Annual Report and Accounts 2021
Walker Crips Group plc - Annual Report and Accounts 2021
Highlights from our year ended 31 March 2021
Resilience and agility through
a challenging year
Financial highlights
Key performance indicators
Resilience and agility through a
challenging year where revenue and
operating profits have been adversely
impacted by the low Bank of England
base rates, partially mitigated by
higher trading commissions and
business performance, including
cost-cutting initiatives.
Total revenues £30.3 million
(2020: £31.4 million).
Operating profit £22,000 (2020:
£1,092,000), being £441,000
(2020: £717,000) when adjusted
for exceptional items*.
Loss before tax £114,000 (2020:
profit before tax £963,000),
being profit before tax £305,000
(2020: £588,000) when adjusted
for exceptional items*.
Adjusted EBITDA £2.61 million
(2020: £2.78 million) **.
Underlying cash generated from
operations £1.08 million (2020:
£1.85 million)***.
Cash and cash equivalents
£8.86 million (2020: £8.61 million).
Assets Under Management (“AUM”)
returned to pre-pandemic levels, with
an increase of 22.2% to £3.4 billion
from March 2020 (2020: £2.8 billion).
Proposed final dividend of
0.60 pence per share (2020: nil),
bringing the total dividends for
the year to 0.75 pence per share
(2020: 0.60 pence per share).
* Exceptional items are disclosed in note 10
to the accounts and a full reconciliation
to IFRS results is presented in the Finance
Director’s review on page 19.
** Adjusted EBITDA represents earnings
before interest, taxation, depreciation
and amortisation on an IFRS basis.
The Directors present this result as it is
a metric widely used by stakeholders
when considering an entity’s financial
performance. A full reconciliation is
provided in the Finance Director’s review
on page 19.
*** Underlying cash generated from operations
shows the cash generated from operations
adjusted for lease liability payments under
IFRS 16 and non-cyclical working capital
movements. The Directors consider that this
metric helps readers understand the cash
generating performance of the Group. A full
reconciliation to IFRS results is presented in
the Finance Director’s review on page 19.
Performance in 2021 is set out below with data from preceding years.
Year-on-year data is presented on a consistent basis providing measurable
indicators. The Board monitors these KPIs regularly.
£30.3m
£0.02m
Revenue
2021
2020
2019
Operating profit
£30.3m
2021
£0.02m
£31.4m
£30.5m
2020
2019
£0.40m
£1.09m
A 3.5% decrease in revenue due to loss of
interest turn on managed deposits and
lower management fee income.
A decline in operating profit due to the
challenging trading environment and
exceptional items discussed in this report.
£0.44m
277,402
Operating profit before
exceptional items
Transaction
volume
2021
2020
2019
£0.44
£0.43
£0.72
2021
2020
2019
130,509
124,603
277,402
A decrease in operating profit before
exceptional items in a year disrupted by
the pandemic.
Trading volumes doubled despite
the COVID-19 pandemic and Brexit
uncertainties.
£5.4bn
Breakdown of AUMA
2021
1.863
1.523
1.974
£5.4bn
2020 1.479
1.292
1.541 £4.3bn
2019 1.639
1.630
1.750 £5.0bn
Administration
Advisory
Discretionary
The Group’s Asset Under Management
and Administration (“AUMA”) returned to
pre-pandemic levels and our shift towards
managed basis continues.
0.75p
Total dividends
(pence per share)
2021
2020
2019
0.75p
0.60p
0.91p
A modest increase from last year as the
Directors take a cautious stance with
ongoing disruptions of the pandemic.
Strategic report
01
Walker Crips Group plc
Making investment
rewarding
We have over a hundred years of
experience in managing investments
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
and providing comprehensive professional training.
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.
What we do
Core Investment Management & Advisory Business
Software as a Service (“SaaS”)
Alternative Investments
Visit our new website
For up-to-date information and the
latest news from www.wcgplc.co.uk
Contents
Strategic report
Financial highlights and KPIs
Welcome
At a glance
Chairman’s statement
CEO’s statement
Business model
Strategy in action
Chief Investment Officer’s analysis
Finance Director’s review
Supporting our community
Principal business risks
Corporate governance
Board of Directors
Introduction to governance
Report by the Directors
Section 172 (1) Statement
Audit Committee report
Remuneration report
Directors’ report
Statement of Directors’ responsibilities
#
01
02
04
06
08
10
16
18
22
24
26
28
29
35
38
42
54
57
58
63
Financial statements
Independent auditor’s report to the
members of Walker Crips Group plc
Consolidated income statement
Consolidated statement of
comprehensive income
64
Consolidated statement of financial position 65
66
Consolidated statement of cash flows
Consolidated statement of changes in equity 67
68
Notes to the accounts
94
Company balance sheet
95
Company statement of changes in equity
96
Notes to the Company accounts
104
Notice of Annual General Meeting
111
Form of proxy
113
Officers and professional advisers
Walker Crips Group plc - Annual Report and Accounts 2021
02
At a glance
A technology-driven
financial services company
The Walker Crips Group offers investment management and
wealth management services, pensions administration and
cloud-based regulation technology.
107
Years looking after our clients
Our offices
Walker Crips operates 12 offices
throughout the UK, headed
and staffed by dedicated
individuals.
12
Offices in the UK
London (head office)
Birmingham
Bristol
Epping
Inverness
Newbury
Norwich
Romford (Finance
& Operations)
Southampton
(opening Summer 2021)
Truro
Wymondham
York
32,904
Clients across the UK
(2020: 33,149)
£30.3m
Total revenue for 2021
(2020: £31.4m)
£5.4bn
Total Assets Under Management
and Administration
(2020: £4.3bn)
Head office
Branch
Finance & Operations
Our values
Founded on traditional values of integrity, courtesy,
fairness and loyalty, we have maintained these
ideals and remain committed to serve our clients
and to deliver good customer outcomes.
1. Integrity
2. Courtesy
3. Fairness
4. Loyalty
Walker Crips Group plc - Annual Report and Accounts 2021
Strategic report
03
At Walker Crips, our mission
is to make investment
rewarding for our clients,
our shareholders and
our staff, and give our
customers a fair deal.
h Read about our Business
model and Strategy in
action on pages 8 to 15
Pensions
Serving clients to better care
for their futures
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.
They also provide company directors with the
infrastructure using SSAS to grow pension funds
for their retirement.
EnOC Technologies
Engineering out complexities “EnOC”
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) allows 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”). We are
using a subscription-based pricing model,
without minimum amounts and long term
lock-in contracts, that is accessible to the
smallest of companies and scalable to
the largest.
Investment management
Private Clients
Our Private Client teams and our Associate
Investment Managers deliver the firm’s
investment management strategy, providing
discretionary services, both model and bespoke,
and advisory services to our clients.
Investment Management
Our eclectic collection of professional investment
managers and advisers provide clients with a
full range of investment management services,
customised to fit the clients’ experience, expertise
and desire to maintain involvement in financial
decisions. These services are supported by
our wide-ranging investment expertise and
the meaningful personal relationships built
on Walker Crips’ 107 years of experience.
Our model portfolios provide a range of
risk-managed investment strategies, designed
to reflect our team’s centralised views on
macro-economic and market trends, and
emphasis on implementation using collective
investment schemes where appropriate.
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, and our
international equity arbitrage desk trades
on arbitrage opportunities.
Structured Investments
Specialist products offered by Walker Crips
Structured Investments (“WCSI”) 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
Our wealth management team delivers an
individualised approach to financial planning.
As independent financial advisers, Walker Crips
Wealth Management (“WCWM”) provides
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 2021
04
Chairman’s statement
Confident in our
continued success
As we publish this report and accounts, we are emerging
from what we all hope will be a once in a lifetime global
event. Your Group has responded strongly to the COVID-19
pandemic and has made substantial progress in the second
half of the year. Whilst I am disappointed that this did
not return the Group to profit for the full year, substantial
progress has been made and I am able to report that the
Group, led by its senior management team, has embarked
on a programme of change to improve operating margins
that will involve increasing revenue generators, streamlining
operating entities and further developing our SaaS services.
Martin Wright
Chairman
Overview of 2020/2021
I was hardly expecting that my first year as
Chairman of your Company would see the world
taken into such tumultuous actual and economic
turmoil. Like most businesses, we approached the
pandemic with trepidation and considerable fear
of the unknown. However, I am much relieved
to report that we have come through the ordeal
better than I and the Board had, at least at the
outset, feared might be the case.
The onset of the COVID-19 pandemic in the first
quarter of the year, and the subsequent renewal
of rigorous lockdowns during the final quarter,
took all businesses into uncharted waters.
However, we reacted rapidly and decisively to
the situation. With its robust IT infrastructure,
the Group moved to remote working with relative
ease on 12 March 2020, eleven days before
the national lockdown commenced, providing
continuity of service for our clients and safety and
protection for our staff. An immediate review of
all costs and business units was undertaken with
a view to finding efficiencies and savings. Supply
contracts were renegotiated and Management
implemented an intensive de-papering exercise.
The Directors across all entities took a voluntary
temporary salary reduction of 20% in the first
three months of the financial year. Employee
numbers and certain expense categories were
reduced in anticipation of hard times ahead, the
result of which was a net reduction in operating
costs of approximately £525,000 for the year.
We placed various staff temporarily on furlough,
at full salary, with most subsequently being
restored to full employment. Once we had
assessed the financial impact of the pandemic
on the Group, all Government support received
was repaid to HMRC.
Crucially, notwithstanding the lockdown, the
Group continued to operate the business fully
across its divisions, while of course following all
Government advice.
In the context of the most uncertain operating
conditions for more than a decade, the Group is
reporting a loss before tax of £114,000 for the
full year. Notwithstanding the overall loss, the full
year achievement is still an improvement on the
loss of £451,000 reported in the Interim Results,
reflecting the turnaround in the second half of
the year as markets improved and the benefits
of cost initiatives came through.
Walker Crips Group plc - Annual Report and Accounts 2021 Strategic report
05
The operating profit for the year of £22,000
fell well short of last year’s profit of £1,092,000,
but, given the substantial impact of the cut
in Bank of England base rates (resulting in a
year on year reduction of revenue and profits
of some £1.4 million), as well as the negative
impact of the pandemic on certain business
units, the consolidated result masks a resilient
underlying performance in the core investment
management business. Nearly all business units
gained momentum in the second half of the year,
and this has continued beyond the year-end.
Executive management is highly focused on the
importance of improving the Group’s operating
margins in order to alleviate our sensitivity to
base rates.
Although our operating divisions all responded
robustly to the challenge of the pandemic, in
some cases market conditions could not be
overridden. This was unfortunately the case
with the Walker Crips Structured Investments
(“WCSI”) division, where the double impact of
lower interest rates and a decline in dividends
paid by UK companies contributed to the
unfavourable environment for pricing this sector
has experienced.
We were disappointed that several advisers from
the Wealth Management division decided to
leave us in September 2020 to set up business
independently. The executive team have
responded with a drive for recruitment and
rejuvenation, which continues apace with the
hiring of new advisers and the acquisition of a
client book with funds under management. We
welcome our new arrivals and look forward to
integrating them into the restrengthened team.
The Group believes that continued investment
in technology is crucial to providing innovative
and effective services to our clients, investment
managers and staff. EnOC Technologies Limited’s
project to commercialise our technology remains
a key limb of our growth plan.
Strategy
We remain confident in the three-pronged
strategy of growing our core business, seeking
opportunities in our alternative business activities
and commercialising our technological capabilities.
The pandemic demonstrated the resilience
of the core investment management business,
though this has been significantly offset by the
impact of the cut in base rates. The Wealth
Management business has rebounded from
adviser and client losses during the year
with a new, aggressive recruitment strategy.
Our alternative business activities provide
diversification and growth opportunities, and the
Group’s seamless transition to working from home
more than justified our focus on technology.
Dividend
Our aim is always to reward shareholders for
their continued support, and the Board did not
take the decision, in March 2020, to withdraw
the final dividend lightly. Given the greater
visibility on the impact of the pandemic and
the improvement in operating performance
as the year went on, an interim dividend of
0.15 pence per share was paid. In that light,
having taken into account the Group’s plans
for more profitable growth and for improved
operating margins, capital headroom, market
outlook and short-term and long-term cash flow
considerations, the Board will recommend for
shareholders’ approval at the forthcoming
AGM for a final dividend of 0.60 pence per
share (2020: zero) payable on 1 October 2021
to those shareholders on the register at the
close of business on 17 September 2021, with
an ex-dividend date of 16 September 2021.
Our community
We believe that in challenging times, it is
important that we continue to support our
chosen charities. In addition to financial support,
we try to do more by using our technology for
good, engaging in technology philanthropy,
and using technology as a catalyst to boost the
efforts of those charities, working with them to
design, deploy and maintain those systems.
Our partner charity, www.twiningenterprise.org.uk,
has a mission to combat mental health stigma
and to assist people who are struggling with
mental health issues around work. Their goal is
to ensure that everyone with a mental health
issue can find employment and cope with the
challenges of working life, to support employers
and raise awareness around mental health in
general and to reduce stigma and discrimination.
This is a mission whose work is crucial, as has
been highlighted during this pandemic. We urge
you to join us by signing on to support Twining
in their mission, staying informed of their latest
news and activities, and support them financially
by going to www.enoc.pro/community.
Directors, Account Executives
and staff
This is my first Chairman’s annual statement.
As I noted, I will happily admit that, whilst
I take no pleasure from reporting a loss, I am
relieved that the impact of the unprecedented
situation has not been more severe. I and my
colleagues have been impressed by and proud
of the manner in which the team as a whole
across the Group have responded. Specifically,
I would like to thank my fellow Directors, our
investment managers and advisers and all
members of staff for their efforts, resilience
and continued commitment to the highest
levels of client service, support and diligence
during this exceptional period of global turmoil.
One can only hope that this is and has been
a once in a lifetime experience.
Outlook
Overall, the story this year has been an
underlying resilience shown by the Group,
in its management and performance, which
bodes well for the future. The headline numbers
do not do justice to the positive momentum
that is developing in several of the operating
divisions and I congratulate our staff and our
investment managers for making this possible.
I and the Board remain excited about the
Group’s prospects.
Martin Wright
Chairman
20 August 2021
Walker Crips Group plc - Annual Report and Accounts 2021
06
CEO’s statement
Innovating and adapting
during challenging times
Our three-pronged strategy continues to give
direction to the Group, whilst the world
and the financial markets look to recover
from the pandemic.
Signature
Sean Lam
Sean Lam
Chief Executive Officer
Chief Executive Officer
Reflection
Before I report on the Group’s performance, I
wish to highlight the continuing tragedy of the
pandemic and remember our fellow citizens who
lost their lives to it. Many have lost family and
friends, and we send our heartfelt condolences,
recognising that in all the analyses of financial
impact, above all it is the human cost that is
hardest to bear. I am proud of how our workforce
responded to this crisis, how we kept the Group
functioning normally, and how we continued to
engage with our clients, ensuring that they did
not suffer any interruption in quality of service
during a very difficult period. Everyone played
their part, demonstrated patience and tenacity,
and got on with the business at hand.
Turning now to the Group’s performance over
the past year, considering where we stood and
the uncertainty that we all faced twelve months
ago, I am pleased with the outcome for the year
ending 31 March 2021. More details of financial
performance are provided in the Group Finance
Director’s review.
The Investment Management division has had
a good year considering the reduction in interest
income left us with a significant revenue gap of
£1.4 million to recover from new initiatives and
other existing areas. We have been adjusting and
organising our firm, putting it on a firmer footing,
reviewing all areas of our business and improving
operating margins and profitability, so that the
business is less sensitive in the future to the dual
risk of a simultaneous fall in asset values and a
decline in interest receivable. We remain focused
on this effort, improving the revenue-growth
capability of existing businesses, generating
greater profitability from revenue-growth
opportunities, while improving control, and the
reduction, of our cost-base.
The Wealth Management division has been
pursuing a controlled aggressive growth
strategy. We are pleased to have a number of
highly experienced financial planners recently
join us, deepening our product knowledge and
expanding our service offering, complementing
our existing team so that we can better serve our
clients together. We are also looking forward to
the opening of our new branch in Southampton
in late summer.
Walker Crips Group plc - Annual Report and Accounts 2021 Strategic report
07
The world has irreversibly changed, over the
past eighteen months, the way we work,
communicate, engage, trade, teach and learn.
Our ability as individuals and collectively as a
people to adapt, learn and change was crucial.
As a species, we probably adopted more
technology in one year, than we would have done
in ten regular years. Our Group must continue
to adapt and innovate, and our dependence on
technology will only increase. We will continue
to prioritise and invest in developing our own
technology, continue to create and innovate for
ourselves and our clients.
As a Group, we continue to support www.
twiningenterprise.org.uk, the mental health
charity. In addition to financial support, we also
try to use our technology for good, through
technology philanthropy. If you wish to find out
more, or want to support Twining financially,
please visit enoc.pro/community.
I wish to add to the words of our Chairman,
my personal thanks to our staff and investment
managers for their unwavering commitment
to our clients, and to our leadership team for
their dedication, advice and candour. And I
thank our shareholders for their patience and
continued support.
As I conclude, I wish to reiterate our mission:
to make investment rewarding for our clients,
our shareholders and our staff and give
our customers a fair deal. We support our
investment managers and our staff by being a
technology-driven financial services company.
Sean Lam
Chief Executive Officer
20 August 2021
Our growth plans for the Structured Investments
division were delayed by the extreme market
conditions for product pricing referred to in the
Chairman’s statement. However, some normality
has since returned to pricing conditions and
the competitive pressures of the last year have
prompted a shake-up in the industry. Having
withstood the pressures of the past year, we
believe that we are well placed to capitalise on
increased activity and resume our growth path.
We are also developing plans to simplify the
Group through the consolidation of the number
of regulated entities and streamlining the
management structure.
Our technology company, EnOC Technologies,
was launched in December 2019 with the Senior
Managers & Certification Regime (“SM&CR”)
system. Since then, EnOC has reached out
far beyond the boundaries of the Group,
collaborating with counterparties in Singapore
and Malaysia on technology initiatives. The
Group has also embarked on our vision to
‘simplify and digitise’, using the EnOC Pro
Platform to create technologies that will
transform processes, create greater efficiencies,
reduce the use of paper, provide better services
to our clients, and reduce costs.
With the commencement of the Senior
Managers & Certification Regime, the
responsibility for the assessment and approval
of ‘certificated individuals’ transferred from the
FCA to the senior managers of FCA regulated
companies. Under this Regime, our senior
managers are directly responsible for the
assessment of our ‘certificated individuals’ as
being fit and proper to carry out their roles and
functions. I am pleased with how management
embraced these new responsibilities and the
robust and effective approach now embedded
in our business. A tremendous amount of work
was invested into the appraisal, review and
feedback process, and an SM&CR panel was
established as the review body for certificated
individuals’ fitness and propriety under SM&CR,
reporting directly into the Board.
The SM&CR appraisal, review and feedback
process has been a valuable and continuing
process, informing our leadership team regarding
our corporate culture, that culture is not just reliant
on the ‘tone from the top’, but that it must also be
evidenced with ‘music from the sides’.
Walker Crips Group plc - Annual Report and Accounts 2021
08
Business model
A technology-driven
financial services company
OUR STRATEGY
OUR BUSINESS MODEL
We are committed to our three-
pronged strategy, designed to
position us as a technology-driven
financial services company.
Core business
Nurture and promote our
core business
This is our largest revenue generator,
providing clients with investment,
wealth, pensions, collectives advice
and the creation of structured
investments and structured deposits
for clients, IFAs and counterparties.
Companion services
Identify higher margin
alternative investment
business
This subset of our core Investment
Management business is where we
create innovative and higher margin
new business lines.
Software as a Service
Identify and close the
technology gap
Systems development is our core
competency and we create much
of our own technology, allowing us
to build and integrate many of our
systems into one central platform.
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 administration, 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.
e yield
W
Sustainability
W
e
s
o
w
Rooted in
tradition.
Growing through
innovation.
Innovation
Knowledge
We grow
Our people
Our workforce comprises highly experienced and
qualified specialists in investment management,
financial advice, and pensions administration,
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 is focused on serving our clients.
Our culture
Walker Crips started advising clients and
dealing in securities in 1914. We uphold the
long-standing traditional values of honesty and
integrity, and our mission is to make investment
rewarding for our clients, our shareholders and
our staff and give our customers a fair deal.
We support our investment managers and our
staff by being a technology-driven financial
services company.
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.
Through 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.
Walker Crips has remained independent for
over 100 years.
OUR VALUES UNDERPIN EVERYTHING WE DO
INTEGRITY / COURTESY / FAIRNESS / LOYALTY
Walker Crips Group plc - Annual Report and Accounts 2021
Strategic report
09
OUR BUSINESS MODEL
HOW WE CREATE VALUE
OUR STAKEHOLDERS
We create value for our investors by increasing our revenues.
Our core revenue is derived from fees charged for the services
our people provide, while additional revenue is produced through
transactional activity and custody charges.
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.
We sow our investments
Our core offering
We continue to expand our offering of investment management and
investment management-adjacent services; supporting our core business
and its companion companies in serving our clients.
Our people
We provide training opportunities to our employed and self-employed staff;
enabling them to operate with the expertise necessary to meet and exceed
clients’ needs. We aim to create a work environment in which our institution’s
century of culture, integrity and accountability permeates our every function,
by improving procedures and modernising monitoring practices.
We grow our Group
Our divisions
Our core business, Investment Management, works alongside Wealth
Management and Pensions to combine companion offerings, utilising the
innovation of our software company, EnOC Technologies Limited.
Innovation
We’re branching out through consistent innovation. We continue to thrive as
we cultivate our technology to strengthen our Group, increase efficiency and
provide value for our shareholders. We yield results for our stakeholders.
Section 172(1) Statement
Section 172 of the Companies Act 2006 requires the Directors to act in a way
that they consider to be in good faith and would be most likely to promote the
success of the Company for the benefit of its members as a whole. Further
details of stakeholder engagement can be found on pages 35 to 37.
Clients
Private and professional clients who have
entrusted us with providing financial planning
advice, managing and safeguarding their
investments, and undertaking transaction
execution services.
Workforce
Our directly employed staff and our network
of self-employed associates.
Suppliers
The providers of goods and services on
which our business relies.
Regulators
The bodies which authorise and regulate
our activities.
Communities and the Environment
The local communities in which we operate
and the environment at large.
OUR VALUES UNDERPIN EVERYTHING WE DO
INTEGRITY / COURTESY / FAIRNESS / LOYALTY
Walker Crips Group plc - Annual Report and Accounts 2021
10
Strategy in action
A three-pronged strategy
Walker Crips is first and foremost a financial services company. We leverage 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. We aim to achieve £10 billion Assets Under Management and Administration (“AUMA”) by 2026; We will further develop our model portfolio service offering as a complementary service to our discretionary bespoke portfolio service; 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 We will continue to employ talented, high quality investment managers, financial planners and pension advisers with an established client base.Walker Crips Group plc - Annual Report and Accounts 2021 Strategic report
11
Investment management strategy
Reflections on last year
Despite the terrible death toll exacted by the pandemic
over the last year, most asset prices emerged mercifully
unscathed. This was in no small measure due to the
wartime-era central bank and government stimulus
programmes that erred on the side of doing too much
rather than doing too little and were not accompanied
by the usual wartime taxes on windfall profits. These
actions steadied markets at the time of maximum stress
when it appeared that no safe haven was available, and
also prevented a spiral of debt-driven defaults in the
real economy. Early on in the pandemic, it became clear
technology would ensure most jobs were unaffected
by the lockdowns, particularly in white-collar industries
whose workers actually became better off through a
combination of savings on transportation costs and
forced savings due to a lack of outlets for expenditure.
Governments may not actually have dropped money
from helicopters but, unless you worked in one of the
most affected industries, the effect was pretty much the
same. Central banks mopped up the massive issuance
of government debt with asset purchase programmes,
and are still buying assets at a rate of about $300 billion
a month.
Our investment managers dealt with the huge swings in
asset prices and sentiment with great professionalism.
Clients and portfolios seeking yield from dividends, and
those exposed to the leisure industry, were the worst
affected, but I’m delighted to say that those portfolios
have generally been nursed through the pandemic
successfully, eventually catching the upswing in prices
that swept up even the most COVID-sensitive industries.
Clients with mandates prioritising capital growth and
those with exposure to the technology sector were well-
positioned for the initial rebound in asset prices and the
ensuing bull market. It’s a testament to the strength of
the relationships between our investment managers and
their clients that very few clients opted out of capital
markets entirely, despite the once-in-a-century events
that were unfolding.
Outlook
The success of government and central bank stimulus
programmes has come at a price. In underwriting capital
market risk, and pouring hitherto unimaginable sums of
money into capital markets while private individuals had
nowhere to spend their income and were accumulating
savings, it appears that a tsunami of expenditure on
financial assets has been unleashed. A wide range of
indicators suggests that asset prices (both in public
and private markets) have been boosted to abnormally
high valuations.
Sentiment indicators also indicate that bullishness is
close to historic highs, with a large degree of speculation
occurring in cryptocurrencies, in the technology sector,
and in small and micro-cap companies.
Despite an expected short-term rebound in earnings and
economic growth, it has become very hard to estimate
the effects of stimulus being withdrawn, where the
economy will settle post-pandemic, and how many
pandemic-era trends will persist. At the same time,
central banks have doubled down, and then tripled
down, on the role of monetary policy in supporting
markets and the economy. The growing dependence
of markets on ultra-low interest rates, together with
high current valuation levels, means that the outlook is
growing more risky at a time when investors’ confidence
is still at a maximum. Moreover, fundamental long-
term growth assumptions are being challenged by the
persistence of the virus, huge government debt burdens,
the geopolitical falling-out of the western world with
China, the rise of protectionism and other threats to
world trade, the pandemic’s impact on immigration, plus
the potential for inflation to gather momentum. With
visibility so limited in the short term and valuation risks
higher than normal, current prices probably represent a
historically bad starting point for future expected returns.
Via the actions of the Investment Senate and the
Patricians’ forum, we are shifting our focus to less
expensive valuations, while trying to identify growth
opportunities with business models that can ride out any
potential fallout from the “return-to-normal”. The aim
is for our clients’ portfolios to increase exposure to solid
but relatively overlooked asset classes, and to express
a healthy scepticism towards the excesses that have
accumulated over recent months.
Strategy
The pandemic temporarily slowed recruitment in the
first half of the year, initially impaired by lockdowns,
before gradually returning to normality as interviewers
and candidates adjusted to video-based interviews.
As one of the remaining investment management
houses who still maintain, and encourage, a fully
bespoke offering we remain attractive as an employer,
especially to investment managers at competitors
who are increasingly being forced to adopt centralised
models. However, the lengthening of restrictive
covenants over the past few years has made the
recruitment process more difficult and less likely to result
in the successful transfer of clients from competitors.
Fortunately, while we are still actively seeking to recruit,
there are also worthwhile opportunities within our
existing business to grow revenues organically and to
improve the operating margins of existing arrangements.
Thus our current strategy is characterised by striving for
internal improvement as well as external growth.
Chris Darbyshire
Chief Investment Officer
Walker Crips Group plc - Annual Report and Accounts 2021
12
Strategy in action (continued)
Wealth management strategy
Reflections on last year
In what has been a difficult year due to lockdown and the new
working from home environment, it is pleasing to see that AUM
has grown since March 2021 to June 2021 by 23.6% and above
the March 2020 figure; new client numbers have been strong
since January 2021. I can therefore confirm that the Wealth
strategy of growth is taking shape with investment in the future.
We have taken on two new Chartered Financial Planners and two
trainee Financial Planners for the York office, and a further two
Chartered Financial Planners and their team for a new office in
Southampton, due to open this Summer.
A client book purchased at the end of 2020 from a Beverley based
IFA has seen 92% of clients successfully onboarded, making up
97% of the expected AUM. Continual operational improvements
see the launch of our new portal and greater control of business
workflow to help reduce lead time.
A new graduate work placement plan has been set up with
York University initially taking on a Maths / Economic graduate
annually, the first to start this July.
Despite the pandemic, recurring revenue from personal clients
under a signed service proposition has remained stable and where
new business may have been put on hold during COVID, since the
start of the calendar year we have seen a rise in new clients and
business as confidence returns.
Thoughts for the year ahead
Working closely with the investment managers we see
opportunities for financial planning within the Group and
externally. We continue the strategy of growing the financial
planners organically, across the UK, seeing the progression of the
trainees with ongoing client servicing as their focus and externally
with the acquisition of qualified financial planners.
Dominic Martin,
Managing Director, Walker Crips
Wealth Management Limited
Walker Crips Group plc - Annual Report and Accounts 2021 Strategic report
13
Pensions strategy
Reflections on last year
Both SSAS and SIPP client numbers have increased over the
period which reflects the change in the business model for the
trading entity Walker Crips Pensions. SSAS clients have increased
to 175 compared to 173 and SIPP clients have increased to 423
compared to 402, which represents a 4% increase in clients.
This has been further illustrated by additional client growth after
the year-end which is on a path to date which will exceed last year.
Assets under management have increased by £43 million (13%)
to £376 million within the division
The EBOR SIPP fee is competitively priced, whilst offering a quality
service proposition to attract both new clients to the Company
and those already receiving a service elsewhere within the Group.
A drop in revenue was expected due to the reduction in the SIPP
fee, but this has been countered with growth in client numbers.
A similar exercise has been carried out for SSAS to bring
standardisation across all client fees. This provides greater
transparency in fee proposition for clients as they are fixed in the
main and no longer based on moving AUM. Improved efficiencies
with the invoicing process enabled us to free up client manager time.
Further use of our portal is to be introduced to Walker Crips
Pensions’ clients to provide interactive information.
Wendy Eastwood,
Managing Director,
Ebor Trustees Limited
Walker Crips Group plc - Annual Report and Accounts 2021
14
Strategy in action (continued)
Barker Poland Asset Management
strategy
Reflections on last year
We have had a good year in spite of the disruption to the business.
Fee turnover to 31 March 2021 was £1.9 million and profit was
circa £0.4 million.
We have four advisers, two of whom are chartered, and a support
team of eight. The team adapted incredibly well to the working
from home environment and this change will undoubtedly have
a big impact on our use of centralised offices in the future.
We continue to manage 550 clients with assets under management
of £320 million. The vast majority of our clients are invested
in one of our risk adjusted models, which is 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 2022, we expect to see
some volatility in portfolio values as the world moves out of
lockdowns. We will continue to focus on financial planning and
investment advice for our existing clients as this ensures that we
maintain the valuable recurring revenue. The majority of our new
clients come via personal recommendations and we will continue
with this approach in the coming year.
Geoff Wright,
Managing Director, Barker Poland
Asset Management LLP
Walker Crips Group plc - Annual Report and Accounts 2021
Strategic report
15
EnOC Technologies Limited strategy
Reflections on last year
Our flagship software, the SM&CR tool, which addresses the Senior
Managers & Certification Regime, has been deployed and embedded
into the Walker Crips Group since December 2019. The SM&CR tool
has also been adopted by a number of external companies and is
being used to comply with their SM&CR obligations. EnOC has also
been engaged by regulated firms in the Far East to develop regulatory
solutions, and we will continue to expand the reach of www.enoc.pro.
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 have also been developing and integrating additional tools
into the Platform, with a view to enlarge our ecosystem and
expand 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.
Sean Lam,
Founder & CEO,
EnOC Technologies Limited
Walker Crips Group plc - Annual Report and Accounts 2021
16
Chief Investment Officer’s analysis
Managing change
at warp speed
With government and regulatory interventions
worldwide, economies and, in turn, financial
markets have shown resilience to recover to near-
pre-pandemic levels.
Chris Darbyshire
Chief Investment Officer
Big Government is here to stay
Having extended and enlarged former
President Trump’s stimulus programmes,
President Biden is cementing the government’s
position as the driving force behind the
economy, something which was necessitated
by the pandemic but is increasingly becoming
the norm around the world. Collectively,
US stimulus programmes have already
exceeded $5 trillion in spending, equivalent
to about 23% of GDP. These included a total
of $3,200 in direct payments given to most
US citizens. Further infrastructure and stimulus
programmes on a similar scale are still being
debated in Congress. The “NextGenerationEU”
recovery fund is not quite on the same scale
but, at €750 billion, it would still represent
about 7% of this year’s GDP. We also know,
from the British government’s own estimates,
that government borrowing this year is likely
to reach 10% of GDP, following on from last
year’s post-second world war record of 14.5%.
This represents a major departure in fiscal
policy for much of the western world, and
has been made possible by the confluence
of several monetary, economic and political
trends. For a start, central banks have spent
the past decade proving to politicians that
they can suppress government borrowing
costs by purchasing mindboggling amounts
of government bonds. Having been sceptical
coming out of the Credit Crunch, politicians
of all stripes now feel more assured that they
have an open cheque book; the only question
is what to use it for.
The virus won’t go away
What will the “return-to-normal” look like,
and will it even look normal? Not all the
economic data recently has conformed to the
expectation of a booming, once-in-a-century
rebound unleashed by government spending,
accumulated savings and the pent-up desire
to consume. Instead, it’s been more a case of
“two steps forward, one step back”.
China’s economy was the first to lose some
momentum, as the central bank acted early to
tighten interest rates and the cost of financing.
The Chinese government, meanwhile, reined in
borrowing by heavily-indebted local authorities
to fund infrastructure projects. The US has
been a bigger surprise, with several hiccups
in the recent economic data despite March’s
awe-inspiring stimulus programme. Most
disappointing has been the slow pace at which
the US economy has created jobs: expectations
for 1-2 million new jobs a month were dashed
Walker Crips Group plc - Annual Report and Accounts 2021 Strategic report
17
The profitability analysis also highlighted
more clearly the elements of the Investment
Management cost-base that will require
Management action if operating margins
are to improve materially. In particular, the
recruitment of investment managers in the
future will involve more focused due diligence
and evaluation with regard to business
models, associated regulatory risks, likely
overhead usage and the potential for future
organic revenue growth. The challenge is all
the more acute because, across the industry,
recruitment opportunities have grown scarcer
with employers increasing the length of notice
periods and using more restrictive covenants
to prevent departures.
Some base level of regulatory flux is becoming
the norm for the financial services industry,
and attention within the industry is now firmly
focused on the impact of Environmental,
Social and Governance (ESG) regulations on
all advisory and investment processes. Prior to
the UK’s departure from the EU, the EU had
proposed changes to the MiFID II suitability
rules to ensure that investors’ ESG preferences
would be taken into consideration. These rules
require providers of investment management
services to measure clients’ ESG preferences
and take them into account within the advisory
and investment process. Complications and
risks arise due to the low levels of ESG related
data on investments presently available, and a
lack of standardisation in the approaches used
to rate ESG considerations.
Chris Darbyshire
Chief Investment Officer
20 August 2021
early on in the year and, though recent data
has improved, the US is still short of the level
needed to replace the 10 million-or-so jobs
displaced by the pandemic. It’s a similar story
in the UK, where consumer spending has
underwhelmed, and business activity in both
services and manufacturing has tapered off
earlier than expected.
So far, then, the reopening has turned out
to be a tad disappointing. What is to blame?
It seems that the most likely culprit is – still –
the virus. Surveys in the UK suggest that many
people have yet to become comfortable visiting
shops and enjoying indoor services. A hefty
proportion of people are still avoiding crowded
public places, and households are likely
to remain cautious, given the ongoing
procession of variants. Old vaccines might
provide a decent level of protection against
new variants, but “decent” is still not a risk
that everyone wants to run.
Markets had a “good” pandemic
You can’t argue with the fact that, going into
the pandemic, the value of the world’s stock
markets was at an all-time high of $89 trillion
and, at the time of writing, they are valued
at $117 trillion. The market’s staying power,
despite all-time high valuations, is prompting
some strategists to reassess their investment
rationales. The new thinking goes that the
pandemic has forced companies into a
once-in-a-century frenzy of capital expenditure
as they retool for the post-pandemic world.
As a result of this, the post-pandemic world
will be more productive, and productivity is
the magic ingredient that boosts economic
growth, allowing company profits to settle at
permanently higher levels. This will break the
cycle of muted economic growth caused by
ageing populations, heavy debt burdens and
a decade of corporate under-investment.
But you don’t have to argue that “this time it’s
different” in order to explain asset prices – a
more prosaic explanation is that bond markets
have been explicitly supported by $300 billion
a month globally in asset purchases by central
banks, and that government stimulus money
has found its way into equity markets. Data on
US household net worth tells us what markets
have long since figured out: the pandemic has
made the average consumer wealthier. The
poorest half of US households saw aggregate
household net worth jump by 36% during the
first year of the pandemic, equivalent to an
increase of about $700 billion spread across
64 million households. That’s not far off the
$850 billion the US government spent sending
stimulus checks to citizens over the same
period. Wealthier households did even better,
with gains driven by the boom in house prices
and the rally in the stock market.
How did we do?
The Investment Management division adjusted
rapidly to the new working environment and
was able, during the course of the year, to
largely overcome the negative impact of the
initial decline in market prices. The managers
promptly contacted their clients, despite
the obstructions that the various lockdowns
imposed on communications, maintaining
relationships and providing important
reassurance at a vital time. As a result,
very few clients felt compelled to exit capital
markets completely despite the extreme
volatility and uncertainty.
Assisted by a regular supply of pandemic-
inspired investment ideas in the weekly
Patricians meetings, managers were able
to reposition portfolios where necessary or
hold on to existing investments where there
was a sufficient prospect of recovery. It was
a testament to the professionalism and
competence of our managers that they
were able to overcome the twin disadvantages
of holding a relatively high proportion of
UK-domiciled assets and a bias towards
dividend income across their client mandates.
As a result, I am delighted to report that our
clients have generally seen a substantial
recovery in portfolio values from the lows
of last year and, in many cases, portfolio
values are now above pre-pandemic levels.
In addition, management instigated a project
to track and apportion overheads within the
Investment Management division, in fine
detail, to individual business units. This has
revealed a number of areas for improvement
in operating margins and various projects have
been identified that will contribute to this goal.
For example, the Investment Management
division’s model portfolio service, operating
under the Service First brand, was centralised
and upgraded, related commercial terms were
improved and its investment process is now
managed directly by the Investment Senate.
The Service First models will also be used to
spearhead the firm’s ESG product strategy.
Walker Crips Group plc - Annual Report and Accounts 2021
18
Finance Director’s review
Resilience and
agility through a
challenging year
The strength of our underlying business
model shone through amidst a challenging
year for our revenues.
Sanath Dandeniya
Finance Director
Financial performance
The reduction of interest rates meant coming
into the year we knew our operating revenues
would be depleted significantly. In the event, the
year on year interest reduction was £1.4 million
(2021: £0.9 million vs 2020: £2.3 million), which
had a direct £ for £ impact on our reported
revenue, operating profit and cash generation.
In light of this, the business and financial focus
has been revenue generation, cost reduction
and cash management. So how did we perform?
Taking each in turn:
Total revenue
Total revenue reduced by 3.5% to £30.3 million
(2020: £31.4 million), but excluding the interest
impact, it rose by 1.0% or £0.3 million. The
increase came from strong performances in our
trading and arbitrage activities. Commission
income from trading increased by 11% to £9
million and the arbitrage desk, including recovery
of the mark to market losses reported last year,
delivered a 250% increase in gross income to
£1 million. Management fee income, being a
factor of market values, was 2.2% down from last
year, or £0.4 million, but it is encouraging to see
levels returning to pre-pandemic heights in the
last quarter and continuing in the first quarter of
the new financial year. A major disappointment
was our structured investments activity, which
experienced a difficult year and ended 39%
down (£0.7 million) from last year. Revenues
from our investor immigration business also
reduced by £0.1 million, reflecting the pandemic’s
curtailment of international travel and migration.
Overall, with increased trading commissions,
reduction in interest turn and the market driven
downturn in fee revenue, the mix between
broking and non-broking income saw a shift
towards broking income in the year. It accounted
for 29.7% (2020: 25.7%) in the year.
Cost reduction
Administrative expenses, excluding exceptional
items, reduced by £652,000 (as noted in the
Chairman’s statement, £525,000 of this was
as a direct result of Management led cost
reduction measures), or 3.1%, during the year,
notwithstanding a significant year on year
increase in regulatory costs of £233,000.
The cost reductions principally reflect prompt
actions taken to mitigate the impact of
the pandemic. These included Directors’
voluntary pay reductions, reduced salaries
following redundancies, placing discretionary
staff recruitment and capital expenditure on
hold; an intense de-papering programme to
streamline and further digitise client and staff
communications; and the renegotiation of a
number of supplier contracts.
Walker Crips Group plc - Annual Report and Accounts 2021 Strategic report
19
Reconciliation of operating profit to operating
profit before exceptional items
Operating profit
Exceptional items (note 10)
Operating profit before tax and exceptional items
Reconciliation of (loss)/profit before tax to profit
before tax and exceptional items
(Loss)/profit before tax
Exceptional items (note 10)
Profit before tax and exceptional items
Adjusted EBITDA
Operating profit
Exceptional items (note 10)
Amortisation / depreciation (note 31)
Right-of-use assets depreciation charge (note 31)
Adjusted EBITDA
Underlying cash generated by the Group
Net cash inflow from operations
Working capital
Lease liability payments under IFRS 16
Exceptional items (note 10)
Underlying cash generated in the period
2021
£’000
22
419
441
2021
£’000
(114)
419
305
2021
£’000
22
419
1,212
961
2,614
2021
£’000
1,806
(8)
(1,133)
419
1,084
2020
£’000
1,092
(375)
717
2020
£’000
963
(375)
588
2020
£’000
1,092
(375)
1,199
867
2,783
2020
£’000
3,483
(160)
(1,101)
(375)
1,847
The Group also benefited from lower
consumption of staff related expenses such as
travel and subsistence during the lockdown with
most staff working from home. Although the
Group initially took advantage of government
support, as performance improved during the
period all amounts received were repaid in full
in the year.
Cash management
The Group’s treasury team maintained tight
focus on and management of cash throughout
the year, with cash inflow from operations being
£1.8 million. Underlying cash generated from
operations, principally reflecting the impact of
lease liability payments, non-cyclical working
capital movements and exceptional items
(see adjacent reconciliation), was £1.08 million
(2020: £1.85 million) demonstrating the Group
remained strongly cash positive after satisfying
lease liability obligations. After deducting cash
deployed in investing activities and dividends
paid, cash and cash equivalents increased to
£8.86 million at year-end (2020: £8.61 million).
Financial result and alternative
performance measures
The Group’s operating profit and loss before
tax for the year of £22,000 and £114,000,
respectively (2020: operating profit and profit
before tax of £1,092,000 and £963,000,
respectively) are disappointing, but reflect a
recovery in the second half of the year when
compared to the operating loss before tax of
£451,000 in the first half. The annual results
include exceptional charges of £419,000 (2020:
exceptional income of £375,000), reflecting the
drivers of income and costs explained above.
Adjusting for exceptional items (see adjacent
reconciliation and further detail in note 10 on
page 81), the Group’s operating profit and
profit before tax for the year are £441,000 and
£305,000, respectively (2020: £717,000 and
£588,000, respectively) and reflect the resilience
of the Group’s core business within the context of
a most challenging year.
The Group’s adjusted EBITDA (being EBITDA
adjusted for exceptional items – see adjacent
reconciliation) is £2.61 million (2020: £2.78
million), which again demonstrates a sound
performance in view of the significant impact
of reduced base rates on the results.
Walker Crips Group plc - Annual Report and Accounts 2021
20
Finance Director’s review (continued)
I mentioned earlier that it has been pleasing
to see an improvement in management fee
income as markets have recovered. Total
Assets Under Management and Administration
(“AUMA”) averaged £4.9 billion during the year,
compared with £5.0 billion in the previous year,
affected by the collapse in equity markets in
March 2020 due to the onset of the global
pandemic. Discretionary and Advisory Assets
Under Management were similarly impacted by
the market decline, though recovered by end
of the year to £3.4 billion (2020: £2.8 billion).
Total AUMA is up 24% from March 2020 levels
to £5.4 billion (2020: £4.3 billion).
Divisional performance
The Investment Management division delivered
an operating profit of £1.3 million for the year,
compared to £2.0 million in the previous year.
As noted in the context of the Group’s results,
this reflects the significant reduction in interest
receivable on managed deposits, lower income
from the structured products business where
the double impact of lower interest rates and
a decline in dividends paid by UK companies
contributed to the worst environment
for pricing the sector has seen, and lower
management fee income, mitigated by strong
performances in trading commissions and the
arbitrage desk activities.
Looking forward, management is not planning
for any reversal in base rate reductions and
therefore remains focused on initiatives to
improve the division’s operating margins. Also
the prospects for the structured investments
business have improved as competitors exit
this sector together with recent improvement
in pricing conditions. Moreover, the structured
investments team was strengthened before
the onset of the pandemic and is positioned to
exploit future opportunities.
Regulatory own funds and own funds requirement
Own funds
Share capital and share premium
Retained earnings
Other reserves
Less:
Own shares held
Regulatory adjustments
Total own funds
Own funds requirement
Credit risk requirement
Market risk requirement
Operational risk requirement
Total own funds requirement
Regulatory capital surplus
Cover on own funds as a %
2021
£’000
6,651
11,260
4,723
(312)
(10,584)
11,738
2021
£’000
1,639
598
3,145
5,382
2020
£’000
6,651
11,582
4,723
(312)
(10,701)
11,943
2020
£’000
1,490
387
3,144
5,021
6,356
6,922
218.1%
237.9%
The Wealth Management division’s progress
was hindered by market conditions and
departures of underperforming teams, resulting
in the division reporting an operating loss of
£127,000 (2020: operating profit £42,000) on
revenues of £1.6 million (2020: £1.9 million).
However, its rejuvenation continues apace with
the hiring of new advisers and the acquisition
of a client book with funds under management
and we anticipate continued growth and
improved results in the coming year.
EnOC Technologies Limited (“EnOC”) reported
an operating loss of £127,000 (2020: £29,000)
as it continues to invest in its capabilities and
future prospects. Its technology underpins the
Group’s delivery platforms whilst it also focuses
on external market opportunities.
Capital resources, liquidity
and regulatory capital
The Group’s capital structure, comprising
solely of equity capital, provides a stable
platform to support growth. At year end, net
assets are £22.3 million (2020: £22.6 million),
reflecting a small net reduction due to the
reported loss after tax and dividends paid.
Liquidity remains strong with cash and cash
equivalents increasing over the year to £8.9
million and testimony to the Group’s overall
resilience and the early measures taken to
address the pandemic. Regulatory capital
at year end, including audited reserves for
the year, is £11.738 million (2020: 11.943
million), comfortably in excess of the Group’s
capital requirements as shown in the tables
above. The finance team has also planned
for the introduction of the new prudential
regulatory regime.
Walker Crips Group plc - Annual Report and Accounts 2021
Strategic report
21
Dividends
The pandemic has not been without its
challenges and the Group has made an overall
loss for the year. However, in view of the second
half performance, strong capital and liquidity
position, balanced reward to our people and
confident financial outlook, it is right to reward
our shareholders for their support. I fully support
the Board’s recommendation to pay a final
dividend of 0.60 pence per share on 1 October
2021 for those members on the shareholders’
register on 17 September 2021. Including the
interim dividend of 0.15 pence per share (2020:
0.60 pence per share), the total dividend for the
year is 0.75 pence per share (2020: 0.60 pence
per share).
Sanath Dandeniya
Finance Director
20 August 2021
Walker Crips Group plc - Annual Report and Accounts 2021
22
Supporting our community
Acting and delivering responsibly
Positive impact
At Walker Crips, we recognise the value of
partnerships as a powerful tool that can benefit
our society. We endeavour to be successful
for our clients, our shareholders and our staff,
but we also try to do our part and give back
wherever we can to our community. We believe
that success should not only be defined in the
commercial sense, but that it should also be
measured by the positive impact that we have
on those who are in need and by the difference
that our work makes for future generations.
To this end, we seek to develop partnerships
with organisations that we can support, and
when possible, to use our technology to assist
them in multiplying their efforts. Many of
our employees are also personally involved in
charitable organisations and activities, and
occasionally organise events at a local level,
which we endeavour to support where we can.
Our partner charity
We are pleased to continue supporting Twining
Enterprise, a charity whose mission is to help
individuals with mental health challenges find
and sustain mainstream employment through
skills training, practical advice, coaching,
community outreach, partnerships with
wide-ranging community organisations, and
other forms of support. Twining understands
that people who struggle with mental health
issues face unique work barriers, preventing
them from getting into, and staying in work.
They believe that with the right support, these
barriers can be overcome and people can enjoy
a healthy working life.
“The partnership with Walker
Crips has enabled Twining to
reach more of London’s most
disadvantaged people as well
as help us develop further
routes for ongoing financial
sustainability and innovation
to ensure we can meet the
growing number of people
experiencing mental health
problems for years to come.”
Oliver Jacobs
CEO, Twining Enterprise
TWINING’S MISSION
Twining’s mission has become even more
crucial during the COVID-19 pandemic,
which has been a particularly challenging
time for many affected individuals. As the
demand for their services has increased
significantly, their resources have been
overstretched and it has become harder to
raise the financial support that they need.
Most people are familiar with bigger and
more high-profile charities, but smaller
organisations like Twining often find it
difficult to gain exposure and visibility.
Our goal is to assist them in increasing
awareness of the important work that they
do by providing financial support and also
by sharing our technological capabilities.
As a company that has been designing and
building our own technology for decades,
we are proud to use it in service of charities
such as Twining, by creating technology
solutions that can multiply their efforts,
help them achieve greater efficiency in
their day to day operations, and maximise
their impact.
Visit their website
For more information about Twining
go to www.twiningenterprise.org.uk
Walker Crips Group plc - Annual Report and Accounts 2021 Strategic report
23
About Twining
Twining has provided mental health and
employment support across London for over
25 years and since 2008 has delivered 65
different projects to over 10,000 individuals.
These projects have spanned a range of
employment support models (included
Individual Placement and Support models,
peer support and retention). They have
in-depth experience in the London boroughs
across North and West London with strong
statutory, community and employer
relationships built up over the years.
26yrs
Supporting the people of London
70%
Participants independently job
searching after the programme
Twining’s impact
In 2020 alone, Twining supported over
1,500 individuals, with nearly 70% of them
now independently job-searching, in work,
further education or training. Since the
start of the pandemic, Twining have had to
do a lot more given the increased demand
for their services; going forward, rising
unemployment and concurrent mental
health challenges will mean the charity’s
work is going to be needed more than ever.
If you are able to, please join them in their
mission to end the vicious cycle of mental
health and unemployment. If you wish to
find out more about their work, make a
donation or sign up as a supporter, please
visit www.enoc.pro/community.
1,500
Individuals supported in 2020
Twining’s services
Services for clients: supporting individuals
to become self-responsible, financially
independent, have a sense of purpose and
engage with others and their community.
We achieve this through 1-2-1 and group
interventions, individually tailored support
and coaching and mentoring.
Support for employers: helping business
owners and managers to positively address
mental health at work and recruit and
retain staff with mental health problems as
effectively as possible.
Walker Crips Group plc - Annual Report and Accounts 2021
24
Principal business risks
Sound risk management
Status
Changes in risk status reflect the change in
values of Pillar 2 capital requirement in the
Group Risk Matrix in the financial year ended
31 March 2021 and forward-looking
assessment of the risk landscape in the
financial year ending 31 March 2022, by the
Head of Group Risk. Changes to the Group
Risk Matrix 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”).
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
Zero/Low
Low/Medium
Medium
Medium/High
High
Maximum Pillar 2
capital requirement
Less than £0.5m
£0.5m – £3m
£3m – £5m
£5m – £7m
Greater than £7m
Risk
How it arises
Mitigation
Status
Client risk/Counterparty risk
Client failure to
settle transaction
Risk appetite –
Low/Medium
Status – Unchanged
Conduct risk
Customer outcomes
Risk appetite –
Low/Medium
Status – Increased
The risk that a client or market counterparty
will not meet its obligations to the Group in
accordance with agreed terms resulting in
losses. 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.
Increased trading activity, as markets
recovered in the second half of the
financial year, has been offset by a
robust control framework, leaving risk
unchanged.
The risk that clients or the wider market
suffer detriment as a result of inappropriate
behaviour or actions by staff or business
partners. 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.
Enhancements were made during the
year to the firm’s Suitability framework,
following focused reviews, with further
work planned in the financial year
ended 31 March 2022. Initiatives to
further embed good conduct, culture
and the objectives of the SM&CR
regime are ongoing to continue to
meet the evolving and increasing
regulatory expectation in this area.
Regulatory risk
Risk appetite –
Zero/Low
Status – Increased
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.
As the FCA moves forward under
new leadership and its extensive
Transformation Project agenda,
regulatory interaction will increase
across the industry. The Group will
face the key challenges of the New
Prudential Regime for Investment
Firms and the proposed Consumer
Duty measures.
Liquidity risk
Risk appetite –
Zero/Low
Status – Reduced
The risk that the Group is unable to meet
its payment obligations associated with
its financial liabilities as they fall due. 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 intra-group funding.
As the negative impact of COVID-19
on trading performance reduced in the
second half of the financial year, the
Group’s liquidity position improved,
cash balances having increased year on
year to 31 March 2021 and budgetary
projections forecasting for this to
continue in the new financial year.
Walker Crips Group plc - Annual Report and Accounts 2021
Strategic report
25
Risk
How it arises
Mitigation
Status
Market risk
Market risk
Risk appetite –
Low/Medium
Status – Unchanged
Capital
adequacy risk
Capital adequacy
Risk appetite –
Low/Medium
Status – Reduced
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 centrally imposed trading limits and
are regularly monitored.
Increased proprietary trading
transactional activity in the year,
particularly in the Group’s arbitrage
trading book, remained well managed
and within risk tolerances.
The risk that the Group’s business strategy
and plans for growth are not sustainable on
the existing regulatory capital base. 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 continues to be one
of prevailing low interest rates. The March
2020 reduction in base rates had a material
negative impact on profit in the year. But
this has been offset by improved fees and
commission, particularly in the second half
of the financial year.
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 Group has multiple sources of income that
complement each other and a large part of the
Group’s 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.
An improved regulatory capital surplus
has resulted from cost management
and revenue generation initiatives and
improved market levels and activity.
The firm continues to develop its three-
pronged strategy and to decouple long
term profitability from being reliant on
interest income.
Operational risk
Business disruption
Risk appetite –
Medium
Status – Reduced
The risk that an internal or external
event (e.g. COVID-19) causes failure of
core business activities or IT systems
supporting them. This risk can arise when
our companies fail to effectively control or
administer the operating systems at the
root of operations, fail to manage their
resource requirements properly or maintain
inadequate security arrangements.
Cyber security
Risk appetite –
Low/Medium
Status – Unchanged
The risk of fraudulent action by internal or
external parties maliciously breaching or
misusing the Group’s internal systems. This
risk can arise from failure to implement
sufficient controls over security access to all
IT systems.
Personnel
Risk appetite –
Zero/Low
Status – Unchanged
The risk of losing key staff and self-
employed investment managers who are
the drivers of significant components within
the Group. This risk can arise from the failure
to reward individuals with challenging
performance targets, and competitive levels
of financial compensation.
Business and information system recovery plans
are approved, tested and maintained. Data
incident log records and analyses all unforeseen
events to prevent recurrence or mitigate impact by
increasing operational resilience. Insurance cover
in place for certain causations (e.g. financial crime
and consequential loss).
COVID-19 driven disruption to business
as usual has diminished as new ways
of working and associated controls
have become embedded as part of the
Group’s operations.
Senior Management oversight, in depth cyber
security training programme, policies and
procedures (including working from home
policies), encryption and protection software
installed, prevention procedures, 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).
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.
External threats continue to increase
in volume and sophistication, but risks
remain well managed and mitigated
by investment in our cyber security
systems and controls and an increase
in cyber security insurance.
Personnel risk continues to be
heightened as a result of the
pandemic, but has been offset by
management actions e.g. increased
staff engagement, focused pay
reviews, town halls, enhanced appraisal
processes and a more effective
recruitment process.
Walker Crips Group plc - Annual Report and Accounts 2021
26
Board of Directors
Experienced leadership
and a safe pair of hands
M
C M RI
N
R
Sean Lam FCPA (Aust.),
Chartered FCSI
Group Chief Executive Officer
Sean Lam 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 in
1992 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 Chief Executive
Officer of EnOC Technologies, Walker Crips’
fintech SaaS company providing regtech to
the industry, with the aim of helping smaller
companies close the technology gap.
Sanath Dandeniya FCCA
Group Finance Director
Martin Wright
Chairman
Martin Wright was appointed to the Board in
July 1996 as a Non-Executive Director and was
appointed as Chairman in September 2020.
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.
Sanath Dandeniya was appointed Group
Finance Director in 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 key
A Audit Committee
C Compliance Committee
M Management Committee
N Nomination Committee
R Remuneration Committee
RI Risk Management Committee
Walker Crips Group plc - Annual Report and Accounts 2021 Strategic report
27
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.
A
N
R
A
N
R
N
R
David Gelber
Non-Executive Director
Clive Bouch FCA
Senior Independent Director
Hua Min Lim
Non-Executive Director
David Gelber served as Non-Executive
Independent Chairman of the Board of
Walker Crips Group plc from January 2007 until
September 2020 when he stood down
as Chairman but has remained a Non-Executive
member of the Board.
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, Veridium
ID Ltd, a leading cyber security company,
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.
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, Europe 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 and is a member of the Group
Risk and Remuneration Committees.
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 leading accounting firms 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.
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. Hua Min 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. Hua Min Lim joined the
Walker Crips Group Board in March 1993.
Walker Crips Group plc - Annual Report and Accounts 2021
28
Introduction to governance
Chairman’s commentary on governance
Martin Wright
Chairman
Beyond adherence to the Code, my Board
colleagues and I are well aware of the increased
focus on wider Environmental, Social and
Governance (“ESG”) factors which are seen as
key determinants of whether businesses are
conducted in a responsible manner. Details
of how we have addressed those factors are
contained in the Section 172 Statement on
pages 35 to 37, as well as other parts of this
Annual Report. Suffice it to say here that with
challenges come opportunities and amongst
the ESG positives to have come from the
pandemic have been significant reductions in
our carbon footprint through the digitisation
and automation of our processes and business
practices, the elimination of waste wherever
possible and a greater than ever concern for,
and attention to, the wellbeing of our own
workforce and the communities around us,
as befits a caring employer.
The Code also provides that all of the Directors
should now be subject to annual re-election.
I can confirm that all current members of the
Board will be putting themselves forward for
re-election at the forthcoming Annual General
Meeting, as set out in the Notice of that
meeting on pages 104 to 110.
Martin Wright
Chairman
20 August 2021
Dear Shareholder
Although I only took over the reins from David
Gelber as Group Chairman halfway through
the last financial year, my many years serving
as a Non-Executive Director on your Board, as
well as others, added to my longer experience
as a corporate lawyer, have made me very
aware of the importance of the quality and
effectiveness of the governance of publicly
listed companies such as ours. I and we are
not daunted by the increasing scrutiny of
governance. The fundamental tenets – acting
in the best long-term interests of shareholders
and other stakeholders, promoting a positive
culture and high standards of conduct and
behaviour throughout the workforce, and
acting with integrity and transparency – have
long been embedded in the Board’s and
senior management’s collective psyche.
The introduction by the Financial Reporting
Council (“FRC”) of a revised UK Corporate
Governance Code in July 2018 (“the Code” –
available to view at www.frc.org.uk), and its
application to the Company from April 2019
have not necessitated any fundamental change
in our business practices or procedures. Given
our size, it is helpful that the Code recognises
that one size does not fit all and that factors
such as the size, nature and complexity of the
business may justify a tailored approach
to the Code’s supporting provisions which are
intended to operate on a “comply or explain”
basis. The following report by the Directors
on the Group’s governance has, therefore,
been prepared on this basis, with openness
in explaining any deviations from the Code’s
provisions and alternative arrangements in place.
The governance of our business has been
thoroughly tested over the past 18 months by
the Covid crisis and, I am satisfied, has not been
found wanting. This has been demonstrated
by our readiness for and relatively seamless
transition to most of our workforce working
from home since mid-March 2020. This new
way of operating has obviously not been
without its challenges but of paramount
importance to management has been the
health, safety and welfare of our employees
and the preservation of our high standards of
service for our clients. I have been pleased to
see how well we have adapted to this new way
of working and communicating. At Board level,
this has involved an increased frequency of
formal and informal meetings, albeit virtually,
to ensure that we have remained on the front
foot in dealing with both the business and
human impacts of the pandemic.
Walker Crips Group plc - Annual Report and Accounts 2021
Governance
29
Report by the Directors – on corporate governance matters
year ended 31 March 2021
This report, together with the Audit Committee and Remuneration reports on subsequent pages, explains how the Company has applied the principles
of the 2018 UK Corporate Governance Code (“the Code”) to the governance of the Group’s affairs.
Compliance
In view of the size and nature of the Company’s and its operating subsidiaries’ businesses, the Board takes a proportionate approach in applying
the Code’s provisions. In accordance with the “comply or explain” guidance, this report explains where the Company complies and where alternative
arrangements are adopted. The principal areas of non-compliance with the Code’s provisions are:
the composition of the Board, with regard to the independence of its Non-Executive Directors, and the formal evaluation of the Board’s,
its members’ and its Committees’ effectiveness; and
the means by which the Board engages with the Group’s workforce
all of which are addressed under the following relevant sections of this report.
Board leadership and Company purpose
Purpose, values, business model and strategy
The Group’s purpose, values, business model and strategy, their alignment with our culture, and how we seek to generate and preserve value over
the long term, are set out on pages 8 to 15.
Strategy execution, threats to plan, business risks, emerging opportunities and progress made are addressed by:
evaluating strategic proposals to ensure that they are aimed at enhancing the business model and generating value for shareholders;
considering the views and priorities of key stakeholders and the impact on strategy;
identifying and reviewing existing and emerging threats to plan and business risks, and how these are being managed or mitigated, as described
on pages 24 to 25;
ensuring the Group’s resources and competencies are aligned with achievement of its strategic ambitions;
reinforcing the Group’s values by adopting workforce policies and practices that are consistent therewith;
promoting effective channels for the workforce to raise any concerns;
implementing robust procedures to manage conflicts of interest;
monitoring progress towards the delivery of the Group’s strategic initiatives; and
undertaking half-yearly assessments of the Group’s prospects and viability and its ability to continue as a going concern, as detailed on
pages 33 and 34.
Particular attention was given throughout the year to reassessing the Group’s principal risks and the effects upon them and the business model
of the pandemic.
Culture and workforce engagement
The Board recognises the importance of workforce engagement and ensuring that the culture throughout the Group is aligned with its purpose, values
and strategy. This is addressed by the Executive Directors and at Board and Committee meetings through:
Executives’ regular engagement with the workforce as explained further on pages 35 and 36;
regular discussion at Board Meetings on culture and matters of concern to the workforce;
receiving and reviewing any whistleblowing reports and approving remedial actions;
monitoring levels of absenteeism and workforce turnover;
receiving reports on conduct, including compliance breaches and any instances of fraud, and considering non-financial behaviours when assessing
individual and Group performance and reward; and
periodic review and approval of all Group policies regarding conduct, health and safety, human resources and social responsibility, amongst others.
The Board has not adopted one of the three methods of workforce engagement set out in the Code as the Group has a relatively small number of
employees with regular engagement through the Executive Directors, which the Board believes provides timely and relevant communication and
awareness of key matters. Details of the methods used are also given in the Section 172 Statement on pages 35 to 36 as are the means by which the
views and interests 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 2021
30
Report by the Directors – on corporate governance matters (continued)
year ended 31 March 2021
Board leadership and Company purpose (continued)
Engagement with shareholders
The Board recognises the importance of regular, meaningful, transparent and effective communications with shareholders. This is principally achieved
through:
the Company’s Interim and Annual Reports and Accounts, which include a detailed review of the business and future developments and are
publicly available on the Company’s website at www.wcgplc.co.uk;
the Annual General Meeting to communicate with private and institutional investors. All Directors are available at AGMs to answer questions
and the proxy votes cast on each resolution proposed are disclosed at those meetings. The Chairman actively encourages and welcomes all
shareholders’ participation in the AGM;
the Chairman and Chief Executive being in regular contact with your Group’s major shareholders, the Lim family, with important factors arising
from these discussions promptly communicated to the Board; and
the Board also encourages individual shareholders to raise any questions with the Chairman, Chief Executive Officer or Senior Independent Director
and ensures these are addressed promptly and thoroughly. This is achieved most efficiently by contacting the Company Secretary at the following
address: CoSec@wcgplc.co.uk.
More information on how the interests of shareholders have been taken into account in the year is contained in the Section 172 Statement
on page 35.
Division of responsibilities
Effectiveness
The Chairman and fellow Directors are cognisant of their responsibility to direct the Group effectively, to actively participate in and contribute to
Board discussions and to promote a culture of objectivity, openness and debate. The Board believes it achieves this with its current composition of
two Executive Directors and four Non-Executive Directors, with separation of the Chairman and Chief Executive Officer appointments. Priority is also
placed on receiving timely and relevant information, with effective support provided by an experienced Company Secretary.
Independence of Non-Executive Directors
The Board is aware that the tenure and/or interests of a majority of its Non-Executive Directors are consistent with certain of the circumstances the
Code identifies as likely to impair a non-executive’s independence. Specifically, Martin Wright, David Gelber and Hua Min Lim have each served on the
Board for considerably more than nine years. Hua Min Lim, together with connected parties, is also a significant shareholder. Martin Wright had served
for more than nine years when he was appointed Chairman of the Board and is a partner of the Group’s solicitors, Charles Russell Speechlys LLP.
Although the duration of their Board appointments and the other interests are circumstances identified by the Code that could impair independence,
the Board reviews the Directors’ contributions every year and is satisfied that they continue to deliver both objectivity and value, providing constructive
challenge and support to the Executive Directors and Management, and demonstrate an independent approach to their responsibilities. In considering
effectiveness, the Non-Executive Directors’ collective and individual competencies, experience and time availability to perform their roles are kept
under review.
The Non-Executive Directors meet without the Executive Directors being present, further enhancing the effectiveness with which they both scrutinise
the Executive Directors’ performance and hold them to account. Clive Bouch, who has served on the Board since 2017, acts as Senior Independent
Non-Executive Director to provide a sounding board for the Chairman and serve as an intermediary for other Directors and shareholders. He meets
with other Directors without the Chairman present as required, for example when addressing the Chairman’s performance and remuneration.
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 exerting influence and constructive challenge at an operating level.
Governance framework
The Board has three 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.wcgplc.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 Chairs of 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 plans, business risk reviews 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.wcgplc.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.
Walker Crips Group plc - Annual Report and Accounts 2021 Governance
31
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:
Total number of meetings
Martin Wright (Chairman)
Clive Bouch (Senior Independent Director)
David Gelber (Non-Executive Director)
Hua Min Lim (Non-Executive Director)1
Sean Lam (Chief Executive)
Sanath Dandeniya (Group Finance Director)
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
11
10
10
10
0
11
11
7
7
7
7
n/a1
n/a
7
1
1
1
1
0
1
1
1
1
1
1
0
n/a
n/a
1 Hua Min 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.
As indicated by the attendance table above, the Board meets regularly through scheduled meetings and at other times as necessary 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 promote 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’s principal responsibilities are to ensure Board appointments are subject to a formal, rigorous and transparent procedure and that
succession plans are based on merit and objective criteria. It also seeks to ensure the contribution of each Director is monitored and the effectiveness
of the Board as a whole is evaluated. The Committee consists of Martin Wright, Clive Bouch, David Gelber and Hua Min Lim.
The Nomination Committee met once during the year to consider and recommend, for Board approval, the appointment of Martin Wright as
Chairman in place of David Gelber upon David’s retirement from the role at the conclusion of the 2020 AGM. It should be noted that David Gelber
chaired this meeting, which deviated from the strict provision of the Code which requires that the Board Chair should not chair the Committee when
it is dealing with the appointment of their successor. Martin Wright now chairs the Committee.
As explained elsewhere, the Group is undergoing a reorganisation. It is the Nomination Committee’s and Board’s considered view that the existing
Board members should continue to serve until completion of this project, which should be during 2022. During this timeframe the Committee will also
perform a thorough Board effectiveness assessment and conduct a search to determine a successor for David Gelber.
This will take full account of the Board’s policy on diversity in considering any appointments within its remit, which encompasses gender, age,
education, disability and ethnicity, and includes the appointment of female members of staff to senior management roles within the Group.
Board composition and re-election
As noted earlier in this report, the Board comprises six Directors of whom two undertake executive roles as Chief Executive and Group Finance Director
respectively, and four are non-executives. In accordance with the Code, all of the Directors are now subject to annual re-election. Therefore, all of the
current Directors will be put forward for re-election at the forthcoming AGM. The Directors’ biographies on pages 26 and 27 describe the range, depth
and complementary nature of their individual skills and experience, the combination of which provides a balanced and effective Board.
Walker Crips Group plc - Annual Report and Accounts 2021
32
Report by the Directors – on corporate governance matters (continued)
year ended 31 March 2021
Audit, risk and internal control
Audit Committee
During the year, the Audit Committee’s composition changed. While Clive Bouch acted as its Chairman throughout, Martin Wright stood down on his
appointment as Board Chairman and David Gelber was appointed to the Committee in his place.
Further information about the Audit Committee, its responsibilities and activities during the year can be found in the Audit Committee report on
pages 38 to 41.
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 continually
throughout the year. Details of the principal risks and how they are being managed or mitigated are set out on pages 24 to 25.
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.
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:
risk appetite, strategy and tolerance, including integration with the Group’s culture, values and behaviour; and
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 management, mitigation, transfer 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:
the organisational structure and the delegation of authorities to operational management;
procedures for the review and authorisation of capital investments;
business plans, budgets and forecasts which are reviewed by the Board;
the reporting and review of financial results and other operating information;
accounting and financial reporting policies to ensure the consistency, integrity and accuracy of the Group’s accounting records; and
financial and operating controls and procedures which are in place throughout the Group and monitored through various means including routine
and special reviews by both the external and internal auditors.
Walker Crips Group plc - Annual Report and Accounts 2021 Governance
33
Compliance Committee
The Executive Compliance Committee monitors the Group’s compliance with all regulatory 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 regulatory bodies. In
the current financial year, the Committee has been engaged with Brexit developments, implementing FCA guidance on Vulnerable Clients, improving
our Financial Crime Compliance programme, developing our Product Governance and Environmental, Social and Governance (ESG) framework, and
the implementation of the Investment Firms Prudential Regime, known as IFPR.
The Committee also ensures all compliance policies, procedures and guidance are adequately and properly implemented. James Hiett, Head of Group
Compliance, acts as the Compliance Committee’s Chairman.
Prospects
Although the Group has been profitable during a period of significant growth in Revenue and Assets under Management since 2012, the Directors
consider the business is underperforming and not delivering satisfactory risk adjusted returns to shareholders.
The Group’s strategy is to build on the existing core businesses of investment management and higher margin alternatives, underpinned by both
improved technology and a focus on cost control, to drive improvement in margins and profitability. Drawing on the Group’s technology competencies,
the strategic initiatives also include the continued development of ‘Software as a Service’ (“SaaS”) as a business serving the financial services sector.
The financial year 2020/21 was severely impacted by the cuts in the Bank of England base rate, as well as the negative impact of the pandemic on
certain income streams. However, it also demonstrated a resilient underlying performance in the core investment management business. The first
half of the year saw higher trading commissions help mitigate the loss on management fee and interest income. Higher trading activity continued
in the second half but, more importantly, the financial markets started their recovery and helped to boost the management fee income as well. Our
alternative investment business, equity arbitrage, performed well.
Nearly all business units gained momentum in the second half of the year, and this has continued beyond the year end. The Directors remain
committed to the strategy and have confidence in the longer-term prospects for the Group, with increased focus on recruitment and cost control,
process efficiencies and maintaining the required investment in new initiatives. These include the reorganisation to simplify the Group’s structure and
gain efficiencies from various operations.
The Group prepares five-year projections for business planning purposes, its ICAAP and stress testing. However, the Directors continue to consider a
three-year period remains appropriate for the viability statement taking into account the unpredictability inherent in the financial sector. The Directors
do not plan to revise the three-year viability statement period in future, but will keep it under review as the strategy takes effect, income sources evolve
and the related risks and rewards are assessed.
Viability statement
The Directors have assessed the outlook of the Group over three years, a period longer than the 12 months underpinning the ‘Going concern’
statement, in accordance with the UK Corporate Governance Code. The Directors consider the three-year time frame to be appropriate in view of our
scale, planning cycle and uncertainties in the financial services markets.
The Group’s operational capabilities were fully tested last year, with the majority of staff switching to remote working in March 2020 in compliance
with government guidelines. Throughout the pandemic, the Group demonstrated strong liquidity and capital resilience and is well placed to progress its
three-pronged strategy.
In the face of a successful vaccine roll-out, whilst dissipating, the pandemic continues to be a source of uncertainty, and there is a real threat of
resurgence once again. However, the Directors have made assumptions with known facts to date in preparing the three-year forecast on which the
Directors place reliance in making the viability assessment.
Importantly, the Directors requested that Management prepare a prudent base case scenario that assumes Bank of England base rates remain
unchanged for the foreseeable future, and market levels continue to be steady at around 7000 for the FTSE 100 index for the 12 months to
31 March 2022.
This base case, following consideration of the principal risks and uncertainties facing the Group, was then subjected 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 “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 scenarios, the Group has positive liquidity throughout the three-year period. All regulatory prudential requirements are
met in the bear scenario, but the severe scenario impacts our prudential capital ratio such that, without management action, it potentially falls below
the regulatory requirement in September 2022.
The Directors consider the severe stress scenario to be remote in view of the prudence built into the base case and stress scenarios, including that
further mitigations available to the Directors are not reflected therein. Such mitigating actions within Management control include reduction in
propriety 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, potential sale of assets and stronger cost reductions.
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.
Walker Crips Group plc - Annual Report and Accounts 2021
34
Report by the Directors – on corporate governance matters (continued)
year ended 31 March 2021
Audit, risk and internal control (continued)
Going concern
The Directors have considered the Group’s ability to continue as a going concern for a period of at least 12 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 68.
Remuneration
The Company’s remuneration policies and practices are designed to support the business strategy and promote long-term success. In particular,
the remuneration policies and structures are designed to be straight-forward and ensure all individual bonus awards are subject to the Remuneration
Committee’s discretion, which includes consideration of both financial and non-financial performance. No Director is involved in deciding their own
remuneration outcome.
The Committee and Board are aware that the current remuneration structures are reflective of legacy arrangements, particularly the formulaic profit
share arrangements, and that presently there are no long-term incentive plans in place. As part of the reorganisation referred to above and elsewhere
in the Annual Report and Accounts, the Remuneration Committee will undertake a full review of remuneration arrangements for Directors and senior
management.
Information on the remuneration policy and the work of the Remuneration Committee can be found in the Remuneration report on pages 42 to 53.
Walker Crips Group plc - Annual Report and Accounts 2021 Governance
35
Section 172(1) Statement
year ended 31 March 2021
Introduction
The following statement describes 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 to the matters set out in that section (amongst others).
Our stakeholders
The Directors consider the Company’s and Group’s key stakeholders to be:
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;
Our Workforce
Our directly employed staff and our network of self-employed associates;
Our Clients
Those private and professional clients who have entrusted us with providing financial planning advice, managing and safeguarding their
investments, and undertaking transactions execution services;
Our Suppliers
The providers of goods and services on which our business relies;
Our Regulators
The bodies which authorise and regulate our activities; and
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
Although the pandemic has given rise to short-term imperatives, the Board has always been careful to consider the long-term implications for the
business and its stakeholders of any proposed course of action, whether tactical or strategic. All such 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 strategic 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 individually and collectively. The Company has only one class of shares which means that all
shareholders have the same rights. Furthermore, to ensure that shareholders are treated in a consistent and equally fair manner, 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 an 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 30 of the Report of 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 its approval of a modest
interim dividend whilst mindful of the need to preserve cash holdings to satisfy regulatory capital requirements and to maintain the strength of
the Group’s balance sheet. Such considerations have again been applied to the subsequent decision to recommend payment of a final dividend for
approval at the 2021 AGM, as set out in the Chairman’s statement on pages 4 to 5.
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.
In response to the FCA’s Senior Managers and Certification Regime (“SM&CR”), which came into force in December 2019, we have developed and
implemented systems and processes to support the review and assessment of competencies of certified individuals throughout the organisation and
led to our formation of an SM&CR panel of senior executives with responsibility for appraising the fitness and propriety of our certified workforce.
Amongst other benefits, this has provided useful feedback on ways of improving our staff annual appraisal system, which is used for continual
development of skills, measure performance, receive feedback and address two-way concerns. As a consequence, we are providing additional training
to managers to ensure that appraisals are conducted in a thorough and consistent way such that they are of equal benefit to individual development
and to management in providing an environment in which our workforce can thrive.
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 health 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 on-the-job capabilities and personal career value.
Walker Crips Group plc - Annual Report and Accounts 2021
36
Section 172(1) Statement (continued)
year ended 31 March 2021
The pandemic has had a profound effect on most people’s way of life and, as far as the Board and senior management are concerned, has placed
added emphasis on ensuring effective engagement with the workforce, most of whom have worked from home throughout the year, and have
continued to do so since.
The measures taken have included:
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, who may have been self-isolating or shielding, and others who have expressed anxiety during the lockdowns;
HR and managers keeping in contact with staff working from home to ensure they have the equipment they need to do so effectively, whilst also
making time for any home-schooling commitments they may have;
making available the Unum LifeWorks Assistance Program to all employees;
the Group CEO issuing regular video messages and conducting virtual town hall meetings for all, providing updates, clear instructions, as well as
encouragement and caring, to personnel throughout the Group;
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;
a survey to gather views from the workforce about a phased return to office working and the extent to which working from home should be
embedded in our working patterns; and
procedures for ensuring safety at work as our people start to consider returning to work in our offices.
Although we placed a small number of staff on furlough, with full pay, under the government’s Coronavirus Job Retention Scheme earlier in the year,
due to the ongoing recovery of the financial markets, the Company decided to repay the furlough grant monies to HMRC in November 2020.
Clients
Our clients are the core of our business, and we continually invest in improving our communication and the customer experience. Our investment
professionals continually undergo professional development in order to remain fit and proper to service and advise our clients. We have deployed our
new website, and Investment Managers’ microsites to ease navigation and search for information on services. We are also investing in revamping our
Client Portal, and further digitising our onboarding process to enhance the customer experience, especially when the majority of our clients have opted
for electronic communications for efficiency, and to help reduce our carbon footprint by using less paper. We have set up a team to focus on the client’s
journey, looking at all the touch points between the business and the clients, to optimise the customer experience.
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.
We have been acutely aware of increased level of activity and sophistication of those engaged in financial crime during the pandemic, and have taken
steps to ensure that our vigilance and the robustness of our systems to any form of malicious attack are maintained at the highest level to protect our
clients and their assets in our care.
The security of our clients’ money and investment assets 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.
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.
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.
Despite the pressures on cash flow caused by the pandemic and its effect on the Group’s income, we have not sought to extend our credit terms and
as disclosed in note 26 to the accounts on page 90, the Group took an average of 14 days to settle supplier invoices in the year, up only slightly from
ten days in the previous year, which demonstrates our fair payment practices.
However, as part of our cost control measures during the year, we have renegotiated a number of supplier contracts to ensure we are getting the best
value for money for our investors. We also subjected the Group’s annual audit to a competitive tender process as a result of which new auditors were
appointed. More information on the change of auditor can be found in the Audit Committee report on page 39.
Although the healthy state of the Group’s cash holdings maintained 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 £4 million, but is raised from time to time, on agreement with HSBC, to facilitate larger transaction settlement primarily
in relation to the Company’s structured investments business.
Walker Crips Group plc - Annual Report and Accounts 2021 Governance
37
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 CEO, the Head of Group Compliance and the Head of Group Risk. These engagements are reported
into the Board, the Audit Committee, relevant subsidiary boards, the Group Risk Management Committee, and the Group Compliance Committee,
to enable the Group to ensure that at all times it is meeting FCA regulatory expectations, and to assist the regulator in meeting its own statutory
regulatory objectives.
Communities and environment
As shown on page 2, 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.
As disclosed in the CEO’s statement on page 7, we are active supporters of Twining Enterprise, a registered charity helping Londoners with mental
health problems get work and stay in 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, efficient office design employing recycled and reusable
materials where possible, direct-to-paperless document generation, and electronic distribution and filing systems. In addition to those measures, and
notwithstanding the phased return to office-based working referred to earlier, we are continuing to offer the option for staff to continue to work from
home to an appropriate degree 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 29 to 34.
Walker Crips Group plc - Annual Report and Accounts 2021
38
Audit Committee report
year ended 31 March 2021
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
completing an audit tender and appointing new auditors.
Composition and constitution
The Board is responsible for establishing and maintaining an Audit Committee and for appointing its members.
Although the 2018 UK Corporate Governance Code (“the Code”), provides that the Committee should comprise of only independent Non-Executive
Directors of the Company with a minimum of two members, the Board, of necessity, recognising the size of the Board and the business, has given
emphasis to ensuring that those Non-Executive Directors serving on the Committee have the necessary skills, experience, objectivity and knowledge
of the sector to operate effectively and to work together in challenging the Board and senior management as they consider appropriate.
Clive Bouch, who is a Chartered Accountant with recent and relevant financial experience, served as the Committee Chairman throughout the year,
with Martin Wright acting as the other Committee member until his appointment as Board Chairman on 9 September 2020, whereupon he stood
down and David Gelber was appointed in his place. 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.
The Group Chairman is also invited to attend meetings.
The Committee’s current Terms of Reference are available for inspection on the Company’s website at www.wcgplc.co.uk.
Main responsibilities of the Committee
The Committee assists the Board in its oversight of the:
a. integrity and quality of financial reporting and disclosure;
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 seven 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 31. The Company Secretary acts as Secretary to the Committee.
The Committee Chairman is responsible for developing the agendas for meetings, in consultation with the Secretary, executive management and
external service providers as appropriate. The Chairman and Secretary ensure that the Committee’s work addresses the areas within its remit. In
addition to those invited to attend meetings on a regular basis as mentioned earlier, 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 2021 fell into three main areas:
1. Accounting and financial reporting
The Committee reviewed the:
a. annual and interim financial statements, reports and preliminary announcements;
b. significant financial reporting policy disclosures, estimates and judgements;
c. appropriateness of the preparation of the financial statements on a going concern basis;
d. long-term viability statement prior to Board approval; and
e. Annual Report to consider whether, taken as a whole, it is fair, balanced and understandable and provides information relevant to shareholders’
assessment of the Group’s position and performance, business model and strategy.
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 and the Heads of Compliance and Risk;
b. reviewed actions taken, and ensured the imposition of appropriate deadlines for implementation, in response to reports on internal controls
in order to address matters identified;
c. assessed the scope and effectiveness of the systems established to identify, manage, and monitor financial and non-financial risk; and
d. monitored the Group’s interaction with regulators.
Walker Crips Group plc - Annual Report and Accounts 2021 Governance
39
Committee activities (continued)
3. External audit
The Committee:
a. oversaw a competitive tender process (see below) and the transition from BDO LLP (“BDO”) to PKF Littlejohn LLP (“PKF”) as the Company’s and
Group’s auditor;
b. reviewed PKF’s audit plan, audit approach, scope of work to be carried out and audit findings;
c. reviewed the auditor’s independence and objectivity, including compliance with the Group’s non-audit services policy; and
d. reviewed the effectiveness of the external audit.
There have been no interactions between the Company and the FRC during the period. 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.
External auditor
Against the backdrop of proposed reform impacting the audit sector and new auditing standards, the Committee has been aware of the upward
pressures on audit fees. Accordingly, the Committee recommended to the Board that an external audit tender should be undertaken to re-confirm the
value proposition.
Following a competitive tender, including receiving written proposals and on-line presentations, the Audit Committee recommended the Board appoint
PKF. BDO resigned on 11 December 2020 and PKF was appointed to fill the casual vacancy as the Company’s and the Group’s independent auditor.
A resolution to re-appoint PKF as auditor will be put to shareholders at the forthcoming AGM. The Committee extends its sincere thanks to all firms
participating in the tender process and for their high quality propositions. A future audit tender process will be conducted before the tenth anniversary
of PKF’s appointment.
BDO was appointed at the AGM held in August 2016 following a competitive tender and the audit of the 31 March 2020 financial statements
was its fourth year as the Group’s auditor. The Committee records its thanks to Neil Fung-On and his team at BDO for their services to the Company
and Group.
PKF has reported to the Committee on how it complies with professional and regulatory requirements to ensure its independence. The Group’s non-
audit services policy is published on the website at www.wcgplc.co.uk. The incumbent auditor also reviews the Group’s interim report and reports to the
FCA on CASS compliance for relevant Group companies. No other services have been provided by the auditors during the year. Details of external audit
and non-audit fees are disclosed in note 9 to the financial statements on page 80.
The performance of the external auditor is monitored on an ongoing basis and takes account of its 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
Committee Chairman communicates directly with the external audit partner to discuss this important matter and share feedback. The Committee is
satisfied that PKF 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 client assets procedures, branch offices’ governance arrangements, financial crime and fraud
protections and the structured investments business operations. The focus for internal audit’s work in the coming year includes reviews of the finance
and internal control functions.
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 may provide 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. It is noted, however, that S&W has provided this service for 10 years and accordingly, as a
matter of good practice, an internal audit tender will be arranged during 2022.
Walker Crips Group plc - Annual Report and Accounts 2021
40
Audit Committee report (continued)
year ended 31 March 2021
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 33 and 34. 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 the effects of the COVID-19 pandemic, current financial resources and capital expenditure plans, together with executive
management’s assessment of the new prudential regime which comes into effect next year. 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:
the Group’s performance during the year and post year end;
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;
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;
the payment of an interim dividend and the decision to reinstate the payment of a final dividend;
Group liquidity, noting that 75% of the Group’s regulatory financial resources at 31 March 2021 are held in cash or cash equivalents and there are
no material restrictions on accessing or utilising required liquidity throughout the Group;
the Group’s regulatory capital at 31 March 2021 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;
the Group’s principal debt obligations are the lease liabilities arising from the adoption of IFRS 16;
an intraday credit line is made available by our principal bankers to enable daily net settlement of market transactions in an orderly fashion; and
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
Action
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 these
acquisitions, amounts to £17.775 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 £6.6 million.
These principally arise on business combinations or hiring of individuals
or teams of Investment Managers and purchase of software licences.
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 £2.2 million, respectively,
with the remaining balance being attributable to individuals or teams
of Investment Managers hired separately and software licences.
As part of this year’s impairment review work the discrepancy
in values was considered 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 assesses 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 60).
The values attributed to client lists are amortised over their
estimated useful lives, being periods of between three and twenty
years. Management assesses 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 management’s supporting
papers in respect of indicators of impairment and amortisation
periods and no impairment of these intangible assets was deemed
to be required. The Committee also considered the procedures
performed by the external auditors (see the independent auditor’s
report on page 60).
Walker Crips Group plc - Annual Report and Accounts 2021
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41
Matter considered
Action
Provisions
The financial statements include provisions and liabilities in respect
of dilapidations (£0.68 million) and customer complaints or claims
(£0.21 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 2020/21, the Group has reported exceptional charges
totalling £419,000. In 2019/20, the Group reported two exceptional
items, which resulted in a net credit to profit and loss of £375,000.
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 60).
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 81), the reasons therefore
and the proposed disclosures, including the reconciliations provided
in the Finance Director’s review on page 19, challenging these to
ensure clarity.
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.
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:
Clive Bouch
Audit Committee Chairman
20 August 2021
Walker Crips Group plc - Annual Report and Accounts 2021
42
Remuneration report
year ended 31 March 2021
Introduction
This report details the Directors’ remuneration for the year ended 31 March 2021 in accordance with Schedule 8 of The Large and Medium-sized
Companies and Groups (Accounts and Reports) Regulations 2008 (referred to below as Schedule 8), the 2018 UK Corporate Governance Code,
the Listing Rules and the Directors’ shareholder-approved Remuneration Policy applicable to that year.
The report is in three parts:
Part A – The Annual Statement from the Remuneration Committee Chairman;
Part B – The Annual Remuneration Report, which is subject to shareholders’ advisory vote; and
Part C – The Proposed Remuneration Policy, which is subject to shareholders’ approval.
The Remuneration Policy applicable to the year ended 31 March 2021 was approved by shareholders at the 2017 Annual General Meeting for
a period of three years from 1 April 2018. It was replaced by a revised Policy put to and approved by shareholders at last year’s AGM, with effect from
1 April 2021. Both the 2017 and 2020 approved Policies are available for inspection on the Group’s website at www.wcgplc.co.uk where the former can
be found on pages 40 to 44 of the 2017 Annual Report and the latter on pages 39 to 42 of the 2020 Annual Report. As explained below, an updated
Remuneration Policy is being proposed for shareholder approval at the forthcoming AGM.
The parts of the Annual Remuneration Report that are subject to audit are identified. The Annual Statement which follows is not subject to audit.
Part A – Annual Statement from the Remuneration Committee Chairman
This is my first report since succeeding Martin Wright as Chairman of the Committee following his appointment as Group Chairman. In view of the
small size of the Company and Board, Martin has continued to serve as a member of the Committee alongside his fellow Non-Executive Directors,
David Gelber and Hua Min Lim.
When Martin reported last year, the impact of the pandemic remained uncertain. From operations and client service perspectives we performed well,
reflecting the leadership, commitment, flexibility and skills of our workforce. That said, we are reporting a financial loss for the year, which makes
deliberations regarding salary increases and bonus awards seem inapt, particularly given the challenges and suffering faced by our stakeholders and
communities at large. However, such deliberations are necessary and I wanted to highlight the Committee’s key decisions upfront.
First, in reviewing the approved remuneration policy, the Committee concluded that it was ambiguous in some places, particularly regarding the
Committee’s authority to exercise discretion when awarding bonuses. Therefore, it was decided to clarify and re-present the policy for shareholder
approval. We have also taken the opportunity to introduce a requirement for Executive Directors, when in receipt of share awards, to retain such shares
until they have built a shareholding equal to one year’s salary and such shares also being subject to a two-year post-employment holding period.
Otherwise, the policy clarifies the operation of the formulaically driven bonus pool and the Committee’s authority to make discretionary awards
both when allocating the pool and separately. We ask our shareholders to consider these clarifications carefully and contact us if you have any
questions thereon.
Second, of primary concern have been the challenges faced by our workforce over the course of the year, the majority of whom have had to adjust
to working from home, and the restrictions on close interaction with colleagues prevalent in an office environment. It is of great credit to our people
that efficiency levels and standards have been maintained and, notwithstanding the continued pressure on revenues and costs, the Committee has
decided to moderate the stringent pay controls that had been imposed during 2020/21. Accordingly, we have provided modest salary increases in the
current year, generally for staff with salaries below £75,000 per annum, and other awards for exceptional performance, allocated at management’s
discretion. The Committee believes these awards to be fully deserved and supported by the improved financial outlook for the Group. There have been
no material changes in the fixed and variable remuneration and revenue sharing arrangements for our investment managers, associates and sales
teams. The Company has also recommenced matching of shares purchased by staff under the Share Incentive Plan in a ratio of half a matching share
for every share the member of staff purchases. Amongst other factors, the Committee has instructed management to consider gender pay equality
across the workforce and market rates for the sector and geographical areas in which we operate when awarding salary increases.
Third, in light of the financial results, we have not awarded pay rises to our Executive Directors, a decision they proactively support. There have been no
changes in pension or bonus arrangements and the formulaically driven bonus pool does not crystallise in respect of the year. However, the Committee
is cognisant that your Executive Directors have worked tirelessly throughout the period and, in the Committee’s view, demonstrated outstanding
leadership. We believe this should be recognised. It is therefore intended, on approval of the Remuneration Policy, and the business continuing to
improve on the second half’s profitable trading, that deferred share-based discretionary awards will be made to the Executive Directors during the
current financial year post publication of the year end results. The aggregate value of such awards will not exceed £60,000. Such shares will be subject
to retention periods as set out in the Policy and also malus and clawback provisions.
Fourth, the Committee considered the emoluments payable to Martin Wright on his appointment as Chairman. It was decided they should be
consistent with those paid to his predecessor with no increase in the amount for the role. As disclosed elsewhere, Martin requests that his fees are
paid directly to Charles Russell Speechlys, the law firm of which he is a partner. The remuneration of the other Non-Executive Directors is out with the
Committee’s remit, being one of the matters reserved for the Board.
In the discharge of its duties, the Committee is aided by advice from specialist financial services sector remuneration consultants in relation to
corporate governance and regulatory matters, and industry good practice. Accordingly, with their assistance, revised terms of reference for the
Committee have been approved by the Board and are available for inspection on the Group’s website at www.wcgplc.co.uk.
Clive Bouch
Remuneration Committee Chairman
20 August 2021
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Part B – Annual Remuneration Report
The Remuneration Committee presents its Annual Remuneration Report, which will be put to an advisory shareholder vote at the 2021 AGM. Sections
which have been subject to audit are noted accordingly.
Summary of Remuneration Policy and implementation in the year ended 31 March 2021
The table below summarises the Remuneration Policy which was approved by shareholders at the 2017 AGM and applied in the year ended 31 March
2021, and how it was implemented in the year. (The revised Remuneration Policy approved at the 2020 AGM applied from 1 April 2021 but, subject to
shareholders’ approval at the 2021 AGM (see pages 49 to 53), will be replaced by the proposed Policy set out in Part C.)
Element
Policy
Salaries/Fees
Executive Directors’ salaries are to reflect the value of their
roles, skills and experience, avoiding excessive risk arising from
over-reliance on variable income. Non-Executive Directors’ fees
are to reflect their skills, experience and roles.
How implemented in 2020/21
No changes were made in the year.
Bonus
LTIP
Pension
Executive Directors are to be incentivised to deliver annual financial
and operational goals through participation in a formulaically
determined profit pool aimed at achieving demanding targets
for Group profit before tax and increasing shareholder value. The
Remuneration Committee may also award discretionary bonuses.
The 2020/21 bonus pool thresholds were 5%
of Group profit before tax in excess of £503,000
and 15% of Group profit before tax in excess
of £1,256,000. In view of the loss for the year
the profit pool thresholds were not triggered.
No discretionary bonuses were awarded in the year.
To be aligned to main strategic objective based on measurable
key statistics.
No LTIP arrangements were in place in the year.
Employer contributions of 5 – 10% of base salary paid to a pension
scheme of the Executive Director’s choice. Approved salary sacrifice
arrangements in place.
Employer contributions were made at 10% of
base salary for Sean Lam and 7% of base salary for
Sanath Dandeniya.
Share Incentive
Plan (SIP)
Executive Directors participate in the Group’s tax efficient
approved SIP (available to all employees) under which the
Company may match contributions made by the employee
to purchase Company shares.
Other benefits
Additional benefits provided for Executive Directors consist of life
cover of four times base salary, permanent health insurance and
family medical insurance cover.
Non-Executive Directors are reimbursed for expenses incurred
in the performance of their duties, grossed up for income tax and
national insurance where appropriate.
Additional salary sacrifice contributions of £nil
and £5,700 were made for Sean Lam and Sanath
Dandeniya respectively.
Matching contributions were suspended with effect
from 1 April 2020 and therefore none were made
in the year.
Benefits maintained in the year at levels in line with
those of other full-time employees.
There were no expense claims made in the year.
Walker Crips Group plc - Annual Report and Accounts 2021
44
Remuneration report (continued)
year ended 31 March 2021
Part B – Annual Remuneration Report (continued)
Remuneration for the year ended 31 March 2021 (audited information)
The table below sets out the remuneration received by the Directors in the year ended 31 March 2021 together with prior year comparatives and
includes a single figure for the total remuneration due, or which will become due, to each Director.
Fixed Remuneration
Variable Remuneration
Name of
Director
Executive
Sean Lam
Year
2021
2020
Sanath Dandeniya* 2021
2020
Non-Executive
Hua Min Lim
Clive Bouch
Martin Wright**
David Gelber
Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Basic
salary
/Fees
(Note 1)
£
209,000
220,000
142,500
75,000
–
–
36,642
38,570
35,539
27,258
40,431
42,559
464,112
403,387
Taxable
benefits
(Note 2)
£
Pension
contri-
butions
(Note 3)
£
Total
Fixed
£
1,750
1,704
1,615
799
20,900
22,000
9,975
5,250
231,650
243,704
154,090
81,049
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
36,642
38,570
35,539
27,258
40,431
42,559
3,365
2,503
30,875
27,250
498,352
433,140
SIP
matching
shares
Bonus
Total
Variable
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
£
£
–
1,800
–
900
–
–
–
1,800
–
–
–
1,800
–
6,300
–
1,800
–
900
–
–
–
1,800
–
–
–
1,800
–
6,300
Total
£
231,650
245,504
154,090
81,949
–
–
36,642
40,370
35,539
27,258
40,431
44,359
498,352
439,440
* Sanath Dandeniya was appointed as a Director on 30 September 2019 in place of Rodney FitzGerald who retired on the same date.
** Charles Russell Speechlys LLP received fees of £35,539 (2020: £27,258) for the services of Martin Wright who is a partner in that firm.
Note 1: Basic salary/Fees
The basic salary and fee amounts paid to the Executive and Non-Executive Directors respectively shown in the table above take account of the 20% waived by them
for the three months from April to June 2020 inclusive. The amounts shown for the Executive Directors are prior to any pension contributions made by the Company
in respect of any salary sacrifices made.
Note 2: Taxable benefits
The amounts shown represent the cost to the Company of providing family medical insurance cover to the relevant Executive Directors, for the year or part-year concerned.
Note 3: Pension contributions
The amounts shown are the contributions made by the Company to the approved pension scheme of the Executive Director’s choice at the entitled rate and do not include
any additional salary sacrifice contributions made.
Annual and deferred bonuses for the year ended 31 March 2021
Based on the Group’s results and profitability and the continuing uncertainty caused by the COVID-19 pandemic, the Committee has not awarded any
discretionary annual bonuses for 2020/21, whether payable in cash or equity, to the Executive Directors. As explained in Part A, following approval
of the proposed Remuneration Policy at the forthcoming AGM, and the business continuing to improve on the second half’s profitable trading, it is
proposed that deferred share based discretionary awards will be made during the year to the Executive Directors with a total value not exceeding £60,000.
Outstanding share awards
There were no share options outstanding at 31 March 2021 or 31 March 2020. There are no share option schemes or Long-Term Incentive Plans
in place for the Directors.
Walker Crips Group plc - Annual Report and Accounts 2021
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Directors’ shareholding and share interests (audited information)
The interests of the Directors and their connected persons in the share capital of the Company are shown in the table below.
Director
Hua Min Lim
Sean Lam
Sanath Dandeniya
David Gelber
Clive Bouch
Martin Wright
Beneficially
owned at
31 March
2020
11,316,290
631,090
29,071
189,863
42,806
16,129
Beneficially
owned at
31 March
2021
12,359,803
638,291
36,096
197,460
49,850
16,129
Beneficially
owned at
30 June
2021
12,359,803
640,574
38,379
199,744
52,133
16,129
There are no shareholding requirements in place. As explained in Part A, the proposed Remuneration Policy to be put to shareholder vote at the 2021
AGM includes a requirement for future share awards to be retained by Executive Directors until a shareholding equal to one year’s salary is achieved,
such shares also being subject to a two-year post-employment holding period.
Share Incentive Plan (“SIP”)
Employees 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 intention is that the employee receives one Matching
Share (but see the restrictions imposed below).
On 1 April 2020, the Directors, as part of the COVID-19 response to preserve cash and liquidity, suspended the matching option. This continued until
1 April 2021 from when it was decided to reintroduce matching at the rate of half a Matching Share for every Partnership Share purchased.
A total of 300,597 (2020: 1,084,297) new Ordinary Shares were issued to the 102 employees who participated in the SIP during the year. At 31 March
2021, 4,090,798 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 still held under the SIP are as follows (audited information):
Director
Sean Lam
Sanath Dandeniya
David Gelber
Clive Bouch
31 March
2020
31 March
2021
24,516
14,149
54,698
15,410
20,664
14,149
54,698
15,410
Total pension entitlements (audited information)
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 are set in the range of 7-10% of base salary for the present Executive
Directors compared with a range of 5-10% for Group employees. In addition, salary sacrifice may be exercised in favour of additional pension
contributions.
Payments to past Directors (audited information)
There were no payments made to past Directors in the year.
Loss of office payments (audited information)
No payments were made to any Director for loss of office in the year.
Walker Crips Group plc - Annual Report and Accounts 2021
46
Remuneration report (continued)
year ended 31 March 2021
Part B – Annual Remuneration Report (continued)
Chief Executive remuneration
Percentage increase in the remuneration of the Chief Executive
Chief Executive
Salary
Bonus
Benefits
Average per employee (£)
– salary
– bonus
2020
£
220,000
–
1,704
2021
£
209,000
–
1,750
40,7691
6,562
41,811
5,150
Change
-5.0%
n/a
2.7%
2.6%
-21.5%
1 The average salary per employee for 2020 has been adjusted from that reported in the 2020 Annual Report (£38,506) to take account of leavers in the year consistent
with the basis used for the 2021 figure.
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 table below shows the total remuneration for each of the individuals who has performed the role of Chief Executive during each of those financial
years. The total remuneration figure includes bonuses awarded based on performance in those years. No long-term incentive awards were made to
any of the Executive Directors.
2011
2012
2013
2014
2015
2016
2017
2018
2019
Year
ended
31 March
2021
2020
Sean Lam
–
–
–
–
–
–
– £133,610 £245,517 £245,504 £231,650
Rodney FitzGerald
£199,592 £174,512 £267,934 £186,769 £187,176 £189,264 £196,119 £69,843
–
–
–
Total remuneration
£199,592 £174,512 £267,934 £186,769 £187,176 £189,264 £196,119 £203,453 £245,517 £245,504
£231,650
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 2021, of £100 invested in Walker Crips Group plc on 31 March 2011 with the value
of £100 invested over the same period in the FTSE Small Cap Index. This Index has been chosen to give a comparison with the average returns that
shareholders could have received by investing in a range of other small UK public companies.
0
Total shareholder return compared to FTSE Small Cap Index
£
300
250
200
150
100
50
0
WCG Plc Share Price TR
FTSE Small Cap Index
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
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
2020
£’000
13,268
396
2021
£’000
12,690
64
Change
-4.40%
-83.84%
Walker Crips Group plc - Annual Report and Accounts 2021
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The total dividends paid in 2019/20 consisted of the final dividend for 2018/19 totalling £142,000 and the interim dividend for 2019/20 totalling
£254,000 while those paid in 2020/21 consisted solely of an interim dividend for that year totalling £64,000 with no final dividend for 2019/20
having been declared or paid due to uncertainties over the economic consequences of the COVID-19 pandemic at that time. As explained on
page 5, the Directors are recommending a final dividend in respect of 2020/21 of 0.60 pence per share, which equates to a total amount payable
of £256,000.
Remuneration Committee governance
The Committee is governed by formal terms of reference agreed by the Board. The terms of reference have been reviewed and revised since the year
end to ensure they reflect the remit of the Committee and accord with proportionate application of current requirements and good practice, taking
into account the size and nature of the business. The Committee’s updated 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 four Non-Executive Directors, Clive Bouch (also Chairman of the Audit and
Remuneration Committees and Senior Independent Director), David Gelber, Hua Min Lim and Martin Wright (Board Chairman).
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 and Group Finance Director attend meetings by invitation and assist the Committee in its deliberations, except when
issues relating to their 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 Group Board level, 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 once in the year. Matters that were considered and discussed included but were not limited to:
The Remuneration Policy for Executive Directors, including structure and performance criteria for the annual bonus arrangements.
Determination of the remuneration of Executive Directors.
Determination of any annual incentive payable to Executive Directors in respect of the year to 31 March 2021.
Oversight of remuneration arrangements for the Group’s senior management and the policy on pay and conditions of employees throughout
the Group.
Review of the Group’s Pillar 3 remuneration disclosures.
Review of the Committee’s terms of reference.
External directorships
None of the Executive Directors held external directorships during the current or prior year.
How the remuneration policy will be applied for the year from 1 April 2021 onwards
As reported in the Remuneration Committee Chairman’s Statement on page 42, a revised remuneration policy was approved by shareholders at the
2020 AGM for a period of three years from 1 April 2021.
No increases have been made to the salaries of the Executive Directors for the year from 1 April 2021.
The formulaic bonus pool in which the Executive Directors may participate will operate as described in the proposed policy set out in Part C. For
2021/22 the pool will be based on 5% of Group profit before tax in excess of £503,000 and 15% of Group profit before tax in excess of £1,256,000.
The Committee may also award in-year discretionary share-based bonuses for the Executive Directors following approval of the proposed policy,
to an aggregate value of no more than £60,000.
Fees for the Chairman and Non-Executive Directors
The Group’s approach to setting Non-Executive Directors’ fees is summarised on page 43. These fees are reviewed periodically by the Board.
A summary of current fees for Non-Executive Directors is as follows:
Martin Wright (Board Chairman)
Clive Bouch (Audit Committee and Remuneration Committee Chairman and Senior Independent Director)
David Gelber
Directors’
fees as at
31 March
2021
£
42,559
38,570
42,559
Walker Crips Group plc - Annual Report and Accounts 2021
48
Remuneration report (continued)
year ended 31 March 2021
Part B – Annual Remuneration Report (continued)
Fees for the Chairman and Non-Executive Directors (continued)
Martin Wright, the Group Chairman, has a letter of appointment as a Non-Executive Director 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 have been increased to £42,559 per annum, plus VAT, plus expenses with
effect from his appointment as Chairman on 9 September 2020. He is also reimbursed for expenses incurred on behalf of the Group. His fees are
payable to Charles Russell Speechlys LLP, in which he is a partner, quarterly in arrears.
David Gelber was appointed as a Non-Executive Director and Chairman of the Group by a letter of 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. He stood down as Chairman at the conclusion of the AGM on 9 September 2020 but has
continued to serve as a Non-Executive Director. 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.
Hua Min Lim has no formal service agreement with and receives no remuneration from the Group.
Clive Bouch was appointed as a Non-Executive Director and later as Chairman of the Audit Committee by a letter of 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. He replaced Martin Wright as Remuneration Committee
Chairman and Senior Independent Director on Martin Wright’s appointment as Group Chairman on 9 September 2020. 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 2021 or proposed.
Statement of shareholder voting
At last year’s AGM, the Directors’ remuneration report received the following proxy votes from shareholders:
2020 AGM
Votes in favour
Votes cast against
Abstentions
2019 AGM
Votes in favour
Votes cast against
Abstentions
Number
Percentage
16,023,235
623,432
1,077
14,562,434
28,932
–
96.2%
3.7%
0.1%
99.8%
0.2%
0.0%
Walker Crips Group plc - Annual Report and Accounts 2021
Governance
49
Part C – Directors’ Proposed Remuneration Policy – for approval by shareholders at the 2021 AGM
The proposed Remuneration Policy (“the Policy”) set out below is intended to supersede the Remuneration Policy approved by the shareholders at
the 2020 AGM (“the current Policy”) and will be put to shareholders for approval at the 2021 AGM. The Policy is set to apply, subject to shareholders’
approval, from the conclusion of the AGM and therefore in respect of the year ending 31 March 2022.
The Policy
The following tables summarise the Company’s policy on each element of remuneration for both the Executive Directors, responsibility for which has
been delegated by the Board to the Remuneration Committee (referred to in this policy as “the Committee”), and the Non-Executive Directors, whose
remuneration is a matter reserved for the Board itself.
Purpose and link
to strategy
Operation
Maximum
opportunity
Performance
conditions
Executive Directors:
Element
Base Salary
Annual increases are
normally in line with
those provided to the
wider Group employee
population unless there is
a change in the Director’s
role or responsibilities
or there is a significant
divergence from market
comparatives of similar
executive directorship
roles.
Executive Directors’
total bonuses, whether
allocated from the bonus
pool or discretionary, are
capped at 100% of base
salary.
n/a.
The bonus pool is
calculated based on
the achievement of
Group profit before tax
targets with performance
conditions set each year
by the Committee. The
conditions will reflect the
purpose and objectives of
the Annual Profit Share.
Allocation of the bonus
pool to participating
executives will be
determined at the
discretion of the
Committee on an
individual basis consistent
with the stated purpose
and operation.
To reflect the value of
the individual and their
role, skills and experience
over time. To provide an
appropriate level of basic
fixed income avoiding
excessive risk arising from
over reliance on variable
income.
Reviewed annually,
effective from 1 July each
year or on appointment.
Agreed when results for
the previous year have
been finalised.
Annual Profit Share –
discretionary allocation
from annual bonus
pool.
To incentivise annual
delivery of financial and
operational goals when
executive management
achieve targets for
Group profit before
tax that are based on
the Board-approved
strategy and business
plan for increasing
Group profitability and
shareholder value.
Determined after results
for the financial year are
concluded with Group
profit before tax being
the primary metric.
Determination of the
bonus pool is formulaic
and calculated by
reference to the Group’s
profit before tax. The
bonus pool may be
allocated to individual
members of the Group’s
executive management
team, including Walker
Crips Group plc Executive
Directors, entirely at the
Committee’s discretion.
In exercising this
discretion, the Committee
will consider the
individual performance
of each Executive
Director and whether
non-financial conditions
and standards of conduct
have been met.
Currently this bonus
is paid wholly in cash
and not subject to
clawback and deferral
conditions, but this may
be reviewed at a later
date to introduce such
conditions.
Walker Crips Group plc - Annual Report and Accounts 2021
50
Remuneration report (continued)
year ended 31 March 2021
Part C – Directors’ Proposed Remuneration Policy – for approval by shareholders at the 2021 AGM (continued)
Purpose and link
to strategy
Operation
Maximum
opportunity
Performance
conditions
Element
Discretionary Bonus
The Committee may
make a discretionary
award to the Executive
Directors that is in
addition to any allocation
from the Annual Profit
Share, or where no
allocation is made from
the Annual Profit Share,
to reflect exceptional
individual performance
and contribution to the
Group.
Determined at the
discretion of the
Committee. A minimum
of 50% of such an
award will be made in
Walker Crips Group plc
ordinary shares. Any such
shares awarded will be
subject to a minimum
vesting period of three
years. Upon vesting the
shares must be held for
a further period of two
years. Such shares will
also be subject to malus
and clawback conditions
including poor conduct
behaviours, including
inability to assess the
fitness and propriety
of the individual, risk
management and
compliance (both Group
and individual) failures.
In all circumstances the
recipients of share-based
awards are permitted to
dispose of such number
of shares as required
to meet any tax and
NIC obligations arising
thereon.
Annual contributions are
made through the payroll
and tax benefits accrue
after three years.
A single award will be
made to any Executive
Director in respect of a
financial year, the value
of which will be at the
Committee’s discretion
but, when combined with
any allocation from the
Annual Profit Share, will
not exceed 100% of the
Director’s annual base
salary.
Exceptional personal
performance which the
Committee judges has
had a significant positive
effect on minimising
the impact of adverse
external factors or
enhancing the impact
of positive factors on
the Group’s operations
and financial results and
preserving shareholder
value. The criteria to be
used by the Committee
to determine whether an
award should be made
include exceptional
personal leadership,
exceptional financial
performance that the
Committee considers
is not appropriately
recognised through
the Annual Profit
Share allocations,
implementation of key
strategic initiatives
deployment of capital,
and compliance with high
standards of conduct,
risk management and
regulations.
Maximum contribution
of £1,800 per annum by
Director and Company.
None.
Share Incentive Plan
(SIP)
Pension
A tax-efficient HMRC-
approved scheme which
allows the Group to
make contributions up to
amounts equal to those
by employees, including
Directors, to purchase
shares in the Company.
To provide retirement
benefits.
Contribution to a pension
scheme of each Executive
Director’s choice. HMRC-
approved salary sacrifice
arrangements in place.
Monthly employer
contribution of 5-10%
of base salary in line
with a similar range for
employees.
n/a.
n/a.
Other Benefits
To provide additional
fringe benefits.
Life Assurance – four
times basic salary.
Continuous upon
recruitment.
Medical Insurance cover
for the Executive Director,
spouse and dependents
to age 24.
Permanent Health
Insurance.
Walker Crips Group plc - Annual Report and Accounts 2021 Governance
51
Purpose and link
to strategy
Operation
Maximum
opportunity
Performance
conditions
Non-Executive Directors
Element
Fees
To reflect the skills and
experience brought by
the Director and their
role.
Benefits
To provide market-related
benefits to Non-
Executive Directors.
n/a.
Fees are reviewed
annually. Increases are
generally consistent with
inflation unless a more
significant adjustment
is required to reflect fair
market comparisons.
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, grossed up for
income tax and NI if
applicable.
Annual Profit Share and Discretionary Bonus
The Annual Profit Share scheme has been established and operated for many years and is regarded as an effective approach to focus Executive
Directors on profit delivery. The performance conditions are chosen to align the potential for Executive Director variable reward with Group profitability
above targets set each year by the Committee. Allocations to individual Directors are wholly at the discretion of the Committee to allow for full
consideration of non-financial performance matters.
The Discretionary Bonus was introduced on the appointment of Sean Lam as Chief Executive Officer to provide an effective reward mechanism in
circumstances where the Remuneration Committee considers this appropriate based on financial and non-financial considerations. Such awards are
subject to good governance requirements of deferral, malus and clawback and seek to incentivise performance and behaviour over the medium term
and longer term. Sanath Dandeniya is also eligible for such a discretionary award.
Total annual awards under the Annual Profit Share and Discretionary Bonus to each Executive Director will not exceed their annual base salary.
Application of the Remuneration Policy
The charts below indicate the level of remuneration that each Executive Director could receive in the first year to which the Policy applies (ie the year to
31 March 2022), at different levels of performance.
For this purpose, Fixed Pay includes base salary and Company pension contributions at their prevailing rates and taxable benefits at their cost to the
Company in 2020/21. As both the Annual Profit Share and Discretionary Bonus awards are entirely at the discretion of the Remuneration Committee
and are capped in aggregate at 100% of base salary, they have been combined as Variable Pay for illustration of the median and maximum levels of
total remuneration that could be received. No account has been taken of SIP matching share awards.
Sean Lam (Chief Executive)
Sanath Dandeniya (Group Finance Director)
Fixed
Median
Maximum
100%
£244k
69%
53%
31% £354k
Fixed
Median
47% £464k
Maximum
100% £162k
68%
52%
32% £237k
48% £312k
£0k
£100k
£200k
£300k
£400k
£500k
£0k
£50k £100k £150k £200k £250k £300k £350k
Fixed Pay
Variable Pay
Fixed Pay
Variable Pay
Walker Crips Group plc - Annual Report and Accounts 2021
52
Remuneration report (continued)
year ended 31 March 2021
Part C – Directors’ Proposed Remuneration Policy – for approval by shareholders at the 2021 AGM (continued)
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:
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;
adjusting profit pool thresholds for exceptional items, whether income or expenditure;
deciding whether to apply malus or clawback to an award; and
determining whether a leaver is a “good leaver”.
Where such discretion is exercised, it will be explained in the next Directors’ remuneration report.
Minimum shareholding
A minimum shareholding requirement of 100% of base salary will apply to all Executive Directors. Only those shares (net of any disposals required to
meet any tax and NIC obligations arising thereon) awarded by the Committee or under the SIP from the date of adoption of the Policy count towards
meeting the minimum shareholding. Any shares awarded when the Executive Director holds in excess of the minimum requirement will continue to be
subject to the three-year vesting period and further two-year holding period applied to them.
The minimum shareholding requirement will continue to apply for two years post-employment although the Committee will have discretion to
dis-apply this in exceptional circumstances. This will be enforced through the retention of any shares subject to the minimum shareholding
requirement vesting in an escrow account until the expiry of the two-year post-employment period.
For the avoidance of doubt, any shares awarded prior to the adoption of the Policy, and any shares purchased by an Executive Director or family
members either before or after adoption of the Policy will not count towards the minimum shareholding requirement and will not be subject to any
post-employment holding period. This will be re-visited should the Company introduce a future share based long-term incentive plan.
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 Group 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 employees when determining
increases in fixed pay for Executive Directors. Pension contributions are applicable on the same basis to employees. Employees are eligible for
performance-related annual bonus derived from a bonus pool linked to Group profitability and a discretionary bonus on the recommendation
of executive management subject to Committee approval.
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 periodically compares the Directors’ remuneration policy with relevant guidelines and takes account of the results of shareholder votes
on remuneration. Historically, shareholders have voted overwhelmingly in favour of past Remuneration Reports and the Remuneration Policy, which
the Committee has accepted as broad endorsement for the approach taken. 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 Part B 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 can 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 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 any conflicts of interest can be managed effectively 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 2021 Governance
53
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 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 allocation of the formulaic annual bonus is discretionary and it is normal practice for total bonus awards
in any year to be limited to 100% of base salary.
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 and letters of appointment
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. Executive
Directors are not eligible for profit-share or discretionary bonus awards in the year of leaving employment, other than at the discretion of the
Committee, but any contractual entitlements (salary, pension and benefits) will be calculated on a pro-rata basis.
The Non-Executive Directors are engaged under letters of appointment for a minimum period not exceeding three years and subject to three months’
notice or, in the case of David Gelber, six months’ notice by either side thereafter. Hua Min Lim, a Non-Executive Director, has no formal service
agreement with and receives no remuneration from the Group.
Loss of office payments
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, pension
contributions 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”. Where an Executive Director is considered by the Committee to be a
“bad leaver”, any deferred awards would be cancelled, at the Committee’s discretion, through the exercise of the malus provisions in the Executive
Director’s service contract.
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 arrangements entered with a Director before 28 June 2012 that are
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:
Clive Bouch
Remuneration Committee Chairman
20 August 2021
Walker Crips Group plc - Annual Report and Accounts 2021
54
Directors’ report
for the year ended 31 March 2021
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 2021.
Results and dividends
Results, distributions and retained profits are as follows:
Retained earnings at 1 April
(Loss)/profit for the year after taxation
Effect of adoption of IFRS 16
Dividends paid
Retained earnings at 31 March
2021
£’000
11,582
(258)
–
(64)
11,260
2020
£’000
10,659
718
601
(396)
11,582
The Directors, having considered the impact of the pandemic and Group’s liquidity requirements, recommend the payment of a final dividend of
0.60 pence per share (2020: nil). The proposed final dividend is subject to shareholder approval at the AGM on 28 September 2021. If approved by
shareholders, this will be paid on 1 October 2021 to shareholders on the Company’s shareholder register at the close of business on 17 September
2021. The total dividend paid in the year was 0.75 pence per share (2020: 0.60 pence per share).
Capital structure
Details of the Group’s share capital are shown in note 29. 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 26 and 27.
Directors’ interests
Directors’ emoluments and beneficial interests in the shares of the Company are disclosed in the Directors’ remuneration report on pages 44 and 45.
Other than noted on page 45, 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 33.
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 2021: No Directors of the Group’s Parent Company were women (2020: nil); 29% of senior managers, being individuals
with responsibility for planning, directing or controlling, were women (2020: 31%); and 40% of the Group’s employees were women (2020: 44%).
Walker Crips Group plc - Annual Report and Accounts 2021
Governance
55
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 62/3 pence
each in the share capital of the Group at a price or prices which will not be less than 62/3 pence and which will not be more than 5% above the average
of the middle market quotation derived from the London Stock Exchange Daily Official List for the ten business days before the relevant purchase is
made.
The authority was given at the last Annual General Meeting of the 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.
Brexit
Though Brexit had some impact on financial markets, the impact to the Group has not been material.
The Group does not have branches or any of its activities conducted in the EU. The Group had very few clients based in the EU and following the Brexit
agreement, all such clients have or are in the process of moving to an alternative investment house. The expected revenues from these clients were
removed from future forecasts, with very little impact felt. Whilst the UK is likely to see disruptions on movement of goods, capital and labour for some
time to come there is no direct impact to the Group.
Financial instruments and risk management
The risk management objectives and policies of the Group are set out in note 25 to the financial statements.
Substantial shareholdings
As at 31 March 2021, 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
3,496,694
3,496,694
3,496,692
8.21
8.21
8.21
As at 30 June 2021, 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
3,496,694
3,496,694
3,496,692
8.21
8.21
8.21
Pillar 3 disclosures
The Basel Capital Accord, issued by the Basel Committee on Banking Supervision, aims to improve the flexibility and risk sensitivity of the existing
Accord. The Accord consists of three mutually reinforcing pillars. Pillar 3 recommends requirements aimed at enhancing market discipline through
effective disclosure of information to market participants.
The disclosures can be found on the following website: www.wcgplc.co.uk.
Walker Crips Group plc - Annual Report and Accounts 2021
56
Directors’ report (continued)
for the year ended 31 March 2021
Carbon emission reporting
Greenhouse gas (GHG) emissions data for the year ended 31 March 2021:
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 2021:
Electricity
Gas
Total
2021
tCO2e
8
87
95
0.45
2021
kWh
373,952
44,555
418,507
2020
tCO2e
12
96
108
0.49
2020
kWh
374,806
64,550
439,356
All energy consumption is in the UK (2020: 100%).
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 to be material for the purposes of preparing this disclosure:
Vehicle use; and
Air conditioning.
Audit information
Each of the persons who is a Director at the date of approval of this Annual Report confirms that:
so far as the Director is aware, there is no relevant audit information of which the Group’s auditor is unaware;
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
a resolution to reappoint the auditor, PKF Littlejohn LLP, will be put to the AGM on 28 September 2021.
Auditor
PKF Littlejohn LLP has signified its willingness to continue in office as auditor.
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 68 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 35.
Approval
This report has been approved by the Board and signed on its behalf by:
Sanath Dandeniya FCCA
Director
20 August 2021
Walker Crips Group plc - Annual Report and Accounts 2021
Governance
57
Statement of Directors’ responsibilities
for the year ended 31 March 2021
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 Accounting Standards (IAS) in conformity with the requirements of the Companies Act
2006, 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:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether the financial statements of the Group have been prepared in accordance with International Accounting Standards in conformity
with the requirements of the Companies Act 2006, subject to any material departures disclosed and explained in the financial statements;
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;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue
in business; and
prepare a Directors’ report, a Strategic report and Directors’ 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 Group’s transactions and disclose
with reasonable accuracy at any time the financial position of the Group 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 Group and 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:
The Group financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of
the Companies Act 2006 and give a true and fair view of the assets, liabilities, financial position and profit and loss
of the Group.
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:
Sanath Dandeniya FCCA
Director
20 August 2021
Walker Crips Group plc - Annual Report and Accounts 2021
58
Independent auditor’s report
to the members of Walker Crips Group plc
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 2021 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 accounts, including significant accounting policies. The financial reporting framework that
has been applied in the preparation of the group financial statements is applicable law and international accounting standards in conformity with the
requirements of the Companies Act 2006. 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:
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 2021 and of the
group’s and parent company’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006;
the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards to the group
financial statements, international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union.
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 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 going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors’ assessment of the group’s and parent company’s ability to continue to adopt the
going concern basis of accounting included:
Confirmation of our understanding of management’s going concern assessment process. We also engaged with management to ensure all key
factors were considered in their assessment.
We obtained management’s going concern assessment, including the cash forecast for a period exceeding twelve months from the date the
financial statements were approved by the directors. The group has modelled various scenarios in their cash forecasts to incorporate unexpected
changes to the forecasted liquidity of the group.
We reviewed the factors and assumptions included in the cash forecast. We considered the appropriateness of the assumptions and methods used
to calculate the cash forecasts and determined that the assumptions and methods utilised were appropriate to be able to make an assessment for
the group.
We reviewed the group’s going concern disclosures included in the annual report in order to assess that the disclosures were appropriate and in
conformity with the reporting standards.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the group’s or parent company’s ability to continue as a going concern for a period of at least twelve months
from when the financial statements are authorised for issue.
In relation to the entities reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention
to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of materiality. We determined materiality for the financial statements as a whole to be
£122,000 for the consolidated financial statements using 0.4% of group revenue as a basis. We consider group revenue to be the most stable
benchmark and the most relevant determinant of the group’s performance used by shareholders.
We used a different level of materiality (‘performance materiality’) to determine the extent of our testing for the audit of the financial statements.
Performance materiality is based on the audit materiality as adjusted for the judgements made as to the entity risk and our evaluation of the specific
risk of each audit area having regard to the internal control environment. This was set at 70% of overall materiality at £85,400.
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of 5% of overall materiality at £6,100 as
well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We reassessed materiality at the end of the audit
and did not find it necessary to revise our planning materiality.
Walker Crips Group plc - Annual Report and Accounts 2021 Financial statements
59
Whilst materiality for the financial statements as a whole was set at £122,000, each significant component of the group was audited to an overall
materiality ranging between £4,000 and £109,000 with performance materiality set at 70% of overall materiality. We applied the concept of
materiality both in planning and performing our audit, and in evaluating the effect of misstatement.
Our approach to the audit
Our audit approach was developed by obtaining an understanding of the group’s activities, the key subjective judgements made by the directors,
for example in respect of significant accounting estimates that involved making assumptions, and considering future events that are inherently
uncertain, and the overall control environment, such as impairment of goodwill, impairment of intangible assets and provision for client claims
Based on this understanding we assessed those aspects of the group’s transactions and balances which were most likely to give rise to a material
misstatement and were most susceptible to irregularities including fraud or error. Specifically, we identified what we considered to be key audit matters
and planned our audit approach accordingly.
All the subsidiaries of the group (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. The group consists of nineteen components. 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.
Key audit matters
Key audit matters are those matters that, in our professional judgment, 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) 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.
Area
Reason
How our scope addressed this matter
Revenue
recognition
Refer to notes 3
(accounting policy)
and 5 (financial
disclosures) of the
group financial
statements.
Revenue is the most relevant determinant
of the group’s performance used by
shareholders. Inaccurate or incomplete
revenue could have a material impact on
group performance.
We obtained an understanding and evaluated the design and
implementation of controls that the group has established in relation
to the recognition of revenue.
We also performed the following tests of detailed procedures tailored
to each revenue stream:
The group’s revenue amounting to
£30,348,000 (2020: £31,422,000)
consists of broking income and non-
broking income from the following
activities:
Stockbroking;
Investment management;
Wealth management;
Pensions administration; and
Interest income
For broking income, the risk is whether
the IT system records trades accurately.
For non-broking income (e.g. management
fees), there is a risk that the calculation
is not in accordance with the signed
agreements or contracts.
Broking income
For a sample of trade commissions, compliance charges and other
commissions, we traced revenue recorded to contract notes and
deductions from client accounts.
We gained reliance on controls being operating effectively on the
group’s systems. This also provided assurance over the completeness
of the balances from the assessment performed using IT techniques.
Non-broking income
Used data analytics to verify the client fees schedule in the underlying
system. The client fees data was extracted and reconciled to the
figures in the final accounts providing assurance over completeness
of the balance.
For a sample of fees we obtained invoices and rate confirmation
letters/signed client agreements to agree the amount, cut off and % fee
applied to the client’s Assets Under Management (“AUM”), as well as
tracing the revenue to deductions from client accounts or bank receipts.
The share prices used for AUM valuations in the sample were agreed to
third-party sources such as the London Stock Exchange.
We gained assurance over the recalculation of the client fees in the
invoices from the assessment performed by our internal IT team
on the group’s systems including a review of both manual and
automated controls.
A sample of accrued fees at the year-end were agreed to invoices to
recalculate the amount accrued, and post year end settlement agreed
to deduction from the client account or bank receipts.
We agreed any new fee tariffs in the year to appropriate authorisation.
Based on the procedures performed, we are satisfied that revenue
is appropriately recognised and classified.
Walker Crips Group plc - Annual Report and Accounts 2021
60
Independent auditor’s report (continued)
to the members of Walker Crips Group plc
Area
Reason
How our scope addressed this matter
Impairment of
goodwill
Refer to notes 3
(accounting policy)
and 17 (financial
disclosures) of the
group financial
statements.
Goodwill amounting to £4,388,000
(2020: £4,388,000) arose from the
acquisitions of London York Fund
Management Limited and Barker Poland
Asset Management LLP in previous years.
Impairment of goodwill is considered
a significant risk as significant
judgement is required to be exercised
by the directors in determining the
underlying assumptions used in the
annual impairment reviews. Key
assumptions include discount rate, long
term growth rates, Enterprise Value/
Assets Under Management (“EV/AUM”)
and Price/Earnings (“P/E”) ratios. The
use of inappropriate or unsupported
assumptions gives rise to the risk of
material misstatement in the carrying
amount of goodwill.
Recognition and
Impairment of
intangible assets
(client lists)
Refer to notes 3
(accounting policy)
and 18 (financial
disclosures) of the
group financial
statements.
Intangible assets (client lists) amounting
to £6,142,000 (2020: £6,682,000) arise in
respect of acquired client lists.
Impairment of intangible assets (client
lists) is considered a significant risk as
significant judgement is required to be
exercised by the directors in assessing
whether the initial recognition criteria has
been met and the estimated useful life is
appropriate and supportable.
Provision for
client claims
Refer to notes 3
(accounting policy)
and 27 (financial
disclosures) of the
group financial
statements.
Claims amounting to £205,000 (2020:
£178,000) arise in the ordinary course of
business.
Significant judgement is required to
be exercised in the assessment of the
amount of any provision that should be
carried in respect of any open claims,
including the availability of insurance.
We obtained an understanding and tested the design and implementation
of the group’s controls over the impairment assessment process.
We evaluated the appropriateness of management’s identification of the
group’s CGUs.
We challenged management on the appropriateness of the impairment
models and reasonableness of the assumptions used through performing
the following:
Benchmarking the group’s key market-related assumptions in the
models, including discount rates, long term growth rates, EV/AUM and
P/E ratios, against external data;
Assessing the reliability of any forecasts through a review of actual past
performance and comparison to previous forecasts;
Testing the mathematical accuracy and performing sensitivity analyses
of the models;
Understanding the commercial prospects of the assets, and where
possible comparison of assumptions with external data sources;
Assessing management’s sensitivity analysis showing the impact
of a reasonably possible change in underlying assumptions;
Performing our own sensitivity analysis using a range of acceptable
assumptions; and
Assessing the adequacy of the disclosures within the financial statements.
Based on the procedures performed, we consider management’s
assessment of no impairment on goodwill to be appropriate and the
carrying value of goodwill is appropriately stated.
For Intangible assets (client lists), we performed the following:
Verifying amounts capitalised in the year against supporting agreements;
Challenging management’s assessment that any additions meet the
required capitalisation criteria;
Performing an assessment on the appropriateness of the useful life;
Reviewing management’s assessment of impairment indicators,
considering both internal and external sources of information; and
Assessing the sufficiency of the sensitivity analyses performed by
management, focusing on what we consider to be reasonably possible
changes in key assumptions.
Based on the procedures performed, the carrying value of intangible assets
(client lists) is appropriately stated.
We evaluated the design and implementation of controls in respect of
provisioning for client claims. Our procedures included the following:
Reviewing external legal advice obtained by management;
Discussing open claim matters and developments with the group
general counsel;
Discussing with management and reviewed relevant correspondence
including the complaints register;
Assessing and challenged management’s conclusions through
understanding precedents set in similar cases;
Circularising relevant third-party legal representatives, together with
follow up discussions, where appropriate; and
Reviewing expenses for any litigation costs.
Based on the procedures performed, we consider the provision for client
claims to be reasonably stated.
Walker Crips Group plc - Annual Report and Accounts 2021 Financial statements
61
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon.
The directors are responsible for the other information contained within the annual report. Our opinion on the group and parent company 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. 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 course of 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 this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
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:
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
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
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 their environment obtained in the course of the audit, we
have not identified material misstatements in the strategic report or the directors’ report.
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:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches
not visited by us; or
the parent company financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the
accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Corporate governance statement
The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the group’s and parent company’s compliance with the provisions of the UK Corporate Governance Statement
specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is
materially consistent with the financial statements or our knowledge obtained during the audit:
Directors’ statement with regards the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified
set out on page 57;
Directors’ explanation as to its assessment of the entity’s prospects, the period this assessment covers and why the period is appropriate on
page 33;
Directors’ statement that they consider the annual report and the financial statements, taken as a whole, to be fair, balanced and understandable
set out on page 57;
Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 24;
The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 32;
and
The section describing the work of the audit committee set out on page 38.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the group and parent company
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 group and parent company 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.
Walker Crips Group plc - Annual Report and Accounts 2021
62
Independent auditor’s report (continued)
to the members of Walker Crips Group plc
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below:
We obtained an understanding of the group and parent company and the sector in which they operate to identify laws and regulations that could
reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions
with management, industry research, application of cumulative audit knowledge and experience of the investment management and wealth
management sectors.
We determined the principal laws and regulations relevant to the group and parent company in this regard to be arising from Companies Act 2006,
Listing Rules, Corporate Governance Code, the rules of the Financial Conduct Authority (“FCA”) and the financial reporting framework. Several
components within the group are authorised and regulated by the FCA and we considered the extent to which non-compliance with the
FCA regulations might have a material effect on the group’s financial statements.
We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the group
and parent company with those laws and regulations. These procedures included but were not limited to making enquiries of management and
those responsible for legal and compliance matters, review of minutes of the Board and papers provided to the audit committee to identify any
indications of non-compliance, and review of legal / regulatory correspondence with the FCA.
We also identified the possible risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-
rebuttable presumption of a risk of fraud arising from management override of controls, that there was a potential for management bias in relation
to the recognition of income, the assessment of any impairment of goodwill and client lists and the assessment of the provision for client claims.
We addressed this by challenging the assumptions and judgements made by management when auditing significant accounting estimates.
As in all of our audits, we addressed the risk of fraud arising from management override of controls by performing audit procedures which included,
but were not limited to: the testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any
significant transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material
misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation
is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-
compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery,
collusion, omission or misrepresentation.
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
We were appointed by the audit committee on 14 December 2020 to audit the financial statements for the period ending 31 March 2021 and
subsequent financial periods. Our total uninterrupted period of engagement is 1 year, covering the period ending 31 March 2021.
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.
In addition to the audit, we also provided CASS audit services to three subsidiaries within the group. CASS audit services are audit related services and
the threat to auditor independence is deemed to be insignificant. We do not consider there to be any other threats that may impair our objectivity and
independence.
Our audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work
has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the
company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Carmine Papa (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
20 August 2021
Walker Crips Group plc - Annual Report and Accounts 2021 Financial statements
63
Consolidated income statement
year ended 31 March 2021
Revenue
Commissions and fees paid
Share of associate/joint venture after tax profit/(loss)
Gross profit
Administrative expenses
Exceptional items
Operating profit
Investment revenue
Finance costs
(Loss)/profit before tax
Taxation
(Loss)/profit for the year attributable to equity holders of the Parent Company
(Loss)/earnings per share
Basic and diluted
The Accounting Policies and Notes on pages 68 to 93 form part of these financial statements.
Note
5
7
8
9
10
11
12
14
2021
£’000
30,348
(9,702)
66
20,712
(20,271)
(419)
22
10
(146)
(114)
(144)
(258)
2020
£’000
31,422
(9,771)
(11)
21,640
(20,923)
375
1,092
76
(205)
963
(245)
718
16
(0.61)p
1.69p
Walker Crips Group plc - Annual Report and Accounts 2021
64
Consolidated statement of comprehensive income
year ended 31 March 2021
(Loss)/profit for the year
Total comprehensive (loss)/income for the year attributable to equity holders of the Parent Company
The Accounting Policies and Notes on pages 68 to 93 form part of these financial statements.
2021
£’000
(258)
(258)
2020
£’000
718
718
Walker Crips Group plc - Annual Report and Accounts 2021
Financial statements
65
Consolidated statement of financial position
as at 31 March 2021
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use asset
Investment in associate/joint venture
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
Provisions
Lease liabilities
Net current assets
Long-term liabilities
Deferred cash consideration
Lease liabilities
Dilapidation provision
Net assets
Equity
Share capital
Share premium account
Own shares
Retained earnings
Other reserves
Group
2021
£’000
4,388
6,566
1,477
3,612
2
37
Group
2020
£’000
4,388
6,701
2,330
4,362
–
51
16,082
17,832
49,098
920
8,855
58,873
74,955
(47,395)
(123)
(400)
(205)
(946)
24,515
638
8,609
33,762
51,594
(22,750)
(424)
(335)
(178)
(969)
(49,069)
(24,656)
9,804
9,106
(33)
(2,856)
(675)
(3,564)
22,322
2,888
3,763
(312)
11,260
4,723
(15)
(3,620)
(659)
(4,294)
22,644
2,888
3,763
(312)
11,582
4,723
Note
17
18
19
20
8
21
22
21
23
26
24
27
28
36
28
27
29
29
30
30
30
Equity attributable to equity holders of the Parent Company
22,322
22,644
The Accounting Policies and Notes on pages 68 to 93 form part of these financial statements.
The financial statements of Walker Crips Group plc (Company registration no: 01432059) were approved by the Board of Directors and authorised for
issue on 20 August 2021.
Signed on behalf of the Board of Directors
Sanath Dandeniya FCCA
Director
20 August 2021
Walker Crips Group plc - Annual Report and Accounts 2021
66
Consolidated statement of cash flows
year ended 31 March 2021
Operating activities
Cash generated from operations
Tax (paid)/received
Net cash generated from 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
Dividends received
Dividends received from associate investment
Interest received
Net cash generated from/(used in) investing activities
Financing activities
Dividends paid
Interest paid
Repayment of lease liabilities*
Repayment of lease interest*
Net cash used in financing activities
Net increase in cash and cash equivalents
Net cash and cash equivalents at beginning of period
Net cash and cash equivalents at end of period
* Total repayment of lease liabilities under IFRS 16 in the period was £1,133,000 (2020: 1,101,000)
The Accounting Policies and Notes on pages 68 to 93 form part of these financial statements.
Note
31
11
8
2021
£’000
1,806
(379)
1,427
(24)
78
(100)
–
8
64
2
28
(64)
(12)
(999)
(134)
2020
£’000
3,483
18
3,501
(321)
101
(21)
(1)
17
–
48
(177)
(396)
(7)
(944)
(157)
(1,209)
(1,504)
246
8,609
8,855
1,820
6,789
8,609
Walker Crips Group plc - Annual Report and Accounts 2021
Financial statements
67
Consolidated statement of changes in equity
year ended 31 March 2021
Share
capital
£’000
Share
premium
account
£’000
Own
shares
Capital
held redemption
£’000
£’000
Other
£’000
Retained
earnings
£’000
Total
equity
£’000
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
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
Comprehensive loss for the year
Total comprehensive loss for the year
Contributions by and distributions to owners
Dividends paid
Total contributions by and distributions to owners
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(258)
(258)
(64)
(64)
(258)
(258)
(64)
(64)
Equity as at 31 March 2021
2,888
3,763
(312)
111
4,612
11,260
22,322
The Accounting Policies and Notes on pages 68 to 93 form part of these financial statements.
Walker Crips Group plc - Annual Report and Accounts 2021
68
Notes to the accounts
year ended 31 March 2021
1. General information
Walker Crips Group plc (“the Company”) is the Parent Company of the Walker Crips group of companies (“the Company”). The Company is a public
limited company incorporated in the United Kingdom under the Companies Act 2006 and listed on the London Stock Exchange. The 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 accounting standards in conformity with the requirements
of the Companies Act 2006.
The principal accounting policies adopted in the preparation of the consolidated financial statements are set out in note 3. The policies have been
consistently applied to all the years presented, unless otherwise stated.
The Group financial statements are presented on pages 63 to 67.
The consolidated financial statements are presented in GBP sterling (£). Amounts shown are rounded to the nearest thousand, unless stated otherwise.
The consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments that are measured at
fair value, and are presented in Pounds Sterling, which is the currency of the primary economic environment in which the Group operates. The principal
accounting policies adopted are set out below and have been applied consistently to all periods presented in the consolidated financial statements.
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 4.
Going concern
The financial statements of the Group have been prepared on a going concern basis. At 31 March 2021, the Group had net assets of £22.3 million
(2020: £22.6 million), net current assets of £9.8 million (2020: £9.1 million) and cash and cash equivalents of £8.9 million (2020: £8.6 million). The
Group reported an operating profit of £22,000 for the year ended 31 March 2021 (2020: £1,092,000), inclusive of exceptional expense of £419,000
(2020: exceptional income of £375,000), and net cash inflows from operating activities of £1.8 million (2020: £3.5 million).
The Directors consider the going concern basis to be appropriate following their assessment of the Group’s financial position and its ability to meet
its obligations as and when they fall due. In making the going concern assessment the Directors have taken into account the following:
The Group’s three-year base case projections based on current strategy, trading performance, expected future profitability, liquidity, capital
solvency and dividend policy.
Outcome of stress scenarios applied to the Group’s base case projections prior to deployment of management actions.
The principal risks facing the Group and its systems of risk management and internal control.
The Group’s ability to generate positive operating cash flow during the year to 31 March 2021, a period of significant uncertainty, and the
projections over the next three years.
Key assumptions that the Directors have made in preparing the base case cash flow forecasts are that:
Revenues reflect the impact of (i) continued low base rates of 10 basis points on income for managing client deposits and (ii) no further significant
impact from the pandemic other than what is already known. The base case assumption is for the FTSE 100 index to remain at the lower 7000
range for a large part of the next 12 months. The total revenue is expected to increase by 5% next year with fee income, helped by the recovering
financial markets, and a conservative new fee expectation from the joiners to our Wealth team. Years two and three growth expectation set
conservatively at 2%.
Base case costs prudently reflect only the actions Management has taken to date.
Expected benefits from the planned consolidation of a number of regulated entities and streamlining the management structure not included in
the forecast at this stage.
Key stress scenarios that the Directors have considered include:
A “bear stress scenario”: representing a further 10% fall in income compared to the base case scenario in the reporting periods ending
31 March 2022 and 31 March 2023.
A remote “severe or reverse stress scenario”: representing a 20% fall in commission income and 15% fall in fee income compared to the base case
for each forecast period.
Both stress scenarios assume no mitigating actions.
Walker Crips Group plc - Annual Report and Accounts 2021 Financial statements
69
Liquidity and regulatory capital resource requirements exceed the minimum thresholds in both the base and bear scenarios. However, in the severe
stress scenario, although the Group has positive liquidity throughout the period, the negative impact on our prudential capital ratio is such that it
is projected to fall below the regulatory requirement in September 2022. The Directors consider this scenario to be remote in view of the prudence
built into the base case planning and that further mitigations available to the Directors are not reflected therein. Such mitigating actions within
Management control include reduction in proprietary risk positions, delayed capital expenditure, further reductions in discretionary spend and
additional reduction in employee headcount. Other mitigating actions which may be possible include seeking shareholder support, sale of assets and
stronger cost reductions.
Following the assessment of the Group’s financial position and its ability to meet its obligations as and when they fall due, including the financial
implications of the pandemic, the Directors are not aware of any material uncertainties that cast significant doubt on the Group’s ability to continue
as a going concern.
Standards and interpretations affecting the reported results or the financial position
The accounting standards adopted are consistent with those of the previous financial year. Amendments to existing IFRS standards did not have
a material impact on the Group’s Consolidated Income Statement or the Statement of Financial Position.
The Group does not expect standards yet to be adopted by the newly-formed and independent UK endorsement body (“UKEB”) to have a material
impact in future years.
3. Significant accounting policies
Basis of consolidation
The Group financial statements consolidate the financial statements of the Group and companies controlled by the Group (its subsidiaries) made up
to 31 March each year. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its powers to direct relevant activities of the entity. Subsidiaries are fully consolidated from the date on which
control is obtained and no longer consolidated from the date that control ceases; their results are in the consolidated financial statements up to the
date that control ceases.
Entities where the interest is 49% or less are assessed for potential treatment as a Group company against the control tests outlined in IFRS 10, being
power over the investee, exposure or rights to variable returns and power over the investee to affect the amount of investors’ returns.
All intercompany balances, income and expenses are eliminated on consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair
values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control
of the acquiree. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 Business
Combinations are recognised at their fair value at the acquisition date.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree is
re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss.
Contingent consideration is classified either as equity or as a financial liability. Amounts classified as a financial liability are subsequently re-measured
to fair value, with changes in fair value recognised in profit or loss.
Interests in associate/joint venture
A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control; that
is when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control.
The Group’s share of the assets, liabilities, income and expenses of jointly controlled entities are accounted for in the consolidated financial statements
under the equity method. Following the acquisition of the remaining interest in the former joint venture, JWPCreers Wealth Management Limited,
which is now a 100% owned subsidiary, no assets or liabilities are classified as a joint venture investment in these financial statements.
An associate is an entity in which the Group has significant influence, but not control or joint control. The Group uses the equity method of accounting
by which the equity investment is initially recorded at cost and subsequently adjusted to reflect the investor’s share of the net assets of the associate.
The Group has a 33% associate investment in Walker Crips Property Income Limited (“WCPIL”) (see note 8).
Walker Crips Group plc - Annual Report and Accounts 2021
70
Notes to the accounts (continued)
year ended 31 March 2021
3. Significant accounting policies (continued)
Intangible assets
(a) Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred, the amount of any non-controlling interest
in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets
acquired. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the
fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognised directly in the income statement.
Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is not
amortised but is reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed
in future periods.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the CGUs, or groups of CGUs, that is
expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level
within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The
carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value-in-use and the fair value less
costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.
(b) Client lists
Client lists are recognised when it is probable that future economic benefits will flow to the Group and the cost of the asset can be measured reliably
whilst the risk and rewards have also transferred into the Group’s ownership.
Intangible assets classified as client lists are recognised when acquired as part of a business combination or when separate payments are made to
acquire clients’ assets by adding teams of investment managers.
The cost of acquired client lists and businesses generating revenue from clients and investment managers are capitalised. These costs are amortised
on a straight-line basis over their expected useful lives of three to twenty years at inception. The amortisation period and amortisation method for
intangible assets are reviewed at least each financial year end. All intangible assets have a finite useful life.
Amortisation of intangible fixed assets is included within administrative expenses in the consolidated income statement.
At each statement of financial position date, the Group reviews the carrying amounts of its intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the
Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
(c) Software licences
Computer software which is not an integral part of the related hardware is recognised as an intangible asset when the Group is expected to benefit
from future use of the software and the costs are reliably measured and amortised using the straight-line method over a useful life of up to five years.
Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually
for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). Prior impairments of
non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date.
Own shares held
Own shares consist of treasury shares which are recognised at cost as a deduction from equity shareholders’ funds. Subsequent consideration received
for the sale of treasury shares is also recognised in equity with any difference being taken to retained earnings. No gain or loss is recognised on sale
of treasury shares.
Walker Crips Group plc - Annual Report and Accounts 2021 Financial statements
71
Revenues recognised under IFRS 15
Revenue from contracts with customers:
Gross commissions on stockbroking activities are recognised on those transactions whose trade date falls within the financial year, with the
execution of the trade being the performance obligation at that point in time.
In Walker Crips Investment Management, fees earned from managing various types of client portfolios are accrued daily over the period to which
they relate with the performance obligation fulfilled over the same period.
Fees in respect of financial services activities of Walker Crips Wealth Management are accrued evenly over the period to which they relate with the
performance obligation fulfilled over the same period.
Fees earned from structured investments are recognised on the date the underlying security of the structured investment is traded and settled,
with the execution of the trade being the performance obligation at that point in time.
Fees earned from software offering, Software as a Service (“SaaS”), are accrued evenly over the period to which they relate with the performance
obligation fulfilled over the same period.
Other incomes:
Interest is recognised as it accrues in respect of the financial year.
Dividend income is recognised when:
the Group’s right to receive payment of dividends is established;
when it is probable that economic benefits associated with the dividend will flow to the Group; and
the amount of the dividend can be reliably measured.
Gains or losses arising on disposal of trading book instruments and changes in fair value of securities held for trading purposes are both recognised
in profit and loss.
The Group does not have any long-term contract assets in relation to customers of any fixed and/or considerable lengths of time which require the
recognition of financing costs or incomes in relation to them.
Operating expenses
Operating expenses and other charges are provided for in full up to the statement of financial position date on an accruals basis.
Exceptional items
To assist in understanding its underlying performance, the Group identifies certain items of pre-tax income and expenditure and discloses them
separately in the Consolidated income statement.
Such items include:
1. profits or losses on disposal, closure or impairment of assets or businesses;
2. corporate transaction and restructuring costs;
3. changes in the fair value of contingent consideration; and
4. non-recurring items considered individually for classification as exceptional by virtue of their nature or size.
The separate disclosure of these items allows a clearer understanding of the Group’s trading performance on a consistent and comparable
basis, together with an understanding of the effect of non-recurring or large individual transactions upon the overall profitability of the Group.
The exceptional items arising in the current period are explained in note 10 and fall under categories 2, 3 and 4 above. The related tax effect is also
quantified and disclosed in note 14.
Deferred income
Income received from clients in respect of future periods to the transaction or reporting date are classified as deferred income within creditors until
such time as value has been received by the client.
Foreign currencies
The individual financial statements of each of the Group’s companies are presented in Pounds Sterling, which is the functional currency of the Group
and the presentation currency of the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency (foreign
currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each statement of financial position date, monetary
assets and liabilities that are denominated in foreign currencies are re-translated at the rates prevailing on the balance sheet date. Exchange
differences arising on the settlement of monetary items, and on the re-translation of monetary items, are included in the consolidated income
statement for the period.
Where consideration is received in advance of revenue being recognised, the date of the transaction reflects the date the consideration is received.
Walker Crips Group plc - Annual Report and Accounts 2021
72
Notes to the accounts (continued)
year ended 31 March 2021
3. Significant accounting policies (continued)
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
33 1/3% 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
Right-of-use assets held under contractual arrangements are depreciated over the lengths of their respective contractual terms, as prescribed under
IFRS 16.
The gain or loss on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the
asset and is recognised in income. The residual values and estimated useful life of items within property, plant and equipment are reviewed at least at
each financial year end. Any shortfalls in carrying value are impaired immediately through profit or loss.
Taxation
The tax expense for the period comprises current and deferred tax.
Tax is recognised in the income statement, except to the extent that it relates to items recognised directly in equity. In this case the tax is also
recognised directly in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the
countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken
in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. However, the deferred tax is not accounted for if it arises from initial recognition of an asset
or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted, or substantially enacted, by the end of the reporting period and
are expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilised.
Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, associates and joint
arrangements, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is
probable that the temporary difference will not reverse in the foreseeable future. Generally, the Group is unable to control the reversal of the temporary
difference for associates, unless there is an agreement in place that gives the Group the ability to control the reversal of the temporary difference not
recognised.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries, associates and joint
arrangements only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available
against which the temporary difference can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities,
and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or
different taxable entities where there is an intention to settle the balances on a net basis.
Financial assets and liabilities
Financial assets and liabilities are recognised in the Consolidated Statement of Financial Position when the Group becomes a party to the contractual
provisions of the instrument.
At initial recognition, the Group measures a financial asset or financial liability at its fair value plus or minus transaction costs. Transaction costs
of financial assets and financial liabilities carried at fair value through profit or loss (“FVTPL”) are expensed in the income statement. Immediately
after initial recognition, an expected credit loss allowance (“ECL”) is recognised for financial assets measured at amortised cost, which results in an
accounting loss being recognised in profit or loss when an asset is newly originated.
The Group does not use hedge accounting.
a) Financial assets
Classification and subsequent measurement
The Group classifies its financial assets in the following measurement categories:
Fair value through profit or loss (“FVTPL”);
Fair value through other comprehensive income (“FVTOCI”); or
Amortised cost.
Financial assets are classified as current or non-current depending on the contractual timing for recovery of the asset. The classification depends on
the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
Walker Crips Group plc - Annual Report and Accounts 2021 Financial statements
73
(i) Debt instruments
Classification and subsequent measurement of debt instruments depend on:
the Group’s business model for managing the asset; and
the cash flow characteristics of the asset.
Business model: The business model reflects how the Group manages the assets in order to generate cash flows. That is, whether the Group’s
objective is solely to collect the contractual cash flows from the assets, to collect both the contractual cash flows and cash flows arising from the sale
of assets, or solely or mainly to collect cash flows arising from the sale of assets. Factors considered by the Group include past experience on how the
contractual cash flows for these assets were collected, how the assets’ performance is evaluated, and how risks are assessed and managed.
Cash flow characteristics of the asset: Where the business model is to hold assets to collect contractual cash flows, the Group assesses whether
the financial instruments’ contractual cash flows represent solely payments of principal and interest (“the SPPI test”). In making this assessment,
the Group considers whether the contractual cash flows are consistent with a basic lending instrument.
Based on these factors, the Group classifies its debt instruments into one of two measurement categories:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and
interest (“SPPI”), and that are not designated at FVTPL, are measured at amortised cost. Amortised cost is the amount at which the financial asset is
measured at initial recognition minus the principal repayments, plus or minus the cumulative amortisation, using the effective interest rate method,
of any difference between that initial amount and the maturity amount, adjusted by any ECL recognised. The effective interest rate is the rate that
exactly discounts estimated future cash payments or receipts through the expected life of the financial asset to the gross carrying amount. Interest
income from these financial assets is included within investment revenues using the effective interest rate method.
Fair value through profit or loss (“FVTPL”): Assets that do not meet the criteria for amortised cost or fair value through other comprehensive
income (“FVTOCI”) are measured at fair value through profit or loss.
Reclassification
The Group reclassifies debt instruments when and only when its business model for managing those assets changes. The reclassification takes place
from the start of the first reporting period following the change.
Impairment
The Group assesses on a forward-looking basis the ECL associated with its debt instruments held at amortised cost. The Group recognises a loss
allowance for such losses at each reporting date. On initial recognition, the Group recognises a 12-month ECL. At the reporting date, if there has been
a significant increase in credit risk, the loss allowance is revised to the lifetime expected credit loss.
The measurement of ECL reflects:
an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes;
the time value of money; and
reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions
and forecasts of future economic conditions.
The Group adopts the simplified approach to trade receivables and contract assets, which allows entities to recognise lifetime expected losses
on all assets, without the need to identify significant increases in credit risk (i.e. no distinction is needed between 12-month and lifetime expected
credit losses).
(ii) Equity instruments
Investments are recognised and derecognised on a trade date basis where a purchase or sale of an investment is under a contract whose terms require
delivery of the instrument within the timeframe established by the market concerned, and are initially measured at fair value.
The Group subsequently measures all equity investments at fair value through profit and loss. Changes in the fair value of financial assets at FVTPL are
recognised in revenue within the Consolidated Income Statement.
(iii) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value. Bank overdrafts are shown within current liabilities in the statement of financial position.
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.
Walker Crips Group plc - Annual Report and Accounts 2021
74
Notes to the accounts (continued)
year ended 31 March 2021
3. Significant accounting policies (continued)
Financial assets and liabilities (continued)
b) Financial liabilities
Classification and subsequent measurement
Financial liabilities are classified and subsequently measured at amortised cost.
Financial liabilities are derecognised when they are extinguished.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity
instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.
Trade payables
Trade payables are classified at amortised cost. Due to their short-term nature, their carrying amount is considered to be the same as their fair value.
Bank overdrafts
Interest-bearing bank overdrafts are initially measured at fair value and shown within current liabilities. Finance charges are accounted for on an
accrual basis in profit or loss using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they
are not settled in the period in which they arise.
Equity instruments
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid, including any directly
attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders, until the shares are
cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction
costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.
Share Incentive Plan (“SIP”)
The Group has an incentive policy to encourage all members of staff to participate in the ownership and future prosperity of the Group. All employees
can participate in the SIP following three months of service. Employees may contribute a maximum of 10% of their gross salary in regular monthly
payments (being not less than £10 and not greater than £150) to acquire Ordinary Shares in the Parent Company (Partnership Shares). Partnership
Shares are acquired monthly.
In response to mitigate some perceived impacts from the pandemic on the Group, the matching option was temporarily suspended during the
twelve-month period to 31 March 2021. On 1 April 2021, the matching option was reinstated to one-half for every Partnership Share purchased. This
arrangement will continue until 31 March 2022. All shares awarded under this scheme have been purchased in the market by the Trustees of the SIP.
Provisions
Provisions for environmental restoration, restructuring costs and legal claims are recognised when the Group has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been
reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised
for future operating losses.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation, using a pre-tax rate that reflects
current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time
is recognised as interest expense.
Long-term liabilities – deferred cash and shares consideration
Amounts payable to personnel under recruitment contracts in respect of the client relationships, which transfer to the Group, are treated as long-term
liabilities if the due date for payment of cash consideration is beyond the period of one year after the year-end date. The value of shares in all cases
is derived by a formula based on the value of client assets received in conjunction with the prevailing share price at the date of issue which in turn
determines the number of shares issuable.
Pension costs
The Group contributes to defined contribution personal pension schemes for selected employees. For defined contribution schemes, the Group pays
contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further
payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expenses when they are due.
Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. The contribution
rate is based on annual salary and the amount is charged to the income statement on an accrual basis.
Dividends paid
Equity dividends are recognised when they become legally payable. Dividend distribution to the Company’s shareholders is recognised as a liability
in the Group’s financial statements in the period in which the dividends are approved by the Company’s shareholders. There is no requirement to
pay dividends unless approved by the shareholders by way of written resolution where there is sufficient cash to meet current liabilities, and without
detriment of any financial covenants, if applicable.
Walker Crips Group plc - Annual Report and Accounts 2021 Financial statements
75
Leases
The Group leases various offices, software and equipment that are recognised under IFRS 16. The Group’s lease contracts are typically made for fixed
periods of 2 to 10 years and extension and termination options enabling maximise operational flexibility are included in a number of property and
software leases across the Group.
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
Leases of low value assets; and
Leases with a duration of 12 months or less.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss.
Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group.
Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use assets are depreciated over
the shorter of the asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following
lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payments that are based on an index or a rate;
amounts expected to be payable by the lessee under residual value guarantees;
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for
leases held by the Group, the lessee’s incremental borrowing rate is used.
To determine the incremental borrowing rate, the Group:
where possible, uses recent third-party financing received by the individual lessee as a starting point, adjust to reflect changes in financing conditions
since third-party financing was received;
uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group, which does not have recent
third-party financing; and
make adjustments specific to the lease, for example term, country, currency and security.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit and loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement date less any lease incentives received;
any initial direct costs; and
restoration costs.
Right-of-use assets are depreciated over the shorter of the lease term and the useful economic life of the underlying asset on a straight-line basis.
The Group does not have any leasing activities acting as a lessor.
Earnings per share
Basic earnings per share is calculated by dividing:
the profit attributable to owners of the company, excluding any costs of servicing equity other than ordinary shares;
by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued
during the year and excluding treasury shares (note 16).
There are currently no obligations present that could have a dilutive effect on ordinary shares.
Walker Crips Group plc - Annual Report and Accounts 2021
76
Notes to the accounts (continued)
year ended 31 March 2021
4. Key sources of estimation uncertainty and judgements
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related
actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Impairment of goodwill – estimation and judgement
Determining whether goodwill is impaired requires an estimation of the fair value less costs to sell and the value-in-use of the cash-generating units
to which goodwill has been allocated. The fair value less costs to sell involves estimation of values based on the application of earnings multiples
and comparison to similar transactions. The value-in-use calculation requires the entity to estimate the future cash flows expected to arise from the
cash-generating unit and apply a discount rate in order to calculate present value. The assumptions used and inputs involve judgements and create
estimation uncertainty. These assumptions have been stress-tested as described in note 17. The carrying amount of goodwill at the balance sheet date
was £4.4 million (2020: £4.4 million) as shown in note 17.
Other intangible assets – judgement
Acquired client lists are capitalised based on current fair values. During the year, one intangible asset, a client list, was purchased by subsidiary Walker
Crips Wealth Management Limited. When the Group purchases client relationships from other corporate entities, a judgement is made as to whether
the transaction should be accounted for as a business combination, or a separate purchase of intangible assets. In making this judgement, the Group
assesses the acquiree against the definition of a business combination in IFRS 3. Payments to newly recruited investment managers are capitalised
when they are judged to be made for the acquisition of client relationship intangibles. The useful lives are estimated by assessing the historic rates of
client retention, the ages and succession plans of the investment managers who manage the clients and the contractual incentives of the investment
managers. The Directors conduct a review of indicators of impairment and also consider a life of up to twenty years to be both appropriate and in line
with peers.
IFRS 16 “Leases” – estimation and judgement
IFRS 16 requires certain judgements and estimates to be made and those significant judgements are explained below.
The Group has opted to use single discount rates for leases with reasonably similar characteristics. The discount rates used have had an impact on
the right-of-use assets’ values, lease liabilities on initial recognition and lease finance costs included within the income statement.
Where a lease includes the option for the Group to extend the lease term, the Group has exercised the judgement, based on current information,
that such leases will be extended to the full length available, and this is included in the calculation of the value of the right-of-use assets and lease
liabilities on initial recognition and valuation at the reporting date.
Provision for dilapidations – estimation and judgement
The Group has made provisions for dilapidations under six leases for its offices. The Group did not enter into any new property leases in the period.
During the year, £14,000 of additional provisions were recognised, including £2,000 of interest, giving a new provision at year-end of £675,000.
The amounts of the provisions are, where possible, estimated using quotes from professional building contractors. The property, plant and equipment
elements of the dilapidations are depreciated over the terms of their respective leases. The liabilities in relation to dilapidations are inflated using an
estimated rate of inflation and discounted using appropriate gilt rates to present value. The change in liability attributable to inflation and discounting
is recognised in interest expense.
Walker Crips Group plc - Annual Report and Accounts 2021 Financial statements
77
5. Revenue
An analysis of the Group’s revenue is as follows:
Stockbroking commission
Fees and other revenue
Investment Management
Wealth Management,
Financial Planning & Pensions
Revenue
Investment revenue (see note 11)
Total income
% of total income
Broking
income
£’000
9,009
–
9,009
–
9,009
–
9,009
29.7%
Non-
broking
income
£’000
–
19,733
19,733
1,606
21,339
10
21,349
70.3%
2021
Total
£’000
9,009
19,733
28,742
1,606
30,348
10
30,358
100.0%
Broking
income
£’000
8,095
–
8,095
–
8,095
–
8,095
25.7%
Non-
broking
income
£’000
–
21,468
21,468
1,859
23,327
76
23,403
74.3%
2020
Total
£’000
8,095
21,468
29,563
1,859
31,422
76
31,498
100.0%
Timing of revenue recognition
The following table presents operating income analysed by the timing of revenue recognition of the operating segment providing the service:
2021
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
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
Investment
Wealth
Management Management
£’000
£’000
10,389
16,393
1,089
855
28,726
161
1,425
20
–
1,606
Investment
Wealth
Management Management
£’000
£’000
10,269
16,706
280
2,307
29,562
410
1,449
–
–
1,859
Consolidated
year ended
31 March
2021
£’000
SaaS
£’000
16
–
–
–
16
10,566
17,818
1,109
855
30,348
Consolidated
year ended
31 March
2020
£’000
SaaS
£’000
–
1
–
–
1
10,679
18,156
280
2,307
31,422
Walker Crips Group plc - Annual Report and Accounts 2021
78
Notes to the accounts (continued)
year ended 31 March 2021
6. Segmental analysis
For segmental reporting purposes, the Group currently has three operating segments; Investment Management, being portfolio-based transaction
execution and investment advice; Wealth Management, being financial planning and pensions administration; and Software as a Service (“SaaS”)
comprising provision of regulatory and admin software to regulated companies. Unallocated corporate expenses, assets and liabilities are not
considered to be allocatable accurately, or fairly, under any known basis of allocation and are therefore disclosed separately.
Walker Crips Investment Management’s activities focus predominantly on investment management of various types of portfolios and asset classes.
Walker Crips Wealth Management provides advisory and administrative services to clients in relation to their financial planning, life insurance,
inheritance tax and pension arrangements.
EnOC Technologies Limited (“EnOC” or “SaaS”) provides the regulatory and admin software, Software as a Service, to regulated companies
including all WCG’s regulated entities. Fees payable by subsidiary companies to EnOC have been eliminated on consolidation and are excluded
from segmental analysis.
Revenues between Group entities, and in turn reportable segments, are excluded from the segmental analysis presented below.
The Group does not derive any revenue from geographical regions outside of the United Kingdom.
2021
Revenue
Revenue from contracts with customers
Other revenue
Total revenue
Results
Segment result
Unallocated corporate expenses
Investment revenue
Finance costs
Loss before tax
Tax
Loss after tax
2021
Other information
Capital additions
Depreciation
Statement of financial positions
Assets
Segment assets
Unallocated corporate assets
Consolidated total assets
Liabilities
Segment liabilities
Unallocated corporate liabilities
Consolidated total liabilities
Investment
Wealth
Management Management
£’000
£’000
Consolidated
year ended
31 March
2021
£’000
SaaS
£’000
26,782
1,944
28,726
1,586
20
1,606
16
–
16
28,384
1,964
30,348
1,333
(127)
(127)
1,079
(1,057)
22
10
(146)
(114)
(144)
(258)
Investment
Wealth
Management Management
£’000
£’000
Consolidated
year ended
31 March
2021
£’000
SaaS
£’000
35
304
201
71
–
–
236
375
67,297
1,138
369
48,486
328
10
68,804
6,151
74,955
48,824
3,809
52,633
Walker Crips Group plc - Annual Report and Accounts 2021
Financial statements
79
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
2020
Other information
Capital additions
Depreciation
Statement of financial positions
Assets
Segment assets
Unallocated corporate assets
Consolidated total assets
Liabilities
Segment liabilities
Unallocated corporate liabilities
Consolidated total liabilities
7. Commissions and fees paid
Commissions and fees paid comprises:
To authorised external agents
To self-employed certified persons
Investment
Wealth
Management Management
£’000
£’000
26,975
2,587
29,562
1,859
–
1,859
SaaS
£’000
1
–
1
2,034
42
(29)
Investment
Wealth
Management Management
£’000
£’000
444
520
14
70
SaaS
£’000
109
13
42,473
964
159
23,805
502
216
2021
£’000
63
9,639
9,702
Consolidated
year ended
31 March
2020
£’000
28,835
2,587
31,422
2,047
(955)
1,092
76
(205)
963
(245)
718
Consolidated
year ended
31 March
2020
£’000
567
603
43,596
7,998
51,594
24,523
4,427
28,950
2020
£’000
65
9,706
9,771
Walker Crips Group plc - Annual Report and Accounts 2021
80
Notes to the accounts (continued)
year ended 31 March 2021
8. Investment in associate/joint venture
Brought forward
Disposals
Share of after-tax profit/(loss)
Dividends
Carried forward
2021
£’000
2020
£’000
–
–
66
(64)
2
44
(33)
(11)
–
–
Associate
The Group has a 33.33% (2020: 33.33%) interest in its associate, Walker Crips Property Income Limited (“WCPIL”), a company incorporated and
operating in the United Kingdom. The brought forward value of the Group’s share of net assets in WCPIL was £1. The Board of WCPIL submitted
management accounts to 31 March 2021 reporting an after-tax profit of £198,000, giving the Group a £66,000 entitlement from which a dividend of
£64,000 was paid to the Group in the period.
Joint venture
As reported in the 2020 Annual Report and Accounts, the Group acquired the remaining interest in the former joint venture, JWPCreers Wealth
Management Limited, which is now a 100% owned subsidiary and has changed its name to Walker Crips Ventures Limited.
9. (Loss)/profit for the year
(Loss)/profit for the year on continuing operations has been arrived at after charging:
Depreciation of property, plant and equipment (see note 19)
Depreciation of right-of-use assets (see note 20)
Amortisation of intangibles (see note 18)
Staff costs (see note 13)
Recharge of staff costs
Settlement costs
Communications
Regulatory costs
Computer expenses
Other expenses
Auditor’s remuneration
2021
£’000
375
961
837
12,690
(710)
1,148
1,195
756
595
2,221
203
20,271
2020
£’000
590
867
609
13,268
(581)
1,049
1,474
523
642
2,262
220
20,923
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
Non-audit services
FCA client assets reporting
Interim review
2021
£’000
2021
%
2020
£’000
2020
%
57
133
13
–
203
28
66
6
–
100
60
145
12
3
220
27
66
6
1
100
Walker Crips Group plc - Annual Report and Accounts 2021
Financial statements
81
10. Exceptional items
Certain amounts are disclosed separately in order to present results which are not distorted by significant items of income and expenditure due to their
nature and materiality.
Changes in fair value of deferred consideration
Insurance recovery of historical claim against the Group
Reorganisation and other costs
2021
£’000
31
–
388
419
2020
£’000
(166)
(209)
–
(375)
The change in deferred consideration fair value is the impact of revaluing, based on latest financial performance, future amounts due in respect of
acquired client relationships.
The prior year insurance recovery was a large receipt recovered following completion of arbitration proceedings in respect of a historic claim expensed
several years before.
In the current year the Group has incurred professional fees and other expenses relating to the actions taken in response to the pandemic, including
redundancy costs and those relating to the Group reorganisation, and a contractual dispute.
11. Investment revenue
Investment revenue comprises:
Interest on bank deposits
Dividends from equity investment
12. Finance costs
Finance costs comprises:
Interest on lease liabilities
Interest on dilapidation provisions
Interest on overdue liabilities
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
2021
£’000
2
8
10
2021
£’000
(134)
(2)
(10)
(146)
2021
£’000
10,643
1,074
94
879
12,690
2020
£’000
59
17
76
2020
£’000
(157)
(41)
(7)
(205)
2020
£’000
10,909
1,182
239
938
13,268
Staff costs do not include commissions payable mainly to self-employed account executives, as these costs are included in total commissions payable
to self-employed certified persons disclosed in note 7. At the end of the year there were 40 certified self-employed account executives (2020: 44).
Please see page 44 for details of Directors’ remunerations.
Walker Crips Group plc - Annual Report and Accounts 2021
82
Notes to the accounts (continued)
year ended 31 March 2021
13. Staff costs (continued)
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”).
14. Taxation
The tax charge is based on the loss/profit for the year of continuing operations and comprises:
UK corporation tax at 19% (2020: 19%)
Prior year adjustments
Origination and reversal of timing differences during the current period
Corporation tax is calculated at 19% (2020: 19%) of the estimated assessable profit for the year.
The charge for the year can be reconciled to the (loss)/profit per the income statement as follows:
(Loss)/profit before tax
Tax on (loss)/profit on ordinary activities at the standard rate UK corporation tax rate of 19% (2020: 19%)
Effects of:
Tax rate changes for deferred tax
Expenses not deductible for tax purposes
Prior year adjustment
Fixed asset differences
Other
2021
Number
2020
Number
2
60
150
212
2021
£’000
96
111
(63)
144
2021
£’000
(114)
(22)
–
22
111
63
(30)
144
2
60
156
218
2020
£’000
328
(16)
(67)
245
2020
£’000
963
183
(15)
7
(1)
74
(3)
245
Current tax has been provided at the rate of 19%. A further reduction in the rate of corporation tax to 17% was due to come into effect from April
2020, however this planned reduction was cancelled in March 2020 and on 17 March 2020 the 19% rate was again substantively enacted. Deferred
tax has been provided at 19% (2020: 19%).
The exceptional charge of £419,000 (2020: the exceptional credit of £375,000), disclosed separately on the consolidated income statement, is tax
deductible to the value of £80,000 (2020: tax chargeable £71,000) of corporation tax. Classifying these credits/costs as exceptional has no effect on
the tax liability.
In the Spring Budget 2021, the Government announced that from 1 April 2023, the UK corporation tax rate will increase from 19% to 25%. This will
have a consequential effect on the Group’s future tax charge.
Walker Crips Group plc - Annual Report and Accounts 2021
Financial statements
83
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 2020 of 0.00p (2019: 0.33p) per share
Interim dividend for the year ended 31 March 2021 of 0.15p (2020: 0.60p) per share
Proposed final dividend for the year ended 31 March 2021 of 0.60p (2020: 0.00p) per share
2021
£’000
–
64
64
256
2020
£’000
142
254
396
–
The proposed final dividends are subject to approval by shareholders at the Annual General Meeting and have not been included as liabilities in these
financial statements.
16. (Loss)/earnings per share
The calculation of basic (loss)/earnings per share for continuing operations is based on the post-tax loss for the financial year of £258,000
(2020: post-tax profit of £718,000) and divided by 42,577,328 (2020: 42,577,328) Ordinary Shares of 62/3 pence, being the weighted average number
of Ordinary Shares in issue during the year.
No dilution to (loss)/earnings per share in the current year or in the prior year.
The calculation of the basic (loss)/earnings per share is based on the following data:
(Loss)/earnings for the purpose of basic (loss)/earnings per share
being net (loss)/profit attributable to equity holders of the Parent Company
Number of shares
2021
£’000
2020
£’000
(258)
718
2021
Number
2020
Number
Weighted average number of Ordinary Shares for the purposes of basic earnings per share
42,577,328
42,577,328
This produced basic loss per share of 0.61 pence (2020: basic earnings per share of 1.69 pence).
17. Goodwill
Cost
At 1 April 2019
At 1 April 2020
At 31 March 2021
Accumulated impairment
At 1 April 2019
At 1 April 2020
Impaired during the year
At 31 March 2021
Carrying amount
At 31 March 2021
At 31 March 2020
£’000
7,056
7,056
7,056
2,668
2,668
–
2,668
4,388
4,388
Walker Crips Group plc - Annual Report and Accounts 2021
84
Notes to the accounts (continued)
year ended 31 March 2021
17. Goodwill (continued)
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”)
2021
£’000
2,901
1,487
4,388
2020
£’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.
The London York computation was based on discounted five-year cash flow projections and terminal values. The key assumptions for these
calculations are a pre-tax discount rate of 12%, terminal growth rates of 2% and the expected changes to revenues and costs during the five-year
projection period based on discussions with senior management, past experience, future expectations in light of anticipated market and economic
conditions, comparisons with our peers and widely available economic and market forecasts. The pre-tax discount rate is determined by management
based on current market assessments of the time value of money and risks specific to the London York CGU. The base value-in-use cash flows were
stress tested for an increase in discount rates to 16% and a 20% fall in net inflows resulting in no impairment.
The discount rate would need to increase to 29% for the London York CGU value-in-use to equal the respective carrying values. Revenues would need
to fall by £565,000 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 £5.4 million (2020: £4.7 million) with headroom, after selling costs, of £1.7 million (2020: £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 30% decrease in BPAM’s profit after tax would result in potential impairment of £11,000.
18. Other intangible assets
Cost
At 1 April 2019
Additions in the year
At 1 April 2020
Reclassification of software as intangibles*
Additions in the year
At 31 March 2021
Amortisation
At 1 April 2019
Charge for the year
At 1 April 2020
Reclassification of software as intangibles*
Charge for the year
At 31 March 2021
Carrying amount
At 31 March 2021
At 31 March 2020
Software
licences
£’000
Client lists
£’000
Total
£’000
10,568
48
10,616
2,783
149
10,524
48
10,572
–
93
10,665
13,548
3,290
600
3,890
–
633
4,523
6,142
6,682
3,306
609
3,915
2,230
837
6,982
6,566
6,701
44
–
44
2,783
56
2,883
16
9
25
2,230
204
2,459
424
19
* The cost and accumulated depreciation of software assets were reclassified as intangible assets from property, plant and equipment. There was no impact to the
Consolidated Income Statement in the current or prior years.
The intangible assets are amortised over their estimated useful lives in order to determine amortisation rates. “Client lists” are assessed on a client-by-
client basis and are amortised over periods of three to twenty years and “Software 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 2021
Financial statements
85
19. Property, plant and equipment
Owned fixed assets
Cost
1 April 2019
Disposal of fully depreciated assets
Additions
1 April 2020
Reclassification of assets*
Reclassification of software as intangibles**
Additions
At 31 March 2021
Accumulated depreciation
1 April 2019
Reclassification of depreciation charge on IFRS 16 reclassified assets
Charge for the year
1 April 2020
Reclassification of assets*
Reclassification of software as intangibles**
Charge for the year
At 31 March 2021
Carrying amount
At 31 March 2021
At 31 March 2020
Leasehold
improvements,
furniture and
equipment
£’000
Computer
software
£’000
Computer
hardware
£’000
2,568
(58)
283
2,793
(10)
(2,783)
–
1,359
–
76
1,435
126
–
21
–
1,582
2,042
(6)
265
2,301
(71)
(2,230)
–
–
1,219
–
148
1,367
47
–
77
1,491
Total
£’000
6,661
(58)
458
7,061
(5)
(2,783)
75
4,348
4,141
(6)
596
4,731
(5)
(2,230)
375
2,871
–
492
91
68
1,477
2,330
2,734
–
99
2,833
(121)
–
54
2,766
880
–
183
1,063
19
–
298
1,380
1,386
1,770
* Adjustments were made in the year to reclassify assets more appropriately between asset classes. The net impact of these adjustments in asset costs and accumulated
depreciation was nil and did not require changes or corrections to depreciation policy.
** The cost and accumulated depreciation of software assets were reclassified as intangible assets from property, plant and equipment. There was no impact to the
Consolidated Income Statement in the current or prior years.
20. Right-of-use assets
Cost
1 April 2020
Additions
At 31 March 2021
Accumulated depreciation
1 April 2020
Charge for the year
At 31 March 2021
Carrying amount
At 31 March 2021
At 31 March 2020
Offices
£’000
4,601
–
4,601
660
659
1,319
3,282
3,941
Computer
software
£’000
Computer
hardware
£’000
533
211
744
187
282
469
275
346
95
–
95
20
20
40
55
75
Total
£’000
5,229
211
5,440
867
961
1,828
3,612
4,362
Walker Crips Group plc - Annual Report and Accounts 2021
86
Notes to the accounts (continued)
year ended 31 March 2021
21. Investments – fair value through profit or loss
Non-current asset investments
At 31 March 2019
At 31 March 2020
Disposals in the period
Change in value in the period
At 31 March 2021
Investments
at fair value
through
profit or loss
£’000
51
51
(11)
(3)
37
Total
£’000
51
51
(11)
(3)
37
The Group’s investments include £37,000 unregulated collective investment scheme (“UCIS”) investments held in relation to a number of customer
complaints (see note 27 for current provisions made against customer complaints).
Current asset investments
Trading investments
Investments – fair value through profit or loss
As at
31 March
2021
£’000
As at
31 March
2020
£’000
920
638
Financial assets at fair value through profit or loss represent investments in equity securities and collectives that present the Group with opportunity for
return through dividend income, interest and trading gains. The fair values of these securities are based on quoted market prices.
The following provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3
based on the degree to which the fair value is observable:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. The Group’s
financial assets held at fair value through profit and loss under current assets fall within this category;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). The Group does not hold financial instruments in this category; and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on
observable market data (unobservable inputs). The Group’s financial assets held at fair value through profit and loss under non-current assets fall
within this category.
At 31 March 2021
Financial assets held at fair value through profit and loss
At 31 March 2020
Financial assets held at fair value through profit and loss
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
920
638
–
–
37
51
957
689
Further IFRS 13 disclosures have not been presented here as the balance represents 1.277% (2020: 1.336%) of total assets. There were no transfers of
investments between any of the levels of hierarchy during the year.
Walker Crips Group plc - Annual Report and Accounts 2021
Financial statements
87
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
23. Cash and cash equivalents
Cash deposits held at bank, repayable on demand without penalty
2021
£’000
40,633
2,447
6,018
49,098
2021
£’000
8,855
8,855
2020
£’000
16,184
2,380
5,951
24,515
2020
£’000
8,609
8,609
Cash and cash equivalents do not include deposits of client monies placed by the Group with banks and building societies in segregated client bank
accounts (free money and settlement accounts). All such deposits are designated by the banks and building societies as clients’ funds and are not
available to satisfy any liabilities of the Group.
The amount of such net deposits which are not included in the consolidated statement of financial position at 31 March 2021 was £274,145,000
(2020: £305,300,000).
The credit quality of banks holding the Group’s cash at 31 March 2021 is analysed below with reference to credit ratings awarded by Fitch.
A+
A
AA-
A-
Unrated or held in cash
24. Deferred tax liability
At 1 April 2019
Use of loss brought forward
Debit to the income statement
At 1 April 2020
Use of loss brought forward
Debit to the income statement
At 31 March 2021
2021
£’000
5,256
–
3,337
25
237
8,855
Short-term
temporary
differences
and other
£’000
Capital
allowances
£’000
13
–
(78)
(65)
–
(59)
(124)
(330)
78
(18)
(270)
32
(38)
(276)
2020
£’000
5,221
1,829
–
1,558
1
8,609
Total
£’000
(317)
78
(96)
(335)
32
(97)
(400)
Deferred income tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through future
taxable profits is probable. The Group did not recognise deferred income tax assets of £11,000 (2020: £nil) in respect of losses amounting to
£58,000 (2020: £nil) that can be carried forward against future taxable income. Losses amounting to £nil (2020: £nil) and £nil (2020: nil) expire
in 2020 and 2021, respectively.
Walker Crips Group plc - Annual Report and Accounts 2021
88
Notes to the accounts (continued)
year ended 31 March 2021
25. Financial instruments and risk profile
Financial risk management
Procedures and controls are in place to identify, assess and ultimately control the financial risks faced by the Group arising from its use of financial
instruments. Steps are taken to mitigate identified risks with established and effective procedures and controls, efficient systems and the adequate
training of staff.
The Group’s risk appetite, along with the procedures and controls mentioned above, are laid out in the Group’s Internal Capital Adequacy Assessment
Process document prepared in accordance with the requirements of the Financial Conduct Authority (“the FCA”).
The overall risk appetite for the Group is considered by Management to be low, despite operating in a marketplace where financial risk is inherent in
investment management and financial services.
The Group considers its financial risks arising from its use of financial instruments to fall into three main categories:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
Financial risk management is a central part of the Group’s strategic management which recognises that an effective risk management programme
can increase a business’s chances of success and reduce the possibility of failure. Continual assessment, monitoring and updating of procedures and
benchmarks are all essential parts of the Group’s risk management strategy.
(i) Credit risk management practices
The Group’s credit risk is the risk of loss through default by a counterparty and, accordingly, the Group’s definition of default is primarily attributable
to its trade receivables or pledged collateral which is the risk that a client, market counterparty or recognised stock exchange will be unable to pay
amounts to settle a trade in full when due. Other credit risks, such as free delivery of securities or cash, are not deemed to be significant. Significant
changes in the economy or a particular sector could result in losses that are different from those that the Group has provided for at the year-end date.
All financial assets at the year-end were assessed for credit impairment and no material amounts have arisen having evaluated the age of overdue
debtors, the quality of recourse to third parties and the availability of mitigation through the disposal of liquid collateral in the form of marketable
securities. The Group’s write-off policy is driven by the historic dearth of instances where material irrecoverable losses have been incurred. Where the
avenues of recourse and mitigation outlined above have not been successful, the outstanding balance, or residual balance if sale proceeds do not fully
cover an exposure, will be written off.
The Board is responsible for oversight of the Group’s credit risk. The Group accepts a limited exposure to credit risk but aims to mitigate and minimise
the risk through various methods. There is no material concentrated credit risk as the exposures are spread across a substantial number of clients and
counterparties.
Trade receivables (includes settlement balances)
Settlement risk arises in any situation where a payment of cash or transfer of a security is made in the expectation of a corresponding delivery of a
security or receipt of cash. Settlement balances arise with clients, market counterparties and recognised stock exchanges.
In the vast majority of cases, control of the stock purchased will remain with the Group until client monetary balances are fully settled.
Where there is an absence of securities collateral, clients are usually required to hold sufficient funds in their managed deposit account prior to the
trade being conducted. Holding significant amounts of client money helps the Group to manage credit risks arising with clients. Many of our clients also
hold significant amounts of stock and other securities in our nominee subsidiary company, providing additional security should a specific transaction
fail to be settled and the proceeds of such securities disposed of can be used to settle all outstanding obligations.
In addition, the client side of settlement balances are normally fully guaranteed by our commission-sharing certified persons who conduct transactions
and manage the relationships with our mutual clients.
Exposures to market counterparties also arise in the settlement of trades or when collateral is placed with them to cover open trading positions. Market
counterparties are usually other FCA-regulated firms and are considered creditworthy, some reliance being placed on the fact that other regulated
firms would be required to meet the stringent capital adequacy requirements of the FCA.
Maximum exposure to credit risk:
Cash
Trade receivables
Other debtors
Accrued interest income
2021
£’000
8,855
40,633
2,447
55
51,990
2020
£’000
8,609
16,184
2,380
56
27,229
Walker Crips Group plc - Annual Report and Accounts 2021
Financial statements
89
An ageing analysis of the Group’s financial assets is presented in the following table:
At 31 March 2021
Trade receivables
Cash and cash equivalent
Other debtors
Accrued interest income
Current
£’000
39,634
8,855
2,291
55
50,835
0-1
month
£’000
932
–
2
–
934
2-3
months
£’000
Over 3
months
£’000
33
–
24
–
57
34
–
130
–
164
Carrying
value
£’000
40,633
8,855
2,447
55
51,990
Expected credit loss
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade
receivables and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on
similar credit risk and ageing. The contract assets have similar risk characteristics to the trade receivables for similar types of contracts.
As noted in principal risks on page 24, the Group undertakes a daily assessment of credit risk which includes monitoring of client and counterparty
exposure and credit limits. New clients are individually assessed for their creditworthiness using external ratings where available and all institutional
relationships are monitored at regular intervals.
As at 31 March 2021, the Directors of the Company reviewed and assessed the Group’s existing assets for impairment using the IFRS 9 simplified
approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets and no additional
impairments have been recognised on application and no material defaults are anticipated within the next twelve months.
Concentration of credit risk
In addition, daily risk management procedures to actively monitor disproportionately large trades by a customer or market counterparty are in place.
The financial standing, pattern of trading, type and size of security or instrument traded are amongst the factors taken into consideration.
(ii) Liquidity risk
Liquidity risk is the risk that the Group is unable to meet its payment obligations associated with its financial liabilities when they fall due.
Historically, sufficient underlying cash has been prevalent in the business for many years as the Group is normally cash-generative. The risk of
unexpected large cash outflows could arise where large amounts are being settled daily of which only a fraction forms the commission earned by the
Group. This could be due to clients settling late or bad deliveries to the market or CREST, also resulting in a payment delay from the market side.
The Group’s policy with regard to liquidity risk is to carefully monitor balance sheet structure and borrowing limits, including:
monitoring of cash positions on a daily basis;
exercising strict control over the timely settlement of trade debtors; and
exercising strict control over the timely settlement of market debtors and creditors.
The Group holds its cash and cash equivalents spread across a number of highly rated financial institutions. All cash and cash equivalents are short-
term highly liquid investments that are readily convertible to known amounts of cash without penalty.
All the regulated Group subsidiaries are subject to the provisions of FCA Liquidity standards if they are within the scope of the rules in the FCA
Handbook chapter IFPRU 7.
The table below analyses the Group’s cash outflow based on the remaining period to the contractual maturity date.
2021
Trade and other payables
2020
Trade and other payables
Less than
1 year
£’000
47,395
47,395
Total
£’000
47,395
47,395
22,750
22,750
22,750
22,750
Future contractual undiscounted cash flows for deferred cash consideration amount to £46,000, which is within current liabilities, and £33,000, which
is within long-term liabilities.
(iii) Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates or equity prices, on financial assets and liabilities will affect the
Group’s results. They relate to price risk on fair value through profit or loss trading investments and are subject to ongoing monitoring.
Walker Crips Group plc - Annual Report and Accounts 2021
90
Notes to the accounts (continued)
year ended 31 March 2021
25. Financial instruments and risk profile (continued)
Fair value of financial instruments
The fair values of the Group’s financial assets and liabilities are not materially different from their carrying values as they are valued at their realisable
values. The Group’s financial assets that are classed as current asset and non-current asset investments (fair value through profit or loss) have been
revalued at 31 March 2021 using closing market prices.
A 10% fall in global equity markets would, in isolation, result in a pre-tax decrease to net assets of £92,000 (2020: £63,800). A 10% rise would have
an equal and opposite effect.
The impact of foreign exchange and interest rate risk is not material and is therefore not presented.
26. Trade and other payables
Amounts owed to clients, brokers and recognised stock exchanges
Other creditors
Contract liability
Accrued expenses
2021
£’000
39,951
3,059
28
4,357
47,395
2020
£’000
15,167
3,548
3
4,032
22,750
Trade creditors and accruals comprise amounts outstanding for investment-related transactions, to customers or counterparties, and ongoing costs.
The average credit period taken for purchases in relation to costs is 14 days (2020: 10 days). The Directors consider that the carrying amount of trade
payables approximates to their fair value.
27. Provisions
Provisions included in other current liabilities and long-term liabilities are made up as follows:
At start of year
Additions
Utilisation of provision
At 31 March 2021
Claims/
complaints
£’000
178
55
(28)
205
Dilapi-
dations
£’000
659
16
–
675
Total
£’000
837
71
(28)
880
Claims/complaints
These provisions relate to outstanding claims and complaints from third parties which, in the opinion of the Board, need providing for after taking into
account the risks and uncertainties surrounding each claim or complaint. The timing of these settlements is unknown but it is expected that they will be
resolved within twelve months.
Dilapidations
The Group, based on revised estimates, has made an additional provision of £16,000 (including interest) for dilapidations in connection with acquired
leasehold premises (2020: total additional provision of £117,000). These costs are expected to arise at the end of each respective lease. Provisions for
dilapidations payable on leases after more than one year amounted to £675,000.
The Group had six leased properties, all of which had contractual dilapidation requirements. The dilapidation provisions in relation to these leases
range from net present values as at the year-end of £10,000 to £530,000 per lease.
Walker Crips Group plc - Annual Report and Accounts 2021
Financial statements
91
28. Lease liabilities
Lease liabilities
At 1 April 2020
Additions
Interest
Lease payments
At 31 March 2021
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
29. Called-up share capital
Called-up, allotted and fully paid
43,327,328 (2020: 43,327,328) Ordinary Shares of 62/3p each
Offices
£’000
4,209
–
123
(846)
3,486
Computer
software
£’000
Computer
hardware
£’000
306
212
9
(266)
261
74
–
2
(21)
55
2021
£’000
946
2,856
3,802
2021
£’000
1,069
266
3,898
65
5,298
Total
£’000
4,589
212
134
(1,133)
3,802
2020
£’000
969
3,620
4,589
2020
£’000
1,099
942
2,643
1,496
6,180
2021
£’000
2020
£’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.
The following movements in share capital occurred during the year:
At 1 April 2020
At 31 March 2021
Number of
shares
43,327,328
43,327,328
Share
capital
£’000
2,888
2,888
Share
premium
£’000
3,763
3,763
Total
£’000
6,651
6,651
The Group’s capital is defined for accounting purposes as total equity. As at 31 March 2021, this totalled £22,322,000 (2020: £22,644,000).
The Group’s objectives when managing capital are to:
safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other
stakeholders;
maintain a strong capital base to support the development of the business;
optimise the distribution of capital across the Group’s subsidiaries, reflecting the requirements of each company;
strive to make capital freely transferable across the Group where possible; and
comply with regulatory requirements at all times.
Walker Crips Group plc - Annual Report and Accounts 2021
92
Notes to the accounts (continued)
year ended 31 March 2021
29. Called-up share capital (continued)
Walker Crips Group plc is classified for capital purposes as an investment management group and performs an Internal Capital Adequacy Assessment
Process (“ICAAP”), which is presented to the FCA on request. Regulatory capital resources for ICAAP purposes are calculated in accordance with
published rules. These require certain adjustments to and certain deductions from accounting capital, the latter largely in respect of intangible assets.
The ICAAP compares regulatory capital resources against regulatory capital requirements derived using the FCA’s Pillar 1 and Pillar 2 methodology.
The Group has adopted the standardised approach to calculating its Pillar 1 credit risk component and the basic indicator approach to calculating its
operational risk component. Capital management policy and practices are applied at both Group and entity level.
In addition to a variety of stress tests performed as part of the ICAAP process, and daily reporting in respect of treasury activity, capital levels are
monitored and forecast to ensure that dividends and investment requirements are appropriately managed and appropriate buffers are kept against
adverse business conditions.
Regulatory capital
No breaches were reported to the FCA during the financial years ended 31 March 2021 and 2020.
Treasury shares
The Group holds 750,000 of its own shares, purchased for total cash consideration of £312,000. In line with the principles of IAS 32 these treasury
shares have been deducted from equity (note 30). No gain or loss has been recognised in the income statement in relation to these shares.
30. Reserves
Apart from share capital and share premium, the Group holds reserves at 31 March 2021 under the following categories:
Own shares held
(£312,000) (2020: (£312,000))
the negative balance of the Group’s own shares, which have
Retained earnings
£11,260,000 (2020: £11,582,000)
Other reserves
£4,723,000 (2020: £4,723,000)
been bought back and held in treasury.
the net cumulative earnings of the Group, which have not been
paid out as dividends, are retained to be reinvested in our core,
or developing, companies.
the cumulative premium on the issue of shares as deferred
consideration for corporate acquisitions £4,612,000 (2020:
£4,612,000) and non-distributable reserve into which amounts
are transferred following the redemption or purchase of the
Group’s own shares £111,000 (2020: £111,000).
31. Cash generated by operations
Operating profit for the year
Adjustments for:
Amortisation of intangibles
Changes in the fair value of deferred consideration
Net change in fair value of financial instruments at fair value through profit or loss*
Share of associate/joint venture after tax result
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
(Increase)/decrease in debtors**
Increase/(decrease) in creditors**
Change in working capital as a result of net effects of acquiring a subsidiary and disposal of a joint venture
De recognition of joint venture asset now fully acquired
Trade and other payables
Trade and other receivables
2021
£’000
22
837
31
(362)
(66)
375
961
(24,572)
24,580
–
–
–
2020
£’000
1,092
609
(166)
367
11
590
867
11,044
(10,884)
(44)
(12)
9
Net cash inflow
1,806
3,483
* Revaluation (profit)/loss on proprietary positions.
** £8,000 cash inflow from working capital movement (2020: £160,000).
32. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of £nil (2020: £nil) contracted but not provided for and £nil (2020: £nil) capital commitments
authorised but not contracted for.
Walker Crips Group plc - Annual Report and Accounts 2021
Financial statements
93
33. Related parties
Directors and their close family members have dealt on standard commercial terms with the Group. The commission and fees earned by the Group
included in revenue through such dealings is as follows:
Commission and fees received from Directors and their close family members
2021
£’000
15
2020
£’000
14
Other related parties include Charles Russell Speechlys, of which Martin Wright, Chairman, is a Partner. Charles Russell Speechlys provides certain legal
services to the Group on normal commercial terms and the amount paid and expensed during the year (including the fees paid to the firm for Mr.
Wright’s services as Director) was £154,000 (2020: £84,000).
Commission of £7,587 (2020: £4,746) was earned by the Group from Phillip Securities (HK) Limited (a Phillip Brokerage Pte Limited company, where
Hua Min Lim is a shareholder) having dealt on standard commercial terms. Additionally, some custody services are provided by Phillip Securities Pte Ltd
(in Singapore, where Hua Min Lim is a Director), again all on standard commercial terms, both these items being included in revenue. Transactions
between the Group and its subsidiaries, which are related parties, have been eliminated on consolidation and are accordingly not disclosed.
Remuneration of the Directors who are the key Management personnel of the Group are disclosed in the table below.
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Share-based payment
2021
£’000
2020
£’000
432
31
–
463
446
34
7
487
34. Contingent liability
From time to time, the Group receives complaints or undertakes past business reviews, the outcomes of which remain uncertain and/or cannot be
reliably quantified based upon information available and circumstances falling outside the Group’s control. Accordingly contingent liabilities arise, the
ultimate impact of which may also depend upon availability of recoveries under the Group’s indemnity insurance and other contractual arrangements.
Other than the complaints deemed to be probable, the Directors presently consider a negative outcome to be remote or a reliable estimate of the
amount of a possible obligation cannot be made. As a result, no disclosure has been made in these financial statements.
35. Subsequent events
There are no material events arising after 31 March 2021, which have an impact on these financial statements.
36. Long-term liabilities – deferred cash consideration
Amounts due to personnel under recruitment contracts/acquisition agreements
2021
£’000
33
2020
£’000
15
These amounts are based on fixed contractual terms and the fair value of the liability approximates carrying value, due to the consistency of the
prevailing market rate of interest when compared to the inception of liability. During the year, deferred consideration of £46,000 was reclassified
within other creditors in current liabilities. This liability was a long-term liability of £15,000 in the prior year and was reassessed to a current liability
of £46,000 in the current year.
Walker Crips Group plc - Annual Report and Accounts 2021
94
Company balance sheet
as at 31 March 2021
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 provisions
Landlord contribution to leasehold improvements
Net assets
Equity
Share capital
Share premium account
Own shares
Retained earnings
Other reserves
Note
41
40
42
43
44
45
48
48
48
47
47
47
47
47
2021
£’000
3,215
856
17,775
21,846
759
74
359
1,192
23,038
(3,162)
(3,162)
(1,970)
–
–
(335)
(335)
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)
19,541
20,128
2,888
3,763
(312)
8,479
4,723
2,888
3,763
(312)
9,066
4,723
Equity attributable to equity holders of the Company
19,541
20,128
As permitted by section 408 of the Companies Act 2006 the Parent Company has elected not to present its own profit and loss account for the year.
Walker Crips Group plc reported an after-tax loss for the financial year of £523,000 (2020: £328,000).
The financial statements of Walker Crips Group plc (Company registration no: 01432059) were approved by the Board of Directors and authorised
for issue on 20 August 2021.
Signed on behalf of the Board of Directors:
Sanath Dandeniya FCCA
Director
Walker Crips Group plc - Annual Report and Accounts 2021
Financial statements
95
Company statement of changes in equity
year ended 31 March 2021
Called up
share
capital
£’000
Share
premium
account
£’000
Equity as at 31 March 2019
2,888
3,763
Total comprehensive loss for the period
Contributions by and distributions to owners
Dividends paid
Total contributions by and distributions to owners
–
–
–
–
–
–
Own
shares
held
£’000
(312)
–
–
–
Other
£’000
4,723
–
–
–
Equity as at 31 March 2020
2,888
3,763
(312)
4,723
Total comprehensive loss for the period
Contributions by and distributions to owners
Dividends paid
Total contributions by and distributions to owners
–
–
–
–
–
–
–
–
–
–
–
–
Retained
earnings
£’000
9,790
(328)
(396)
(396)
9,066
(523)
(64)
(64)
Total
equity
£’000
20,852
(328)
(396)
(396)
20,128
(523)
(64)
(64)
Equity as at 31 March 2021
2,888
3,763
(312)
4,723
8,479
19,541
Walker Crips Group plc - Annual Report and Accounts 2021
96
Notes to the Company accounts
year ended 31 March 2021
37. Significant accounting policies
The separate financial statements of Walker Crips Group plc, the Parent Company, are presented as required by the Companies Act 2006.
The financial statements have been prepared under the historical cost convention except for the modification to a fair value basis for certain financial
instruments as specified in the accounting policies below, and in accordance with Financial Reporting Standard (FRS 102), the Financial Reporting
Standard applicable in the UK and the Republic of Ireland, and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires
Management to exercise judgement in applying the Parent Company’s accounting policies (see note 38).
The financial statements are presented in the currency of the primary activities of the Parent Company (its functional currency). For the purpose of the
financial statements, the results and financial position are presented in Sterling (£). The principal accounting policies have been summarised below.
They have all been applied consistently throughout the year and the preceding year.
The Parent Company has chosen to adopt the disclosure exemption in relation to the preparation of a cash flow statement under FRS 102.
Going concern
After conducting enquiries, the Directors believe that the Parent Company has adequate resources to continue in existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in preparing the financial statements. The Parent Company’s business activities, together
with the factors likely to affect its future development, performance and position, has been rigorously assessed.
Property, plant and equipment
Fixtures and equipment are stated at historical cost less accumulated depreciation and provision for any impairment. Depreciation is charged so as to
write-off the cost or valuation of assets over their estimated useful lives using the straight-line method on the following bases:
Computer hardware
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
33 1/3% per annum on cost
The gain or loss on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the
asset and is recognised in income. The residual values and estimated useful life of items within property, plant and equipment are reviewed at least at
each financial year end. Any shortfalls in carrying value are impaired immediately through profit or loss.
Intangible assets
Client lists
Client lists are recognised when it is probable that future economic benefits will flow to the Parent Company and the cost of the asset can be measured
reliably whilst the risk and rewards have also transferred into the Parent Company’s ownership.
Intangible assets classified as client lists are recognised when acquired as part of a business combination or when separate payments are made to
acquire clients’ assets by adding teams of investment managers.
The cost of acquired client lists and businesses generating revenue from clients and investment managers are capitalised. These costs are amortised
on a straight-line basis over their expected useful lives of three to twenty years. The amortisation period and amortisation method for intangible assets
are reviewed at least each financial year end. All intangible assets have a finite useful life.
Impairment of non-financial assets
At each reporting date, the Parent Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. For the purposes of assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash flows (cash-generating units). If there is an indication of possible impairment, the recoverable amount of
any affected asset (or group of related assets) is estimated and compared with its carrying amount. If the estimated recoverable amount is lower, the
carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in profit or loss.
Taxation
The tax expense represents the sum of the tax currently payable and any deferred tax.
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid or recovered using the tax rates and laws that
have been enacted or substantively enacted by the balance sheet date. Current tax charges arising on the realisation of revaluation gains recognised
in the statement of comprehensive income are also recorded in this statement.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date.
A deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as
probable that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax
assets and liabilities are not discounted.
Own shares held
Own shares consist of treasury shares which are recognised at cost as a deduction from equity shareholders’ funds. Subsequent consideration received
for the sale of treasury shares is also recognised in equity with any difference being taken to retained earnings. No gain or loss is recognised on sale of
treasury shares.
Walker Crips Group plc - Annual Report and Accounts 2021 Financial statements
97
Financial instruments
Financial assets and financial liabilities are recognised in the balance sheet when the Parent Company becomes a party to the contractual provisions
of the instrument. Section 11 of FRS 102 has been applied in classifying financial instruments depending on the nature of the instrument held.
Revenue
Income consists of interest received or accrued over time and dividend income recorded when received.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Debtors
Other debtors are classified as basic financial instruments and measured at initial recognition at transaction price. Debtors are subsequently measured
at amortised cost using the effective interest rate method. A provision is established when there is objective evidence that the Group will not be able to
collect all amounts due.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits, together with other short-term highly liquid investments, which are readily
convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity
instrument is any contract that evidences a residual interest in the assets of the Parent Company after deducting all of its liabilities. Equity instruments
issued by the Parent Company are recorded at the proceeds received, net of direct issue costs.
Leases
Rentals under operating leases are charged on a straight-line basis over the lease term even if the payments are not made on such a basis. Benefits
received as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.
38. Key sources of estimation uncertainty and judgements
The preparation of financial statements in conformity with generally accepted accounting practice requires Management to make estimates and
judgements that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the balance sheet
date and the reported amounts of revenues and expenses during the reporting period.
Intangible assets
Acquired client lists are capitalised based on current fair values. By assessing the historic rates of client retention, the ages and succession plans of the
investment managers who manage the clients and the contractual incentives of the investment managers, the Directors consider a life of up to twenty
years to be both appropriate and in line with our peers. There were no acquisitions made in the period to 31 March 2021. Additions in the period relate
to existing client lists and are disclosed in note 41.
39. Loss for the year
Loss for the financial year of £523,000 (2020: £328,000) is after an amount of £57,000 (2020: £60,000) 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
2021
£’000
2020
£’000
147
12
3
162
170
14
4
188
In the current year, employee costs are those of the Non-Executive Directors, a proportion of Executive Directors and the cost of the Group’s profit
share scheme. The remaining Executive Directors’ employee costs are borne by Walker Crips Investment Management Limited.
The monthly average number of staff employed during the year was:
Executive Directors
Non-Executive Directors
2021
Number
2020
Number
2
4
6
2
4
6
Walker Crips Group plc - Annual Report and Accounts 2021
98
Notes to the Company accounts (continued)
year ended 31 March 2021
40. Property, plant and equipment
Cost
At 1 April 2020
Asset transfers on 1 April 2020 *
At 31 March 2021
Amortisation
At 1 April 2020
Asset transfers on 1 April 2020 *
Charge for the year
At 31 March 2021
Net book value
At 31 March 2021
At 31 March 2020
Leasehold
improvements,
furniture and
equipment
£’000
Computer
software
£’000
2,192
(518)
1,674
772
(106)
152
818
856
1,420
858
–
858
858
–
–
858
–
–
Total
£’000
3,050
(518)
2,532
1,630
(106)
152
1,676
856
1,420
* The cost and accumulated depreciation of leasehold property dilapidation assets and liabilities were transferred on 1 April 2020 to subsidiary Walker Crips Investment
Management Limited to reflect the real obligation of the subsidiary to pay for the future works. The adjustment had no impact on the financial performance or position
of the Group, in the current year or prior periods, due to the fact that Walker Crips Investment Management Limited is a wholly owned subsidiary.
41. Other intangible assets
Cost
At 1 April 2020
At 31 March 2021
Amortisation
At 1 April 2020
Charge for the year
At 31 March 2021
Net book value
At 31 March 2021
At 31 March 2020
Client lists
£’000
5,076
5,076
1,520
341
1,861
3,215
3,556
Total
£’000
5,076
5,076
1,520
341
1,861
3,215
3,556
Walker Crips Group plc - Annual Report and Accounts 2021
Financial statements
99
42. Investments measured at cost less impairment
Subsidiary undertakings
2021
£’000
17,775
2020
£’000
17,425
During the year, the Company subscribed to a further 349,999 new shares in its subsidiary EnOC Technologies Limited, a 100% owned subsidiary,
for consideration of £349,999.
A complete list of subsidiary undertakings can be found in note 53.
43. Trade and other receivables
Amounts owed by Group undertakings
Prepayments and accrued income
Other debtors
2021
£’000
751
8
–
759
2020
£’000
436
8
293
737
A presentational change was made in this note to exclude the deferred tax asset from this grouping and to present it in its own line on the face of the
statement of financial position. The deferred tax asset is presented separately in note 44.
44. Deferred taxation
At 1 April
Use of Group Relief
(Charge)/credit to the income statement
At 31 March
2021
£’000
179
(40)
(65)
74
2020
£’000
224
(86)
41
179
A further reduction in the rate of corporation tax to 17% was due to come into effect from April 2020, however this planned reduction was cancelled
in March 2020 and on 17 March 2020 the 19% rate was again substantively enacted. Deferred tax has been provided at 19% (2020: 19%).
In the Spring Budget 2021, the Government announced that from 1 April 2023, the UK corporation tax rate will increase from 19% to 25%. This will
have a consequential effect on the Company’s future tax charge.
45. Trade and other payables
Accruals and deferred income
Amounts due to subsidiary undertakings
Other creditors
2021
£’000
142
2,730
290
3,162
2020
£’000
99
2,195
69
2,363
Walker Crips Group plc - Annual Report and Accounts 2021
100
Notes to the Company accounts (continued)
year ended 31 March 2021
46. Risk management policies
Procedures and controls are in place to identify, assess and ultimately control the financial risks faced by the Parent Company arising from its use of
financial instruments. Steps are taken to mitigate identified risks with established and effective procedures and controls, efficient systems and the
adequate training of staff.
The Parent Company’s risk appetite, along with the procedures and controls mentioned above, are laid out in the Group’s Internal Capital Adequacy
Assessment Process document prepared in accordance with the requirements of the Financial Conduct Authority (“FCA”).
The overall risk appetite for the Parent Company and for the Group as a whole is considered by Management to be low, despite operating in a market-
place where financial risk is inherent in the core businesses of investment management and financial services.
The Group considers its financial risks arising from its use of financial instruments to fall into three main categories:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
Further information on the disclosures and policies carried out by the Parent Company and the Group are made in note 25 of the consolidated financial
statements.
(i) Credit risk
Maximum exposure to credit risk:
Cash
Other debtors
As at 31 March
2021
£’000
359
–
359
The credit quality of banks holding the Group’s cash at 31 March 2021 is analysed below with reference to credit ratings awarded by Fitch.
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
< 30 days
> 30 days
> 3 months
2021
£’000
–
359
–
359
2021
£’000
–
–
–
–
–
2020
£’000
141
293
434
2020
£’000
11
–
130
141
2020
£’000
293
–
–
–
293
Walker Crips Group plc - Annual Report and Accounts 2021
Financial statements
101
(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
2021
£’000
3,162
–
3,162
2021
£’000
3,162
–
–
3,162
2020
£’000
2,363
569
2,932
2020
£’000
2,363
15
554
2,932
(iii) Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates or equity prices will affect the Group’s income.
These relate to price risk breached on available-for-sale and trading investments and closely monitored using limits to prevent significant losses.
Fair value of financial instruments
No financial instruments at fair value were held by the Parent Company in the current or prior financial year.
47. Called-up share capital
Called-up, allotted and fully paid
43,327,328 (2020: 43,327,328) Ordinary Shares of 62/3p each
No new shares were issued in the year to 31 March 2021 or the prior year.
2021
£’000
2020
£’000
2,888
2,888
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 2020
At 31 March 2021
Number
of shares
43,327,328
43,327,328
Share
capital
£’000
2,888
2,888
Share
premium
£’000
3,763
3,763
Total
£’000
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.
Walker Crips Group plc - Annual Report and Accounts 2021
102
Notes to the Company accounts (continued)
year ended 31 March 2021
47. Called-up share capital (continued)
Apart from share capital and share premium, the Parent Company holds reserves at 31 March 2021 under the following categories:
Own shares held
(£312,000) (2020: (£312,000))
the negative balance of the Parent Company’s own shares that
Retained earnings
£8,479,000 (2020: £9,066,000)
Other reserves
£4,723,000 (2020: £4,723,000)
have been bought back and held in treasury.
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.
the cumulative premium on the issue of shares as deferred
consideration for corporate acquisitions £4,612,000 (2020:
£4,612,000) and non-distributable reserve into which amounts
are transferred following the redemption or purchase of the
Group’s own shares £111,000 (2020: £111,000).
48. Creditors: amounts falling due after more than one year
Dilapidation provision
Landlord contribution to leasehold improvements
Deferred cash consideration
2021
£’000
–
335
–
335
2020
£’000
554
398
15
967
The cost and accumulated depreciation of leasehold property dilapidation assets and liabilities were transferred on 1 April 2020 to subsidiary
Walker Crips Investment Management Limited to reflect the real obligation of the subsidiary to pay for the future works. The adjustment had no
impact on the financial performance or position of the Group, in the current year or prior periods, due to the fact that Walker Crips Investment
Management Limited is a wholly owned subsidiary.
During the year, deferred consideration of £46,000 was reclassified within other creditors in current liabilities. This liability was a long-term liability
of £15,000 in the prior year and was reassessed to a current liability of £46,000 in the current year.
49. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of £nil (2020: £nil) contracted but not provided for and £nil (2020: £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
2021
£’000
–
–
–
2020
£’000
765
2,616
1,390
As part of a review of Group-wide assets and lease commitments, it was the view of the Directors that the lease commitments previously disclosed
in this Company in fact belong in the Company’s subsidiary Walker Crips Investment Management Limited. This is reflected in the individual company
accounts of the subsidiary. The resulting adjustment to this disclosure has had no impact on profit or loss in either entity.
50. Related party transactions
Key Management are those persons having authority and responsibility for planning, controlling and directing the activities of the Parent Company
and Group. In the opinion of the Board, the Parent Company and Group’s key Management are the Directors of Walker Crips Group plc.
Total compensation to key management personnel is £463,000 (2020: £487,000).
51. Contingent liability
From time to time, the Company receives complaints or undertakes past business reviews, the outcomes of which remain uncertain and/or cannot
be reliably quantified based upon information available and circumstances falling outside the Company’s control. Accordingly contingent liabilities
arise, the ultimate impact of which may also depend upon availability of recoveries under the Company’s indemnity insurance and other contractual
arrangements. Other than the complaints deemed to be probable, the Directors presently consider a negative outcome to be remote or a reliable
estimate of the amount of a possible obligation cannot be made. As a result, no disclosure has been made in these financial statements.
Walker Crips Group plc - Annual Report and Accounts 2021
Financial statements
103
52. Subsequent events
There are no material events arising after 31 March 2021, which have an impact on these financial statements.
53. Subsidiaries and associates
Principal place
of business
Principal activity
Class and percentage
of shares held
Group
Trading subsidiaries
Walker Crips Investment Management Limited1 United Kingdom
Investment management
London York Fund Managers Limited3
United Kingdom
Management services
Walker Crips Wealth Management Limited3
United Kingdom
Financial services advice
Ebor Trustees Limited3
United Kingdom
Pensions management
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
EnOC Technologies Limited1
United Kingdom
Financial regulation and other software
Ordinary Shares 100%
Barker Poland Asset Management LLP1
United Kingdom
Investment management
Membership 100%
Non-trading subsidiaries
Walker Crips Financial Services Limited1
United Kingdom
Financial services
G & E Investment Services Limited3
United Kingdom
Holding company
Ebor Pensions Management Limited3
United Kingdom
Dormant company
Investorlink Limited1
Walker Cambria Limited1
United Kingdom
Agency stockbroking
United Kingdom
Dormant company
Walker Crips Trustees Limited1
United Kingdom
Dormant company
W.B. Nominees Limited2
United Kingdom
Nominee company
WCWB (PEP) Nominees Limited2
United Kingdom
Nominee company
WCWB (ISA) Nominees Limited2
United Kingdom
Nominee company
WCWB Nominees Limited2
United Kingdom
Nominee company
Walker Crips Consultants Limited1
United Kingdom
Dormant company
Walker Crips Ventures Limited3
United Kingdom
Financial services advice
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Associate
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.
Walker Crips Group plc - Annual Report and Accounts 2021
104
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 information regarding Annual General Meeting arrangements in light of the
Coronavirus (COVID-19) outbreak
Although the Company is holding this year’s Annual General Meeting of the Company (the “Meeting”) as a physical meeting, the Board of Directors
understands that some shareholders may be unwilling or unable to attend in person in the light of restrictions on travel and potential health concerns.
Therefore, as well as the ability to attend in person, shareholders will be able to view the proceedings by way of video link. Please note that shareholders
using the video link option will not formally be in attendance at the Meeting and so will not be able to vote using this facility. Therefore, shareholders
who wish to use the video link facility are encouraged to vote in advance by proxy. In addition, because of the possibility that COVID-19 restrictions
are re-imposed or extended in the period from the date of this notice of Meeting and the date of the Meeting itself, all shareholders are encouraged
to vote in advance by proxy. Voting in advance by proxy will not preclude a shareholder from attending in person. If the Company is required to restrict
attendance to the Meeting following the date of this notice it will make an appropriate RNS announcement.
Shareholders who wish to follow proceedings via video link must inform the Company Secretary of their wish to do so 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 CoSec@wcgplc.co.uk. Notification of attendance must be received
by the Company by no later than 11.00 a.m. on 24 September 2021. Shareholders who have notified the Company that they wish to use the video link
will be provided personalised access details by email to the address provided by them on 27 September 2021.
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 CoSec@wcgplc.co.uk. Please ensure that you submit your
questions by 11.00 a.m. on 24 September 2021. 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.wcgplc.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 on page 111. Given the
potential for travel and other restrictions (including a restriction on the number of persons who can meet in an indoor location) to be imposed between
the date of this notice and the Meeting, which may mean the Company cannot hold a fully open Meeting, 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 may 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.
If there are any changes to the arrangements for the holding of the Meeting for any reason, the Company will make an appropriate RNS announcement.
Walker Crips Group plc - Annual Report and Accounts 2021 Financial statements
105
Notice is hereby given that the Annual General Meeting of Walker Crips Group plc (the “Company”) will be held at the registered office of the
Company, Old Change House, 128 Queen Victoria Street, London EC4V 4BJ on 28 September 2021 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 2021.
2. To approve the Directors’ remuneration report (excluding the Directors’ remuneration policy set out on pages 49 to 53 of the Directors’
remuneration report) for the year ended 31 March 2021.
3. To approve the Directors’ remuneration policy, the full text of which is set out on pages 49 to 53 of the Directors’ remuneration report for the year
ended 31 March 2021, which takes immediate effect.
4. To declare a final dividend of 0.60 pence per Ordinary Share for the year ended 31 March 2021.
5. To re-elect as a Director Mr. M. Wright.
6. To re-elect as a Director Mr. S. K. W. Lam.
7. To re-elect as a Director Mr. S. Dandeniya.
8. To re-elect as a Director Mr. C. Bouch.
9. To re-elect as a Director Mr. D. Gelber.
10. To re-elect as a Director Mr. H. M. Lim.
11. To re-appoint PKF Littlejohn LLP as auditor of the Company until the conclusion of the next meeting at which accounts are laid.
12. 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:
13. 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:
14. That, subject to the passing of Resolution 13, 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 (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).
15. That the Company be and is hereby granted pursuant to section 701 of the Companies Act 2006 general and unconditional authority to make
market purchases (within the meaning of section 693 of the Companies Act 2006) on the London Stock Exchange of Ordinary Shares of 62/3 pence
each in the capital of the Company (Ordinary Shares) provided that:
(a) the maximum aggregate number of Ordinary Shares hereby authorised to be purchased is limited to 10% of the Company’s issued share
capital then in issue;
(b) the minimum price which may be paid for any Ordinary Shares is 62/3 pence per Ordinary Share;
(c) the maximum price (exclusive of expenses) which may be paid for any Ordinary Shares is not more than 5% above the average of the middle
market quotations for the Ordinary Shares (as derived from the London Stock Exchange Daily Official List) for the ten business days before the
purchase is made;
(d) 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
(e) 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).
16. 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
Rod Goddard
Secretary
6 September 2021
Walker Crips Group plc
Old Change House, 128 Queen Victoria Street, London, England, EC4V 4BJ
Reg No. 01432059
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106
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 2021 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 2021 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.wcgplc.co.uk. Shareholders may raise any questions on the Annual Report and Accounts under this resolution.
Resolution 2: Approval of the 2021 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 42 to 53 of the Annual Report and Accounts for the year ended 31 March 2021 (other than the Directors’ remuneration policy set out
on pages 49 to 53). The vote is advisory only and does not affect the actual remuneration paid to an individual Director.
Resolution 3: Approval of the 2021 Directors’ remuneration policy
The Directors’ remuneration policy was approved by shareholders at the Annual General Meeting on 9 September 2020 with effect from
1 April 2021(“the existing remuneration policy”). 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, but a company can seek to amend or replace its remuneration
policy more frequently.
As explained in the Annual Statement of the Remuneration Committee Chairman on page 42 of the Annual Report for the year ended 31 March
2021, in order to resolve certain ambiguities in the existing remuneration policy, the Board is seeking to replace it with the proposed remuneration
policy set out on pages 49 to 53 of the Directors’ remuneration report for the year ended 31 March 2021. The proposed remuneration policy contains
revised provisions for the award of annual profit shares and discretionary bonuses to the Executive Directors and introduces a minimum shareholding
requirement and post-employment shareholding period for share awards on the terms and subject to the restrictions contained therein.
If approved by shareholders, the policy is intended to be effective from the conclusion of the Annual General Meeting. 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.
Resolution 4: Final dividend
Shareholders are being asked in Resolution 4 to approve a final dividend of 0.60 pence per Ordinary Share for the year ended 31 March 2021. If you
approve the recommended final dividend, this will be paid on 1 October 2021 to all ordinary shareholders who were on the register of members at the
close of business on 17 September 2021.
Resolutions 5 to 10: 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 5 to 10. 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 26 and 27 of the Annual Report and Accounts
for the year ended 31 March 2021.
Resolution 11: 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.
Following receipt of a letter of resignation as auditor from BDO LLP on 11 December 2020, the Board appointed PKF Littlejohn LLP as auditor to fill the
casual vacancy created.
Accordingly, shareholders are being asked in Resolution 11 to approve the re-appointment of PKF Littlejohn 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 12: 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.
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107
Resolution 13: Renewal of the Directors’ authority to allot shares
Resolution 13 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 3 September 2021) (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 9 September 2020.
750,000 shares are held in treasury as at 3 September 2021 (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.
Shareholders may further note that there were neither warrants nor options to subscribe for equity shares in the Company which were outstanding
as at 3 September 2021 (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 14: Renewal of the Directors’ authority to disapply pre-emption rights
Resolution 14 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 (being 10% of the Company’s issued share capital (excluding treasury shares) as at 3 September 2021 (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 9 September 2020.
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 15: 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.
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 16: 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 16, 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 2022 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:
6.00 p.m. on 24 September 2021; or
if this Meeting is adjourned, at 6.00 p.m. on the day two days prior to the adjourned meeting (excluding weekends),
shall be entitled to attend and vote at the meeting.
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. Given the potential for restrictions to be imposed both locally and nationally which may affect travel and/or the ability for people to
meet in indoor locations in the period between the date of this notice of Meeting and the Meeting itself, 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.
If such restrictions are imposed and are in force on the date of the Meeting, it may not be possible for a named person other than the
Chairman of the Meeting to attend and 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:
completed and signed;
sent or delivered to Neville Registrars Limited, Neville House, Steelpark Road, Halesowen B62 8HD;
or sent via email to info@nevilleregistrars.co.uk; and
received by Neville Registrars Limited no later than 11.00 a.m. on 24 September 2021.
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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Financial statements
109
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 24 September 2021, or, in the event of an adjournment of the meeting,
48 hours before the adjourned meeting (excluding weekends). 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 24 September 2021.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph directly
below, your proxy appointment will remain valid.
Appointment of a proxy does not preclude you from attending the Meeting in person. If you have appointed a proxy and attend the Meeting
in person, your proxy appointment will automatically be terminated.
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 3 September 2021 (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 62/3 pence each. Each Ordinary Share carries the right to one vote at a general meeting of the Company.
The Company held 750,000 Ordinary Shares in treasury on 3 September 2021 and, therefore, the total number of voting rights in the Company
as at such date is 42,577,328.
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110
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.wcgplc.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. Shareholders who are
not attending the Meeting in person but who would like to pose a question to the Meeting must do so in advance by emailing your question
to CoSec@wcgplc.co.uk. Questions must be received by 11.00 a.m. on 24 September 2021. 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.wcgplc.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:
it may not require the members making the request to pay any expenses incurred by the Company in complying with the request;
it must forward the statement to the Company’s auditor no later than the time the statement is made available on the Company’s website;
and
the statement may be dealt with as part of the business of the Meeting.
The request:
may be in hard copy form or in electronic form;
must either set out the statement in full or, if supporting a statement sent by another shareholder, clearly identify the statement which is being
supported;
must be authenticated by an accompanying statement setting out the identity of the person or persons making it; and
must 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 CoSec@wcgplc.co.uk. Please state
“WCG Plc 2021 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 2021 Financial statements
111
Form of proxy
For use at the Annual General Meeting (the “Meeting”) of Walker Crips Group plc (the “Company”) to be at the registered office of the Company,
Old Change House, 128 Queen Victoria Street, London EC4V 4BJ on 28 September 2021 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.
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:
For
Against
Vote withheld
1)
2)
3)
4)
5)
6)
To receive and adopt the Directors’ report and audited financial statements
To approve the Directors’ remuneration report
To approve the Directors’ remuneration policy
To declare a final dividend of 0.60 pence per Ordinary Share
To re-elect Martin Wright as a Director
To re-elect Sean Lam as a Director
7) To re-elect Sanath Dandeniya as a Director
8)
9)
To re-elect Clive Bouch as a Director
To re-elect David Gelber as a Director
10) To re-elect Hua Min Lim as a Director
11) To re-appoint PKF Littlejohn LLP as auditor
12) To authorise the Directors to set the remuneration of the auditor
13) To authorise the Directors to allot shares
14) To disapply pre-emption rights1
15) To authorise the Company to make market purchases of its own shares1
16) 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:
Walker Crips Group plc - Annual Report and Accounts 2021
112
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. Please see Note 7 for important information in
relation to recommended actions for proxy appointments.
2. Appointment of a proxy does not preclude you from attending the meeting in person.
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. Given the potential for restrictions on attendance to be imposed prior to the date of the meeting, the Company strongly recommends
and encourages shareholders to appoint the Chairman of the meeting as their proxy to vote in accordance with their instructions.
8. To appoint a proxy using this form, the form must be:
completed and signed;
sent or delivered to Neville Registrars Limited, Neville House, Steelpark Road, Halesowen B62 8HD;
or sent via email to info@nevilleregistrars.co.uk; and
received by Neville Registrars Limited no later than 11.00 a.m. on 24 September 2021.
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 24 September 2021. 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 2021 Financial statements
113
Officers and professional advisers
Directors
Executive Directors
Sean Lam FCPA (Aust.), Chartered FCSI – Chief Executive Officer
Sanath Dandeniya FCCA – Group Finance Director
Non-Executive Directors
Martin Wright – Chairman
Clive Bouch FCA – Audit Committee Chairman & Senior Independent Director
David Gelber
Hua Min Lim
Secretary
Rod 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
PKF Littlejohn LLP
London
Registrars
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen B62 8HD
Design and Production
www.carrkamasa.co.uk
Walker Crips Group plc - Annual Report and Accounts 2021
Walker Crips Group plc
Old Change House,
128 Queen Victoria Street,
London
EC4V 4BJ
020 3100 8000
www.wcgplc.co.uk
client.services@wcgplc.co.uk