator in meeting its own statutory regulatory objectives.
Walker Crips Group plc - Annual Report and Accounts 2020
28
Section 172 (1) statement (continued)
year ended 31 March 2020
Communities and environment
As shown on page 3, the Group has offices in various locations in England, and in Scotland and Wales, and sees itself as a member of the local
communities in which it operates. The conduct of the Group’s people, especially in relation to local supplier and client relationships and their
determination to be good, responsible and supportive neighbours, are prime ways in which local communities are impacted by our activities.
Individual offices have participated in various local initiatives such as charitable events, sponsorship of local sports clubs and recycling drives.
We are active supporters of Twining Enterprise, a registered charity helping Londoners with mental health problems get work and keep work,
supporting employers and campaigning against mental health stigma.
We are committed to minimising the impact of our activities on the environment and have implemented a range of policies and procedures including
the use of segregated waste recycling facilities, energy-saving office electricals, state-of-the-art office design employing recycled and reusable materials
where possible, direct-to-paperless document generation, electronic distribution and filing systems, and the option for staff to work from home to reduce
their travelling carbon footprint.
Reputation
The Board recognises the importance of maintaining a robust corporate governance framework and a reputation for high standards of business conduct,
as is set out in the Directors’ report on corporate governance matters on pages 21 to 25.
Walker Crips Group plc - Annual Report and Accounts 2020
Corporate governance
Audit Committee report
year ended 31 March 2020
29
Chairman’s introduction
On behalf of the Board, I am pleased to present the Audit Committee’s Report on its responsibilities and activities during the year. These have included
a detailed interrogation of the full application and impact of the new accounting standard IFRS 16 to this year’s financial reporting and disclosures.
Although the effects of the coronavirus pandemic on the Group’s activities had only begun to be felt in the last quarter of the year, the Committee has
been pro-active, both before and after the year end, in reviewing and challenging the actions being taken by Management to support our people and
clients, manage risks and mitigate the financial impact.
Composition and constitution
The Board is responsible for establishing and maintaining an Audit Committee and for appointing its members.
In accordance with the 2018 UK Corporate Governance Code (the new Code), the Committee is to comprise of only independent Non-Executive
Directors of the Company with a minimum of two members. At least one of those members should have recent and relevant financial experience and the
Committee as a whole should have competence relevant to the sector in which the Company operates. The Board and Committee members are satisfied
these requirements are met.
As the Chairman of the Board may no longer be a member of the Committee, David Gelber stood down at the start of the year and, throughout the year,
the members of the Committee were Clive Bouch, who acted as Chairman, and Martin Wright. As authorised by its terms of reference, the Committee
invited the Group Finance Director and the Heads of Compliance and Group Risk to attend and report at each of its meetings as well as representatives of
both its internal and external auditors. As it is intended that Martin Wright will assume the role of Group Chairman on David Gelber’s retirement from the
role at the forthcoming AGM, Martin Wright will then be replaced by David Gelber as a member of the Committee.
The Committee undertook a comprehensive review of its terms of reference to ensure their compliance with the new Code and current standards and
the resulting revised terms of reference were approved by the Board and are available for inspection on the Company’s website at www.walkercrips.co.uk.
Main responsibilities of the Committee
The Committee assists the Board in its oversight of the:
integrity and quality of financial reporting and disclosure;
a.
b. selection and application of accounting policies and practices;
c. adequacy and effectiveness of the risk management systems and internal control environment;
d. Group’s compliance with legal and regulatory requirements relevant to financial reporting and accounting;
e. appointment/reappointment, independence and performance of the external auditor, including the quality and effectiveness of the external audit;
f.
g. effectiveness of internal audit;
h. Group’s compliance with statutory tax obligations; and
i. other issues, if any, on which the Board may request the Committee’s opinion.
integrity of significant financial returns to regulators;
Meetings
There were six formal meetings of the Committee during the year. The Committee members’ meeting attendances are set out in the Report by the
Directors on corporate governance matters on page 22.
The Committee Chairman is responsible for developing the agendas for meetings, in consultation with Management and external service providers, as
appropriate, and ensuring that the Committee’s work addresses the requirements of the New Code and relevant guidance and all areas within its remit
are covered.
The Company Secretary acts as Secretary to the Committee and, in addition to those invited to attend meetings on a regular basis as mentioned earlier
in this report, other senior members of the Group’s Management may be called upon to report to the Committee and respond to any questions it may
have.
Outside of formal meetings, the Committee Chairman maintains a dialogue with the Board Chairman, CEO, Group Finance Director, the Heads of
Compliance and Group Risk, the external audit partner and the internal auditors.
Committee activities
The work of the Committee during the year ended 31 March 2020 fell into three main areas:
1. Accounting and financial reporting
The Committee reviewed the:
a. annual and interim financial statements;
b. significant financial reporting policy disclosures and judgements;
c. appropriateness of the preparation of the financial statements on a going concern basis;
d.
e. Annual Report to consider whether, taken as a whole, it is fair, balanced and understandable and provides information relevant to shareholders’
long-term viability statement prior to Board approval; and
assessment of the Group’s position and performance, business model and strategy.
Walker Crips Group plc - Annual Report and Accounts 2020
30
Audit Committee report (continued)
year ended 31 March 2020
Committee activities (continued)
2. Internal controls
The Committee:
a. monitored the integrity and effectiveness of the Group’s internal financial controls through consideration of key risks and mitigating controls, and
reports and presentations from internal audit, external audit, other subject matter specialists and the Heads of Compliance and Risk;
b. assessed the scope and effectiveness of the systems established to identify, manage, and monitor financial and non-financial risk;
c. received reports on the finance team’s implementation of a new general ledger for the Group’s principal operating company, Walker Crips Investment
Management Limited;
d. reviewed the Group’s whistleblowing policy, and monitored and reviewed the plans, work, resources and effectiveness of the internal audit function
together with its recommendations and Management’s responses thereto; and
e. reviewed actions taken in response to reports on internal controls in order to address matters identified.
3. External audit
The Committee:
a. reviewed BDO LLP’s (“BDO”) audit plan, audit approach, scope of work to be carried out and audit findings;
b. reviewed the auditor’s independence and objectivity, including compliance with the Group’s non-audit services policy;
c. reviewed the effectiveness of the external audit; and
d. discussed the findings of the FRC’s report on its audit quality inspection of BDO with the engagement partner.
When reviewing the preparation, content and presentation of the Annual Report, the Committee considers, and challenges Management on actions to
take account of, the matters raised in the FRC’s letter to Audit Committee Chairs and Finance Directors. There have been no interactions between the
Company and the FRC during the period.
External auditor
BDO was appointed at the AGM held in August 2016 following a competitive tender and the audit of the 31 March 2020 financial statements is its fourth
year as the Group’s auditor. The Committee intends to conduct an audit tender process again before the tenth anniversary of BDO’s appointment.
BDO reports to the Committee on its actions taken to comply with professional and regulatory requirements to ensure its independence. The Group’s
non-audit services policy is published on the website at www.walkercrips.co.uk. BDO also conducts a review of the Group’s interim report and reports to
the FCA on CASS compliance. No other services have been provided by BDO during the year. Details of external audit and non-audit fees are disclosed in
note 9 to the financial statements on page 75.
The performance of the external auditor is monitored on an ongoing basis and takes account of BDO’s knowledge of our sector, the quality and
experience of the individuals assigned, the level of engagement, effectiveness of communication, feedback from Management and Committee members
and published findings of the FRC’s audit quality inspection reviews. As part of the Committee’s deliberations on audit quality and effectiveness, the
Chair of the Committee communicates directly with the external audit partner to discuss this important matter and share feedback. The Committee is
satisfied that BDO has performed an effective audit.
The Committee reviews specific reports and good practice suggestions presented by the external auditor. The Committee discusses and acts upon the
external auditor’s comments relating to internal financial control and on the preparation of the financial statements. The Committee reports any issues
directly to the Board after each meeting. The Committee also meets with the external auditor without Management being present at least once a year.
The statutory audit has not resulted in any significant control issues or matters that required material adjustment to the accounts.
Internal audit
The provision of internal audit activities continues to be outsourced to Smith & Williamson LLP (“S&W”).
The internal audit function reports directly to the Committee. The internal audit plan and scope of work is reviewed and approved by the Committee
each year after being appraised by Management. The budget is agreed between the Committee Chairman and Group Finance Director having regard
to the planned scope of work. To support the effectiveness of assurance coverage across the second and third lines of defence, internal audit presents a
three-year rolling plan.
The internal audit reports and recommendations are presented to the Committee together with Management’s responses and proposed actions for
discussion and challenge.
During the year, internal audit’s work included reviews of cyber security, the short-term lending business, client assets and execution only transactions,
The focus for internal audit’s work in the coming year includes follow up on the implementation of the new general ledger, financial crime/fraud,
structured investments and visits to Branch offices.
The Committee monitors the effectiveness of the internal audit service provided by S&W. The particular focus is on competence and capabilities, subject
matter expertise, timely reporting and the quality of communication and recommendations. The Committee also monitors any other services that S&W
provides to ensure the integrity and independence of the Group’s third line of defence is not compromised. The Committee is satisfied with the service
provided by S&W and will continue with the arrangements.
Walker Crips Group plc - Annual Report and Accounts 2020
Corporate governance
31
Going concern and longer-term viability statement
Disclosures regarding the adoption of the going concern basis of financial statement preparation and the Directors’ viability statement are found
on pages 25 and 59. In considering these disclosures, the Committee reviewed the Group’s strategic priorities, projections for the forthcoming year
and medium term, current business performance against those projections, the stress and reverse stress scenarios updated to reflect current market
conditions and COVID-19, current financial resources and capital expenditure plans. The Committee challenged the reasons for the period adopted for
the viability statement and the consideration given to key assumptions and dependencies.
The Committee noted and/or challenged in particular:
(cid:1) the Group’s performance during the year and post year end;
(cid:1) the impact of COVID-19 on income experienced to date and key assumptions underpinning those reflected in Management’s updated projections,
including stress and reverse stress scenarios;
(cid:1) the effects of Management’s actions to protect the safety of staff and support client service in response to COVID-19 and further actions taken and
proposed to mitigate the financial impact on the Group, including underlying key assumptions;
(cid:1) the payment of an interim dividend and prudent decision to cease payment of future dividends;
(cid:1) 81% of the Group’s regulatory financial resources at 31 March 2020 are held in cash or cash equivalents and there are no material restrictions on
accessing or utilising required liquidity throughout the Group;
(cid:1) the Group’s regulatory capital at 31 March 2020 and the date of this report comfortably exceeds its regulatory capital requirement and all regulated
entities within the Group held capital in excess of their solo regulatory requirements;
(cid:1) the Group’s principal debt obligations are the lease liabilities arising on adoption of IFRS 16;
(cid:1) an intraday credit line is made available by our principal bankers to enable daily net settlement of market transactions in an orderly fashion; and
(cid:1) the stress scenario analyses and management actions demonstrating the Group meets projected solvency and liquidity requirements to continue
as a going concern.
Financial reporting and significant financial judgements
The main areas considered by the Committee are set out below and overleaf:
Matter considered
Carrying value of Walker Crips Group plc’s investment in subsidiaries
The carrying value of the Parent Company’s investment in subsidiaries,
including the value attributed to client lists arising from acquisitions,
amounts to £17,425 million. This significantly exceeds the market value
of the Group as determined by reference to the quoted share price. This
situation has persisted for several years.
Impairment of goodwill and intangible assets
The Consolidated Statement of Financial Position includes goodwill of
£4.4 million and client lists, including software licences, of £6.7 million.
These principally arise on business combinations or hiring of individuals
or teams of Investment Managers.
The goodwill arose on, and has been allocated to, the acquisitions of
London York Fund Managers Limited £2.9 million and Barker Poland
Asset Management LLP £1.5 million, which continue as identifiable
cash-generating units (“CGUs”). The year end amortised value of client
lists attributed to these CGUs are £nil and £2.4 million, respectively,
with the remaining balance being attributable to individuals or teams
of Investment Managers hired.
Action
As part of this year’s impairment review work the discrepancy in
values was considered in depth and the conclusion reached that the
carrying value is supported based upon valuations of the principal
trading subsidiaries. Reasons for the discrepancy include the overheads
incurred at the Parent Company level, the small size of the Group and
illiquidity in the market for the Company’s shares. The Committee
also considered the procedures performed by the external auditors
in respect of the carrying value, which has been identified by them
as a key risk but not a key audit matter.
Management assess any impairment of goodwill by comparing the
book value of assets attributable to the CGUs to the higher of their
fair value less cost to sell or value-in-use. The Committee reviewed
Management’s papers supporting the conclusion there was no
impairment, with particular challenge regarding the assumptions used
and adequacy of the disclosures (see note 17). The Committee also
considered the procedures performed by the external auditors (see the
independent auditor’s report on page 47).
The values attributed to client lists are amortised over their
estimated useful lives, being periods between three and twenty
years. Management assess any further indicators of impairment
by reference to the continuing value of Assets Under Management
and Administration, peer comparisons, the loss of senior Investment
Managers, the loss rate of clients, and other causes of possible
outflows. The Committee reviewed and challenged Management’s
supporting papers in respect of indicators of impairment and
amortisation periods and no impairment of these intangible assets is
required. The Committee also noted and agreed with the revision in
the useful economic life of certain client assets (see note 3) and related
accounting treatment for this change in estimate. The Committee also
considered the procedures performed by the external auditors (see the
independent auditor’s report page 47).
Walker Crips Group plc - Annual Report and Accounts 2020
32
Audit Committee report (continued)
year ended 31 March 2020
Financial reporting and significant financial judgements (continued)
Matter considered
Provisions
The financial statements include provisions and liabilities in respect
of dilapidations (£0.66 million) and customer complaints or claims
(£0.18 million). These amounts are estimated with varying degrees
of certainty.
Exceptional items
The Group classifies certain material items as exceptional to allow a
clearer understanding of the underlying trading performance of the
business. In 2019/20, the Group has reported two exceptional items,
which results in a net credit to profit and loss of £0.375 million. In
2018/19, exceptional items resulted in a net charge of £0.032 million.
New accounting standards
IFRS 16 applied to the Group’s financial statements for the year ending
31 March 2020.
Action
The Committee considered Management’s determination of the
amounts provided and concluded they were reasonable based upon the
information available.
The Committee also considered the procedures followed by the external
auditors and their findings, including those in respect of provisions for
client claims (see independent auditor’s report on page 47).
The Committee requested, received and considered explanations from
Management setting out the description of items that would fall to
be exceptional (see note 10 on page 75), the reasons therefore and
the proposed disclosures, including the reconciliations provided in the
CEO’s Statement, challenging these to ensure clarity.
The Group has adopted IFRS 16 “Leases” retrospectively from 1 April
2019, but has not restated comparatives for the prior year, as permitted
under the specific transitional provisions in the accounting standard.
The work to collect the relevant data and agree the appropriate
accounting policies and disclosures has been significant. During the
year, the Committee reviewed all aspects of IFRS 16 adoption and
is satisfied that the methodology used and the assumptions and
judgements are reasonable and the disclosures appropriate. The
Committee also reviewed Management’s determination of and
reasons for presenting the IAS 17 consistent EBITDA and underlying
cash generated alternative performance measures, which facilitates
the understanding of the impact of IFRS 16 on the Group’s results.
Performance evaluation
A formal evaluation of the Committee’s performance will be undertaken later this calendar year based on feedback to a questionnaire distributed to
Committee members and others who regularly attend Audit Committee meetings. Two areas identified for improvement in the previous evaluation,
being prioritisation of key agenda items by rotating the order in which finance and the second and third lines of defence functions present at meetings,
together with more timely production of minutes, have been addressed during the year.
During the year, Committee members have maintained and developed their knowledge and awareness through a combination of self-reading, practical
experience, receiving presentations and/or undertaking formal CISI modules.
Approval
This report in its entirety has been approved by the Committee and signed on its behalf by:
C. Bouch
Audit Committee Chairman
31 July 2020
Walker Crips Group plc - Annual Report and Accounts 2020
Corporate governance
33
Remuneration Committee report
year ended 31 March 2020
Introduction
This is the Remuneration Committee (“the Committee”) report for the year ended 31 March 2020. It sets out the remuneration policy and remuneration
details for both the Executive and Non-Executive Directors of the Group. 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:
(cid:1) the statement by the Chairman of the Committee set out below;
(cid:1) the Annual Report; and
(cid:1) the policy report.
The Annual report on remuneration provides details on remuneration in the period. The policy report was approved by the shareholders at the 2017
Annual General Meeting (AGM) for a period of three years and is therefore now being put to the shareholders at the 2020 AGM. A resolution to approve
the Annual report on remuneration will also be put to this year’s Annual General Meeting.
The Companies Act 2006 requires the auditor 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 Committee and the extract of the policy report
are not subject to audit.
Annual statement from the Chairman of the Remuneration Committee
This financial year was a mixed one for the Group, with the first ten months of the year showing marked improvement on prior year. However, with the
onset of the COVID-19 pandemic in late February, and its impact on the global economy since then, March saw a record slump in the FTSE index and the
Bank of England base rate. This had the two-fold effect of hampering both the Group’s AUM-based fee income and managed deposit interest income.
Though the reported performance is still an improvement on prior year, a look ahead suggests a large amount of uncertainty. Accordingly, in keeping with
other measures adopted by the Group, no bonuses have been awarded to the Executive Directors relating to the financial year.
During the year, no other significant changes were made to the remuneration arrangements. Nick Hansen* was appointed as CEO of WCIM and Chris
Darbyshire was appointed as Chief Investment Officer of WCIM. Sanath Dandeniya was promoted to Group Finance Director.
In the same context of cost cutting measures, it was decided that, at least until the impact of the pandemic has been established and quantified, shares
will not be awarded under the Share Incentive Plan (SIP) in the current financial year.
With Rodney FitzGerald’s retirement and no bonuses being awarded for the current financial year, Directors’ total emoluments have reduced from last
year. There are no LTIP arrangements in place at the year-end.
The Committee continues to monitor the Group’s remuneration arrangements to ensure that it maintains appropriate measures and processes for annual
and long-term incentives, with an emphasis on increasing the proportion of non-cash, share-based bonus awards.
M. J. Wright
Remuneration Committee Chairman
31 July 2020
* Awaiting approval from the FCA.
Walker Crips Group plc - Annual Report and Accounts 2020
34
Remuneration Committee report (continued)
year ended 31 March 2020
Annual report on remuneration – subject to advisory vote by shareholders at the 2020 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 2020 AGM.
Remuneration for the year ended 31 March 2020 (audited information)
The table below sets out the remuneration received by the Directors in relation to performance in the year to 31 March 2020 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
£
Personal
Taxable
pension
benefits contributions
£
£
Share
incentive
plan
matching
share
Bonus contribution
£
£
Name of Director
Executive
S. K. W. Lam
R. A. FitzGerald1
S. S. Dandeniya2
G. J. B. Jackson3
M. J. W. Rushton4
Non-Executive
H. M. Lim
C. Bouch
M. J. Wright5
D. M. Gelber
Total
Year
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
220,000
220,000
64,936
100,000
75,000
–
–
50,195
–
129,767
–
–
38,570
38,570
–
–
42,559
42,559
441,065
581,091
1,704
1,717
1,613
3,970
799
–
–
1,078
–
1,961
–
–
–
–
–
–
–
–
22,000
22,000
6,494
10,000
5,250
–
–
3,514
–
9,084
–
–
–
–
–
–
–
–
4,116
8,726
33,744
44,598
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£
245,504
245,517
73,943
115,770
81,949
–
–
54,787
–
142,316
1,800
1,800
900
1,800
900
–
–
–
–
1,504
–
–
–
–
1,800
1,800
40,370
40,370
–
–
1,800
1,800
7,200
8,704
–
–
44,359
44,359
486,125
643,119
Executives can elect to sacrifice fixed or variable remuneration into a pension scheme of their choice.
1 R. A. FitzGerald retired on 30 September 2019.
2
S. S. Dandeniya appointed on 30 September 2019.
3 G. J. B. Jackson resigned on 23 July 2018.
4 M. J. W. Rushton resigned on 30 January 2019.
5 Charles Russell Speechlys LLP received fees of £27,258 (2019: £27,255) for the services of M. J. Wright who is a Partner.
Annual bonus for the year ended 31 March 2020
The Group operates a profit sharing pool from which the Executive Directors may receive a discretionary bonus linked to performance which is described
on page 39. The Chief Executive Officer has separate bonus arrangements which are described in the table on page 36. All bonuses have historically been
paid in cash with no deferred component, however arrangements are now in place for future bonuses payable to the Chief Executive to be awarded partly
in shares deferred from sale for three years.
Based on the Group’s results and profitability and the ongoing uncertainty caused by the COVID-19 pandemic, the Committee has not awarded any
discretionary annual bonuses for the current year payable in cash or equity to the Executive Directors.
Outstanding share awards
There were no share options outstanding and not vested at 31 March 2020 and 31 March 2019. There are no share option schemes and no Long-term
Incentive Plans are in place for any of the Directors.
Deferred bonus
Deferred bonus arrangements were put in place for Sean Lam upon becoming CEO, as described on page 36. No awards have been made during the year
(2019: £ nil).
Walker Crips Group plc - Annual Report and Accounts 2020
Corporate governance
35
Directors’ shareholding and share interests (audited information)
The interests of the Directors and their connected persons in the share capital of the Group are shown in the table below.
Director
H. M. Lim
R . A. FitzGerald
S. K. W. Lam
S. S. Dandeniya
D. M. Gelber
C. Bouch
M. J. Wright
Beneficially
owned at
31 March
2019
Beneficially
owned at
31 March
2020
Beneficially
owned at
30 June
2020
10,629,836
320,367
582,928
n/a
171,635
27,898
16,129
11,316,290
n/a
631,090
29,071
189,863
42,806
16,129
11,416,290
n/a
632,919
30,901
191,693
44,636
16,129
Share Incentive Plan (“SIP”)
All employees of the Group are eligible to participate in the SIP following three months of service. Employees may contribute a maximum of 10% of
their gross salary in regular monthly payments (being not less than £10 and not greater than £150) to acquire Ordinary Shares in the Parent Company
(Partnership Shares). Partnership Shares are acquired monthly. For every Partnership Share purchased, the employee receives one Matching Share.
On 1 April 2020, Directors as part of the COVID-19 response to preserve cash and liquidity, suspended the matching option. This will continue until
31 March 2021.
A total of 1,084,297 (2019: 885,382) new Ordinary Shares were issued to the 110 employees who participated in the SIP during the year. At 31 March
2020, 4,500,855 shares were held in the SIP on their behalf, in the employee’s name. There were no forfeited shares not allocated to any specific
employee.
Matching Shares awarded to Directors and held under the SIP are as follows:
Director
R. A. FitzGerald
S. K. W. Lam
S. S. Dandeniya
D. M. Gelber
C. Bouch
31 March
2019
31 March
2020
22,849
20,914
n/a
47,685
8,397
n/a
25,516
14,149
54,698
15,410
Material contracts with Directors
Other related parties include Charles Russell Speechlys LLP, in which M. J. Wright, Non-Executive Director, is a Partner. Charles Russell Speechlys LLP
provides certain legal services to the Group on normal commercial terms and the amount paid and expensed during the year (including the fees paid
to the firm for Mr. Wright’s services as Director) was £84,000 (2019: £181,000).
Commission of £4,746 (2019: £3,454) 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, certain overseas 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 Group pension schemes in operation. The Group contributes a percentage of the Executive Directors’ basic salaries into
personal pension arrangements of their choice. Monthly employer contributions of 5-10% of base salary for Executive Directors can be compared with
a maximum of 5% paid for employees. 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.
Walker Crips Group plc - Annual Report and Accounts 2020
36
Remuneration Committee report (continued)
year ended 31 March 2020
Annual report on remuneration – subject to advisory vote by shareholders at the 2020 AGM (continued)
Loss of office payments
No payments in lieu of notice were paid in the current year. In the prior year, a payment in lieu of notice of £85,596 was paid to Mark Rushton.
Percentage increase in the remuneration of the Chief Executive
Chief Executive
Salary
Bonus
Benefits
Average per employee (£)
– salary
– bonus
2019
£
220,000
–
1,717
2020
£
220,000
–
1,704
37,619
7,831
38,506
6,562
Change
0.0%
n/a
-0.8%
2.4%
-16.2%
The table above shows the movement in salary and annual bonus for the Chief Executive between the current and previous financial years compared
to that of the average employee. The Committee has chosen this comparator as it provides a better reflection of the earnings of the average worker
than the movement in the Group’s total wage bill, since the latter is subject to distortion by movements in the number of employees. The average bonus
per employee only reflects bonuses paid to individuals working in profitable business units and is not an award to every member of staff. Given the
uncertainty caused by the COVID-19 outbreak, to preserve cash, the Group has not awarded a general staff bonus this year.
Performance graph
The graph below shows a comparison between the Group’s total shareholder return (“TSR”) performance compared with the companies in the FTSE
Small Cap Index. The graph compares the value, at 31 March 2020, of £100 invested in Walker Crips Group plc on 31 March 2010 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.
Total shareholder return compared to FTSE Small Cap Index
500
400
300
200
100
0
WCG Plc Share Price TR
FTSE Small Cap Index
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
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 any of the Executive Directors
during the year.
2010
2011
2012
2013
2014
2015
2016
2017
2018
Years
ended
31 March
2020
2019
Total remuneration
£193,807 £199,592 £174,512 £267,934 £186,769 £187,176 £189,264 £196,119 £203,453 £245,517 £245,504
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
2019
£’000
12,680
796
2020
£’000
13,268
396
Change
4.64%
-50.25%
This self-evidently reflects the decision not to pay a final dividend for 2020 in the light of the impact of the COVID-19 pandemic.
Walker Crips Group plc - Annual Report and Accounts 2020
Corporate governance
37
Remuneration Committee governance
The 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 Committee’s terms of reference can be viewed on the Group’s website.
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. The Committee consists of three Non-Executive Directors, David Gelber, Martin Wright (Chair of
Remuneration Committee and Senior Independent Director) and Clive Bouch (Chair of Audit Committee).
None of the Committee’s 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 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 from third party
experts and independent legal advice may be sought 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.
The Committee met on three occasions. Matters that were considered and discussed included but were not limited to:
(cid:1) the remuneration policy for Executive Directors, including structure and performance criteria for the annual divisional and bonus pool arrangements
and long-term incentive plan;
(cid:1) determination of remuneration of Executive Directors;
(cid:1) determination of annual incentive payable to Executive Directors in respect of the year to 31 March 2020;
(cid:1) oversight of remuneration arrangements for senior Executives;
(cid:1) review of the Group’s Pillar 3 remuneration disclosures; and
(cid:1) review of the Committee’s terms of reference.
External directorships
None of the Executive Directors held external directorships during the current and prior year.
How the remuneration policy will be applied for the year from 1 April 2020 onwards
Having reviewed base salaries in 2019 and 2020, and the measures taken urgently in March and April to address the pandemic, no increases have been
made to the salaries of the Executives.
S. K. W. Lam
R. A. FitzGerald1
S . S Dandeniya2
1 Represents part-time attendance based on an annual salary of £150,000.
2 Appointed on 30 September 2020.
Salary as at
31 March
2019
£
Salary as at
31 March
2020
£
220,000
100,000
–
220,000
–
75,000
Fees for the Chairman and Non-Executive Directors
The Group’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
Directors’
fee as at
31 March
2020
£
42,559
27,258
38,570
Walker Crips Group plc - Annual Report and Accounts 2020
38
Remuneration Committee report (continued)
year ended 31 March 2020
How the remuneration policy will be applied for the year from 1 April 2020 onwards (continued)
Fees for the Chairman and Non-Executive Directors (continued)
D. M. Gelber was appointed as Non-Executive Chairman of the Group 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 Group’s
Articles of Association. His remuneration is now a fee of £42,559 per annum, plus reimbursement of expenses incurred on behalf of the Group, plus a
contribution by the Group to the Share Incentive Plan.
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 Group’s Articles of Association. His fees are now £27,258 per annum, plus VAT, plus expenses. His fees are payable to Charles Russell Speechlys LLP
quarterly in arrears.
H. M. Lim has no formal service agreement with and receives no remuneration from the Group.
C. Bouch was appointed as a Non-Executive Director and later as Chairman of the Audit Committee by a letter agreement dated 24 March 2017 for a
term commencing on 31 March 2017 of not less than three years, save that the appointment is terminable by either party on at least three months’
notice in writing or otherwise in accordance with the Group’s Articles of Association. His remuneration is a fee of £38,570 per annum, plus reimbursement
of other specific expenses incurred on behalf of the Group and contribution by the Group to the Share Incentive Plan.
Directors’ contracts are available for inspection at the Annual General Meeting or on appointment at our London head office.
LTIP for Executive Directors
There are no LTIP arrangements in place at 31 March 2020.
Statement of shareholder voting
At last year’s AGM, the Directors’ remuneration report received the following proxy votes from shareholders:
2019 AGM
Votes in favour
Votes cast against
Abstentions
2018 AGM
Votes in favour
Votes cast against
Abstentions
Number
Percentage
14,562,434
28,932
–
99.8%
0.2%
0%
Number
Percentage
14,392,574
24,000
–
99.8%
0.2%
0%
Walker Crips Group plc - Annual Report and Accounts 2020
Corporate governance
39
Directors’ remuneration policy report – to be approved by shareholders at the 2020 AGM
Scope
The Committee determines the Group’s policy on the remuneration of the Executive Directors and other members of Executive Management, including
employees designated as code staff under the FCA Remuneration Code. The Committee’s terms of reference are available on the Group’s website.
Fees policy for the Board Chairman and other Non-Executive Directors
The Board as a whole will determine the remuneration of the Non-Executive Directors, with Non-Executive Directors exempting themselves from
discussions and voting.
The Committee takes into account the following objectives in determining the Directors’ remuneration policy:
(cid:1) this policy has been designed to support the delivery of the Group strategic business objectives and corporate values, by attracting, retaining and
motivating talented Directors and senior Management of the calibre to manage the business successfully;
(cid:1) to reward and motivate good and above average performance; and
(cid:1) to comply with the requirements of the FCA Remuneration Code after taking account of disapplication of parts of the Code determined by
proportionality guidelines set by the FCA.
Key principles
(cid:1) to adopt a structure of fixed and variable remuneration, industry comparable with the size and profitability of the Group, that will take account
of Group performance and will motivate Directors and staff to develop and expand the business responsibly;
(cid:1) to avoid creating incentives for excessive risk taking that exceeds tolerated risk levels of the Group or its risk appetite;
(cid:1) to adopt only incentive plans which align with the Group’s business strategy;
(cid:1) to make proportionate fixed and variable awards that are governed by this policy which should not prevent the Group from meeting its capital
requirements and consolidating its capital base;
(cid:1) to ensure that all types of remuneration arrangement operated by the Group outlined in this policy are regularly reviewed;
(cid:1) where appropriate to reward exceptional contribution with specific arrangements;
(cid:1) to apply consistency with the general remuneration culture prevalent throughout the Group; and
(cid:1) to ensure that the Group does not pay variable remuneration through vehicles that facilitate avoidance of local regulation or tax evasion.
Operation of policy
The view of the Committee is that the remuneration of the Executive Directors is appropriate and balanced and that it supports the objective of
delivering the business model and strategy adopted by the Group.
The following tables summarise the components and policy for Directors’ remuneration packages which were applied during the year including
performance measures for bonus entitlement:
Element
Salary
Bonus
Purpose and link to
strategy
Reflect the value of the
individual and their role.
Reflect skills, experience
over time. Provide an
appropriate level of basic
fixed income avoiding
excessive risk arising from
over reliance on variable
income.
Incentivise annual
delivery of financial and
operational goals.
Relatively high potential
rewards for achieving
demanding targets for
Group profit before tax
which is based on the
Board-approved strategy
for increasing profit and
shareholder value.
A discretionary bonus may
be awarded to the Chief
Executive on achievement
of stretching performance
targets and fulfilment of
certain behavioural and
numeric criteria.
Operation
Maximum opportunity
Performance conditions
Reviewed annually,
effective 1 July. Agreed
when results for the
previous year have been
finalised.
n/a.
Annual increases are
normally in line with those
provided to the wider
employee population
unless there is a change
in the Director’s role or
responsibility or there is
a significant divergence
from market comparatives
of similar executive
directorship roles.
Determined after results
for the financial year are
signed off with Group
profit before tax being a
primary metric.
A discretionary bonus
of an amount up to a
maximum rate of 15% of
profits is pooled partly for
allocation to the Executive
Directors.
Except in the case of the
Chief Executive there is
no maximum, but the
Committee will exercise
its discretion responsibly
having regard to the
interests of shareholders.
The Chief Executive’s
discretionary bonus is
capped at a maximum of
100% of basic salary.
Specific awards agreed on an individual basis
consistent with the key principles. A general
discretionary award taken from the pool will
be allocated based on performance measured
over the financial year, including achievement
of specific strategic-based objectives and
upon profit before tax of the Group for the
Walker Crips Group plc Executive Board.
The pool consists of 5% of Group profit before
tax in excess of £497,423 and 15% above
profit for the year in excess of £1,243,557.
The Chief Executive must meet the following
criteria which may vary from year to year:
profitability growth, new initiatives, efficient
use of capital, achieve strategic objectives,
liquidity and growth in share price, compliance
with high standards of conduct, risk and
regulation.
Walker Crips Group plc - Annual Report and Accounts 2020
40
Remuneration Committee report (continued)
year ended 31 March 2020
Directors’ remuneration policy report – to be approved by shareholders at the 2020 AGM (continued)
Key principles (continued)
Element
Purpose and link to
strategy
Share
Incentive
Plan
A tax-efficient HMRC-
approved scheme which
allows the Group to make
contributions equal to
those by employees,
including Directors,
to purchase shares
in the Company.
Operation
Maximum opportunity
Performance conditions
None as not considered material.
Annual contributions are
made through the payroll
and tax benefits accrue
after three years.
Maximum contribution
of £1,800 per annum by
Director and Company.
(On 1 April 2020, the
Directors as part of the
COVID-19 response
to preserve cash and
liquidity, suspended the
matching option. This will
continue until 31 March
2021).
Long-term
Incentive
Plan
(LTIP)
Aligned to main strategic
objective. Based on the
Company’s measurable
key statistics (e.g. NAV
growth).
At the year-end there were
no LTIPs in place.
n/a
Pension
Provide modest retirement
benefits. Opportunity for
Executive to contribute to
their own retirement plan.
Contribution to pension
scheme of Executive’s
choice. HMRC-approved
salary sacrifice
arrangement.
Monthly employer
contribution of 5-10%
of base salary compared
to a maximum of 5%
for employees. Salary
sacrifice for employee
contribution.
Other
benefits
Provide additional fringe
benefit.
Life Assurance – four
times basic salary.
Continuous upon
recruitment.
n/a
n/a
n/a
Medical Insurance
for family to age 24.
Permanent Health
Insurance.
Participation in Group
Share Incentive Scheme.
Non-Executive Directors
Element
Purpose and link to
strategy
Fees
Reflects the skills and
experience brought by the
Director and their role.
Benefits
Provide market-related
benefits to Non-Executive
Directors.
Operation
Maximum opportunity
Performance conditions
n/a
Fees are reviewed
annually but not
necessarily increased.
Increases are normally in
line with inflation.
Reasonable costs.
n/a
Fees consist of a base
Board fee and fees
for Chairmanship of
Committees. Account is
taken of practice adopted
by similar-sized companies
and time commitment.
Benefits include
reimbursement of
expenditure incurred in
connection with their
duties.
Walker Crips Group plc - Annual Report and Accounts 2020
Corporate governance
41
Remuneration Committee discretion
In addition to assessing and making judgements on the meeting of performance targets and the appropriate incentives payable, the Committee has
certain operational discretions available that can be exercised in relation to Executive Directors’ remuneration including, but not limited to:
(cid:1) amending performance conditions following a major corporate event or in circumstances in which the Committee considers that the impact of
external economic influences is such that the original metrics and/or targets are no longer appropriate or where there is other political uncertainty
having a significant impact on the business environment to ensure a fair and consistent assessment of performance;
(cid:1) deciding whether to apply malus or clawback to an award;
(cid:1) determining whether a leaver is a ‘good leaver’; and
(cid:1) specific bonuses may be agreed with Executive Directors consistent with the key principles.
Where such discretion is exercised, it will be explained in the next Directors’ remuneration report.
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. The Group
applies a consistent remuneration philosophy for employees at all levels.
Fixed pay components for all employees, including specifically for new appointments and promotions to new positions, are benchmarked against relevant
market comparators and the Committee takes account of the aggregate rate of base salary increase for all employees when determining increases
in fixed pay for Directors. Pension contributions are applicable on the same basis to all employees. All employees are eligible for performance-related
annual bonus derived from a bonus pool linked to Group profitability. Certain senior employees (other than the Executive Directors) may become eligible
to receive LTIP awards.
Benchmarking
The Committee takes account of market benchmark data when setting total remuneration packages for Executive Directors. Comparisons are made with
other FTSE-listed companies of similar size and business profile. Practices in the private client investment management sector, and other related sectors,
are also considered. Benchmark data is used by the Committee as a reference point, alongside other factors such as the individual’s role and experience,
and the relative size of the company and personal performance, rather than as a direct determinant of pay levels.
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 Group Chairman or Committee Chairman
will consult with major shareholders about these in advance.
Details of votes cast for and against the resolution to approve last year’s remuneration report are provided in the Annual report on remuneration section
of the Directors’ remuneration report. If there is a significant vote against any remuneration resolution, the Committee will endeavour to understand the
reasons for the lack of support and to address shareholders’ concerns.
Consideration of employment conditions elsewhere in the Group
The Group does not operate formal employee consultation on remuneration. However, employees are able to provide direct feedback on the Group’s
remuneration policies to their line managers or the Human Resources department. The Committee monitors the effectiveness of the Group’s
remuneration policy in recruiting, retaining, engaging and motivating employees.
The Committee does not seek to apply fixed ratios between the total remuneration levels of different roles in the Group, as this would prevent it from
recruiting and retaining the necessary talent in a highly competitive employment market.
External Non-Executive Director positions
Executive Directors are permitted to serve as Non-Executive Directors of other companies, on the grounds that this can help to broaden the skills and
experience of the Director, provided there is no competition with the Company’s business activities and where these duties do not interfere with the
individual’s ability to perform his duties for the Company.
Where an outside appointment is accepted in furtherance of the Company’s business, any fees received are remitted to the Company.
Walker Crips Group plc - Annual Report and Accounts 2020
42
Remuneration Committee report (continued)
year ended 31 March 2020
Directors’ remuneration policy report – to be approved by shareholders at the 2020 AGM (continued)
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 maximum levels of the Group’s approved
remuneration policy in force at the time of appointment. The Remuneration Committee is conscious of the importance of not paying more than is
necessary to secure the best candidate. However, there may be circumstances in which a higher salary than that of the incumbent needs to be offered to
attract a new Director into a role. As noted above, the annual bonus is discretionary and there is no maximum variable pay.
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 may involve the use of awards made under Rule 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 foregone.
Shareholders will be informed of any such payments and the rationale for these.
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. The Company’s policy is for Executive Directors’ notice periods to be limited to six months by either party. The incumbent
CEO, Sean Lam, has a notice period of 12 months.
If the employing company wrongfully terminates the employment of an Executive Director without giving the period of notice required under the
contract, the Executive Director would be entitled to claim recompense for up to six or the agreed term of months’ total fixed pay (i.e. salary and
benefits). Where an Executive Director is considered by the Committee to be a ‘good leaver’, circumstances in which the individual leaves because of
retirement, redundancy, ill-health, death or disability, or otherwise at the Committee’s discretion, the Committee may 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 period of any notice or ‘garden leave’.
In the event of a change of control of the Company there is no enhancement to these terms.
Legacy arrangements
For the avoidance of doubt, the Directors’ remuneration policy includes any arrangement entered with a Director before 28 June 2012 that is unchanged
since that date. Any other remuneration or termination payments made to a Director during the currency of this policy will be consistent with the terms of
this policy. Details of any payments to former Directors will be set out in the implementation section of this report as they arise.
Approval
This report was approved by the Committee and the Board and signed on its behalf by:
M. J. Wright
Remuneration Committee Chairman
31 July 2020
Walker Crips Group plc - Annual Report and Accounts 2020
Corporate governance
Directors’ report
year ended 31 March 2020
43
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 2020.
Results and dividends
Results, distributions and retained profits are as follows:
Retained earnings at 1 April
Profit for the year after taxation
Effect of adoption of IFRS 16
Dividends paid
Retained earnings at 31 March
2020
£’000
10,659
718
601
(396)
2019
£’000
11,122
333
–
(796)
11,582
10,659
The Directors do not propose to pay a final dividend this year (2019: 0.33 pence per share). The Directors believe it is important to maintain Group’s
liquidity position at the highest level whilst the uncertainty caused by the COVID-19 pandemic continues. The total dividend paid in the year was 0.60
pence per share (2019: 0.91 pence per share).
Capital structure
Details of the Group’s share capital are shown in note 30. The Group 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 Group.
There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general provisions of the Articles
of Association and prevailing legislation. The Directors are not aware of any agreements between holders of the Group’s shares that may result in
restrictions on the transfer of securities or on voting rights.
Where shares have been issued as consideration for new clients to investment advisers upon commencement with the Group, these shares are restricted
from sale for periods of four to six years.
No person has any special rights of control over the Group’s share capital and all issued shares are fully paid.
With regard to the appointment and replacement of Directors, the Group is governed by its Articles of Association, the UK Corporate Governance Code,
the Companies Acts and related legislation. The Articles themselves may be amended by a 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 18 and 19.
Directors’ interests
Directors’ emoluments and beneficial interests in the shares of the Company are disclosed in the Directors’ Remuneration Report on page 33. Other than
noted on page 35 there are no other situations where a Director had a material interest in a contract to which the Company or any of its subsidiaries was
a party (other than their own service contract), requiring disclosure under the Companies Act 2006.
Related party transactions
Details of related party transactions are disclosed in note 34.
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.
Employment policy
We are committed to the principle of equality and equal opportunities in employment. We are opposed to any form of less favourable treatment or
financial reward through direct or indirect discrimination, harassment, victimisation to employees or job applicants on the grounds of age, race, religion
or belief, marriage or civil partnership, pregnancy or maternity, sex, sexual orientation, gender reassignment or disability.
We recognise our obligations under the Equality Act 2010 and The Codes of Practice published by the Equality and Human Rights Commission and the
European Commission for the elimination of discrimination on the grounds of age, disability, gender reassignment, race, religion or belief, sex, sexual
orientation, marriage and civil partnership, maternity and pregnancy and for the elimination of discrimination in pay between men and women who do
the same work.
We report that at the end of 2020: No Directors of the Group’s Parent Company were women (2019: nil); 31% of senior managers, being individuals
with responsibility for planning, directing or controlling, were women (2019: 31%); and 44% of the Group’s employees were women (2019: 45%).
Walker Crips Group plc - Annual Report and Accounts 2020
44
Directors’ report (continued)
year ended 31 March 2020
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 Group’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.
Insurance and indemnification of Directors
The Group has put in place insurance to cover its Directors and officers which gives appropriate cover for legal action brought against any of them.
In addition, the Group’s Articles of Association provide for the ability of the Group to grant qualifying third-party indemnity provisions (as defined
in section 234 of the Companies Act 2006) for the benefit of the Directors in relation to certain losses and liabilities which they may incur (or have
incurred) in connection with their duties, powers or office.
Ordinary and special business
Resolutions will be placed before the Annual General Meeting to confer authority on the Group to allot equity securities of up to an aggregate nominal
amount of £946,162 and to authorise and empower the Group to allot equity securities.
The Companies Act 2006 permits a public group to purchase its own shares in accordance with the powers contained in its Articles of Association and
with the authority of a resolution of shareholders. The Directors believe that the Group should be authorised to take advantage of these provisions and,
therefore, pursuant to the power contained in the Group’s Articles of Association, it is intended to propose a special resolution at the forthcoming Annual
General Meeting to confer authority on the Group to purchase up to a maximum in aggregate of 10% of the Ordinary Shares of 6 2/3 pence each in the
share capital of the Group at a price or prices which will not be less than 6 2/3 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 Group 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 Group to do so. Shareholders should note that any Ordinary Shares purchased by the Group will
either be cancelled and the number of Ordinary Shares in issue will accordingly be reduced or will be held as treasury shares.
Financial instruments and risk management
The risk management objectives and policies of the Group are set out in note 26 to the financial statements.
Substantial shareholdings
As at 31 March 2020, there were no interests, excluding those of Directors, in excess of 3% of the Ordinary Share capital of the Group.
L . W. S. Lim
L. W. Y. Lim
L. W. J. Lim
Number
Percentage
3,227,523
3,227,523
3,227,521
7.58
7.58
7.58
As at 30 June 2020, the following interests, excluding those of Directors, in excess of 3% of the Ordinary Share capital of the Group were held:
L . W. S. Lim
L. W. Y. Lim
L. W. J. Lim
Number
Percentage
3,227,523
3,227,523
3,227,521
7.58
7.58
7.58
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.walkercrips.co.uk.
Walker Crips Group plc - Annual Report and Accounts 2020
Corporate governance
45
Carbon emission reporting
Greenhouse gas (GHG) emissions data for the year ended 31 March 2020:
Scope 1 – combustion of fuel
Scope 2 – purchased electricity
Total
Total emissions per employee
The underlying global energy use for the year ended 31 March 2020:
Electricity
Gas
Total
All energy consumption is in the UK (2019: 100%).
2020
tCO²e
12
96
108
0.49
2019
tCO²e
7
86
93
0.43
2020
kWh
374,806
64,550
439,356
2019
kWh
304,062
39,862
343,924
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.
These disclosures incorporate the requirements of The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report)
Regulations 2018, which is effective for periods beginning 1 April 2019.
The Group continues to incorporate considerations of the environment and energy efficiency into its decision-making processes and further information
in relation to its impact is considered in the Group’s Section 172(1) statement contained in the Group’s Strategic Report.
The following sources of emissions are not deemed material for the purposes of preparing this disclosure:
(cid:1) vehicle use; and
(cid:1) air conditioning.
Audit information
Each of the persons who is a Director at the date of approval of this Annual Report confirms that:
(cid:1) so far as the Director is aware, there is no relevant audit information of which the Group’s auditor is unaware;
(cid:1) the Director has taken all the steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information
and to establish that the Group’s auditor is aware of that information; and
(cid:1) a resolution to reappoint the auditor, BDO LLP, will be put to the AGM on 9 September 2020.
Going concern
The Group’s forecasts and projections show sufficient cash resources, working capital and regulatory financial resources for its present requirements
covering a period extending more than 12 months (see note 2 on page 59 for further details). Accordingly, the Directors continue to adopt the going
concern basis for the preparation of the financial statements.
Subsequent events
Details of significant events occurring after the end of the reporting period are given in note 37.
Approval
This report has been approved by the Board and signed on its behalf by:
S. S. Dandeniya FCCA, Director
31 July 2020
Walker Crips Group plc - Annual Report and Accounts 2020
46
Statement of Directors’ responsibilities
year ended 31 March 2020
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 International Financial Reporting Standards (IFRSs) as adopted by the European Union and have elected
to prepare the Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and Company and of the profit or loss for the Group for that period.
In preparing these financial statements, the Directors are required to:
(cid:1) select suitable accounting policies and then apply them consistently;
(cid:1) make judgements and accounting estimates that are reasonable and prudent;
(cid:1) state whether the financial statements of the Group have been prepared in accordance with IFRSs as adopted by the European Union, subject to any
material departures disclosed and explained in the financial statements;
(cid:1) state whether applicable UK Accounting Standards have been followed in the preparation of the Company financial statements, subject to any
material departures disclosed and explained in the financial statements;
(cid:1) prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and
(cid:1) prepare a Directors’ report, a Strategic report and Director’s remuneration report which comply with the requirements of the Companies Act 2006.
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 enable them to ensure that the financial statements comply with the
Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. 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 confirm that the Annual Report and Accounts, taken as a whole, are fair, balanced, and understandable and provide the information
necessary for shareholders to assess the Group’s position and performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a website. Financial statements are
published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of
the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.
Directors’ responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
(cid:1) the Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the
European Union and Article 4 of the IAS Regulation and give a true and fair view of the assets, liabilities, financial position and profit and loss of the
Group; and
(cid:1) the Annual Report includes a fair review of the development and performance of the business and the financial position of the Group and the Parent
Company, together with a description of the principal risks and uncertainties that they face.
Approval
This report has been approved by the Board and signed on its behalf by:
S. S. Dandeniya FCCA, Director
31 July 2020
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
47
Independent auditor’s report to the members of Walker Crips Group PLC
year ended 31 March 2020
Opinion
We have audited the financial statements of Walker Crips Group plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended
31 March 2020 which 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 company balance
sheet, the company statement of changes in equity and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and International
Financial Reporting Standards (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 including Financial Reporting Standard 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
(cid:1) 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 2020 and of the
Group’s profit for the year then ended;
(cid:1) the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
(cid:1) the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice;
and
(cid:1) 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the
Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to principal risks, going concern and viability statement
We have nothing to report in respect of the following information in the annual report, in relation to which the ISAs (UK) require us to report to you
whether we have anything material to add or draw attention to:
(cid:1) the Directors’ confirmation set out on page 23 in the annual report that they have carried out a robust assessment of the Group’s emerging and
principal risks and the disclosures in the annual report that describe the principal risks and the procedures in place to identify emerging risks and
explain how they are being managed or mitigated;
(cid:1) the Directors’ statement set out on page 25 in the financial statements about whether the Directors considered it appropriate to adopt the going
concern basis of accounting in preparing the financial statements and the Directors’ identification of any material uncertainties to the Group and the
Parent Company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements;
(cid:1) whether the Directors’ statement relating to going concern required under the Listing Rules in accordance with Listing Rule 9.8.6R(3) is materially
inconsistent with our knowledge obtained in the audit; or
(cid:1) the Directors’ explanation set out on page 59 in the annual report 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.
Walker Crips Group plc - Annual Report and Accounts 2020
48
Independent auditor’s report to the members of Walker Crips Group PLC (continued)
year ended 31 March 2020
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified including those which
had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. 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.
Key Audit Matter
Revenue recognition (notes 3 and 5)
The Group’s revenue of £31,422,000 (2019: £30,458,000) consists of fees
from two distinct components, broking income and non-broking income.
Revenue recognition is considered to be a significant audit risk as
it is a key driver of return to investors and because incomplete or
inaccurate income could have a material impact on the Group’s results.
In respect of broking income there is a risk that the IT platform may not
capture the trades correctly.
In respect of non-broking income, namely management fees, there
is a risk that the management fee may be calculated incorrectly
as a result of incorrect tariffs being used.
How we addressed the Key Audit Matter in the Audit
In respect of revenue recognition, our strategy was tailored to each revenue
stream. We responded to this matter by performing test of controls and
tests of detail as set out below, covering all revenue streams.
Our audit testing included, but was not restricted to:
Broking income
(cid:1) We performed controls testing to test the operating effectiveness of the
key controls in place over the completeness and the accuracy of broking
revenue, including automated controls and manual controls.
(cid:1) We traced a sample of recorded transactions to supporting contract
notes and to either bank statements or deductions from client accounts
to check that revenue was accurately recorded and accounted for.
Non-broking income
(cid:1) Using data analytics, we undertook a recalculation of quarterly
management fees earned during the year. This recalculation was based
on the fee tariff per client and the value of Assets Under Management
(AUM). A sample of recorded management fee income was traced to
the invoice/ investor pack and we checked that the fees were deducted
from client accounts.
(cid:1) For AUM values, we tested the operating effectiveness of key controls
in place over the existence and valuation of securities, including
automated controls and manual controls.
(cid:1) For a sample of AUM values, these were agreed to an independent
3rd party source and checked that the AUM was linked to a
fee-paying client.
(cid:1) In respect of fee tariffs, where there were changes in the fee tariff or
new fee tariffs, we agreed a sample to either client agreements or fee
tariff confirmations letters issued.
(cid:1) In respect of accrued fees, testing was performed on a sample basis
to check that revenue was recognised in the correct period. Testing
included a recalculation of the revenue to check that the appropriate
proportion of income had been recognised in the year.
Key observations:
Based on our procedures performed, we did not identify any matters which
would indicate that revenue is not appropriately recognised in accordance
with the requirements of applicable accounting standards.
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
49
Key Audit Matter
Recognition and impairment of client lists intangible assets
(notes 3 and 18)
Acquired client lists of £6,682,000 (2019: £7,234,000) are capitalised.
Judgement is exercised in determining whether the consideration paid in
respect of acquiring the client list meets the criteria for capitalisation and
if so, the appropriate period for the capitalised cost to be
amortised over.
Judgement is also exercised in determining the underlying assumptions,
such as attrition rates, used in the impairment review.
Management have completed an assessment of the carrying value of
each intangible asset at the year-end which involved undertaking a review
for indicators of impairment.
These judgements are explained further in the accounting policy in note 3
and in note 4 Key Sources of Estimation Uncertainty and in the disclosures
in note 18.
Provisions for client claims (notes 3 and 28)
Provisions made for client claims are based on management’s
assessment of the likelihood of outcomes of individual cases whilst taking
into consideration factors such as the level of insurance cover and the
progress of any claims referred to the Financial Ombudsman Service.
Provisions for client claims is considered a significant audit risk as
judgement is involved in determining whether a provision is required
to be accounted for.
How we addressed the Key Audit Matter in the Audit
Our audit testing included, but was not restricted to:
(cid:1) We obtained and challenged management’s technical analysis in
respect of compliance with the capitalisation criteria by benchmarking
to comparable companies and assessing whether the intangible asset
met the requirements to be capitalised.
In respect of the impairment assessment we challenged management’s
assessment by undertaking the following tests:
(cid:1) We compared the Useful Economic Life (UEL) of the intangibles against
the actual client attrition rates
(cid:1) We obtained and checked management’s value in use calculations
for mathematical accuracy and challenged the basis and inputs
into the calculation by benchmarking to actuals and industry practice.
We also obtained management’s fair value calculations based on
a % of AUM which had been prepared as part of their impairment
assessment and challenged the assumptions in the calculations based
on past performance and industry practice.
(cid:1) We challenged management’s assessment of indicators of impairment
by comparing to AUM and revenue generated from the intangible
asset over the prior three year period to identify trends. Embedded
in management’s assessment was assumptions associated with the
expected impact of COVID 19 on future revenues and AUMs which in
turn link into the assumptions used in the going concern assessment.
Key observations:
Based on our procedures performed, we consider management’s
assessment of no impairment to the client lists be appropriate.
We responded to this matter by obtaining and challenging management’s
analysis of claims. For a sample of claims, we have agreed this to the
relevant correspondence and the complaints register.
We also performed the following procedures:
(cid:1) Reviewed correspondence from the Group’s legal advisors where
applicable, as well as with the Financial Ombudsman Service to
ascertain whether a provision was to be recognised.
(cid:1) Reviewed the level of insurance coverage in place and correspondence
with brokers or underwriters to check that there is sufficient coverage
should there be a settlement of a claim.
(cid:1) Reviewed the accuracy of the provisioning basis in prior years. This
involved a comparison of the provision recognised in prior years to
the actual amounts either paid out or reversed in the current year to
ascertain whether the provisioning basis is accurate.
(cid:1) Considered the completeness of the provisions for client claims
through review of board minutes, complaints registers and internal
compliance reviews.
Key observations:
Based on our procedures performed, we consider the provision for client
claims to be reasonable.
Walker Crips Group plc - Annual Report and Accounts 2020
50
Independent auditor’s report to the members of Walker Crips Group PLC (continued)
year ended 31 March 2020
How we addressed the Key Audit Matter in the Audit
We responded to this matter by challenging management’s assessment of
the carrying value of goodwill and the related impairment reviews.
We performed the following procedures:
(cid:1) We tested the integrity of the valuation models by agreeing inputs into
the models to supporting documentation and performed recalculations.
(cid:1) With the assistance of our valuation specialists we reviewed the
assumptions used in the calculations and challenged management
on these assumptions, in particular the discount rate used to discount
expected future cash flows and the assumptions associated with the fair
value less cost of disposal basis.
(cid:1) We assessed management’s sensitivity analysis showing the impact
of a reasonably possible change in impairment assumptions and we
performed sensitivity analysis using a range of acceptable discount
factors. The discount rate used is a pre-tax Weighted Average Cost of
Capital (WACC) that reflects current market assessments of the time
value of money and the risks specific to the cash-flows. We benchmarked
individual components of the WACC to current market rates.
(cid:1) We agreed the calculations in the valuation models to forecasts,
which we have examined as part of the going concern review, to check
for consistency.
(cid:1) We compared the results of the cash generating units against forecasts
made in the prior year to check the reliability of management’s forecasts.
(cid:1) We assessed the adequacy of disclosure within the financial statements.
Key observations:
Based on our procedures performed, we consider management’s
assessment of no goodwill impairment to be appropriate.
Our audit work in this respect included:
We made enquiries of management to understand the impact of COVID-19
on the Group’s financial performance, business activities and operations,
and regulatory capital and liquidity.
We assessed the relevant sensitivities and stress tests included in
managements going concern assessment by performing the following:
(cid:1) Evaluated management forecasts and challenged the assumptions and
predicted outcomes by benchmarking against comparable companies,
analysis undertaken on expected sector performance and also against
market performance post year end. We considered the base and stress
scenarios testing undertaken by management to support the going
concern assessment which included assumptions about the potential
impact a prolonged recession due to COVID-19 could have on regulatory
capital, revenue and possible cost saving measures.
(cid:1) Reviewed post year end performance against forecasts to understand
what scenario the business is currently tracking.
(cid:1) Linked the assumptions on revenue growth and AUM used as part of
the going concern assessment back into the impairment assessments in
respect of goodwill and intangibles.
We reviewed the adequacy of disclosures in the financial statements
against management’s assessments.
Key Audit Matter
Impairment of goodwill (notes 3 and 17)
Goodwill of £4,388,000 (2019: £4,388,000) relates to the acquisition of
the London York cash generating unit and the acquisition of the Barker
Poland Asset Management LLP cash generating unit.
Impairment of goodwill is considered to be a significant audit risk as
judgement is exercised in determining the underlying assumptions used
in the annual impairment reviews which are required to be carried out
by Directors which gives rise to the risk of material misstatement in the
carrying value of goodwill. The assumptions include the P/E ratio, discount
rate, operating margin and growth rate. There is also a risk over the
completeness of the disclosures within the financial statements.
These judgements are explained further in the accounting policy in
note 3, and in note 4 Key Sources of Estimation Uncertainty and in the
disclosures in note 17.
Impact of the outbreak of COVID-19 on going concern and
valuation of intangible assets
(Strategic Report, note 2 and note 37)
During the year and in the preparation of the financial statements
the potential impact of COVID-19 has been significant and has led
to disruption in financial markets, and severe curtailment and restrictions
to normal patterns of business both within the United Kingdom
and globally.
In assessing whether the entity is a going concern management is
required to take into account all available information about the future,
being a period of at least 12 months from the date when the financial
statements are authorised for issue, including the effects of COVID-19
on their operations. Management have considered the base and stress
scenarios which include assumptions around key sensitivities such as
market crash, large settlement failure, operational failure, loss of major
clients and loss of associates as a result of a prolonged COVID-19
pandemic and the resultant impact that it could have on revenue, the
cash and capital position during this period.
Management have performed an assessment of the potential impact of
COVID-19 on the Group’s operations and performance. This has required
management to make judgements as to the reasonably foreseeable
impacts of COVID-19 in their impairment assessments of goodwill and
intangibles. In making those judgements, management has taken into
account the significant uncertainty as to the impact both on the wider
economy and on the markets in which the Group trades.
In light of the above, the impact of the COVID-19 pandemic on going
concern and the valuation of intangible assets is considered a key
audit matter.
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
51
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality
to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis
of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance
materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial
as we also take account of the nature of the identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect
on the financial statements as a whole.
The application of these key considerations gives rise to two levels of materiality applicable to the Group and the Parent Company, the quantum and
purpose of which are tabulated below.
Materiality measure
Financial statement
materiality (6.5% of
the three year average,
adjusted profit before tax)
Purpose
Assessing whether the financial statement
as a whole present a true and fair view.
Performance materiality
(60% of financial statement
materiality)
Parent Company financial
statement materiality (80%
of Group materiality)
Lower level of materiality applied
in performance of the audit when
determining the nature and extent of
testing applied to individual balances and
classes of transactions.
Assessing whether the financial statements
as a whole present a true and fair view.
Parent Company
performance materiality
(60% of Parent Company
financial statement
materiality)
Lower level of materiality applied
in performance of the audit when
determining the nature and extent of
testing applied to individual balances and
classes of transactions.
Key considerations and benchmarks
(cid:1) A principal consideration for members
of the Company in assessing the
financial performance of the Group.
(cid:1) Normalises profit to reflect the
underlying profit of the core business,
excluding items which are considered to
be one off occurrences and are outside
the normal course of business.
(cid:1) Financial statement materiality
(cid:1) Risk and control environment
(cid:1) History of prior errors
Quantum (£)
£60,000
(2019: £63,000)
£36,000
(2019: £38,000)
A principal consideration for members
of the Parent Company in assessing the
financial performance of the Parent
Company.
£48,000
(2019: £50,500)
(cid:1) Parent Company financial statement
materiality
£28,800
(2019: £30,200)
(cid:1) Risk and control environment
(cid:1) History of prior errors
Component materiality ranged from £3,700 to £57,000. We agreed with the Audit Committee that we would report to them all individual audit
differences in excess of £1,200 (2019: £1,000), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
An overview of the scope of our audit
Our audit approach was developed by obtaining an understanding of the Group’s activities, the key functions undertaken by the Board and the overall
control environment. Based on this understanding we determined materiality and assessed those aspects of the Group’s transactions and balances which
were most likely to give rise to a material misstatement. In particular, we focused on areas where the Directors made subjective judgements.
All components are based in the UK and the Group audit team have responsibility for the audit of all components included in the consolidated financial
statements. Audits of nineteen components were performed at a materiality level calculated by reference to a proportion of Group materiality
appropriate to the relevant scale of the business concerned. Five of the components were determined to be significant components and were subject
to full scope audits. The remaining components were considered to be non-significant components and specific audit procedures were performed on
material balances.
Capability of the audit to detect irregularities, including fraud
We gained an understanding of the legal and regulatory framework applicable to the Group and the industry in which it operates, and considered the
risk of acts by the Group which were contrary to applicable laws and regulations, including fraud. These included but were not limited to compliance
with Companies Act 2006, United Kingdom Generally Accepted Accounting Practice where applicable and IFRSs as adopted by the European Union,
the Financial Conduct Authority’s regulations and the Listing Rules.
We designed audit procedures to respond to the risk, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk
of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion.
Walker Crips Group plc - Annual Report and Accounts 2020
52
Independent auditor’s report to the members of Walker Crips Group PLC (continued)
year ended 31 March 2020
We focused on laws and regulations that could give rise to a material misstatement in the Group financial statements. Our tests included, but were not
limited to:
(cid:1) agreement of the financial statement disclosures to underlying supporting documentation;
(cid:1) enquiries of management;
(cid:1) review of minutes of board meetings throughout the period; and
(cid:1) considering the effectiveness of the control environment in monitoring compliance with laws and regulations.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any
indications of fraud or non-compliance with laws and regulations throughout the audit.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the
events and transactions reflected in the financial statements, the less likely we would become aware of it. We also addressed the risk of management
override of internal controls, including testing journals and evaluating whether there was evidence of bias by the Directors that represented a risk of
material misstatement due to fraud.
Other information
The Directors are responsible for the other information. The other information comprises the information included in the annual report and accounts
other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and,
except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit
of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material
misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
In this context, we also have nothing to report in regard to our responsibility to specifically address the following items in the other information and to
report as uncorrected material misstatements of the other information where we conclude that those items meet the following conditions:
(cid:1) Fair, balanced and understandable, set out on page 46 – the statement given by the Directors that they consider 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, performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or
(cid:1) Audit committee reporting, set out on page 29 – the section describing the work of the audit committee does not appropriately address matters
communicated by us to the audit committee; or
(cid:1) Directors’ statement of compliance with the UK Corporate Governance Code, set out on page 21 – the parts of the Directors’ statement
required under the Listing Rules relating to the Company’s compliance with the UK Corporate Governance Code containing provisions specified for
review by the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate
Governance Code.
Opinions 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.
In our opinion, based on the work undertaken in the course of the audit:
(cid:1) 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 and those reports have been prepared in accordance with applicable legal requirements;
(cid:1) the information about internal control and risk management systems in relation to financial reporting processes and about share capital structures,
given in compliance with rules 7.2.5 and 7.2.6 in the Disclosure Guidance and Transparency Rules sourcebook made by the Financial Conduct
Authority (the FCA Rules), is consistent with the financial statements and has been prepared in accordance with applicable legal requirements; and
(cid:1) information about the Company’s corporate governance code and practices and about its administrative, management and supervisory bodies and
their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the FCA Rules.
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
53
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have
not identified material misstatements in:
(cid:1) the strategic report or the Directors’ report; or
(cid:1) the information about internal control and risk management systems in relation to financial reporting processes and about share capital structures,
given in compliance with rules 7.2.5 and 7.2.6 of the FCA Rules.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
(cid:1) 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
(cid:1) the Parent Company financial statements and the part of the Directors’ remuneration report to be audited are not in agreement with the accounting
records and returns; or
(cid:1) certain disclosures of Directors’ remuneration specified by law are not made; or
(cid:1) we have not received all the information and explanations we require for our audit; or
(cid:1) a corporate governance statement has not been prepared by the Parent Company.
Responsibilities of Directors
As explained more fully in the statement of Directors’ responsibilities set out on page 46, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed by the Board of Directors on 3 August 2016 to audit the financial statements
for the year ended 31 March 2017 and subsequent financial periods. The period of total uninterrupted engagement is four years, covering the years
ended 31 March 2017 to 31 March 2020.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Parent Company and we remain independent
of the Group and the Parent Company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the Parent 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 Parent 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 Parent
Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Neil Fung-On (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London
United Kingdom
31 July 2020
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Walker Crips Group plc - Annual Report and Accounts 2020
54
Consolidated income statement
year ended 31 March 2020
Revenue
Commission and fees paid
Share of change in net assets of joint venture
Gross profit
Administrative expenses
Exceptional items
Operating profit
Investment revenue
Finance costs
Profit before tax
Taxation
Profit for the year attributable to equity holders of the Parent Company
Earnings per share
Basic
Diluted
Note
5
7
8
9
10
11
12
14
16
16
2020
£’000
31,422
(9,771)
(11)
21,640
(20,923)
375
1,092
76
(205)
963
(245)
718
2019
£’000
30,458
(9,673)
14
20,799
(20,365)
(32)
402
90
(3)
489
(156)
333
1.69p
1.69p
0.78p
0.78p
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
55
Consolidated statement of comprehensive income
year ended 31 March 2020
Profit for the year
Total comprehensive income for the year attributable to equity holders of the Parent Company
2020
£’000
718
718
2019
£’000
333
333
Walker Crips Group plc - Annual Report and Accounts 2020
56
Consolidated statement of financial position
as at 31 March 2020
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use assets
Investment in joint ventures
Investments – fair value through profit or loss
Current assets
Trade and other receivables
Investments – fair value through profit or loss
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Deferred tax liabilities
Bank overdrafts
Provisions
Lease liabilities
Net current assets
Long-term liabilities
Deferred cash consideration
Lease liabilities
Dilapidation provision
Landlord contribution to leasehold improvements
Net assets
Equity
Share capital
Share premium account
Own shares
Retained earnings
Other reserves
Equity attributable to equity holders of the Parent Company
Note
17
18
19
20
8
21
22
21
23
27
24
25
28
29
38
29
28
30
30
31
31
31
Group
2020
£’000
4,388
6,701
2,330
4,362
–
51
Group
2019
£’000
4,388
7,262
2,520
–
44
51
17,832
14,265
24,515
638
8,609
33,762
51,594
(22,750)
(424)
(335)
–
(178)
(969)
(24,656)
9,106
(15)
(3,620)
(659)
–
(4,294)
22,644
2,888
3,763
(312)
11,582
4,723
22,644
35,785
1,005
6,916
43,706
57,971
(34,095)
(178)
(317)
(127)
(484)
–
(35,201)
8,505
(47)
–
(542)
(460)
(1,049)
21,721
2,888
3,763
(312)
10,659
4,723
21,721
The financial statements of Walker Crips Group plc (Company registration no: 01432059) were approved by the Board of Directors and authorised for
issue on 31 July 2020.
Signed on behalf of the Board of Directors
S. S. Dandeniya FCCA, Director
31 July 2020
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
Consolidated statement of cash flows
year ended 31 March 2020
Operating activities
Cash generated / (used) by operations
Tax received
Net cash generated / (used) by operating activities
Investing activities
Purchase of property, plant and equipment
Sale of investments held for trading
Consideration paid on acquisition of client lists
Consideration paid on acquisition of subsidiary
Deferred consideration paid on acquisition of subsidiary
Dividends received
Interest received
Net cash used by investing activities
Financing activities
Dividends paid
Interest paid
Repayment of lease liabilities*
Repayment of lease interest*
Net cash used by financing activities
Net increase / (decrease) in cash and cash equivalents
Net cash and cash equivalents at beginning of period
Net cash and cash equivalents at end of period
Cash and cash equivalents
Bank overdrafts
* Total repayment of lease liabilities under IFRS 16 in the period was £1,101,000.
57
2019
£’000
(631)
66
(565)
(382)
789
(111)
–
(600)
23
67
(214)
(796)
(3)
–
–
(799)
(1,578)
8,367
6,789
6,916
(127)
6,789
Note
32
11
12
2020
£’000
3,483
18
3,501
(321)
101
(21)
(1)
–
17
48
(177)
(396)
(7)
(944)
(157)
(1,504)
1,820
6,789
8,609
8,609
–
8,609
Walker Crips Group plc - Annual Report and Accounts 2020
58
Consolidated statement of changes in equity
year ended 31 March 2020
Share
capital
£’000
Share
premium
account
£’000
Own
shares
Capital
held redemption
£’000
£’000
Equity as at 31 March 2018
2,861
3,674
(312)
111
Total comprehensive income for the year
Contributions by and distributions to owners
Dividends paid
Issue of shares on acquisition of intangibles and
as deferred consideration
Total contributions by and distributions to owners
–
–
27
27
–
–
89
89
–
–
–
–
–
–
–
–
Other
£’000
4,557
–
–
55
55
Retained
earnings
£’000
Total
equity
£’000
11,122
22,013
333
333
(796)
(796)
–
(796)
171
(625)
Equity as at 31 March 2019
2,888
3,763
(312)
111
4,612
10,659
21,721
Comprehensive income for the year
Effect of adoption of IFRS 16 (see note 35)
Total comprehensive income for the year
Contributions by and distributions to owners
Dividends paid
Total contributions by and distributions to owners
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
718
601
718
601
1,319
1,319
(396)
(396)
(396)
(396)
Equity as at 31 March 2020
2,888
3,763
(312)
111
4,612
11,582
22,644
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
Notes to the accounts
year ended 31 March 2020
59
1. General information
Walker Crips Group plc (“the Company”) is the Parent Company of the Walker Crips group of companies (“the Group”). The Group is a public limited
company incorporated in the United Kingdom under the Companies Act 2006. The nature of the Group’s operations and its principal activities are
set out on pages 2 to 3. The Group is registered in England and Wales. The address of the registered office is Old Change House, 128 Queen Victoria Street,
London EC4V 4BJ.
The significant accounting policies have been disclosed below. The accounting policies for the Group and the Company are consistent unless
otherwise stated.
2. Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by the
European Union (“EU”), Article 4 of the EU IAS Regulation and Companies Act 2006.
The Group financial statements are presented on pages 54 to 58.
The consolidated financial statements are presented in pounds sterling (£). Amounts shown are rounded to the nearest thousand, unless stated
otherwise.
The consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments that are measured at
fair value, and are presented in pounds sterling, which is the currency of the primary economic environment in which the Group operates. The principal
accounting policies adopted are set out below and have been applied consistently to all periods presented in the consolidated financial statements.
The Directors have considered the guidance of the UK Financial Reporting Council and events relating to the spread of coronavirus (COVID-19) pandemic
and have treated this as an in year event with due consideration given in preparing these financial statements.
Going concern
The financial statements of the Group have been prepared on a going concern basis. At 31 March 2020, the Group had net assets of £22.6 million
(31 March 2019: £21.7 million), net current assets of £9.1 million (31 March 2019: £8.5 million) and cash and cash equivalents of £8.6 million (31 March
2019: £6.8 million (net of overdraft)). The Group reported an operating profit of £1.09 million for the year ended 31 March 2020 inclusive of exceptional
income of £375,000 (31 March 2019: £402,000 inclusive of exceptional costs of £32,000) and net cash inflows from operating activities of £3.5 million
(31 March 2019: net cash outflows from operating activities of £565,000).
The Directors consider the going concern basis to be appropriate following their assessment of the Group’s financial position and its ability to meet its
obligations as and when they fall due. In making the going concern assessment the Directors have taken into account the following:
(cid:1) The capital structure and liquidity of the Group, noting the capital comprises equity, the balance sheet now reflects lease liabilities arising on the
adoption of IFRS 16 and the level of liquid resources remains strong.
(cid:1) Its base case and stressed cash flow forecasts over the financial reporting periods ending 31 March 2021 and 31 March 2022.
(cid:1) The principal risks facing the Group and its systems of risk management and internal control.
(cid:1) Improved operating cash flow during the year to 31 March 2020, noting the reported figure also benefits from the impact of adopting IFRS 16 in
respect of leased assets for which the resulting liability repayments and interest cost in the year were £944,000 and £157,000 respectively.
(cid:1) The uncertainty caused by the COVID-19 outbreak and the immediate measures, including suspension of certain discretionary spends, cost cutting
and use of the Government job retention scheme, to mitigate the impact on the business.
Key assumptions that the Directors have made in preparing the base case cash flow forecasts are that:
(cid:1) Revenues prudently reflect the impact of (i) continued low base rates of 10 basis points on income for managing client deposits and (ii) lower fee
income expectation as a result of the lower UK equity market levels. The base case assumption is for the FTSE100 index to remain at 5700 range
until December 2020 and recovering to 7000 range and increasing modestly thereon. Overall revenue growth expectation for future years set
conservatively at 2% to 3.3% from the COVID-19 impacted lower starting point.
(cid:1) Base case costs prudently reflect only the actions Management has taken to date in response to the impact of COVID-19 on the business
for the remainder of the present reporting year, with any further cost savings delayed until the year to 31 March 2022.
Key stress scenarios that the Directors have considered include:
(cid:1) A ‘bear stress scenario’: representing a further 10% fall in income compared to the base case scenario in reporting period ending 31 March 2021
and 31 March 2022.
(cid:1) A remote ‘severe or reverse stress scenario’: representing a 20% fall in commission income and 15% fall in fee income compared to the base case
for each forecast period.
(cid:1) Both stress scenarios assume no mitigating actions.
Walker Crips Group plc - Annual Report and Accounts 2020
60
Notes to the accounts (continued)
year ended 31 March 2020
2. Basis of preparation (continued)
Going concern (continued)
Liquidity and regulatory capital resource requirement exceeded the minimum threshold in both the base and bear scenarios. However, in the severe stress
scenario, although the Group has positive liquidity throughout the period, the negative impact on our prudential capital ratio is such that it falls below
the regulatory requirement in June 2022. The Directors consider this scenario to be remote in view of the prudence built into the base case planning and
that further mitigations available to the Directors are not reflected therein. Such mitigating actions within Management control include reduction in
proprietary risk positions, delayed capital expenditure, further reductions in discretionary spend and additional reduction in employee headcount. Other
mitigating actions which may be possible include seeking shareholder support, sale of assets and stronger cost reductions.
The Directors have also considered the wider operational consequences and ramifications of the COVID-19 pandemic. As explained in the Chief
Executive’s report our business infrastructure has proved resilient in protecting the safety of our employees and maintaining our high levels of client
service in the ‘working from home’ mode of operations. The Government lockdown restrictions have caused some disruptions, however, the Group’s
advanced IT systems, along with greater use of cloud-based technology, have allowed all operations to run at 100% capacity. We continue to review
our approach in line with latest developments and government guidance. Our stress testing demonstrates the Group’s financial resilience and operating
flexibility.
Following the assessment of the Group’s financial position and its ability to meet its obligations as and when they fall due, including the financial
implications of the pandemic, the Directors are not aware of any material uncertainties that cast significant doubt on the Group’s ability to continue
as a going concern.
Standards and interpretations affecting the reported results or the financial position
The accounting policies adopted are consistent with those of the previous financial year with the exception of IFRS 16 “Leases”. The Group has applied
the modified retrospective approach and has not restated comparative amounts for the period prior to initial adoption. The impact of adopting this new
standard is outlined in note 3.
The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the Group.
3. Significant accounting policies
Basis of consolidation
The Group financial statements consolidate the financial statements of the Group and companies controlled by the Group (its subsidiaries) made up
to 31 March each year. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its powers to direct relevant activities of the entity. Subsidiaries are fully consolidated from the date on which
control is obtained and no longer consolidated from the date that control ceases; their results are in the consolidated financial statements up to the date
that control ceases.
Entities where the interest is 49% or less are assessed for potential treatment as a Group company against the control tests outlined in IFRS 10, being
power over the investee, exposure or rights to variable returns and power over the investee to affect the amount of investors’ returns.
All intercompany balances, income and expenses are eliminated on consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair
values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control
of the acquiree. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 “Business
Combinations” are recognised at their fair value at the acquisition date.
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. In the current year, there was no longer an asset classified as a joint venture investment.
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 company or jointly controlled entity at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently
measured at cost less any accumulated impairment losses. Goodwill is not amortised but is reviewed for impairment at least annually. Any impairment
is recognised immediately in profit or loss and is not subsequently reversed in future periods.
For the purpose of impairment testing, goodwill 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 company or jointly controlled entity, the attributable amount of goodwill is included in the
determination of the profit or loss on disposal.
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Intangible assets
(a) Client lists
Client lists are recognised when it is probable that future economic benefits will flow to the Group and the cost of the asset can be measured reliably
whilst the risk and rewards have also transferred into the Group’s ownership.
Intangible assets classified as client lists are recognised when acquired as part of a business combination or when separate payments are made to
acquire clients’ assets by adding teams of Investment Managers.
The cost of acquired client lists and businesses generating revenue from clients and Investment Managers are capitalised. These costs are amortised on
a straight-line basis over their expected useful lives of three to twenty years. The amortisation period and amortisation method for intangible assets are
reviewed at least each financial year end. All intangible assets have a finite useful life.
Amortisation of intangible fixed assets is included within administrative expenses in the consolidated income statement.
At each statement of financial position date, the Group reviews the carrying amounts of its intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
During the year, a review of the Group’s intangible assets resulted in the revision of the Useful Economic Life (“UEL”) of an acquired client list. The Truro
client list, which had an estimated UEL of 16.25 years as at 31 March 2019, was revised to 11.25 years. As it was a change in accounting estimate, this
revision and the resultant change in annual amortisation for this intangible asset was applied prospectively, beginning with a new annual amortisation
charge for this asset in the current financial year.
The revised amortisation charge in respect of this intangible asset was £143,000 in the current year and the annual charge expected for the remaining
UEL of the asset. The charge in prior year was £99,000.
(b) Software licences
Computer software which is not an integral part of the related hardware is recognised as an intangible asset when the Group is expected to benefit
from future use of the software and the costs are reliably measured and amortised using the straight line method over a useful life of up to five years.
Own shares held
Own shares consist of treasury shares which are recognised at cost as a deduction from equity shareholders’ funds. Subsequent consideration received
for the sale of treasury shares is also recognised in equity with any difference being taken to retained earnings. No gain or loss is recognised on sale of
treasury shares.
Shares to be issued
Shares to be issued represent the Group’s best estimate of the Ordinary Shares in the Group which are likely to be issued, following business combinations
or the acquisition of client relationships which involve deferred payments in the Group’s shares. Where shares are due to be issued within a year, the sum
is included in current liabilities. Shares to be issued are dependent on the achievement of pre-defined targets and are treated as a liability until they are
allotted and issued. There were no transactions recognised in relation to this in the current year.
Revenue recognition
Revenue is measured at a fair value of the consideration 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.
Revenues recognised under IFRS 15
Revenue from contracts with customers:
(cid:1) gross commissions on stockbroking activities are recognised on those transactions whose trade date falls within the financial year, with the execution
of the trade being the performance obligation at that point in time;
(cid:1) in Walker Crips Investment Management, fees earned from managing various types of client portfolios are accrued daily over the period to which they
relate with the performance obligation fulfilled over the same period;
(cid:1) fees in respect of financial services activities of Walker Crips Wealth Management are accrued evenly over the period to which they relate with the
performance obligation fulfilled over the same period;
(cid:1) fees earned from structured investments are recognised on the date the underlying security of the structured investment is traded and settled, with
the execution of the trade being the performance obligation at that point in time; and
(cid:1) fees earned from software offering, Software as a Service “SaaS”, are accrued evenly over the period to which they relate with the performance
obligation fulfilled over the same period.
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Notes to the accounts (continued)
year ended 31 March 2020
3. Significant accounting policies (continued)
Revenues recognised under IFRS 15 (continued)
Other incomes:
(cid:1) interest is recognised as it accrues in respect of the financial year;
(cid:1) dividend income is recognised when:
(cid:1) the Group’s right to receive payment of dividends is established;
(cid:1) it is probable that economic benefits associated with the dividend will flow to the Group;
(cid:1) the amount of the dividend can be reliably measured; and
(cid:1) gains or losses arising on disposal of trading book instruments and changes in fair value of securities held for trading purposes are both recognised in
profit and loss.
The Group does not have any long-term contract assets in relation to customers of any fixed and/or considerable lengths of time which require the
recognition of financing costs or incomes in relation to them.
Operating expenses
Operating expenses and other charges are provided for in full up to the statement of financial position date on an accruals basis.
Exceptional items
To assist in understanding its underlying performance, the Group identifies certain items of pre-tax income and expenditure and discloses them
separately in the Consolidated income statement.
Such items would include:
1. profits or losses on disposal, closure or impairment of assets or businesses;
2. corporate transaction and restructuring costs;
3. changes in the fair value of contingent consideration; and
4. non-recurring items considered individually for classification as exceptional by virtue of their nature or size.
The separate disclosure of these items allows a clearer understanding of the Group’s trading performance on a consistent and comparable basis, together
with an understanding of the effect of non-recurring or large individual transactions upon the overall profitability of the Group. The exceptional items
arising in the current period are explained in note 10 and all fall under category 4 above. The related tax effect is also quantified and disclosed in note 14.
Deferred income
Income received from clients in respect of future periods to the transaction or reporting date are classified as deferred income within creditors until such
time as value has been received by the client.
Foreign currencies
The individual financial statements of each of the Group’s companies are presented in pounds sterling, which is the functional currency of the Group
and the presentation currency of the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency (foreign currencies)
are recorded at the rates of exchange prevailing on the dates of the transactions. At each statement of financial position date, monetary assets and
liabilities that are denominated in foreign currencies are re-translated at the rates prevailing on the balance sheet date. Exchange differences arising
on the settlement of monetary items, and on the re-translation of monetary items, are included in the consolidated income statement for the period.
Where consideration is received in advance of revenue being recognised, the date of the transaction reflects the date the consideration is received.
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.
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
Computer software
Leasehold improvements
Furniture and equipment
331/3 % per annum on cost
between 20% and 331/3 % per annum on cost
over the term of the lease under IFRS 16
331/3 % per annum on cost
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63
Right-of-use assets held under contractual arrangements are depreciated over the lengths of their respective contractual terms, as prescribed under IFRS 16.
The gain or loss on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the
asset and is recognised in income. The residual values and estimated useful life of items within property, plant and equipment are reviewed at least at
each financial year end. Any shortfalls in carrying value are impaired immediately through profit or loss.
Taxation
The tax expense 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. 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 in which the liability is settled or the asset is realised based on tax rates
that have been enacted or substantively enacted by the statement of financial position date. Deferred tax is charged or credited directly to the income
statement, except when it relates to items charged or credited to ‘Other comprehensive income’ in which case the deferred tax is also dealt with in other
comprehensive income.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to do so and presented as a net number on the face of the
statement of financial position.
Financial assets and liabilities
Financial assets and liabilities are recognised in the Consolidated statement of financial position when the Group becomes a party to the contractual
provisions of the instrument.
At initial recognition, the Group measures a financial asset or financial liability at its fair value plus or minus transaction costs. Transaction costs of
financial assets and financial liabilities carried at fair value through profit or loss (“FVTPL”) are expensed in the statement of comprehensive income.
Immediately after initial recognition, an expected credit loss allowance (“ECL”) is recognised for financial assets measured at amortised cost, which
results in an accounting loss being recognised in profit or loss when an asset is newly originated.
The Group does not use hedge accounting.
a) Financial assets
Classification and subsequent measurement
The Group classifies its financial assets in the following measurement categories:
(cid:1) Fair value through profit or loss (“FVTPL”); or
(cid:1) Amortised cost.
Financial assets are classified as current or non-current depending on the contractual timing for recovery of the asset.
(i) Debt instruments
Classification and subsequent measurement of debt instruments depend on:
(cid:1) the Group’s business model for managing the asset; and
(cid:1) the cash flow characteristics of the asset.
Business model: The business model reflects how the Group manages the assets in order to generate cash flows. That is, whether the Group’s objective
is solely to collect the contractual cash flows from the assets, to collect both the contractual cash flows and cash flows arising from the sale of assets, or
solely or mainly to collect cash flows arising from the sale of assets. Factors considered by the Group include past experience on how the contractual cash
flows for these assets were collected, how the assets’ performance is evaluated, and how risks are assessed and managed.
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64
Notes to the accounts (continued)
year ended 31 March 2020
3. Significant accounting policies (continued)
Financial assets and liabilities (continued)
a) Financial assets (continued)
(i) Debt instruments (continued)
Cash flow characteristics of the asset: Where the business model is to hold assets to collect contractual cash flows, the Group assesses whether the
financial instruments’ contractual cash flows represent solely payments of principal and interest (“the SPPI test”). In making this assessment, the Group
considers whether the contractual cash flows are consistent with a basic lending instrument.
Based on these factors, the Group classifies its debt instruments into one of two measurement categories:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest
(“SPPI”), and that are not designated at FVTPL, are measured at amortised cost. Amortised cost is the amount at which the financial asset is measured
at initial recognition minus the principal repayments, plus or minus the cumulative amortisation, using the effective interest rate method, of any
difference between that initial amount and the maturity amount, adjusted by any ECL recognised. The effective interest rate is the rate that exactly
discounts estimated future cash payments or receipts through the expected life of the financial asset to the gross carrying amount. Interest income from
these financial assets is included within investment revenues using the effective interest rate method.
Fair value through profit or loss (“FVTPL”): Assets that do not meet the criteria for amortised cost or fair value through other comprehensive income
(“FVTOCI”) are measured at fair value through profit or loss.
Reclassification
The Group reclassifies debt instruments when and only when its business model for managing those assets changes. The reclassification takes place
from the start of the first reporting period following the change.
Impairment
The Group assesses on a forward-looking basis the ECL associated with its debt instruments held at amortised cost. The Group recognises a loss
allowance for such losses at each reporting date. On initial recognition, the Group recognises a 12-month ECL. At the reporting date, if there has
been a significant increase in credit risk, the loss allowance is revised to the lifetime expected credit loss.
The measurement of ECL reflects:
(cid:1) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes;
(cid:1) the time value of money; and
(cid:1) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions
and forecasts of future economic conditions.
The Group adopts the simplified approach to trade receivables and contacts assets, which allows entities to recognise lifetime expected losses on all
assets, without the need to identify significant increases in credit risk (i.e. no distinction is needed between 12-month and lifetime expected credit losses).
(ii) Equity instruments
Investments are recognised and derecognised on a trade date basis where a purchase or sale of an investment is under a contract whose terms require
delivery of the instrument within the timeframe established by the market concerned, and are initially measured at fair value.
The Group subsequently measures all equity investments at fair value through profit and loss. Changes in the fair value of financial assets at FVTPL
are recognised in revenue within the consolidated income statement.
(iii) Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with financial institutions and other short-term, highly liquid investments with
original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes
in value. Bank overdrafts are shown within current liabilities in the statement of financial position.
De-recognition
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group
has transferred substantially all the risks and rewards of ownership.
b) Financial liabilities
Classification and subsequent measurement
Financial liabilities are classified and subsequently measured at amortised cost.
Financial liabilities are derecognised when they are extinguished.
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65
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
Trade payables
Trade payables are classified at amortised cost. Due to their short-term nature, their carrying amount is considered to be the same as their fair value.
Bank overdrafts
Interest-bearing bank overdrafts are initially measured at fair value and shown within current liabilities. Finance charges are accounted for on an accrual
basis in profit or loss using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not
settled in the period in which they arise.
Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Share Incentive Plan (“SIP”)
The Group has an incentive policy to encourage all members of staff to participate in the ownership and future prosperity of the Group. All employees
can participate in the SIP following three months of service. Employees may contribute a maximum of 10% of their gross salary in regular monthly
payments (being not less than £10 and not greater than £150) to acquire Ordinary Shares in the Parent Company (Partnership Shares). Partnership
Shares are acquired monthly.
For the period ending 31 March 2020, for every Partnership Share purchased, the employee receives one matching share. All shares awarded under this
scheme have been purchased in the market by the Trustees of the SIP.
On 1 April 2020, the Directors as part of the COVID-19 response to preserve cash and liquidity, suspended the matching option. This will continue until
31 March 2021.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle
that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the statement of financial
position date, and are discounted to present value where the effect is material.
Long-term liabilities – deferred cash and shares consideration
Amounts payable to personnel under recruitment contracts in respect of the client relationships, which transfer to the Group, are treated as long-term
liabilities if the due date for payment of cash consideration is beyond the period of one year after the year-end date. The value of shares in all cases
is derived by a formula based on the value of client assets received in conjunction with the prevailing share price at the date of issue which in turn
determines the number of shares issuable.
Share-based payments
The Group issues equity-settled share-based payments to certain self-employed 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.
The Group also issues shares as part of deferred consideration for client relationships acquired under arrangements agreed with Investment Managers
when they join the Group. Equity-settled share-based payments are awarded if Assets Under Management or revenue targets for incoming clients have
been achieved. The fair value is estimated at the date of transfer of the assets and are amortised on a straight-line basis over their estimated useful lives.
As at the reporting date there were no share-based payments in issue.
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.
Dividends paid
Equity dividends are recognised when they become legally payable. There is no requirement to pay dividends unless approved by the shareholders by way
of written resolution where there is sufficient cash to meet current liabilities, and without detriment of any financial covenants, if applicable.
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Notes to the accounts (continued)
year ended 31 March 2020
3. Significant accounting policies (continued)
Financial assets and liabilities (continued)
Changes in accounting policies
IFRS 16 “Leases”
As outlined in note 2 above, the Group has adopted IFRS 16 “Leases” for the first time this period. This new standard was adopted on 1 April 2019. Under
the transition method chosen, comparative information is not restated, and therefore, the revised requirements are not reflected in the prior year financial
statements. Rather, these changes have been processed at the date of initial application (1 April 2019) and recognised in the opening equity balances.
Details of the impact of adoption are given below.
IFRS 16 provides a single lessee accounting model by removing the IAS 17 classification of leases as either operating or finance leases. The standard
introduces a single, on-balance sheet accounting model, which requires:
(cid:1) recognition of a right-of-use asset and corresponding lease liability with respect to all lease arrangements in which the Group is the lessee, except for
short-term leases and leases of low value assets;
(cid:1) recognition of a depreciation charge on the right-of-use asset on a straight-line basis over the shorter of the expected life of the asset and the lease
term; and
(cid:1) recognition of an interest charge arising from the unwinding of the discounted lease liability over the lease term.
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
(cid:1) leases of low value assets; and
(cid:1) leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease unless this is not readily determinable, in which case the Group’s incremental borrowing rate
on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they depend on an index
or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout the lease term.
Other variable lease payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also includes:
(cid:1) amounts expected to be payable under any residual value guarantee;
(cid:1) the exercise price of any purchase option granted in favour of the Group if it is reasonable certain to assess that option; and
(cid:1) any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being exercised.
Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:
(cid:1) lease payments made at or before commencement of the lease;
(cid:1) initial direct costs incurred; and
(cid:1) the amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset (typically leasehold
dilapidations – see note 28).
Subsequent to initial measurement, lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic
life of the asset if, rarely, this is judged to be shorter than the lease term.
Reassessment of lease term by way of extension, exercising of break clause or termination will result in an adjustment to the carrying value of the lease
liability to reflect the payments to make over the revised term.
The Group’s leasing activities
The Group leases various offices, software and equipment that were recognised as right-of-use assets on the application of IFRS 16. The Group’s lease
contracts are typically made for fixed periods of 2 to 10 years and extension and termination options are included in a number of property and software
leases across the Group. These terms are used to maximise operational flexibility in terms of managing contracts.
The extensions to leases are exercisable only by the Group and not by the respective lessor. Lease terms are negotiated on an individual basis and contain
a wide range of different but comparable terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used
as security for borrowing purposes.
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Prior to the implementation of IFRS 16, payments made under operating leases (net of any incentives received from the lessor) were charged to
profit or loss on a straight-line basis over the period of the lease. From 1 April 2019, leases are recognised as a right-of-use asset and a corresponding
liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost.
The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the
liability for each period. The right-of-use assets are depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following
lease payments:
(cid:1) fixed payments (including in-substance fixed payments), less any lease incentives receivable;
(cid:1) variable lease payment that are based on an index or a rate;
(cid:1) amounts expected to be payable by the lessee under residual value guarantees;
(cid:1) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
(cid:1) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The Group, as permitted under IFRS 16, has used the incremental borrowing rate, being the rate that the Group estimates that it would have
to pay to borrow funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
(cid:1) the amount of the initial measurement of lease liability;
(cid:1) any lease payments made at or before the commencement date less any lease incentives received;
(cid:1) any initial direct costs; and
(cid:1) restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss.
Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.
The Group does not have any leasing activities acting as a lessor.
Transition method and practical expedients utilised
The Group has adopted IFRS 16 retrospectively from 1 April 2019, but has not restated comparatives for prior year ending 31 March 2019, as permitted
under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore
recognised in the opening statement of financial position on 1 April 2019.
The Group elected to apply the practical expedient to not reassess whether a contract is, or contains, a lease at the date of initial application. Contracts
entered into before the transition date that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed. The definition of a lease under
IFRS 16 was applied only to contracts entered into or changed on or after 1 April 2019.
IFRS 16 provides for certain optional practical expedients, including those related to the initial adoption of the standard. The Group applied the
following practical expedients when applying IFRS 16 to leases previously classified as operating leases under IAS 17:
(cid:1) apply a single discount rate to a portfolio of leases with reasonably similar characteristics;
(cid:1) exclude initial direct costs from the measurement of right-of-use assets at the date of initial application for leases where the right-of-use asset was
determined as if IFRS 16 had been applied since the commencement date;
(cid:1) reliance on previous assessments on whether leases are onerous as opposed to preparing an impairment review under IAS 36 as at the date of initial
application;
(cid:1) applied the exemption not to recognise right-of-use assets and liabilities for leases with less than 12 months of lease term remaining as of the date
of initial application; and
(cid:1) the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
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68
Notes to the accounts (continued)
year ended 31 March 2020
3. Significant accounting policies (continued)
Adjustments recognised on adoption of IFRS 16
As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially
all of the risks and rewards of ownership. Under IFRS 16, the Group recognises right-of-use assets and lease liabilities for most leases. However, the
Group has elected not to recognise right-of-use assets and lease liabilities for some leases of low value assets based on the value of the underlying asset
when new or for short-term leases with a lease term of 12 months or less.
On adoption of IFRS 16, the Group recognised right-of-use assets and lease liabilities in relation to leases of property, software and hire of equipment,
which had previously been classified as operating leases. The lease liabilities were measured at the present value of the remaining lease payments,
discounted using the Group’s incremental borrowing rate as at 1 April 2019. The Group’s incremental borrowing rate is the rate at which a similar
borrowing could be obtained from an independent creditor under comparable terms and conditions. The incremental borrowing rates used by the
Group to measure lease liabilities at 1 April 2019 are listed in the table below:
Leased property
Hire of equipment
Software licences
Incremental
borrowing rate
3.23%
2.87%
2.87%
In the context of transition to IFRS 16, right-of-use assets of £5,062,000 and lease liabilities of £5,366,000 were recognised as at 1 April 2019.
Of these lease liabilities, £1,026,000 were due within one year and were captured within current liabilities in the statement of financial position.
In addition, the Group has decided not to apply the new IFRS 16 guidance to leases whose lease term will end within 12 months of the date of initial
application. In such cases, the leases are accounted for as short-term leases and the lease payments associated with them are recognised as an
expense from short-term leases.
The following table reconciles the minimum lease commitments disclosed in the Group’s 31 March 2019 annual financial statements to the amount of
lease liabilities recognised on 1 April 2019:
Operating lease commitments disclosed as at 31 March 2019
Less: Service & Maintenance element included within lease commitments
Adjusted operating lease commitments
Discounted using the lessee’s incremental borrowing rate at the date of initial application
Add: finance lease liabilities recognised as at 1 April 2019
Less: short-term leases recognised on a straight-line basis as expense
Lease liability recognised as at 1 April 2019
Of which were due:
Current lease liabilities
Non-current lease liabilities
As at 1 April 2019
£’000
7,214
(997)
6,217
5,233
142
(9)
5,366
1,026
4,340
5,366
Details of the right-of-use assets and lease liabilities can be found in notes 20 and 29, respectively.
Judgements and estimates
IFRS 16 requires certain judgements and estimates to be made and those significant judgements are explained below.
(cid:1) Following a review of all leases, the Group has opted to use single discount rates for leases with reasonably similar characteristics. The discount rates
used, which are listed within the above disclosure, have had an impact on the right-of-use asset values, lease liabilities on initial recognition and
lease finance costs included within the income statement.
(cid:1) IFRS 16 defines a lease term as the non-cancellable period of a lease, together with the options to extend or terminate a lease, if the lessee is
reasonably certain to exercise the lease options available at the time of reporting. Where a lease includes the option for the Group to extend the
lease term, the Group has exercised the judgement, based on current information, that such leases will be extended to the full length available, and
this is included in the calculation of the value of the right-of-use assets and lease liabilities on initial recognition and valuation at the reporting date.
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
69
4. Key sources of estimation uncertainty and judgements
COVID-19 – estimation and judgement
The COVID-19 pandemic is an unprecedented global event; therefore, it is somewhat difficult to predict certain outcomes, including future revenues
and cash flows. The unpredictable nature of this pandemic carries a higher degree of uncertainty, but in preparing these financial statements,
the Directors have used all available information and past experience in making estimates and judgements.
Impairment of goodwill – estimation and judgement
Determining whether goodwill is impaired requires an estimation of the fair value less costs to sell and the value-in-use of the cash-generating units
to which goodwill has been allocated. The fair value less costs to sell involves estimation of values based on the application of earnings multiples
and comparison to similar transactions. The value-in-use calculation requires the entity to estimate the future cash flows expected to arise from the
cash-generating unit and apply a discount rate in order to calculate present value. The assumptions used and inputs involve judgements and create
estimation uncertainty. These assumptions have been stress-tested as described in note 17. The carrying amount of goodwill at the balance sheet
date was £4.4 million (2019: £4.4 million) as shown in note 17.
Other intangible assets – judgement
Acquired client lists are capitalised based on current fair values. No acquisitions were made in the period to 31 March 2020. When the Group
purchases client relationships from other corporate entities, a judgement is made as to whether the transaction should be accounted for as a business
combination, or a separate purchase of intangible assets. In making this judgement, the Group assesses the acquiree against the definition of a
business combination in IFRS 3. Payments to newly recruited Investment Managers are capitalised when they are judged to be made for the acquisition
of client relationship intangibles. The useful lives are estimated by assessing the historic rates of client retention, the ages and succession plans of
the Investment Managers who manage the clients and the contractual incentives of the Investment Managers. The Directors conduct a review of
indicators of impairment and also consider a life of up to twenty years to be both appropriate and in line with peers.
IFRS 16 “Leases” – estimation and judgement
IFRS 16 requires certain judgements and estimates to be made and those significant judgements are explained below.
(cid:1) Following a review of all leases, the Group has opted to use single discount rates for leases with reasonably similar characteristics. The discount rates
used, which are listed within the above disclosure, have had an impact on the right-of-use asset values, lease liabilities on initial recognition and
lease finance costs included within the income statement.
(cid:1) IFRS 16 defines a lease term as the non-cancellable period of a lease, together with the options to extend or terminate a lease, if the lessee is
reasonably certain to exercise the lease options available at the time of reporting. Where a lease includes the option for the Group to extend the
lease term, the Group has exercised the judgement, based on current information, that such leases will be extended to the full length available, and
this is included in the calculation of the value of the right-of-use assets and lease liabilities on initial recognition and valuation at the reporting date.
Short-Term Lending Administration – judgement
The Group provides administrative services to Special Purpose Vehicles who in turn make loans to specialist lenders in the residential housing
construction industry. Having considered the requirements of IFRS 10, the Directors have also obtained independent advice to support our conclusion
that no additional consolidation is required as a result of these arrangements and the structure in which the Group provides this service.
During the period, all contracts relating to Short-Term Lending Administration were novated to a new entity, Walker Crips Property Investment Limited
(WCPIL), where the Group holds 33% investment. Future revenue from this division will be accounted via the equity accounting method.
Provision for dilapidations – estimation and judgement
The Group has made provisions for dilapidations under six leases for its offices. The Group did not enter into any new property leases in the period.
During the year, £117,000 of additional provisions were recognised, including £41,000 of interest, giving a new provision at year-end of £659,000.
Walker Crips Group plc - Annual Report and Accounts 2020
70
Notes to the accounts (continued)
year ended 31 March 2020
5. Revenue
An analysis of the Group’s revenue is as follows:
Stockbroking commission
Fees and other revenue1
Broking
income
£’000
8,095
–
Non-
broking
income
£’000
–
21,468
2020
Total
£’000
8,095
21,468
Investment Management
Wealth Management, Financial Planning & Pensions
Revenue
8,095
–
8,095
21,468
1,859
29,563
1,859
23,327
31,422
Broking
income
£’000
8,667
–
8,667
–
8,667
Non-
broking
income
£’000
–
20,0223
20,022
1,7693
21,791
2019
Total
£’000
8,667
20,022
28,889
1,769
30,458
Investment revenue (see note 11)
–
76
76
–
902
902
Total income
% of total income
8,095
23,403
31,498
8,667
21,881
30,548
25.7
74.3
100.0
28.4
71.6
100.0
1 Includes Investment Management, Structured Investments, Alternative Investments and SaaS.
2 Prior year adjusted to exclude finance costs of £3,000. See note 12 for finance costs.
3 During the period to March 2020, two teams transferred from Wealth Management to Investment Management and as a result, to make the comparison more meaningful, revenue of £832,000 was
transferred from Wealth Management to Investment Management.
Timing of revenue recognition
The following table presents operating income analysed by the timing of revenue recognition of the operating segment providing the service:
2020
Revenue from contracts with customers
Products and services transferred at a point in time
Products and services transferred over time
Other revenue
Products and services transferred at a point in time
Products and services transferred over time
2019
Revenue from contracts with customers
Products and services transferred at a point in time
Products and services transferred over time 1
Other revenue
Products and services transferred at a point in time
Products and services transferred over time
Investment
Wealth
Management Management
£’000
£’000
10,269
16,706
410
1,449
280
2,307
29,562
–
–
1,859
Investment
Wealth
Management Management
£’000
£’000
Consolidated
year ended
31 March
2020
£’000
SaaS
£’000
–
1
–
–
1
10,679
18,156
280
2,307
31,422
Consolidated
year ended
31 March
2019
£’000
SaaS
£’000
10,360
16,309
459
1,250
–
–
10,819
17,559
234
1,786
28,689
60
–
1,769
–
–
–
294
1,786
30,458
1 During the period to March 2020, two business segments were transferred from Wealth Management to Investment Management and as a result, to make the comparison more meaningful, revenue
from contracts with customers of £832,000 was transferred from Wealth Management to Investment Management.
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
71
Brought forward
Amounts included in contract liabilities that were recognised
as revenue during the period
Settlement of contract assets brought forward
Cash received in advance of performance and not recognised
as revenue during the period
Amounts included in contract assets that were recognised
as revenue during the period
At 31 March
Contract
assets
2020
£’000
Contract
assets
2019
£’000
Contract
liabilities
2020
£’000
Contract
liabilities
2019
£’000
4,623
4,005
–
(4,623)
–
(4,005)
–
–
4,907
4,907
4,623
4,623
(4)
4
–
(3)
–
(3)
(3)
3
–
(4)
–
(4)
6. Segmental analysis
For segmental reporting purposes, the Group currently has three operating segments; Investment Management, being portfolio-based transaction
execution and investment advice; Wealth Management, being financial planning and pension advice; and Software as a Service (SaaS), comprising
provision of regulatory and admin software to regulated companies. Unallocated corporate expenses, assets and liabilities are not considered to be
allocatable accurately, or fairly, under any known basis of allocation and are therefore disclosed separately.
Walker Crips Investment Management’s activities focus predominantly on investment management of various types of portfolios and asset classes.
Walker Crips Wealth Management provides advisory and administrative services to clients in relation to their financial planning, life insurance,
inheritance tax and pension arrangements.
EnOC Technologies Limited (SaaS) provides the regulatory and admin software, Software as a Service, to regulated companies including all WCG’s
regulated entities. Fees payable by subsidiary companies to EnOC Technologies Limited have been eliminated on consolidation. These companies are
the basis on which the Group reports its primary segment information.
Revenues between Group entities, and in turn reportable segments, are excluded from the below analysis as part of the consolidation journals to cancel
intercompany transactions and balances.
2020
Revenue
Revenue from contracts with customers
Other revenue
Total revenue
Results
Segment result
Unallocated corporate expenses
Investment revenue
Finance costs
Profit before tax
Tax
Profit after tax
Investment
Wealth
Management Management
£’000
£’000
Consolidated
year ended
31 March
2020
£’000
SaaS
£’000
26,975
2,587
29,562
1,859
–
1,859
1
–
1
28,835
2,587
31,422
2,034
42
(29)
2,047
(955)
1,092
76
(205)
963
(245)
718
Walker Crips Group plc - Annual Report and Accounts 2020
Investment
Wealth
Management Management
£’000
£’000
Consolidated
year ended
31 March
2020
£’000
SaaS
£’000
444
520
14
70
109
13
567
603
42,473
964
159
23,805
502
216
43,596
7,998
51,594
24,523
4,427
28,950
Investment
Wealth
Management Management
£’000
£’000
Consolidated
year ended
31 March
2019
£’000
SaaS
£’000
26,669
2,020
28,689
1,709
60
1,769
1,223
138
–
–
–
–
28,378
2,080
30,458
1,361
(959)
402
90
(3)
489
(156)
333
72
Notes to the accounts (continued)
year ended 31 March 2020
6. Segmental analysis (continued)
2020
Other information
Capital additions
Depreciation
Statement of financial positions
Assets
Segment assets
Unallocated corporate expenses
Consolidated total assets
Liabilities
Segment liabilities
Unallocated corporate liabilities
Consolidated total liabilities
2019
Revenue
Revenue from contracts with customers1
Other revenue
Total revenue
Results
Segment result
Unallocated corporate expenses
Investment revenue
Finance costs
Profit before tax
Tax
Profit after tax
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
73
2019
Other information
Capital additions
Depreciation
Statement of financial positions
Assets
Segment assets
Unallocated corporate expenses
Consolidated total assets
Liabilities
Segment liabilities
Unallocated corporate liabilities
Consolidated total liabilities
Investment
Wealth
Management Management
£’000
£’000
318
522
93
71
50,823
2,601
35,072
774
Consolidated
year ended
31 March
2019
£’000
SaaS
£’000
–
–
–
–
411
593
53,424
4,547
58,975
35,846
404
36,250
1 During the period to March 2020, two business segments were transferred from Wealth Management to Investment Management and as a result, to make the comparison more meaningful, revenue
from contracts with customers of £832,000, Segment result of £210,000 and Segment assets of £125,000 were transferred from Wealth Management to Investment Management.
7. Commissions and fees paid
Commissions and fees paid comprises:
To authorised external agents
To approved persons
2020
£’000
65
9,706
9,771
2019
£’000
25
9,648
9,673
Walker Crips Group plc - Annual Report and Accounts 2020
74
Notes to the accounts (continued)
year ended 31 March 2020
8. Investment in joint venture and associate
Associate
The Group has a 33% (2019: nil) interest in an associate, Walker Crips Property Income Limited (“WCPIL”), a separate structured vehicle incorporated and
operating in the United Kingdom.
The contractual arrangement provides the Group with only the rights to the net assets with the rights to the assets and obligation for liabilities resting
primarily with WCPIL.
This investment has not been recognised as associate in the consolidated financial statements of the Group for the period ending 31 March 2020, since
the related results were not material for the Group.
Joint venture
In the prior year, the Group had a 50% interest in a joint venture, JWPCreers Wealth Management Limited, a regulated financial services company.
The primary activity of JWPCreers Wealth Management Limited was to provide financial advice to the clients of JWPCreers LLP (a firm of accountants),
who held the other 50% interest in the joint venture. The contractual arrangement provided the Group with equal rights to the net assets of the joint
arrangement, with the rights to the assets and obligation regarding the liabilities resting primarily with JWPCreers Wealth Management Limited. Under
IFRS 11, this joint arrangement was classified as a joint venture and was included in the consolidated financial statements using the equity method.
On 1 April 2019, Walker Crips Wealth Management Limited, a 100% owned subsidiary of the Group, increased its shareholding in JWPCreers Wealth
Management Limited from 50% to 100%. In the previous financial year to 31 March 2019, this entity was a joint venture. On 2 April 2019, the entity
changed its name to Walker Crips Ventures Limited.
As part of the purchase agreement, prior to the increase in shareholding, and on 1 April 2019, a dividend payment of £22,000 was paid to “A”
shareholders of the joint venture, being the joint venture partner only. This saw the net assets of the joint venture decrease by £22,000 on 1 April 2019,
just prior to the acquisition by WCWM on the same day. The Group’s share of the decrease in net assets of half this amount is reflected in the
consolidated income statement as an £11,000 share of change in net assets of the joint venture. Given the above there are no financial figures
at 31 March 2020 since WCV is a subsidiary of the Group. Thus n/a is shown below.
Summarised financial information in relation to the joint venture is presented below:
As at 31 March
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Included in the above amounts are:
Cash and cash equivalents
Current financial liabilities (excluding trade payables)
Non-current financial liabilities (excluding trade payables)
Net assets (100%)
Group share of net assets (50%)
Period ending 31 March
Revenue
Profit before tax
Profit after tax
Tax expense
Total consolidated income
Total consolidated income (100%)
Group share of total consolidated income (50%)
Dividends received by Group from joint venture
Included in the above amounts are:
Depreciation and amortisation
Interest income
Interest expense
Income tax expense (income)
Walker Crips Group plc - Annual Report and Accounts 2020
2020
£’000
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2019
£’000
100
–
(12)
–
90
(6)
–
88
44
84
28
23
5
28
14
–
–
–
–
–
–
Financial statements
75
9. Profit for the year
Profit for the year on continuing operations has been arrived at after charging:
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangibles
Staff costs
Recharge of staff costs
Settlement costs
Communications
Computer expenses
Other expenses
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 its annual accounts
The audit of the Company’s subsidiaries pursuant to legislation – current year
The audit of the Company’s subsidiaries pursuant to legislation – prior year
Non-audit services
FCA client assets reporting
Interim review
£’000
60
145
–
12
3
220
Note
19
20
18
13
2020
%
27
66
–
6
1
100
2020
£’000
590
867
609
13,268
(581)
1,049
1,474
642
2,785
220
–
20,923
£’000
51
125
125
12
2
315
10. Exceptional items
As a result of their materiality the Directors decided to disclose certain amounts separately in order to present results which are not distorted by
significant items of income and expenditure.
Changes in the value of deferred consideration
Transaction cost in relation to a launch of a public issuance
Insurance recovery of historical claim against the Group
2020
£’000
(166)
–
(209)
(375)
2019
£’000
593
–
558
12,680
(521)
1,012
1,264
738
2,452
315
1,274
20,365
2019
%
16
40
40
3
1
100
2019
£’000
(102)
134
–
32
In the period to 31 March 2020, the Group received £209,000 in respect of a disputed insurance recovery. This related to a historic claim expensed in prior
periods that was resolved in the current period, following arbitration proceedings. In addition, cash consideration payable for acquired client relationships
was re-assessed based on actual values and accordingly, an exceptional credit has been recorded in the year representing the reversal of an over-
estimation of £166,000.
During the period to 31 March 2019, cash consideration payable on acquisition of client relationships was re-assessed based on the actual values and
accordingly, an exceptional credit, being exceptional in nature and size, was recorded representing the reversal of an over-estimation of £102,000 of
such consideration.
Also, during the period to 31 March 2019, a further £134,000 provision was made to cover the costs of delayed launch of a listed bond in connection with
the Group’s short-term lending facility business. The bond has not been launched to date, therefore Directors believe it is prudent to retain the provision
until all matters relating to the launch have been resolved.
Walker Crips Group plc - Annual Report and Accounts 2020
76
Notes to the accounts (continued)
year ended 31 March 2020
11. Investment revenues
Investment revenue comprises:
Interest on bank deposits/fixed income securities
Dividends from equity investment
12. Finance costs
Finance costs comprises:
Interest on lease liabilities
Interest on dilapidation provisions
Interest on overdue liabilities
Net investment revenue
13. Staff costs
Particulars of employee costs (including Directors) are as shown below:
Wages and salaries
Social security costs
Share incentive plan
Other employment costs
2020
£’000
59
17
76
2020
£’000
(157)
(41)
(7)
(205)
2020
£’000
10,909
1,182
239
938
13,268
2019
£’000
67
23
90
2019
£’000
–
–
(3)
(3)
2019
£’000
10,390
1,126
209
955
12,680
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 7. At the end of the year there were 44 self-employed account executives who were approved persons of the Group
(2019: 49). Please see page 34 for details of Directors’ remuneration.
The average number of staff employed during the year was:
Executive Directors
Certification and approved staff
Other staff
The table incorporates the new staff classification under Senior Managers and Certification Regime (SM&CR).
2020
Number
2019
Number
2
60
156
218
3
58
157
218
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
77
14. Taxation
The tax charge is based on the profit for the year of continuing operations and comprises:
UK corporation tax at 19% (2019: 19%)
Prior year adjustments
Origination and reversal of timing differences during the current period
Adjustment to the estimated recoverable amount of deferred tax
Corporation tax is calculated at 19% (2019: 19%) of the estimated assessable profit for the year.
The charge for the year can be reconciled to the profit per the income statement as follows:
Profit before tax
Tax on profit on ordinary activities at the standard rate UK corporation tax rate of 19% (2019: 19%)
Effects of:
Tax rate changes for deferred tax
Expenses not deductible for tax purposes
Prior year adjustment
Fixed asset differences
Non-taxable income
Other
2020
£’000
2019
£’000
328
(16)
(67)
–
245
2020
£’000
963
183
(15)
7
(1)
74
–
(3)
245
189
(6)
(35)
8
156
2019
£’000
489
93
3
3
3
58
(4)
–
156
Current tax has been provided at the rate of 19%. A further reduction in the rate of corporation tax to 17% was due to come into effect from April 2020,
however this planned reduction was cancelled in March 2020 and on 17 March 2020 the 19% rate was again substantively enacted. Deferred tax has been
provided at 19% (2019: 17%).
The exceptional credit of £375,000 (2019: cost of £32,000), disclosed separately on the consolidated income statement, is tax chargeable to the value of
£71,250 (2019: tax deductible £6,000) of corporation tax. Classifying these credits/costs as exceptional has no effect on the tax liability.
15. Dividends
When determining the level of proposed dividend in any year a number of factors are taken into account including levels of profitability, future cash
commitments, investment needs, shareholder expectations and prudent buffers for maintaining an adequate regulatory capital surplus. Amounts
recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 March 2019 of 0.33p (2018: 1.29p) per share
Interim dividend for the year ended 31 March 2020 of 0.60p (2019: 0.58p) per share
Proposed final dividend for the year ended 31 March 2020 of 0.00p (2019: 0.33p) per share
2020
£’000
142
254
396
–
2019
£’000
549
247
796
142
Subject to approval by shareholders at the Annual General Meeting held in September, the Directors do not propose to pay a final dividend this year.
Walker Crips Group plc - Annual Report and Accounts 2020
78
Notes to the accounts (continued)
year ended 31 March 2020
16. Earnings per share
The calculation of basic earnings per share for continuing operations is based on the post-tax profit for the financial year of £718,000 (2019: £333,000)
and on 42,577,328 (2019: 42,509,997) Ordinary Shares of 6 2/3 pence, being the weighted average number of Ordinary Shares in issue during the year.
No dilution to earnings per share in the current year or in the prior year.
The calculation of the basic and diluted earnings per share is based on the following data:
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
Weighted average number of Ordinary Shares for the purposes of diluted earnings per share
2020
£’000
718
718
2019
£’000
333
333
2020
Number
2019
Number
42,577,328
42,509,997
42,577,328
42,509,997
This produced basic earnings per share of 1.69 pence (2019: 0.78 pence) and diluted earnings per share of 1.69 pence (2019: 0.78 pence).
17. Goodwill
Cost
At 1 April 2018
At 1 April 2019
At 31 March 2020
Accumulated impairment
At 1 April 2018
At 1 April 2019
Impaired during the year
At 31 March 2020
Carrying amount
At 31 March 2020
At 31 March 2019
£’000
7,056
7,056
7,056
2,668
2,668
–
2,668
4,388
4,388
Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from that
business combination or intangible asset. The carrying amount of goodwill has been allocated as follows:
London York Fund Managers Limited CGU (London York)
Barker Poland Asset Management LLP CGU (BPAM)
2020
£’000
2,901
1,487
4,388
2019
£’000
2,901
1,487
4,388
The recoverable amounts of the CGUs have been determined based upon value-in-use calculations for the London York CGU and fair value less costs of
disposal for the BPAM CGU.
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
79
The London York computation was based on discounted five-year cash flow projections and terminal values. The key assumptions for these calculations
are a pre-tax discount rate of 12%, terminal growth rates of 1.75% and the expected changes to revenues and costs during the five-year projection
period based on discussions with senior Management, past experience, future expectations in light of anticipated market and economic conditions,
comparisons with our peers and widely available economic and market forecasts. The pre-tax discount rate is determined by Management based on
current market assessments of the time value of money and risks specific to the London York CGU. The base value-in-use cash flows were stress tested
for an increase in discount rates to 16% and a 20% fall in net inflows resulting in no impairment.
The discount rate would need to increase to 27.6% for the London York CGU value in use to equal the respective carrying values. Revenues would need
to fall by £456,000 per annum in present value terms for the London York CGU value in use to equal the respective carrying values.
The BPAM CGU recoverable amount was assessed, in accordance with IAS 36, by adopting the higher method of the fair value less cost of disposal
to determine the recoverable amount (as opposed to the lower value in use). The recoverable amount at the year-end calculated for the BPAM CGU,
determined by the fair value less cost of disposal, exceeded that produced by the value-in-use calculation. The fair value less cost of disposal amounted
to £4.7 million (2019: £4.9 million) with headroom, after selling costs, of £0.9 million after applying price earnings multiples based on the average of the
Group’s and its peers’ published results. Accordingly, this measurement is classified as fair value hierarchy Level 3 being directly based on observable
market data. A 20% decrease in BPAM’s profit after tax would result in potential impairment of £136,000. Profit before tax would have to drop by
£60,000 per annum before an impairment is required.
The impairment assessment of both CGUs gives due consideration to the implications of COVID-19 and has been assessed in line with Group’s going
concern assessment, therefore after careful consideration, Management has concluded that there is no impairment to goodwill.
18. Other intangible assets
Cost
At 1 April 2018
Disposal of fully depreciated intangible assets
Additions in the year
At 1 April 2019
Disposal of fully depreciated intangible assets
Additions in the year
At 31 March 2020
Amortisation
At 1 April 2018
Eliminated on disposal of fully depreciated intangible assets
Charge for the year
At 1 April 2019
Charge for the year
At 31 March 2020
Carrying amount
At 31 March 2020
At 31 March 2019
Unit trust
management
contracts
£’000
Software
licences
£’000
Client lists
£’000
240
(240)
–
–
–
–
–
240
(240)
–
–
–
–
–
–
44
–
–
44
–
–
44
7
–
9
16
9
25
19
28
10,531
–
(7)
10,524
–
48
10,572
2,741
–
549
3,290
600
3,890
6,682
7,234
Total
£’000
10,815
(240)
(7)
10,568
–
48
10,616
2,988
(240)
558
3,306
609
3,915
6,701
7,262
The intangible assets are amortised over their estimated useful lives. ‘Unit trust management contracts’ are amortised over ten years but are no longer
in use. ‘Client lists’ are amortised over three to twenty years and ‘Software licences’ are amortised over five years. There are no indications that the value
attributable to client lists should be impaired.
Walker Crips Group plc - Annual Report and Accounts 2020
80
Notes to the accounts (continued)
year ended 31 March 2020
19. Property, plant and equipment
Owned fixed assets
Cost
At 1 April 2018
Disposal of fully depreciated assets
Additions
At 1 April 2019
Re-classification of initial software build costs to software lease liabilities
Additions
At 31 March 2020
Accumulated depreciation
At 1 April 2018
Eliminated on disposal of fully depreciated assets
Charge for the year
At 1 April 2019
Charge for the year
Re-classification of depreciation charge on IFRS 16 re-classified assets
At 31 March 2020
Carrying amount
At 31 March 2020
At 31 March 2019
20. Right-of-use assets
Right-of-use assets held under leasing arrangements under IFRS 16
Cost
Recognised on adoption of IFRS 16 on 1 April 2019
Lease reassessment
Additions
At 31 March 2020
Accumulated depreciation
1 April 2019
Charge for the year
At 31 March 2020
Carrying amount
At 31 March 2020
At 31 March 2019
Walker Crips Group plc - Annual Report and Accounts 2020
Leasehold
improvements,
furniture and
equipment
£’000
Computer
software
£’000
Computer
hardware
£’000
2,765
(182)
151
2,734
–
99
2,833
762
(178)
296
880
183
–
2,355
–
213
2,568
(58)
283
2,793
1,882
–
160
2,042
265
(6)
1,063
2,301
1,770
1,854
492
526
1,312
–
47
1,359
–
76
1,435
1,082
–
137
1,219
148
–
1,367
68
140
Offices
£’000
4,601
–
–
4,601
–
660
660
3,941
–
Computer
software
£’000
Computer
hardware
£’000
366
25
142
533
–
187
187
346
–
95
–
–
95
–
20
20
75
–
Total
£’000
6,432
(182)
411
6,661
(58)
458
7,061
3,726
(178)
593
4,141
596
(6)
4,731
2,330
2,520
Total
£’000
5,062
25
142
5,229
–
867
867
4,362
–
Financial statements
81
21. Investments
Non-current asset investments
At 31 March 2019
At 31 March 2020
Investments at
fair value through
profit or loss
£’000
51
51
Total
£’000
51
51
The Group’s investments include £11,000 of life policies and £40,000 unregulated collective investment scheme (“UCIS”) investments held in relation to
a number of customer complaints.
Current asset investments
Trading investments
Investments – fair value through profit or loss
As at
31 March
2020
£’000
As at
31 March
2019
£’000
638
1,005
Financial assets at fair value through profit or loss represent investments in equity securities and collectives that present the Group with opportunity
for return through dividend income, interest and trading gains. The fair values of these securities are based on quoted market prices.
The following provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3
based on the degree to which the fair value is observable:
(cid:1) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. The Group’s
financial assets held at fair value through profit and loss under current assets fall within this category;
(cid:1) 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
(cid:1) Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on
observable market data (unobservable inputs). The Group’s financial assets held at fair value through profit and loss under non-current assets fall
within this category.
At 31 March 2020
Financial assets held at fair value through profit and loss
At 31 March 2019
Financial assets held at fair value through profit and loss
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
638
1,005
–
–
51
689
51
1,056
Further IFRS 13 disclosures have not been presented here as the balance represents 1.336% (2019: 1.822%) of total assets. There were no transfers of
investments between any of the Levels of hierarchy during the year.
22. Trade and other receivables
Amounts falling due within one year:
Due from clients, brokers and recognised stock exchanges at amortised cost
Other debtors at amortised cost
Prepayments and accrued income
2020
£’000
16,184
2,380
5,951
24,515
2019
£’000
27,030
3,063
5,692
35,785
Walker Crips Group plc - Annual Report and Accounts 2020
82
Notes to the accounts (continued)
year ended 31 March 2020
23. Cash and cash equivalents at amortised cost
Short-term cash deposits held at bank, repayable on demand with penalty
Cash deposits held at bank, repayable on demand without penalty
2020
£’000
–
8,609
8,609
2019
£’000
3,250
3,666
6,916
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 2020 was £305,300,000
(2019: £300,600,000).
The credit quality of banks holding the Group’s cash at 31 March 2020 is analysed below with reference to credit ratings awarded by Fitch.
A+
A
AA-
A-
Unrated or held in cash
24. Deferred tax liability
At 1 April 2018
Use of loss brought forward
Debit to the income statement
At 1 April 2019
Use of loss brought forward
(Debit)/credit to the income statement
Debit to the statement of comprehensive income
At 31 March 2020
2020
£’000
5,221
1,829
–
1,558
1
8,609
Short-term
temporary
differences
and other
£’000
Capital
allowances
£’000
23
–
(10)
13
–
(78)
–
(65)
(364)
37
(3)
(330)
78
67
(85)
(270)
2019
£’000
2,659
1,122
3,135
–
–
6,916
Total
£’000
(341)
37
(13)
(317)
78
(11)
(85)
(335)
A further reduction in the rate of corporation tax to 17% was due to come into effect from April 2020, however this planned reduction was cancelled in
March 2020 and on 17 March 2020 the 19% rate was again substantively enacted. Deferred tax has been provided at 19% (2019: 17%).
25. Bank overdrafts at amortised cost
Bank overdrafts
2020
£’000
–
2019
£’000
(127)
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
83
26. 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 marketplace where financial risk is inherent in
investment management and financial services.
The Group considers its financial risks arising from its use of financial instruments to fall into three main categories:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
Financial risk management is a central part of the Group’s strategic management which recognises that an effective risk management programme
can increase a business’s chances of success and reduce the possibility of failure. Continual assessment, monitoring and updating of procedures and
benchmarks are all essential parts of the Group’s risk management strategy.
(i) Credit risk management practices
The Group’s credit risk is the risk of loss through default by a counterparty and, accordingly, the Group’s definition of default is primarily attributable to
its trade receivables or pledged collateral which is the risk that a client, market counterparty or recognised stock exchange will be unable to pay amounts
to settle a trade in full when due. Other credit risks, such as free delivery of securities or cash, are not deemed to be significant. Significant changes in the
economy or a particular sector could result in losses that are different from those that the Group has provided for at the year-end date.
All financial assets at the year-end were assessed for credit impairment and no material amounts have arisen having evaluated the age of overdue
debtors, the quality of recourse to third parties and the availability of mitigation through the disposal of liquid collateral in the form of marketable
securities. The Group’s write-off policy is driven by the historic dearth of instances where material irrecoverable losses have been incurred. Where the
avenues of recourse and mitigation outlined above have not been successful, the outstanding balance, or residual balance if sale proceeds do not fully
cover an exposure, will be written off.
The Board is responsible for oversight of the Group’s credit risk. The Group accepts a limited exposure to credit risk but aims to mitigate and minimise
the risk through various methods. There is no material concentrated credit risk as the exposures are spread across a substantial number of clients and
counterparties.
Trade receivables (includes settlement balances)
Settlement risk arises in any situation where a payment of cash or transfer of a security is made in the expectation of a corresponding delivery of a
security or receipt of cash. Settlement balances arise with clients, market counterparties and recognised stock exchanges.
In the vast majority of cases, control of the stock purchased will remain with the Group until client monetary balances are fully settled.
Where there is an absence of securities collateral, clients are usually required to hold sufficient funds in their managed deposit account prior to the trade
being conducted. Holding significant amounts of client money helps the Group to manage credit risks arising with clients. Many of our clients also hold
significant amounts of stock and other securities in our nominee subsidiary company, providing additional security should a specific transaction fail to be
settled and the proceeds of such securities disposed of can be used to settle all outstanding obligations.
In addition, the client side of settlement balances is normally fully guaranteed by our commission-sharing certification 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 are 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.
Walker Crips Group plc - Annual Report and Accounts 2020
84
Notes to the accounts (continued)
year ended 31 March 2020
26. Financial instruments and risk profile (continued)
Financial risk management (continued)
(i) Credit risk management practices (continued)
Maximum exposure to credit risk:
Cash
Trade receivables
Other debtors
Accrued income
An ageing analysis of the Group’s financial assets is presented in the following table:
2020
£’000
8,609
16,184
2,380
56
27,229
At 31 March 2020
Trade receivable
Cash and cash equivalent
Other debtors
Current
£’000
14,559
8,609
2,265
25,443
0 – 1
month
£’000
1,547
–
134
1,681
2 – 3
months
£’000
Over 3
months
£’000
60
–
–
60
18
–
37
55
2019
£’000
6,916
27,030
3,063
23
37,032
Carrying
value
£’000
16,184
8,609
2,436
27,229
Expected credit loss
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables
and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit risk
and ageing. The contract assets have similar risk characteristics to the trade receivables for similar types of contracts.
In relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model as opposed to an incurred credit loss model under IAS 39.
The expected credit loss model requires the Group to account for expected credit losses and changes in those expected credit losses at each reporting
date to reflect changes in credit risk since initial recognition of the financial assets. In other words, it is no longer necessary for a credit event to have
occurred before credit losses are recognised.
As noted in principal risks on page 16, the Group undertakes a daily assessment of credit risk which includes monitoring of client and counterparty
exposure and credit limits. New clients are individually assessed for their credit worthiness using external ratings where available and all institutional
relationships are monitored at regular intervals.
As at 31 March 2020, the Directors of the Company reviewed and assessed the Group’s existing assets for impairment using the IFRS 9 simplified
approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets and no additional
impairments have been recognised. No material defaults are anticipated.
Concentration of credit risk
In addition, daily risk management procedures to actively monitor disproportionately large trades by a customer or market counterparty are in place.
The financial standing, pattern of trading, type and size of security or instrument traded are amongst the factors taken into consideration.
(ii) Liquidity risk
Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial liabilities when they fall due.
Historically, sufficient underlying cash has been prevalent in the business for many years as the Group is normally cash-generative. The risk of unexpected
large cash outflows could arise where large amounts are being settled daily of which only a fraction forms the commission earned by the Group. This
could be due to clients settling late or bad deliveries to the market or CREST, also resulting in a payment delay from the market side.
The Group’s policy with regard to liquidity risk is to carefully monitor balance sheet structure and borrowing limits, including:
(cid:1) monitoring of cash positions on a daily basis;
(cid:1) exercising strict control over the timely settlement of trade debtors; and
(cid:1) 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 2020
Financial statements
85
The table below analyses the Group’s cash outflow based on the remaining period to the contractual maturity date.
2020
Trade and other payables
2019
Bank overdrafts
Trade and other payables
Less than
1 year
£’000
22,750
22,750
127
34,095
34,222
Total
£’000
22,750
22,750
127
34,095
34,222
Future contracted undiscounted cash flows for deferred cash consideration amount to £15,000, and are shown in long-term liabilities.
(iii) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates or equity prices, on financial assets and liabilities will affect the
Group’s results. They relate to price risk on fair value through profit or loss trading investments and are subject to ongoing monitoring.
Fair value of financial instruments
The fair values of the Group’s financial assets and liabilities are not materially different from their carrying values as they have been revalued at
31 March 2020 using closing market prices.
A 10% fall in global equity markets would, in isolation, result in a pre-tax decrease to net assets of £63,800 (2019: £100,500). A 10% rise would have
an equal and opposite effect.
The impact of foreign exchange and interest rate risk is not material and is therefore not presented.
27. Trade and other payables
Amounts owed to clients, brokers and recognised stock exchanges
Other creditors
Contract liability
Accrued expenses
2020
£’000
15,167
3,548
3
4,032
22,750
2019
£’000
25,781
4,021
4
4,289
34,095
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 ten days (2019: thirteen days). The Directors consider that the carrying amount of
trade payables approximates to their fair value.
Walker Crips Group plc - Annual Report and Accounts 2020
86
Notes to the accounts (continued)
year ended 31 March 2020
28. Provisions
Provisions included in other current liabilities and long-term liabilities are made up as follows:
At start of year
Additions
Utilisation of provision
Unused amounts reversed during the year
484
1
(258)
(49)
178
542
117
–
–
659
2020
Claims /
2020
complaints Dilapidations
£’000
£’000
Total
£’000
1,026
118
(258)
(49)
837
Claims/complaints
These provisions relate to outstanding claims and complaints from third parties which, in the opinion of the Board, need providing for after taking into
account the risks and uncertainties surrounding each claim or complaint. The timing of these settlements is unknown but it is expected that they will be
resolved within twelve months.
Dilapidations
The Group, based on revised estimates, has made an additional provision of £117,000 for dilapidations in connection with acquired leasehold premises
(2019: nil). These costs are expected to arise at the end of each respective lease. Provisions for dilapidations payable on leases after more than one year
amounted to £659,000.
The Group has six leased properties, all of which have contractual dilapidation requirements. The dilapidation provisions in relation to these leases range
from net present values as at the year-end of £10,000 to £528,000 per lease.
29. Lease liabilities
Lease liabilities
Cost
Recognised on adoption of IFRS 16 on 1 April 2019
Additions
Adjustments*
Interest
Lease payments
At 31 March 2020
* Adjustments relates to new services added to existing leases recognised on 1 April 2019.
Lease liabilities profile (statement of financial position)
Amounts due within one year
Amounts due after more than one year
Undiscounted lease maturity analysis
Within one year
Between one and two years
Between two and five years
Over five years
Total undiscounted lease liabilities
Walker Crips Group plc - Annual Report and Accounts 2020
Offices
£’000
Computer
software
£’000
Computer
hardware
£’000
4,916
–
–
147
(854)
4,209
362
142
25
8
(231)
306
88
–
–
2
(16)
74
2020
£’000
969
3,620
4,589
2020
£’000
1,099
942
2,643
1,496
6,180
Total
£’000
5,366
142
25
157
(1,101)
4,589
2019
£’000
–
–
–
2019
£’000
–
–
–
–
–
Financial statements
87
30. Called-up share capital
Called-up, allotted and fully paid
43,327,328 (2019: 43,327,328) Ordinary Shares of 6 2/3 p each
2020
£’000
2019
£’000
2,888
2,888
The Group’s Articles were amended in 2010 since when there has been no authorised share capital. Shareholders have no restrictions on their holdings
except for certain Investment Managers who were awarded shares in the Group soon after joining as part of the consideration for their client relationships.
These holdings cannot be sold for a period of four to six years from commencement date.
In the prior year, 409,598 new Ordinary Shares were issued and allotted to various personnel associated with the Group in order to meet contractual
commitments made by the Group as part of the ongoing expansion of its client base. All shares issued to personnel under recruitment contracts are
restricted from sale for periods between four to six years.
The following movements in share capital occurred during the year:
At 1 April 2018
Shares issued to personnel
At 1 April 2019
At 31 March 2020
Number of
shares
42,917,730
409,598
43,327,328
43,327,328
Share
capital
£’000
2,861
27
2,888
2,888
Share
premium
£’000
3,674
89
3,763
3,763
Total
£’000
6,535
116
6,651
6,651
The Group’s capital is defined for accounting purposes as total equity. As at 31 March 2020, this totalled £22,644,000 (2019: £21,721,000). The increase
during the year was attributable to the impact of adopting IFRS 16 on 1 April 2019, profit for the year less dividends paid.
The Group’s objectives when managing capital are to:
(cid:1) safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other
stakeholders;
(cid:1) maintain a strong capital base in a cost-efficient manner to be able to support the development of the business when required;
(cid:1) optimise the distribution of capital across the Group’s subsidiaries, reflecting the requirements of each company;
(cid:1) strive to make capital freely transferable across the Group where possible; and
(cid:1) comply with regulatory requirements at all times.
Walker Crips Group plc is classified for capital purposes as an investment management group and performs an Internal Capital Adequacy Assessment
Process (“ICAAP”), which is presented to the FCA on request. Regulatory capital resources for ICAAP purposes are calculated in accordance with published
rules. These require certain adjustments to and certain deductions from accounting capital, the latter largely in respect of intangible assets. The ICAAP
compares regulatory capital resources against regulatory capital requirements derived using the FCA’s Pillar 1 and Pillar 2 methodology.
The Group has adopted the standardised approach to calculating its Pillar 1 credit risk component and the basic indicator approach to calculating its
operational risk component. Capital management policy and practices are applied at both Group and entity level.
In addition to a variety of stress tests performed as part of the ICAAP process, and daily reporting in respect of treasury activity, capital levels are
monitored and forecast to ensure that dividends and investment requirements are appropriately managed and appropriate buffers are kept against
adverse business conditions.
Regulatory capital
No breaches were reported to the FCA during the financial years ended 31 March 2019 and 2020.
The Group holds 750,000 of its own shares, purchased for total cash consideration of £312,000. In line with the principles of IAS 32 these treasury shares
have been deducted from equity. No gain or loss has been recognised in the income statement in relation to these shares.
31. Reserves
Apart from share capital and share premium, the Group holds reserves at 31 March 2020 under the following categories:
Own shares held
(£312,000) (2019: (£312,000))
Retained earnings
£11,582,000 (2019: £10,659,000)
– the negative balance of the Group’s own shares,
which have been bought back and held in treasury.
– the net cumulative earnings of the Group, which have not paid out
as dividends, retained to be reinvested in our core, or developing,
companies.
Other reserves
£4,723,000 (2019: £4,723,000)
– the cumulative premium on the issue of shares as deferred
consideration for corporate acquisitions.
Walker Crips Group plc - Annual Report and Accounts 2020
88
Notes to the accounts (continued)
year ended 31 March 2020
32. Cash generated/(used) by operations
Operating profit for the year
Adjustments for:
Amortisation of intangibles
Changes in the fair value of deferred consideration
Loss on sale of tangible fixed asset
Net change in fair value of financial instruments at fair value through profit or loss*
Share of change in net assets of joint venture
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Decrease in debtors**
Decrease in creditors**
Change in working capital as a result of net effects of acquiring a subsidiary and disposal of a joint venture
Derecognition of joint venture asset now fully acquired
Trade and other payables
Trade and other receivables
2020
£’000
1,092
609
(166)
–
367
11
590
867
11,044
(10,884)
(44)
(12)
9
2019
£’000
402
558
(102)
4
91
(14)
593
–
1,642
(3,805)
–
–
–
Net cash inflow / (outflow)
3,483
(631)
* Mark to market loss on year end positions reflecting market declines in March 2020.
** £160,000 cash inflow from working capital movement (prior year, an outflow of £2,163,000).
33. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of £ nil (2019: £ nil) contracted but not provided for and £ nil (2019: £ nil) capital commitments
authorised but not contracted for.
Lease commitments
Prior to 1 April 2019, all Group leases were classified as operating leases. The future aggregate minimum lease payments under non-cancellable
operating leases prior to the implementation of IFRS 16 were:
Within one year
Within two to five years
More than five years
2019
£’000
1,445
3,742
2,027
34. Related parties
Directors and their close family members have dealt on standard commercial terms with the Group. The commission and fees earned by the Group
included in revenue through such dealings is as follows:
Commission and fees received from Directors and their close family members
2020
£’000
14
2019
£’000
10
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 (including the fees paid to the firm
for Mr. Wright’s services as Director) was £84,000 (2019: £181,000), including administrative expenses or other receivables if the costs are reimbursable.
Commission of £4,746 (2019: £3,354) was earned by the Group from Phillip Securities (HK) Limited (a Phillip Brokerage Pte Limited company, where
H. M. Lim is a shareholder) having dealt on standard commercial terms. Additionally, some custody services are provided by Phillip Securities Pte Ltd
(in Singapore, where H. M. Lim is a Director), again all on standard commercial terms, both these items being included in revenue. Transactions between
the Group and its subsidiaries, which are related parties, have been eliminated on consolidation and are accordingly not disclosed. Remuneration of the
Directors who are the key Management personnel of the Group are disclosed in the table opposite.
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
89
Key Management personnel compensation
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based payment
2020
£’000
2019
£’000
446
34
–
7
487
590
45
86
9
730
35. Effect of changes in accounting policies
Impact on financial statements on adoption
Right-of use assets were initially measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments
relating to that lease recognised in the balance sheet as at 31 March 2019. There were no onerous lease contracts that would have required an
adjustment to the right-of-use assets at the date of initial application.
The following illustrates the impact on the income statement on the adoption of IFRS 16:
31 March
2020
as reported
£’000
Rents
£’000
Finance
Other
costs Depreciation adjustments
£’000
£’000
£’000
Revenue
Commission and fees paid
Share of after tax profit from joint venture
Gross profit
Administrative expenses
Exceptional items
Operating profit
Investment revenue
Finance costs
Profit before tax
Taxation
31,422
(9,771)
(11)
21,640
(20,923)
375
1,092
76
(205)
963
(245)
–
–
–
–
(855)
–
(855)
–
–
(855)
–
–
–
–
–
–
–
–
–
157
157
–
–
–
–
–
861*
–
861
–
–
861
–
Profit for the period attributable to equity
holders of the Parent Company
718
(855)
157
861
–
–
–
–
19**
–
19
–
–
19
–
19
31 March
2020
under
IAS 17
£’000
31,422
(9,771)
(11)
21,640
(20,898)
375
1,117
76
(48)
1,145
(245)
900
* This depreciation is the net effect of the depreciation charges relating to the new right-of-use assets and the existing depreciation treatment of items adjusted for as a result of the application of IFRS 16.
** This adjustment relates to the revised treatment of irrecoverable VAT on certain rental invoices as a result of the application of IFRS 16.
The recognised right-of-use assets split between asset classes on 1 April 2019 and 31 March 2020 can be seen in note 20.
The change in accounting policy affected the following items in the statement of financial position on 1 April 2019:
(cid:1) Right-of-use assets – increase by £5,062,000;
(cid:1) Prepayments – decrease by £239,000 regarding rental prepayments;
(cid:1) Accrued expenses – decrease by £621,000 regarding the rent-free period;
(cid:1) Current liabilities – decrease by £63,000 regarding the landlord contribution;
(cid:1) Non-current lease liabilities – decrease by £460,000 regarding the landlord contribution;
(cid:1) Current liabilities – increase by £1,026,000 regarding lease liabilities within one year;
(cid:1) Non-current lease liabilities – increase by £4,340,000 regarding lease liabilities after one year.
The net impact on retained earnings on 1 April 2019 was an increase of £601,000.
Walker Crips Group plc - Annual Report and Accounts 2020
90
Notes to the accounts (continued)
year ended 31 March 2020
35. Effect of changes in accounting policies (continued)
Impact on financial statements on adoption (continued)
The table below presents the impact of adopting IFRS 16 on the statement of financial position as at 1 April 2019:
Right-of-use assets on 1 April 2019 (based on lease liabilities)
Adjustments:
Derecognition of landlord contribution
Reclassification of prepaid expenses
Total right-of-use assets on 1 April 2019 after all adjustments
Irrecoverable VAT reversal of prepayments
Reduction in accrued expenses (derecognition of rent-free period)
Net increase in retained earnings
As at 1 April 2019
£’000
5,366
(523)
219
5,062
As at 1 April 2019
£’000
(20)
621
601
Included in profit or loss for the period are £867,000 of depreciation of right-of-use assets and £157,000 of finance expenses on lease liabilities. The Group
did not classify any leases as low value leases.
The lease liabilities outstanding as at 31 March 2020 are disclosed in note 29.
36. Contingent liability
Occasionally the Group receives complaints that are considered without merit, but the final outcome sometimes falls outside the Group’s control. Where
such claims are not covered by the Group’s indemnity insurance, for example due to an excess or coverage dispute, a contingent liability arises. However,
where in the view of the Directors a negative outcome is considered to be remote no disclosure has been made in these financial statements.
37. Subsequent events
There are no material events arising after 31 March 2020 which have an impact on these financial statements.
COVID-19 is a significant in-year event, the impact of which is likely to be felt for an unquantifiable number of months or even years. The Investment
and Wealth Management market in which the Group operates is a resilient market with a good track record of early recovery. However, the Group has
considered the immediate consequences and ramifications of the pandemic and, accordingly, has already taken some early steps to protect the Group,
our client service and our employees.
Business Continuity Plans are in place across the Group’s operating segments, with measures to manage and continue client service, operational
efficiency and staff welfare whilst a significant portion of our staff continue to work remotely from home. We continue to review this approach on a daily
basis in line with Government guidance.
38. Long-term liabilities – deferred cash consideration
Amounts due to personnel under recruitment contracts/acquisition agreements
2020
£’000
15
2019
£’000
47
These amounts are based on fixed contractual terms and the fair value of the liability approximates carrying value, due to the consistency of the prevailing
market rate of interest when compared to the inception of liability.
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
Company balance sheet
as at 31 March 2020
Non-current assets
Other intangible assets
Property, plant and equipment
Investments measured at cost less impairment
Current assets
Trade and other receivables
Deferred tax asset
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Net current liabilities
Long-term liabilities
Deferred cash consideration
Dilapidation provision
Landlord contribution to leasehold improvements
Net assets
Equity
Share capital
Share premium account
Own shares
Retained earnings
Other reserves
91
2019
£’000
3,879
1,556
17,425
22,860
770
224
269
1,263
24,123
(2,314)
(2,314)
(1,051)
(47)
(450)
(460)
(957)
2020
£’000
3,556
1,420
17,425
22,401
737
179
141
1,057
23,458
(2,363)
(2,363)
(1,306)
(15)
(554)
(398)
(967)
20,128
20,852
2,888
3,763
(312)
9,066
4,723
2,888
3,763
(312)
9,790
4,723
Note
43
42
44
45
46
47
50
50
50
49
49
49
49
49
Equity attributable to equity holders of the Parent Company
20,128
20,852
As permitted by section 408 of the Companies Act 2006 the Parent Company has elected not to present its own profit and loss account for the year.
Walker Crips Group plc reported a loss for the financial year of £328,000 (2019: profit of £1,690,000).
The financial statements of Walker Crips Group plc (Company registration no: 01432059) were approved by the Board of Directors and authorised for
issue on 31 July 2020.
Signed on behalf of the Board of Directors:
S. S. Dandeniya FCCA
Director
31 July 2020
Walker Crips Group plc - Annual Report and Accounts 2020
92
Company statement of changes in equity
year ended 31 March 2020
Equity as at 31 March 2018
Total comprehensive income for the period
Contributions by and distributions to owners
Dividends paid
Issue of shares on acquisition of intangibles and
as deferred consideration
Total contributions by and distributions to owners
Called up
share
capital
£’000
Share
premium
account
£’000
Own
shares
held
£’000
2,861
3,674
(312)
–
–
27
27
–
–
89
89
–
–
–
–
Other
£’000
4,668
–
–
55
55
Retained
earnings
£’000
8,896
1,690
Total
equity
£’000
19,787
1,690
(796)
(796)
–
(796)
171
(625)
Equity as at 31 March 2019
2,888
3,763
(312)
4,723
9,790
20,852
Total comprehensive income for the period
Contributions by and distributions to owners
Dividends paid
Total contributions by and distributions to owners
–
–
–
–
–
–
–
–
–
–
–
–
(328)
(328)
(396)
(396)
(396)
(396)
Equity as at 31 March 2020
2,888
3,763
(312)
4,723
9,066
20,128
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
93
Notes to the Company accounts
year ended 31 March 2020
39. Significant accounting policies
The separate financial statements of Walker Crips Group plc, the Parent Company, are presented as required by the Companies Act 2006.
The financial statements have been prepared under the historical cost convention except for the modification to a fair value basis for certain financial
instruments as specified in the accounting policies below, and in accordance with Financial Reporting Standard (FRS 102), the Financial Reporting
Standard applicable in the UK and the Republic of Ireland, and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires
Management to exercise judgement in applying the Parent Company’s accounting policies (see note 40).
The financial statements are presented in the currency of the primary activities of the Parent Company (its functional currency). For the purpose of
the financial statements, the results and financial position are presented in pounds sterling (£). The principal accounting policies have been summarised
below. They have all been applied consistently throughout the year and the preceding year.
The Parent Company has chosen to adopt the disclosure exemption in relation to the preparation of a cash flow statement under FRS 102.
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
Computer software
Leasehold improvements
Furniture and equipment
331/3 % per annum on cost
between 20% and 331/3 % per annum on cost
over the term of the lease
331/3 % per annum on cost
The gain or loss on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the
asset and is recognised in income. The residual values and estimated useful life of items within property, plant and equipment are reviewed at least at
each financial year end. Any shortfalls in carrying value are impaired immediately through profit or loss.
Intangible assets
Client lists
Client lists are recognised when it is probable that future economic benefits will flow to the Parent Company and the cost of the asset can be measured
reliably whilst the risk and rewards have also transferred into the Parent Company’s ownership.
Intangible assets classified as client lists are recognised when acquired as part of a business combination or when separate payments are made to
acquire clients’ assets by adding teams of Investment Managers.
The cost of acquired client lists and businesses generating revenue from clients and Investment Managers are capitalised. These costs are amortised on
a straight-line basis over their expected useful lives of three to twenty years. The amortisation period and amortisation method for intangible assets are
reviewed at least each financial year end. All intangible assets have a finite useful life.
During the year, a review of the Company’s intangible assets resulted in the revision of the UEL of an acquired client list. The Truro client list, which had an
estimated UEL of 16.25 years as at 31 March 2019, was revised to 11.25 years. As it was a change in accounting estimate, this revision and the resultant
change in annual amortisation for this intangible asset was applied prospectively, beginning with a new annual amortisation charge for this asset in the
current financial year.
The revised amortisation charge in respect of this intangible asset was £143,000 in the current year and the annual charge expected for the remaining
UEL of the asset. The charge in prior year was £99,000.
Impairment of non-financial assets
At each reporting date, the Parent Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. For the purposes of assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash flows (cash-generating units). If there is an indication of possible impairment, the recoverable amount
of any affected asset (or group of related assets) is estimated and compared with its carrying amount. If the estimated recoverable amount is lower,
the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in profit or loss.
Taxation
The tax expense represents the sum of the tax currently payable and any deferred tax.
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid or recovered using the tax rates and laws that have
been enacted or substantively enacted by the balance sheet date. Current tax charges arising on the realisation of revaluation gains recognised in the
statement of comprehensive income are also recorded in this statement.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date.
A deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as 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.
Walker Crips Group plc - Annual Report and Accounts 2020
94
Notes to the Company accounts (continued)
year ended 31 March 2020
39. Significant accounting policies (continued)
Own shares held
Own shares consist of treasury shares which are recognised at cost as a deduction from equity shareholders’ funds. Subsequent consideration received
for the sale of treasury shares is also recognised in equity with any difference being taken to retained earnings. No gain or loss is recognised on sale of
treasury shares.
Financial instruments
Financial assets and financial liabilities are recognised in the balance sheet when the Parent Company becomes a party to the contractual provisions
of the instrument. Section 11 of FRS 102 has been applied in classifying financial instruments depending on the nature of the instrument held.
Revenue
Income consists of interest received or accrued over time and dividend income recorded when received.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment. The fair valuation of the Parent 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
Other debtors are classified as basic financial instruments and measured at initial recognition at transaction price. Debtors are subsequently measured
at amortised cost using the effective interest rate method. A provision is established when there is objective evidence that the Group will not be able to
collect all amounts due.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits, together with other short-term highly liquid investments, which are readily
convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the Parent Company after deducting all of its liabilities. Equity instruments issued by the
Parent Company are recorded at the proceeds received, net of direct issue costs.
Share-based payments
The Parent Company makes share-based payments to certain self-employed account executives of a subsidiary within the Group; the share-based
payment is accounted for as an intangible in the respective subsidiary.
As at the reporting date there were no share-based payments in issue.
Shares to be issued
Shares to be issued represent the Parent Company’s best estimate of the Ordinary Shares in the Parent Company which are likely to be issued following
business combinations or the acquisition of client relationships which involve deferred payments in the Parent Company’s shares. Where shares are due
to be issued within a year, the sum is included in current liabilities. Shares to be issued are dependent on the achievement of predefined targets and are
treated as a liability until they are allotted and issued. The Parent Company had recognised as a liability the sum which has been issued and allotted to
personnel associated with the Parent Company in order to meet contractual commitments given as part of the recent expansion of its client base. There
were no transactions recognised in relation to this in the current year.
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 Parent Company has adequate resources to continue in existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in preparing the financial statements. The Parent Company’s business activities, together
with the factors likely to affect its future development, performance and position, have been rigorously assessed (see page 59).
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
95
40. Key sources of estimation uncertainty and judgements
The preparation of financial statements in conformity with generally accepted accounting practice requires Management to make estimates and
judgements that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the balance sheet
date and the reported amounts of revenues and expenses during the reporting period.
Intangible assets
Acquired client lists are capitalised based on current fair values. By assessing the historic rates of client retention, the ages and succession plans of the
Investment Managers who manage the clients and the contractual incentives of the Investment Managers, the Directors consider a life of up to twenty
years to be both appropriate and in line with our peers. There were no acquisitions made in the period to 31 March 2020. Additions in the period relate
to existing client lists and are disclosed in note 43.
The determination of what constitutes ‘observable’ requires significant judgement by the Directors when using peer comparisons to rationalise our
assessments. 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.
41. Profit/loss for the year
Loss for the financial year of £328,000 (2019: profit of £1,690,000) is after an amount of £60,000 (2019: £51,000) related to the auditor’s remuneration
for audit services to the Parent Company.
Particulars of employee costs (including Directors) are as shown below:
Employee costs during the year amounted to:
Employee costs during the year amounted to:
Wages and salaries
Social security costs
Other costs
2020
£’000
2019
£’000
170
14
4
188
176
15
7
198
In the current year, employee costs are those of the Non-Executive Directors, a proportion of the Executive Directors and the cost of the Group’s profit
share scheme. The remaining Executive Director employee costs are borne by Walker Crips Investment Management Limited.
The monthly average number of staff employed during the year was:
Executive Directors
Non-Executive Directors
2020
Number
2019
Number
2
4
6
3
4
7
Walker Crips Group plc - Annual Report and Accounts 2020
96
Notes to the Company accounts (continued)
year ended 31 March 2020
42. Property, plant and equipment
Cost
At 1 April 2019
Additions
At 31 March 2020
Amortisation
At 1 April 2019
Charge for the year
At 31 March 2020
Net book value
At 31 March 2020
At 31 March 2019
43. Other intangible assets
Cost
At 1 April 2019
Additions
At 31 March 2020
Amortisation
At 1 April 2019
Charge for the year
At 31 March 2020
Net book value
At 31 March 2020
At 31 March 2019
44. Fixed asset investments
Subsidiary undertakings
A complete list of subsidiary undertakings can be found in note 55.
Walker Crips Group plc - Annual Report and Accounts 2020
Leasehold
improvements,
furniture and
equipment
£’000
Computer
software
£’000
2,125
67
2,192
569
203
772
1,420
1,556
858
–
858
858
–
858
–
–
Client lists
£’000
5,055
21
5,076
1,176
344
1,520
Total
£’000
2,983
67
3,050
1,427
203
1,630
1,420
1,556
Total
£’000
5,055
21
5,076
1,176
344
1,520
3,556
3,879
3,556
3,879
2020
£’000
17,425
2019
£’000
17,425
Financial statements
97
45. Trade and other receivables
Amounts owed by Group undertakings
Prepayments and accrued income
Other debtors
2020
£’000
436
8
293
737
2019
£’000
492
28
250
770
A presentational change was made in this note to exclude the deferred tax asset from this grouping and to present it in its own line on the face of the
statement of financial position. The deferred tax asset is presented separately in note 46.
46. Deferred taxation
At 1 April
Use of losses brought forward
Use of Group relief
Credit to the income statement
As at 31 March
2020
£’000
224
–
(86)
41
179
2019
£’000
140
–
–
84
224
A further reduction in the rate of corporation tax to 17% was due to come into effect from April 2020, however this planned reduction was cancelled in
March 2020 and on 17 March 2020 the 19% rate was again substantively enacted. Deferred tax has been provided at 19% (2019: 17%).
47. Trade and other payables
Accruals and deferred income
Amounts due to subsidiary undertakings
Other creditors
2020
£’000
99
2,195
69
2,363
2019
£’000
117
1,950
247
2,314
48. Risk management policies
Procedures and controls are in place to identify, assess and ultimately control the financial risks faced by the Parent Company arising from its use of
financial instruments. Steps are taken to mitigate identified risks with established and effective procedures and controls, efficient systems and the
adequate training of staff.
The Parent Company’s risk appetite, along with the procedures and controls mentioned above, are laid out in the Group’s Internal Capital Adequacy
Assessment Process document prepared in accordance with the requirements of the Financial Conduct Authority (“FCA”).
The overall risk appetite for the Parent Company and for the Group as a whole is considered by Management to be low, despite operating in a market-
place where financial risk is inherent in the core businesses of Investment Management and financial services.
The Group considers its financial risks arising from its use of financial instruments to fall into three main categories:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
Further information on the disclosures and policies carried out by the Parent Company and the Group are made in note 26 of the consolidated financial
statements.
Walker Crips Group plc - Annual Report and Accounts 2020
98
Notes to the Company accounts (continued)
year ended 31 March 2020
48. Risk management policies (continued)
(i) Credit risk
Maximum exposure to credit risk:
Cash
Other debtors
As at 31 March
2020
£’000
141
293
434
The credit quality of banks holding the Group’s cash at 31 March 2020 is analysed below with reference to credit ratings awarded by Fitch.
A+
A
AA-
As at 31 March
Analysis of other debtors due from financial institutions:
Neither past due, nor impaired
Amounts past due, but not impaired
As at 31 March
< 30 days
> 30 days
> 3 months
2020
£’000
11
–
130
141
2020
£’000
293
–
–
–
293
2019
£’000
269
250
519
2019
£’000
224
45
–
269
2019
£’000
250
–
–
–
250
(ii) Liquidity risk
The tables below analyse the Parent Company’s future undiscounted cash outflows based on the remaining period to the contractual maturity date:
Creditors due within one year
Creditors due after more than one year
As at 31 March
Within one year
Within two to five years
After more than five years
As at 31 March
2020
£’000
2,363
569
2,932
2020
£’000
2,363
15
554
2,932
2019
£’000
2,314
497
2,811
2019
£’000
2,314
47
450
2,811
(iii) Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates or equity prices will affect the Group’s income.
These relate to price risk breached on available-for-sale and trading investments and closely monitored using limits to prevent significant losses.
Fair value of financial instruments
No financial instruments at fair value were held by the Parent Company in the current or prior financial year.
Walker Crips Group plc - Annual Report and Accounts 2020
Financial statements
99
49. Called-up share capital
Called-up, allotted and fully paid
43,327,328 (2019: 43,327,328) Ordinary Shares of 6 2/3 p each
2020
£’000
2019
£’000
2,888
2,888
No new shares were issued in the year to 31 March 2020. In the prior year, 409,598 new Ordinary Shares were issued and allotted to various personnel
associated with the Parent Company in order to meet contractual commitments made by the Parent Company as part of the ongoing expansion of its
client base.
The Parent Company holds 750,000 of its own shares, purchased for a total cash consideration of £312,000. In line with the principles of FRS 102,
section 11, these treasury shares have been deducted from equity. No gain or loss has been recognised in the profit and loss account in relation to these
shares. The following movements in share capital occurred during the year:
At 1 April 2018
Issue of shares on acquisition of intangibles and as
deferred consideration
At 1 April 2019
At 31 March 2020
Number
of shares
42,917,730
409,598
43,327,328
43,327,328
Share
capital
£’000
2,861
27
2,888
2,888
Share
premium
£’000
3,674
89
3,763
3,763
Total
£’000
6,535
116
6,651
6,651
Walker Crips is classified for capital purposes as an Investment Management group and performs an Internal Capital Adequacy Assessment Process
(ICAAP), which is presented to the FCA on request. Regulatory capital resources for ICAAP purposes are calculated in accordance with published rules.
These require certain adjustments to and certain deductions from accounting capital, the latter largely in respect of intangible assets. The ICAAP
compares regulatory capital resources against regulatory capital requirements derived using the FCA’s Pillar 1 and Pillar 2 methodology. The Group has
adopted the standardised approach to calculating its Pillar 1 credit risk component and the basic indicator approach to calculating its operational risk
component. Capital management policy and practices are applied at both Group and entity level.
In addition to a variety of stress tests performed as part of the ICAAP process, and daily reporting in respect of treasury activity, capital levels are
monitored and forecast to ensure that dividends and investment requirements are appropriately managed and appropriate buffers are kept against
adverse business conditions.
Apart from share capital and share premium, the Parent Company holds reserves at 31 March 2020 under the following categories:
Own shares held
(£312,000) (2019: (£312,000))
– the negative balance of the Parent Company’s own shares, which have been bought
back and held in treasury.
Retained earnings
£9,066,000 (2019: £9,790,000)
– the net cumulative earnings of the Parent Company, which have not paid out as
dividends, retained to be reinvested in our core, or new, business.
Other reserves
£4,723,000 (2019: £4,723,000)
– the cumulative premium on the issue of shares as deferred consideration
for corporate acquisitions.
50. Creditors: amounts falling due after more than one year
Dilapidation provision
Landlord contribution to leasehold improvements
Deferred cash consideration
2020
£’000
554
398
15
967
2019
£’000
450
460
47
957
Walker Crips Group plc - Annual Report and Accounts 2020
100
Notes to the Company accounts (continued)
year ended 31 March 2020
51. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of £ nil (2019: £ nil) contracted but not provided for and £ nil (2019: £ 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
More than five years
2020
£’000
765
2,616
1,390
2019
£’000
763
2,775
1,976
52. Related party transactions
Key Management are those persons having authority and responsibility for planning, controlling and directing the activities of the Parent Company and
Group. In the opinion of the Board, the Parent Company and Group’s key Management are the Directors of Walker Crips Group plc.
Total compensation to key Management personnel is £487,000 (2019: £730,000).
53. Contingent liability
Occasionally the Company receives complaints that are considered without merit, but the final outcome sometimes falls outside the Company’s control.
Where such claims are not covered by the Group’s indemnity insurance, for example due to an excess or coverage dispute, a contingent liability arises.
However, where in the view of the Directors a negative outcome is considered to be remote no disclosure has been made in these financial statements.
54. Subsequent events
There are no material events arising after 31 March 2020 which have an impact on these financial statements.
COVID-19 is a significant in-year event, the impact of which is likely to be felt for an unquantifiable number of months or even years. The Investment
and Wealth Management market in which the Group operates is a resilient market with a good track record of early recovery. However, the Group has
considered the immediate consequences and ramifications of the pandemic and, accordingly, has already taken some early steps to protect the Group,
our client service and our employees.
Business Continuity Plans are in place across the Group’s operating segments, with measures to manage and continue client service, operational
efficiency and staff welfare whilst a significant portion of our staff continue to work remotely from home. We continue to review this approach on a daily
basis in line with Government guidance.
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55. Subsidiaries and jointly-owned entities
Principal place of business
Principal activity
Class and percentage
of shares held
Group
Trading subsidiaries
Walker Crips Investment Management Limited1
United Kingdom
Investment management
Ordinary Shares 100%
London York Fund Managers Limited3
United Kingdom
Management services
Ordinary Shares 100%
Walker Crips Wealth Management Limited 3
United Kingdom
Financial services advice
Ordinary Shares 100%
Ebor Trustees Limited 3
EnOC Technologies Limited1
United Kingdom
United Kingdom
Pensions management
Ordinary Shares 100%
Financial regulation and other software
Ordinary Shares 100%
Barker Poland Asset Management LLP1
United Kingdom
Investment management
Membership 100%
Non-trading subsidiaries
Walker Crips Financial Services Limited1
United Kingdom
G & E Investment Services Limited 3
Ebor Pensions Management Limited 3
Investorlink Limited1
Walker Cambria Limited1
Walker Crips Trustees Limited1
W.B. Nominees Limited 2
WCWB (PEP) Nominees Limited 2
WCWB (ISA) Nominees Limited 2
WCWB Nominees Limited 2
Walker Crips Consultants Limited1
Walker Crips Ventures Limited 3
Jointly-owned entities
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%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Financial services advice
Ordinary Shares 100%
Walker Crips Property Income Limited1
United Kingdom
Holding company
Ordinary Shares 33.3%
The registered office for companies and associated undertakings is:
1 Old Change House, 128 Queen Victoria Street, London, England, EC4V 4BJ.
2 St James House, 27-43 Eastern Road, Romford, Essex, England, RM1 3NH.
3 Apollo House, Eboracum Way, York, England, YO31 7RE.
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Notice of Annual General Meeting
of Walker Crips Group plc (the “Company”)
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.
Important changes to Annual General Meeting arrangements in light of the Coronavirus (COVID-19) outbreak
In response to the continuing COVID-19 outbreak and public health guidance and legislation issued by the UK Government (including the Corporate
Governance and Insolvency Act 2020 which came into effect on 25 June 2020), this year’s Annual General Meeting of the Company (the “Meeting”)
will be held electronically and shareholders will not be able to attend the meeting in person.
Although shareholders are not able to attend the Meeting in person this year, the Meeting and the opportunity it affords for the Board of Directors to
engage with the Company’s shareholders is important. As the Meeting will be held electronically, shareholders can attend and participate in the Meeting
without leaving their homes and shareholders are strongly encouraged to do so.
Shareholders who wish to electronically attend the Meeting must inform the Company Secretary of their wish to attend and provide an email address
to which personalised electronic attendance details will then be sent. Notice of attendance may be given to the Company Secretary by way of post
to Old Change House, 128 Queen Victoria Street, London, England, EC4V 4BJ or by email to agm2020@walkercrips.co.uk. Notification of attendance
must be received by the Company by no later than 11.00 a.m. on 7 September 2020. Shareholders who have notified the Company that they will
attend the Meeting will be provided personalised access details for electronic attendance of the Meeting by email to the address provided by them
on 8 September 2020.
Questions prior to and at the Annual General Meeting
If you would like to pose a question, you can do so in advance by emailing your question to agm2020@wcgplc.co.uk. Please ensure that you submit
your questions by 11.00 a.m. on 7 September 2020. Following the Meeting, the Company will publish details of the business conducted at the Meeting,
including responses to selected questions received, on its website at www.walkercrips.co.uk.
Voting at the Annual General Meeting
Shareholders can vote on the resolutions to be put to the Meeting by completing, signing and returning the proxy form posted to you. Given the current
restrictions on attendance, shareholders are strongly encouraged to appoint the Chairman of the Meeting as their proxy to ensure that their vote is
counted, rather than a named person who will not be permitted to attend the Meeting in person. Voting on all resolutions will be carried out on a poll to
ensure that the results reflect the votes received.
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Notice is hereby given that the Annual General Meeting of Walker Crips Group plc (the “Company”) will be held electronically from the registered office,
Old Change House, 128 Queen Victoria Street, London EC4V 4BJ on 9 September 2020 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’ reports and audited financial statements for the year ended 31 March 2020.
2. To approve the Directors’ remuneration report (excluding the summary of the Directors’ remuneration policy set out on pages 39 to 42 of the
Directors’ remuneration report) for the year ended 31 March 2020.
3. To approve the Directors’ remuneration policy, the full text of which is set out on pages 39 to 42 of the Directors’ remuneration report for the year
ended 31 March 2020, which takes effect from 1 April 2021.
4. To re-elect as a Director Mr. David Gelber.
5. To re-elect as a Director Mr. Sean Kin Wai Lam.
6. To re-elect as a Director Mr. Sanath Dandeniya.
7. To re-elect as a Director Mr. Martin Wright.
8. To re-elect as a Director Mr. Hua Min Lim.
9. To re-elect as a Director Mr. Clive Bouch.
10. To re-appoint BDO LLP as auditor of the Company until the conclusion of the next meeting at which accounts are laid.
11. 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:
12. 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 fifteen 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 £946,162 (equivalent to one third of the Company’s issued share capital (excluding treasury shares)
as at the date of this notice of meeting). All previous authorities pursuant to Article 12(B) are revoked, subject to Article 12(D).
To consider, and if thought fit, to pass the following resolutions, which will be proposed as special resolutions:
13. That, subject to the passing of Resolution 12, 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 fifteen 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 £283,488.00 (equivalent to 10% of the Company’s issued share capital (excluding treasury shares) as at the date of this notice
of meeting). All previous authorities pursuant to Article 12(C) are revoked, subject to Article 12(D).
14. 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)
b)
c)
d)
e)
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;
the minimum price which may be paid for any Ordinary Shares is 62/3 pence per Ordinary Share;
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 fifteen 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).
15. That the Company be authorised to call a general meeting of the shareholders, other than an Annual General Meeting, on not less than fourteen
clear days’ notice.
By order of the Board
R. Goddard
Secretary
14 August 2020
Walker Crips Group plc
Old Change House, 128 Queen Victoria Street, London, England, EC4V 4BJ
Reg No. 01432059
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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”). Your vote is important
to the Company and all shareholders are encouraged to vote on all shareholder matters.
The Board considers that all resolutions proposed are likely to promote the success of the Company and are in the best interests of the Company
and its shareholders as a whole. Your Board unanimously recommends that shareholders vote in favour of them.
Resolution 1: Receipt of the 2020 Annual Report and Accounts
The Directors’ and auditor’s reports and the audited financial statements of the Company (“the Annual Report and Accounts”) for the year ended
31 March 2020 have been made available to shareholders and will be presented at the Meeting. The Annual Report and Accounts may also be accessed
on the Company’s website at www.walkercrips.co.uk. Shareholders may raise any questions on the Annual Report and Accounts under this resolution.
Resolution 2: Approval of the 2020 Directors’ remuneration report
In accordance with section 439 of the Companies Act 2006, shareholders are requested to approve the Directors’ remuneration report which can be
found on pages 33 to 42 of the Annual Report and Accounts for the year ended 31 March 2020 (other than the summary of the Directors’ remuneration
policy set out on pages 39 to 42). The vote is advisory only and does not affect the actual remuneration paid to an individual Director.
Resolution 3: Approval of the 2020 Directors’ remuneration policy
The Directors’ remuneration policy was last approved by shareholders at the Annual General Meeting on 6 September 2017 with effect from 1 April 2018.
Under section 439A of the Companies Act 2006, the Directors’ remuneration policy is required to be put to shareholders for approval every three years,
and the vote is binding.
No changes are being proposed to the existing Directors’ remuneration policy and accordingly shareholders are asked to re-approve the Directors’
existing remuneration policy, as set out on pages 39 to 42 of the Directors’ remuneration report for the year ended 31 March 2020.
If approved by shareholders, the policy is intended to be valid for a period of three years from 1 April 2021. Once in effect, the Company will not be able
to make a remuneration payment to a current or prospective Director or a payment for loss of office to a current or past Director, unless that payment
is consistent with the policy or has otherwise been approved by a resolution of shareholders of the Company.
Resolutions 4 to 9: Re-election of Directors
The UK Corporate Governance Code 2018 provides that all Directors should be subject to annual re-election. Accordingly, each of the Directors is retiring
and seeking re-election.
The resolutions relating to the re-election of the Directors are proposed as separate resolutions numbered 4 to 9. The Board believes that the
performance of each of the Directors standing for re-election continues to be effective and each Director demonstrates commitment to the role. As such,
the Board determined that the Company would benefit by retaining the knowledge and experience gained by these Directors over the previous years.
The biographies of the Directors eligible and standing for re-election at the Meeting are set out on pages 18 and 19 of the Annual Report and Accounts
for the year ended 31 March 2020.
Resolution 10: Appointment of auditor
The Company is required to appoint its auditor at each general meeting at which accounts are laid before the shareholders and the auditor is usually
appointed to hold office from the conclusion of an Annual General Meeting until the conclusion of the next Annual General Meeting. BDO LLP have
indicated their willingness to continue in office.
Accordingly, shareholders are being asked in resolution 10 to approve the re-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.
Resolution 11: Remuneration of the auditor
This resolution 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 and the Group to the auditor
and recommend them to the Board.
Resolution 12: Renewal of the Directors’ authority to allot shares
Resolution 12 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 £946,162 (being one-third of the Company’s issued share capital (excluding treasury
shares) as at 13 August 2020) (being the latest practicable date prior to the date of this notice of meeting). This resolution, which is an ordinary
resolution, will replace the authority given to the Directors at the last Annual General Meeting on 4 September 2019.
750,000 shares are held in treasury as at 13 August 2020 (being the latest practicable date prior to the date of this notice of meeting), representing
approximately 1.73% of the Company’s issued share capital (excluding treasury shares) on that date.
The Directors have no present intention to issue new Ordinary Shares other than those commitments disclosed in the Annual Report and Accounts, if any.
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 fifteen months from the date of the passing of the
resolution, whichever is the earlier.
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Resolution 13: Renewal of the Directors’ authority to disapply pre-emption rights
Resolution 13 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 £283,488.00 (being 10% of the Company’s issued share capital (excluding treasury shares) as at 13 August 2020 (being the latest practicable
date prior to the date of this notice of meeting)) 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 4 September 2019.
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 fifteen months from the date of the passing of the
resolution, whichever is the earlier.
Resolution 14: 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 there were neither warrants nor options to subscribe for equity shares in the Company which were outstanding
as at 13 August 2020 (being the latest practicable date prior to the date of this notice of meeting).
This authority will expire on the next Annual General Meeting of the Company or the date falling fifteen months from the date of the passing of the
resolution, whichever is the earlier.
Resolution 15: Notice period for general meeting
The notice period for general meetings of the Company is twenty-one clear days unless shareholders approve a shorter notice period which cannot be less
than fourteen clear days. Annual General Meetings will continue to be called on at least twenty-one clear days’ notice.
Resolution 15, which is a special resolution, will enable the Company to call general meetings (other than Annual General Meetings) on fourteen 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 2021 when it is intended that a similar resolution to renew the authority
will be proposed.
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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:
(cid:1) 6.00 p.m. on 7 September 2020; or
(cid:1) 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 electronically and vote at the meeting (for the avoidance of doubt, only the Chairman of the Meeting will be able to vote
at the Meeting as proxy, voting arrangements for any such adjourned meeting will be determined at such time).
Changes to the register of members after the relevant deadline shall be disregarded in determining the rights of any person 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 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. However, please see Note 4 below for important information on appointment of
anyone other than the Chairman of the Meeting as proxy.
3. 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. However, please see Note 4 below for
important information on appointment of anyone other than the Chairman of the Meeting as proxy.
4. In light of COVID-19, you are strongly encouraged to appoint the Chairman of the Meeting as your proxy to vote in accordance with your
instructions, to ensure that your vote is counted. Given the restrictions on attendance in person, no person other than the Chairman of
the Meeting will be able to attend or vote at the meeting as proxy.
5. 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 form or contact Neville
Registrars Limited to obtain an extra proxy form on 0121 585 1131.
6. 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
7. 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:
(cid:1) completed and signed;
(cid:1) sent or delivered to Neville Registrars Limited, Neville House, Steelpark Road, Halesowen B62 8HD; and
(cid:1) received by Neville Registrars Limited no later than 11.00 a.m. on 7 September 2020.
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.
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Appointment of proxies through CREST
8. 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 or instructions 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, regardless of whether it constitutes the appointment of a proxy
or is an amendment to the instruction given to a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the
issuer’s agent ID (7RA11) by no later than 11.00 a.m. on 7 September 2020, or, in the event of an adjournment of the meeting, 48 hours before the
adjourned meeting. 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. After
this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
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
9.
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
10. 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
11. 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, Steelpark Road, Halesowen B62 8HD. 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 7 September 2020.
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.
Corporate representatives
12. 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.
Issued shares and total voting rights
13. As at 13 August 2020 (being the latest practicable date prior to the date of this notice of meeting), the Company’s issued share capital comprised
43,327,328 Ordinary Shares of 6 2/3 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 13 August 2020 and, therefore, the total number of voting rights in the Company as at such date
is 42,577,328.
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Notice of Annual General Meeting (continued)
Communication
14. 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
15. Information regarding the Meeting, including the information required by section 311A of the Companies Act 2006, is available from
www.walkercrips.co.uk.
Questions at the Meeting
16. 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. In light of COVID-19, shareholders who would like to pose
a question to the Meeting must do so in advance by emailing your question to agm2020@wcgplc.co.uk. Questions must be received by 11.00 a.m.
on 7 September. Following the Meeting, the Company will publish details of the business conducted at the Meeting, including responses to selected
questions received, on its website at www.walkercrips.co.uk.
Website publication of audit concerns
17. 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 the Company’s 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 Report and
Accounts 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:
(cid:1) it may not require the members making the request to pay any expenses incurred by the Company in complying with the request;
(cid:1) 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
(cid:1) the statement may be dealt with as part of the business of the Meeting.
The request:
(cid:1) may be in hard copy form or in electronic form;
(cid:1) either set out the statement in full or, if supporting a statement sent by another shareholder, clearly identify the statement which is being
supported;
(cid:1) must be authenticated by an accompanying statement setting out the identity of the person or persons making it; and
(cid:1) be received by the Company at least one week before the meeting.
In the case of a request made in hard copy form, such request must be sent to the Company Secretary at Walker Crips Group plc, Old Change House,
128 Queen Victoria Street, London, England, EC4V 4BJ.
In the case of a request made in electronic form, such request must be sent to the Company Secretary at rod.goddard@wcgplc.co.uk. Please state “WCG
Plc 2020 AGM” in the subject line of the email.
Nominated person
18. 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 2020
Financial statements
109
Form of proxy
For use at the Annual General Meeting (the “Meeting”) of Walker Crips Group plc (the “Company”) to be held electronically from the registered office,
Old Change House, 128 Queen Victoria Street, London EC4V 4BJ on 9 September 2020 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):
(name(s) in full)
Of (address)
(BLOCK LETTERS PLEASE)
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)
2)
3)
4)
To receive and adopt the Directors’ report and audited financial statements
To approve the Directors’ remuneration report
To approve the Directors’ remuneration policy
To re-elect David Gelber as a Director
5) To re-elect Sean Kin Wai Lam as a Director
6) To re-elect Sanath Dandeniya as a Director
7) To re-elect Martin Wright as a Director
8)
9)
To re-elect Hua Min Lim as a Director
To re-elect Clive Bouch as a Director
10) To re-appoint BDO LLP as auditor
11) To authorise the Directors to set the remuneration of the auditor
12) To authorise the Directors to allot shares
13) To disapply pre-emption rights1
14) To authorise the Company to make market purchases of its own shares1
15)
To authorise the Company to call a general meeting of shareholders
on not less than fourteen clear days’ notice1
1 Special resolution.
Signed:
(for a company see Note 9 to this form of proxy)
Dated:
(cid:4)
Walker Crips Group plc - Annual Report and Accounts 2020
110
Form of proxy
notes
Notes:
1. As a member of the Company you are entitled to appoint a proxy or proxies to exercise all or any of your rights to attend and vote at a general
meeting of the Company. You can only appoint a proxy using the procedures set out in these notes.
2. Appointment of a proxy does not preclude you from attending the meeting electronically.
3. 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.
4.
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).
5. 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).
6. 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.
In light of COVID-19, the Company strongly encourages shareholders to appoint the Chairman of the meeting as their proxy to vote in
accordance with their instructions, given the current restrictions on attendance.
8. To appoint a proxy using this form, the form must be:
(cid:1) completed and signed;
(cid:1) sent or delivered to Neville Registrars Limited, Neville House, Steelpark Road, Halesowen B62 8HD; and
(cid:1) received by Neville Registrars Limited no later than 11.00 a.m. on 7 September 2020.
9.
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.
10. 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.
11. 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 CREST ID (7RA11) by 11.00 a.m. on 7 September 2020. See the notes to the notice of meeting for further information on proxy appointment
through CREST.
12. 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).
13. 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.
14. For details of how to change your proxy instructions or revoke your proxy appointment see the notes to the notice of meeting.
15. 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 2020
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111
Officers and professional advisers
Directors
Executive Directors
S. K. W. Lam FCPA (Aust.), Chartered FCSI – Chief Executive Officer
S. S. Dandeniya ACCA – Group Finance Director
Non-Executive Directors
D. M. Gelber – Chairman
H. M. Lim
M. J. Wright – Senior Independent Director
C. Bouch FCA – Audit Committee Chairman
Secretary
R. Goddard
Registered office
Old Change House
128 Queen Victoria Street
London EC4V 4BJ
Bankers
HSBC Bank plc
London
Solicitors
Charles Russell Speechlys LLP
London
Auditor
BDO LLP
London
Registrars
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen B62 8HD
Walker Crips Group plc - Annual Report and Accounts 2020
112
Notes
Walker Crips Group plc - Annual Report and Accounts 2020
Design and Production
www.carrkamasa.co.uk
Walker Crips Group plc - Annual Report and Accounts 2020
Walker Crips Group plc
Old Change House,
128 Queen Victoria Street,
London
EC4V 4BJ
020 3100 8000
www.walkercrips.com
client.services@wcgplc.co.uk