Making investment
rewarding
Annual Report and Accounts 2022
Key performance indicators
Performance in 2022 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.
Breakdown of AUMA
£5.5bn
Commentary
The Group’s Assets Under Management and Administration (“AUMA”) as
at 31 March 2022 saw a marginal increase of 1.8%, with overall levels
reflecting markets declining in response to inflationary pressures brought
on by world events.
Type of asset
a. Administration
b. Advisory
c. Discretionary
Total
2022
£’bn
1.895
1.632
1.930
5.457
2021
£’bn
1.974
1.523
1.863
5.360
2020
£’bn
1.541
1.292
1.479
4.312
2019
£’bn
1.750
1.630
1.639
5.019
a.
c.
b.
Revenue
Operating profit
Transaction volume
£32.8m
2022
2021
2020
£0.33m
£32.8m
2022
£0.33m
£30.3m
2021
£0.02m
£31.4m
2020
£1.09m
Commentary
An 8.1% increase in revenue from strong
performances in our core business.
Commentary
The strong performance in our core business
drove the Group’s return to profitability, but
the 2022 results were negatively impacted by
reorganisation and redundancy costs together
with other significant exceptional costs.
Operating profit before
exceptional items
£1.86m
2022
2021
£0.44m
2020
£0.72m
Total dividends
(pence per share)
1.50p
2022
2021
2020
0.75p
0.60p
£1.86m
1.50p
Commentary
A good indication of the strength in our
core business.
Commentary
With improving financial performance and
strengthening of our core business the
Directors look to reward shareholders for their
continued support.
124,421
300,000
285,000
270,000
255,000
240,000
225,000
210,000
195,000
180,000
165,000
150,000
135,000
120,000
105,000
90,000
75,000
60,000
45,000
30,000
15,000
0
2020
2021
2022
Commentary
Trading volumes have returned to lower levels
since the hyperactivity witnessed at the height
of the pandemic.
Walker Crips Group plc - Annual Report and Accounts 2022 During over a hundred
years of experience in
managing investments for
our clients, we have seen
many challenging periods,
resurgences and booms.
Walker Crips’ predecessors
first bought and sold shares
for clients on the London
Stock Exchange in 1914.
We are a cohort of people, both employed and
self-employed, within a culture of constant
development and commitment to serve our
clients fairly and to help them grow their
investments in line with their goals and risk
appetites.
We continue to make progress as we cultivate
our technology to strengthen our Group, increase
efficiency and deliver value for our stakeholders.
S
C
F
Strategic report
At a glance
Chairman’s statement
Financial highlights
CEO’s statement
Our strategy and business model
Chief Investment Officer’s analysis
Finance Director’s review
Supporting our community
Principal risks and uncertainties
Section 172 (1) Statement
Environmental strategy (including TCFD)
Corporate governance
Board of Directors
Chairman's commentary on governance
Report by the Directors on
corporate governance matters
Audit Committee report
Remuneration report
Directors’ report
Statement of Directors’ responsibilities
Financial statements
Independent auditor’s report to the
members of Walker Crips Group plc
Consolidated income statement
Consolidated statement of
comprehensive income
Consolidated statement of financial position
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the accounts
Company balance sheet
Company statement of changes in equity
Notes to the Company accounts
Officers and professional advisers
1
2
4
6
8
10
12
16
20
22
26
28
32
34
35
40
44
51
54
55
61
62
63
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66
93
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95
103
This report forms part of our wider communications suite. But as part of our
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we want to reduce our carbon footprint on the world. With that in mind,
we would like you to consider opting for digital pdfs in the future. We will
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Walker Crips Group plc - Annual Report and Accounts 2022 2
At a glance
The Walker Crips Group offers investment
management and wealth management
services, pensions administration and
related cloud-based technology solutions.
Our offices
Walker Crips operates
10 offices throughout the
UK, headed and staffed
by dedicated individuals.
Offices in the UK
10
London (head office)
Birmingham
Bristol
Epping
Inverness
Newbury
Solent
Truro
Wymondham
York
Key
Head office
Branch
Strategic reportWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
Corporate governance
Financial statements
3
At Walker Crips, our mission
is to help our clients navigate
intimidating and ever more
complex investment markets,
through our highly capable
people and technology.
Years of looking after clients
Clients across the UK
108
28,084
(2021: 32,904)
Total Assets Under Management
and Administration
£5.5bn
(2021: £5.4bn)
Wealth management
Preserving and nurturing client wealth
Our wealth management team assists clients
in financial planning by learning about them as
people and understanding their requirements.
As independent financial advisers, Walker Crips
Wealth Management (“WCWM”) provides
guidance on an extensive range of financial
matters such as life assurance, pre-retirement
planning, at-retirement advice, savings plans,
tax-efficient management of investments and
estate planning.
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 ("SaaS") division
continues to provide cloud-based software
solutions to our business partners. EnOC’s aim
is to close the technology gap by providing
companies of all sizes access to enterprise level
technology and software.
Investment management
Private Clients
Our Private Client teams and our associate
investment managers provide discretionary
services, both model and bespoke, and advisory
services to our clients.
Investment Management
Our professional investment managers and advisers
provide clients with a wide range of services to suit
their life and financial goals, balanced with their
risk profiles. These services are supported by our
wealth of experience, knowledge, and technological
systems. 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.
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.
Alternative Investments
We have a successful International Equity
Arbitrage team that is continually looking
at market opportunities.
On 17 February 2022, the Government
announced the immediate closure of the Tier 1
Visa programme for all new applicants, which has
resulted in the cessation of this business line for
new clients. However, existing clients with entry
clearance to remain as Tier 1 Investor Migrants,
can remain in the programme until its natural
conclusion.
Walker Crips Group plc - Annual Report and Accounts 2022 4
Chairman’s
statement
Return to operational profitability
and continued focus on improving
operating margins.
Martin Wright
Chairman
The combination of the recovery in
financial markets and focus on profit
improvement has seen the Group
return to profit for the full year. The
core business delivered a strong
performance, and continues to do so
in the first part of our new financial
year, albeit the impact of good growth
in revenues and improving margins
were marred by the exceptional
costs we are reporting and which are
explained further below and in the
CEO’s report. At a strategic level, we
continue to progress a number of
projects that will incur additional costs
in the near-term and, as I said in my
statement for the interim report, the
Investment Management division’s
project to improve operating margins
will be a long-term exercise, with the
overall impact on operating margins
expected to be positive, but unlikely
to be smooth from reporting period
to reporting period.
Overview of 2021/2022
The tumultuous events that accompanied my first
year as Chairman of your company have been
succeeded by conditions that are, mercifully, less
traumatic but which, perhaps, still deserve to be
labelled as extraordinary. The rapid rise of inflation
to 40-year highs has made management strategy
and investment conditions tricky, to say the least,
and markets are understandably struggling to
cope with the impact.
The rewards of Management’s efforts to reduce
costs during the pandemic, accompanied by the
more-benign market conditions which applied
throughout the first three quarters of the financial
year, gave the Group breathing space to focus
on improving operating margins within the
Investment Management division, in tandem
with the ongoing efforts to renew growth in the
Wealth Management division. That strategy is
bearing fruit and should continue to do so over
the longer-term.
I am also pleased to report that the Structured
Investments business has bounced back from its
annus horribilis of the previous year, under the
guidance of its new managers, and I wish them
continued success. The Investment Management
division, which includes the structured investment
team, was the principal driver of growth in
operating profits during the year, and the division’s
performance was also enhanced by the improved
contributions of the investment management
teams in the firm’s York, London and Inverness
offices and the Barker Poland Asset Management
team in London. We were disappointed that
two investment managers from the division’s
Truro office have departed. Having spent eight
successful years in Truro, we are committed to
maintaining a local presence, and will continue
to serve our existing clients. I thank our team
members who have stepped in to provide
continuity to our clients, while we recruit locally.
As set out in the financial highlights, revenues for
the year grew by £2.5 million to £32.8 million and
Adjusted EBITDA* increased by £1.29 million to
£3.90 million (2021: £2.61 million), an incremental
operating margin of 51.6% and testament to
Management’s focus on margin improvement. It
is therefore extremely disappointing that the very
welcome improvements in financial performance
generally have been undermined by a number
of matters that have given rise to significant
exceptional costs. Although certain exceptional
costs relate to the restructuring initiated during
the pandemic, those required firstly to improve
our financial crime framework and separately for
the estimated cost of redress to a small number of
customers caused by the actions of one associate,
were neither anticipated nor acceptable. We are
making the changes necessary to address these
matters and the associate concerned has been
sanctioned. I would add that insurers have been
informed of the redress matter, although at this
stage no recovery has been recognised in the
accounts pending finalisation of the loss and
insurer’s confirmation of cover. The Group is taking
all appropriate measures to ensure losses in relation
to this matter are recovered. I can also confirm
that the Executive Directors were not awarded the
discretionary bonuses approved by shareholders at
last year’s Annual General Meeting.
Results have also been hampered by the residual
effect of the decline in Bank of England base rates
during the previous year and lower contributions
from the Group’s alternative businesses.
After exceptional costs, the Group’s profit before
tax for the year is £324,000, an improvement on
the loss of £114,000 reported in the previous year.
The exceptional costs noted are non-recurring and
therefore, given the underlying improvement in
trading, the Directors are recommending a final
dividend of 1.20 pence per share, doubling the
previous year’s final dividend.
Strategic reportWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
Corporate governance
Financial statements
5
Directors, Account Executives
and staff
Whilst I am hopeful that the challenging period
of the pandemic is behind us all, and pleased
to have reported a return to profit, the Group
nevertheless faces challenges ahead. This includes
acknowledging and making the necessary changes
to our culture, leadership team, behaviours and
controls to mitigate recurrence of the failures that
gave rise to the exceptional costs noted above. We
know these costs and the reasons therefore will
be disappointing news for our shareholders. Your
Directors and the leadership team are focused on
the required changes and the need to make them
without distracting from the many positive actions
being taken to grow the business and improve
margins. 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.
Outlook
The rebound in the underlying trading
performance this year demonstrates the Group's
potential to generate revenue growth and improve
profitability, which continues to bode well for
the future.
Martin Wright
Chairman
29 July 2022
* Adjusted EBITDA represents earnings before
interest, taxation, depreciation and amortisation,
and exceptional items. The Directors present this
result as it is a metric widely used by stakeholders
when considering an entity’s financial performance.
A full reconciliation to IFRS results is provided in the
Finance Director’s review on page 17.
Strategy
The pandemic demonstrated the resilience of the
core Investment Management business, which,
exceptional costs aside, has bounced back robustly.
The Wealth Management business has rebounded
from adviser and client losses during the previous
year and its recruitment strategy has started to
produce revenue growth. The York office, which is
home to our biggest Wealth Management team
and one of our largest Investment Management
teams, leads the firm in its ability to derive
revenue-synergies from both types of service, and
points the way forward for the rest of the Group in
generating top-line growth. We hope to replicate
that close working relationship between the
Wealth Management division’s new Solent office
and our other teams of investment managers
around the country.
The Group’s seamless transition to flexible
working, which is now more entrenched than ever
as a working practice at our own and most other
companies, justified our focus on technology.
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. The Group will
therefore maintain its focus on revenue growth
and margin improvement, and continue keeping
a tight rein on costs in light of current inflationary
pressures and the tight labour markets.
Dividend
Our aim is always to reward our shareholders for
their continued support. In that light, having taken
into account the Group’s improved profitability
and potential for continuing improved operating
margins, capital headroom, 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
1.20 pence per share (2021: 0.60 pence) payable
on 7 October 2022 to those shareholders on the
register at the close of business on 23 September
2022, with an ex-dividend date of 22 September
2022. As noted earlier, this is a twofold increase on
the previous year’s final dividend.
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, 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 enoc.pro/community.
Walker Crips Group plc - Annual Report and Accounts 2022 6
Financial highlights
Capitalising on the strength of the underlying business – A strong performance
in the underlying business, albeit marred by exceptional costs impacting the
results for the year, means the Group increases its final dividend in respect
of the year to 1.20 pence per share, doubling the previous year.
Revenue
Operating profit
Profit before tax
Total revenues increased 8.1% to £32.8
million (2021: £30.3 million).
A significant improvement in operating profit to
£326,000 (2021: £22,000), being £1,866,000
(2021: £441,000) when adjusted for operational
exceptional items*.
Profit before tax £324,000 (2021: loss
before tax £114,000), being profit before tax
£1,761,000 (2021: £305,000) when adjusted
for total exceptional items*.
Adjusted EBITDA
Adjusted EBITDA increased 49% to
£3.90 million (2021: £2.61 million)**.
* 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 17.
** Adjusted EBITDA represents earnings before interest, taxation, depreciation and amortisation, and exceptional items.
The Directors present this result as it is a metric widely used by stakeholders when considering an entity’s financial
performance. A full reconciliation to IFRS results is provided in the Finance Director’s review on page 17.
*** Underlying cash generated from operations represents the cash generated from operations adjusted for lease liability
payments under IFRS 16, non-cyclical working capital movements and exceptional items. The Directors consider that this
metric helps readers understand the cash generating performance of the Group. A full reconciliation to the IFRS results is
provided in the Finance Director’s review on page 17.
Strategic reportWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
Corporate governance
Financial statements
7
Underlying cash generated from operations
improved 71% to £1.34 million
(2021: £0.78 million)***.
Underlying cash
generated
Cash and cash equivalents
£11.11 million (2021: £8.86 million).
Assets Under Management (“AUM”)
increased by 5.9% to £3.6 billion
(2021: £3.4 billion).
Proposed final dividend of 1.20 pence per
share (2021: 0.60 pence per share), bringing the
total dividends for the year to 1.50 pence per
share (2021: 0.75 pence per share).
Cash and cash
equivalents
Assets Under
Management
Proposed final
dividend
Walker Crips Group plc - Annual Report and Accounts 2022 8
CEO’s statement
Our values
We serve our clients with the following values:
Integrity
Courtesy
Fairness
Loyalty
I am proud that our investment
managers, financial planners,
advisers, and our staff have continued
to serve our customers diligently
through the global challenges of
the past few years. There was a job
to be done, and they got it done.
I am thankful to, and grateful for,
all my colleagues for ensuring that
our customers were well taken care
of, without interruption in service.
After nearly two years of working from home,
we have now comfortably settled into a hybrid
working model where members can either
work all week in the office, desk-share a few
days a week, hot-desk once in a while, or work
from home, depending on the needs of the
department while balancing the needs of the
staff. This can only work if there’s mutual trust
and responsibility, and I’m pleased to say that we
have both in spades. As long as our performance
and customer engagement remains high, hybrid
working can continue.
Group’s performance
In our Investment Management division, we
were sensitive to the dual risk of a simultaneous
fall in asset values and a decline in interest
income, but we reviewed and streamlined
certain parts of our business during the past two
years which led to significant improvements in
operating margins and profitability.
Innovating, digitising
and focusing on
customer outcomes
Sean Lam
Chief Executive Officer
We will accelerate our effort to simplify and
digitise our business further, making our
business more efficient, more scalable, but still
providing good outcomes to our customers.
We will continue to improve the revenue-
growth potential of the existing businesses,
generate greater profitability from such growth
opportunities, while also maintaining a tight
control of, and increasing the productivity of, our
cost-base. The division generally had a strong
year, with robust, double-digit growth in fee
income offsetting the decline in commissions
and interest income.
Our Wealth Management and Barker Poland
Asset Management divisions have also had
a year of strong revenue growth. Our new
Solent branch in Fareham has had a great
start and contributed strongly to the Wealth
Management division. Our York office has
worked very well together, providing financial
planning, investment management and pensions
(SIPP and SSAS) services, working together for
our customers. The investment team continues
to manage the firm’s flagship Service First
model portfolios, Inheritance Tax Relief model
portfolios, and has oversight over the Truro
branch, ensuring that we maintain our service
offering to our customers in Cornwall.
Our Structured Investments team contributed
to the Investment Management division’s
performance with significant growth in fee
income, as the industry bounced back vigorously
from a very difficult last financial year. Walker
Crips is now the leading structured products
distributor in the UK and we thank the team for
holding fast during the difficulties of last year,
where one of the most significant players exited
the market completely, and we are now poised to
capitalise on the opportunities of this year.
Challenges
We continue to invest heavily in our regulatory
framework. Regulation continues to move
forward unabated and we must adapt swiftly.
The next big regulatory initiative is Consumer
Duty which, amongst other things, places
emphasis on consumer outcomes and firms’
obligations to proactively deliver them. Firms
are required to take all reasonable steps to avoid
causing foreseeable harm to customers, enabling
them to pursue their financial objectives, and
always act in good faith towards them.
During the year, the Investment Management
division incurred significant costs that have been
designated exceptional in the accounts that
follow and explained in note 10 to the financial
statements, including two material items I want to
address upfront. The first relates to expenditure to
upgrade and improve our financial crime control
framework, which was subject to an independent
review. I wish to stress that there has been no
evidence of financial crime, but our controls and
procedures around this area needed significant
improvement. The remediation and enhancement
project commenced during the year and the total
estimated cost of £595,000 has been provided
for. Secondly, and separate from upgrading and
improving our financial crime control framework,
we identified that there was inappropriate
conduct by an associate that caused financial
detriment to a small number of customers.
The associate concerned has been sanctioned
and their contract terminated, and whilst we
should have identified it in a timelier manner,
Management is satisfied that this was an isolated
incident. All relevant parties have been informed,
including the regulator, and we are in the process
of finalising the redress calculation which is
presently estimated to be £650,000 including
associated costs before any potential insurance
recoveries. Any future recovery will also be treated
as an exceptional item.
Strategic reportWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
Corporate governance
Financial statements
9
We can all do our part in reducing our carbon
footprint:
REFUSE – Avoid buying harmful, wasteful
or non-recyclable products, e.g. unnecessary
product packaging and single-use plastics.
Don’t need, don’t buy. Less painful on the
pocket too.
REDUCE – Reduce the use of harmful,
wasteful, and non-recyclable products so
that fewer of them end up in landfill. Use
the minimum required to avoid unnecessary
waste. For example, don’t need, don’t print.
Reduce single-use plastics, plastic packaging,
and Styrofoam cups.
REUSE – Get rid of the "buy and throw-away"
mindset. Use what you have as often, and for
as long, as you can.
REPAIR – Try to repair things before tossing
them out.
REPURPOSE – If something is no longer
useful for its original purpose, think
creatively of ways it can be broken down and
reconstituted as something else. I am a big
fan of upcycling!
ROT – Compost if you can, try not to let your
trash end up in landfill.
RECYCLE – Make recycling your last step,
after going through all the R’s above.
We must purposefully and actively practise the seven
“R”s at home and in the office, so that they become
automatic and habitual.
Outward focus
As a Group, we continue to support
twiningenterprise.org.uk, the mental health
charity. In addition to financial support, we also
try to use our technology for good, through
technology philanthropy. If you wish to find out
more, or want to support Twining financially,
please visit enoc.pro/community.
Conclusion
As I conclude, I wish to reiterate our mission: to
make investment rewarding for our customers,
our shareholders and our staff, and to give
our customers a fair deal. And we support our
investment advisers and our staff by being a
technology-driven financial services company.
I wish to thank all my colleagues at Walker Crips
for their energy, enthusiasm, loyalty, dedication
and their can-do attitude, and for their unwavering
focus on ensuring that our customers are well
looked after.
Sean Lam
Chief Executive Officer
29 July 2022
In light of these weaknesses, Management is
embedding a broader review of the Group’s
regulatory compliance framework to ensure our
processes are at industry standards and are able
to adapt to the changing regulatory landscape.
Our financial planning and budgeting reflect this
planned step-up in risk and compliance costs.
We are also reinforcing a tenet of our core
principles that “Compliance and Risk are
everybody’s responsibility”, renewing our
emphasis and setting the tone from the top.
During the year, the Group sold its one-third
share of its investment in Walker Crips Property
Income Limited for £105,000. This will have
minimal impact on our future revenues. We
stopped onboarding new customers to the Tier 1
Investor Visa programme in November 2021 and
the government permanently closed the Tier 1
(Investor) Visa route for foreign nationals on
17 February 2022. For customers who are already
in the programme, we will continue to service
them until its natural conclusion.
Nevertheless, the Group is able to report a profit
before tax of £324,000 for the full year after
all exceptional items, an improvement on the
£114,000 loss reported in the previous year. This
was assisted by the return to growth of the core
businesses of investment management, wealth
management and structured investments.
Technology advantage
We will accelerate our vision to “Simplify and
Digitise”. We will do what we do but we must do
it better, faster, and more economically. We will
use our EnOC Pro Platform to create technologies
that will transform processes, create greater
efficiencies, reduce the use of paper, provide
better services to our customers, and allow our
staff to do the more complex, thinking work
and less of the manual repetitive processes.
We 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, utilising our
digital capabilities to create and innovate for
our customers and the firm. We are technology
makers, not just technology takers.
Reducing our carbon footprint
If we want our children to see tomorrow, like
we saw yesterday, then let’s not screw up today.
We must not pillage the earth like a Ponzi
scheme; it is unconscionable to plunder from
the future to satisfy today. Put simply, we must
safeguard our planet for our children, and for
our children’s children.
We consciously began our journey in small
teps back in 2007 when we moved offices.
We installed PIR lighting, refurbished the old
doors instead of buying new (surprisingly, it costs
the same!), and for the first time embarked on
a de-papering exercise. In 2013, we decided to
better utilise cloud services which resulted in the
long-term reduction of our server room size by
75%, reducing heat emissions by requiring fewer
on-site servers, less air conditioning and less
electricity. Our lighting is powered by low-energy
consumption LEDs.
Hybrid working is here to stay, and we are
currently merging some of our offices to better
utilise our available square footage. We have
turned off excess appliances like refrigerators
and dishwashers. It may seem minuscule, but it
all adds up. We are also persuading the landlords
of our buildings to sign up with “green” energy
suppliers using sustainable resources. One of our
mantras is to “Simplify and Digitise”; digitisation
increases efficiencies and reduces the drain on
resources. We have engaged carbon emission
auditors to determine our carbon output, and our
goal is to continue to reduce it each year. Time is
running out for our planet, so it needs to be more
like a sprint, and less like a marathon.
Walker Crips Group plc - Annual Report and Accounts 2022 10
Our strategy and business model
Our strategy – We are committed to
growing our core business and to do
so with greater efficiency, which has
helped us emerge from a challenging
year last year and maintains our focus
on improving profitability.
Core business
Companion services
Software as a service
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.
We aim to both grow organically by
home-growing investment managers,
as well as attracting new investment
managers with established client lists.
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.
Identify and close the
technology gap
Systems development is a core
competency and we create much
of our own technology, allowing us
to build and integrate many of our
systems into one central platform.
Our offerings have been taken up by
external customers, and we continue
to develop products to meet various
needs in staff management.
Strategic reportWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
Corporate governance
Financial statements
11
Our business model – 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. And through our Software as
a Service subsidiary, EnOC Technologies,
we create technology for the Group and
our business partners.
Our people
Our culture
The backbone of our business
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.
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.
Investing in a future that works
for everyone
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 encourage a culture of compliance and adherence to rules and
regulations to ensure that client interests are protected. We support
our investment managers and our staff by being a technology-driven
financial services company.
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. Through our Software as a Service
division, we also deploy proprietary technology to our business partners.
Walker Crips Group plc - Annual Report and Accounts 2022 12
Chief Investment
Officer's analysis
Long after the peak in equity
markets, signs of speculation
in the mega-caps were still
abundant, with announcements
of stock splits by US technology
companies greeted by extremely
outsized responses.
Chris Darbyshire
Chief Investment Officer
Having reached peak exuberance
during the year, investor sentiment
ended up accelerating into the
trough of despair. But it was a hard-
fought contest and, for much of the
year, the enormous amounts of cash
being pumped into the economy
by central banks and governments
continued to find their way into
financial assets. The nature of
the assets being bought showing
very clearly who was doing the
buying: analysts at Bank of America
estimated that American retail
investors poured nearly $900 billion
into global equity funds in the year
to November 2021, more than the
combined total over the previous
19 years. Robust inflows continued
right through the inflation shock
and the situation in Ukraine, with US
equity funds taking in an estimated
$84 billion in the first calendar
quarter of 2022. Meanwhile, US
corporate share buybacks reached
all-time highs during our financial
year, and were still accelerating as
the year ended.
The vast majority of flows were captured by
index trackers, reinforcing the dominance of
the world’s largest companies which, in turn,
reinforced the dominance of the technology
sector. Flush with money and enthusiasm,
investors in the US ignored a growing,
global wave of anti-technology lawsuits and
regulations. Indeed, as recently as December, a
three-times leveraged fund tracking the Nasdaq
100 stock index saw record inflows (of $1.5
billion) in a single day. At the same time, Apple’s
market value reached nearly 3% of the value of
all the world’s stock markets combined, and the
top five US technology companies represented
over 10% of the world’s stock market value. Not
only did the behemoths lead indexes higher, but
they did so with an unusual serenity for most
of the year: at one point in the fourth calendar
quarter of 2021, the S&P 500 rose to all-time
highs for seven days in a row. Long after the
peak in equity markets, signs of speculation
in the mega-caps were still abundant, with
announcements of stock splits by US technology
companies greeted by extremely outsized
responses. Alphabet (Google) enjoyed a $130
billion boost to its market value on the day of
the announcement, Amazon saw an $80 billion
boost for its stock split and, more recently, Tesla
an $84 billion boost.
As a result, equity markets were able to maintain
their relative calm while bond markets entered
an inflation-inspired meltdown, but that’s now
history, of course. Within two months of the end
of 2021, the capital markets were in panic mode,
catalysed by inflation and the war in Ukraine.
Indeed, markets themselves have now become
the headlines, and not in a good way. Having
spent most of the last two years blithely ignoring
any and all risks, many investors have no choice
but to focus only on risk.
Nothing captured the zeitgeist better than the
cryptocurrency universe, whose total market value
exceeded $2 trillion in April 2021, supposedly
driven by “institutional” demand as traditional
asset managers discovered its true value. To put
that in perspective, $2 trillion exceeded the cash
in circulation of most national currencies, and
you could have bought the entire German stock
market with it. At one point the government of
El Salvador caught the speculative bug with its
historic, but ultimately botched, decision to make
Bitcoin legal tender. Other governments moved in
the other direction: central banks in the developed
world began to encircle the technology with the
threat of regulation, and China went all-out when
it declared all crypto-currency transactions to be
illegal. In case anybody missed it, this edict was
issued simultaneously by the People’s Bank of
China and nine other government institutions,
including the Supreme Court and the police.
Cryptos were already losing value by the end of
the year as the inflows of cash required to pump
prices higher began to subside and, subsequent
to the year-end, there has been a more substantial
implosion caused by failures of the technologies
involved. Books about cryptocurrencies will soon
take their place in the economic literature about
speculative bubbles.
Strategic reportWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
Corporate governance
Financial statements
13
The mood darkened further, however, as
successive inflation reports outstripped
forecasters’ expectations, and inflation spread
from pandemic-affected goods to the broader
service economy. With higher house prices
also feeding into higher rental costs, a major
component of inflation calculations, a higher
trajectory for inflation was locked-in.
China went from investable to
uninvestable, and back again
Having been the lead underwriter of global
economic growth since the Credit Crunch, China
spent the year in reverse gear. China’s economy
was the first to lose some momentum following
the pandemic, as the central bank acted early to
tighten interest rates and the costs of financing.
The Chinese government, meanwhile, reined in
borrowing by heavily-indebted local authorities
to fund infrastructure projects. A series of high-
profile corporate restructurings dealt a further
blow to China’s economic credibility, starting
with Huarong Asset Management, a state-owned
enterprise and one of China’s biggest issuers.
Huarong threatened to default on $42 billion
of debt, of which $23 billion was denominated
in US dollars and held by foreigners. This was
followed by the effective bankruptcy of the
giant, debt-laden Chinese property company
Evergrande, whose debt burden was estimated
by some sources to be equivalent to 2-3% of
Chinese GDP.
But what really scared investors was a year-long
regulatory crackdown on technology companies.
First was the authorities’ cancellation of the
flotation of Ant Financial, one of the largest
initial public offerings ever planned, apparently
following public criticisms by its founder, Jack Ma,
of China’s regulatory approach to the finance
sector. Jack Ma disappeared from view for
several months afterwards, but was back in the
spotlight recently when another of his creations,
internet giant Alibaba Group Holdings, was fined
a record $2.8 billion by Chinese regulators for
anti-competitive practices.
These fears moved to a whole new level of
intensity with the announcement of probes into
three Chinese companies that had listed on US
stock exchanges within the last few weeks. One of
them, Didi Global (the Chinese version of on-line
taxi company Uber), had listed on the New York
Stock Exchange a mere two days previously. All
three companies were ordered to halt new user
registrations, and app stores were told to remove
Didi’s service from their platforms. That the
authorities were targeting Chinese companies
that have just raised money in the US should
be seen in the context of the broader trade war
between China and the developed world. By doing
this, Beijing demonstrated its dislike of overseas
listings, discouraged Chinese technology firms
from having foreign investors and, moreover,
undermined the credibility of the New York Stock
Exchange as a venue for Chinese listings. Capital
markets became weaponised. This would normally
have subdued capital markets in the developed
world but, fortunately for investors, pandemic
stimulus had replaced Chinese government
stimulus as the driver of sentiment.
The rise of inflation and the fall
of central bankers
A sharp acceleration in inflationary forces first
became visible in the economic data in May
2021, but it was fully six months before bond
markets began to pay much attention. By then,
expectations for inflation had already doubled.
Month after month, as each inflation report
trounced expectations, bonds refused to concede
defeat. In July 2021, for example, German
government 10-year bonds rallied by the most
since the start of the pandemic. It was a similar
story across the rest of the developed world, with
bonds rallying despite economic growth roaring
back and inflation surging towards its highs of
the last two decades.
Central bankers were complicit in the delusion.
As late as August, Federal Reserve Chairman
Powell was reiterating his view that the surge in
inflation was only temporary and, not only would
the asset purchases continue in the near-term,
but any “tapering” of asset purchases would
not be accompanied by higher interest rates.
At that time, Chairman Powell was unwilling to
pick a fight with markets, even if that meant
running more inflation risk and further inflating
asset-price bubbles. Everything was priced for
perfection, but with a massive, post-pandemic
rebound in the economy, record levels of
corporate profits, and ultra-loose monetary
policy providing maximum support, perfection
was still very much on the menu. By the end of
the year, inflation had more than doubled but
$300 billion a month was still being injected into
government bond markets via asset purchase
programmes. The monetary policy needle was
still set to “maximum growth”, and bond markets
had begun to reflect uncertainty around the
extent, duration and consequences of inflation.
The Federal Reserve’s (“the Fed”) credibility was
further undermined by reports in the media that
Fed officials had front-run crucial decisions by
the central bank, and that the Chairman’s own
portfolio had been advantaged by the choice of
assets under the Fed’s asset purchase programme.
The officials concerned immediately liquidated
their personal portfolios, and the Chairman
initiated a review of the rules on investments by
Fed insiders. As a result, Fed officials were forced
to exit markets in their personal portfolios, while
simultaneously facing the biggest policy dilemma
since the Credit Crunch.
Within a couple of months, the energy crisis had
begun to materialise and central banks went
from dismissing inflation as being “transitory”
to inflation being their main concern. At first,
only the tone changed, while the existing policy
guidance was left intact. However, bond markets
weren’t buying it, prompting gut-wrenching shifts
in rate expectations all around the world. Such
was the momentum that, at one point, investors
were able to observe in real time the President
of the European Central Bank (“ECB”) explaining
at length why the ECB would not be raising rates
anytime soon while, simultaneously, Eurozone
bond yields rocketed into orbit. It was like a visit
to the Hall of Mirrors.
By now, Fed governors were queuing up to signal
a faster withdrawal from the Fed’s $120 billion
a month asset-purchase programme but, in a
sign of the times, markets initially reacted with
exuberance. Equity markets hit new all-time highs
in December and even Bond markets managed
a decent rally during the fourth calendar quarter
of 2021. It was January before they finally got
the message: bond markets shifted from steady
eddies to screaming demons in a regime change
of record-breaking rapidity.
Walker Crips Group plc - Annual Report and Accounts 2022 14
Chief Investment Officer's
analysis continued
Meanwhile, the rapid downward spiral in US-
China political and trade relations continued.
President Biden put another nail in the coffin
with a ban on investment in a blacklist of
Chinese companies with ties to China’s military;
US investors were given one year to divest any
holdings. The legislation was a continuation
of an initiative started by President Trump,
but Biden took it a step further, adding more
companies to the list and strengthening it
against legal challenges. International investors
and global corporates were faced with a
dilemma: Chinese markets are attractive because
the economic growth expectations are huge.
But to participate you have to bow-down to the
powers in Beijing, while running the gauntlet of
western public opinion.
Adding to these issues, the pandemic continued
to cause serious problems for China’s economy
due to the government’s zero-tolerance
approach to managing Covid risk. Although the
onset of the Omicron variant initially panicked
markets all over the world, causing the worst
daily decline in more than a year, it took only
a month for developed world stock markets to
shrug it off. This largely reflected the response
of western consumers, whose behaviour
(influenced by vaccination programmes)
has been progressively less affected by each
wave of the virus. China’s zero-Covid policy,
on the other hand, which was so effective at
containing the first wave of the pandemic, has
led to a lack of acquired immunity. Moreover,
Sinovac, the Chinese Covid vaccine, was found
to be relatively ineffective against Omicron – a
result that increases the risk of any given variant
causing a healthcare crisis. This makes it very
unlikely that China will be able to alter its zero-
tolerance approach to Covid even if it wanted
to, and increases the likelihood of Chinese
factory closures, further global supply chain
blockages and persistent inflation.
The Chinese off-shore stock market, and its
technology sector in particular, reflected this
sequence of disasters. The Hang Seng China
Enterprises Index, which measures the prices of
Chinese companies listed in Hong Kong, fell by
32% during our financial year, and subsequently
fell another 10% on top of that. The Nasdaq
Golden Dragon Index, an index of Chinese
companies listed in the US, fell 70% from peak-
to-trough. Even the on-shore domestic equity
markets, which were reported to have benefited
from government support, traded below the
levels reached in 2015.
Following our year-end, the pendulum swung
back in favour of investors, with a series of
supportive statements from the authorities,
including from President Xi himself. First among
them, the top Chinese financial regulator
committed to stability in capital markets,
supporting overseas stock listings, resolving risks
in the property market and to completing the
crackdown on the technology sector “as soon as
possible.” The Nasdaq Golden Dragon Index of
Chinese companies listed in America promptly
rallied by a third. At one point, the Hang Seng
China Enterprises Index, comprising Chinese
companies listed in Hong Kong, rallied by 20%
in two days. Next, the central bank intervened
to weaken the Chinese yuan, and the Chinese
government distanced itself from the conflict in
Ukraine. Finally, President Xi offered the prospect
of a change in the country’s longstanding zero-
Covid policy by committing to reduce Covid’s
economic impact. Optimists described this as
akin to Draghi’s “we will do whatever it takes”
moment during the eurozone crisis. While the
pace of good news-flow has slowed somewhat
since then, such public statements are usually
perceived by Chinese investors as a state-
sanctioned buy-signal.
How did we do?
The year started with our clients’ portfolios
enjoying some of the best returns in years,
with UK shares having been caught up in the
all-encompassing global stock market rally.
The further down the size-scale you went, the
better it got: the FTSE 100 index had rallied but
was outshone by small and mid-sized British
companies, where our portfolios are typically
overweight compared with relevant benchmarks.
The FTSE 250, which tracks the performance
of small and mid-sized British companies,
reached new all-time highs early in our financial
year and the FTSE AIM, which tracks the smallest
UK listed companies, rose to 35% above its
pre-pandemic level.
The pound sterling was the missing piece,
however, as acrimonious post-Brexit dealings
with the EU damaged confidence in the
prospects for what is still the UK’s single
biggest trading relationship. Threats by the
British government to walk away from its treaty
obligations with the EU set a worrying precedent
and, at the very least, are hardly likely to
encourage investment from the EU. Meanwhile
the EU was aggressively encouraging providers
of financial services – one of the UK’s biggest
exports – to relocate within the single market.
As the year went on, and the speculative fervour
supporting small-cap stocks wore off, the FTSE
100’s bias towards energy, mining and banking
stocks meant it actually benefited from the surge
in inflation, while most other global stock market
indices slipped. Our portfolios benefited from an
inherent overweight to UK large-cap exposure and
to old-economy dividend-payers. The decision
by European countries, notably Germany, to
increase military expenditure predictably sent
defence-related stocks soaring. This was a boon
to a host of British companies. For the first time
in nearly two decades, investors seeking income
outperformed those seeking growth. It’s tempting
to say that the long-running pre-eminence of
growth stocks over value stocks has finally come
to an end, but there have been many false dawns
of this kind in the past.
Clients seeking growth have been impacted by the
crash in the valuations of growth stocks. However,
the reversal in the market’s attitude to growth
stocks has been indiscriminate, punishing some
companies whose prospects for revenues and
profits remain undimmed by inflationary trends.
The ability of a company to prosper despite
inflation, or even during a recession, depends
on the strength of its brand, products and
business model. It’s extremely unlikely that good
companies become bad companies overnight,
but that is what the market is pricing. Good
companies are now available on very attractive
valuations, and we are inclined to see this as an
opportunity. Time will tell whether we are correct,
but, for now, we do not believe that the current
market swing towards value will endure long
enough to justify wholesale changes to portfolios.
We remain long term investors and believe the
quality of the underlying investments will outlast
this uncertainty.
Where now for ESG?
Progress towards a parallel, Environmental,
Social and Governance (“ESG”) conscious world
for investors is accelerating. Even central banks
are getting in on the act. During our financial
year, the European Central Bank set out plans
to involve climate change considerations in its
analysis of the economy and financial markets,
the Bank of Japan published a climate change
strategy, in which it will purchase foreign
currency-denominated green bonds issued by
governments and other foreign institutions.
Meanwhile, the UK became the first country
to introduce a green savings product from a
sovereign issuer.
Should investors be weighting portfolios towards
ESG-friendly investments? With extreme
weather events affecting the harvests of coffee,
corn, wheat and sugar this year, sending their
commodity-market prices soaring, and with
wildfires and other extreme weather-events
becoming seemingly commonplace, it’s natural
to want to respond.
Strategic reportWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
Corporate governance
Financial statements
15
The war in Ukraine may have caused some
governments to roll back plans to mothball fossil
fuel technologies, but it has also been a boon to
energy generators everywhere, including those
of renewable energy. Moreover, performance of
ESG-friendly funds has been strong over the past
several years, though that has more to do with
their historically large allocations to the technology
sector than their inherent ESG qualities.
Ultimately, all types of risk end up being
financial if they cause asset prices to fluctuate.
The ESG concept isolates and unites particular
sources of risk under a common banner, which is
increasingly being championed by governments,
the financial services sector and regulators
worldwide. It’s not unusual for major risks to
attract this level of attention – witness the
pandemic stimulus programmes that united
governments and central banks in a coordinated
policy response.
The difference is that the “E” in ESG is going
to be with us for a very long time. Unlike social
and governance issues, climate-related risks
have potentially profound and wide-ranging
consequences for asset prices. The good news
is that these will most likely unfold over a long
horizon, giving investors – and asset prices – the
ability to react appropriately. Financial theory
says that competitive markets are very quick to
assess and incorporate threats and opportunities,
so it should not be easier to earn returns in ESG
investments than in any other sector. But it’s
worth considering the risks and potential rewards
that are specific to this sector, and which make it
so distinctive. One is the pace of climate change
itself which, if it becomes very volatile, raises the
risk of abrupt, unforeseen shifts in government
policies. These would be reflected in increasing
volatility of prices of fossil fuel-dependent
industries as well as of green champions.
Another distinct risk is whether, and how,
societies adapt to the long-term goal of a zero-
emissions world. After all, adapting to the post-
Covid world has not exactly gone smoothly. Like
vaccine-deniers, climate change-deniers abound,
and society as a whole must bear the cost of the
transition to sustainable energy production and
consumption. With inflation already raging, that
looks unlikely to be a vote-winner in the short-
term. Volatility in the pace of policy change is
therefore a distinct possibility, despite the current
momentum towards green goals.
Chris Darbyshire
Chief Investment Officer
29 July 2022
Walker Crips Group plc - Annual Report and Accounts 2022 16
Finance Director's
review
Our response to the pandemic
challenged the Group to focus
on revenue generation, cost
reduction and cash management
in the core business.
Sanath Dandeniya
Finance Director
The business responded well to the
challenges caused by the pandemic,
and now we look to build on that
resilience as the Group continues its
focus on revenue growth and margin
improvement.
Financial performance
Our response to the pandemic challenged the
Group to focus on revenue generation, cost
reduction and cash management in the core
business. These actions served us well and the
resilience of the core business, recovery in markets
and actions taken have returned the Group to
profitability, notwithstanding the inflationary
pressures we now face and the significant
investment we made and continue to make in
strengthening our risk and compliance functions.
Total revenue
Total revenue increased by 8.1% to £32.8 million
(2021: £30.3 million), a record for the Group
and more than offsetting the loss in interest
income that adversely impacted the results in
recent years. The increase was due to strong
performances in our core business. Management
fee income was robust, rising by 9.7%. The
recovery in markets played a role in this, but most
of our businesses were also able to generate
additional revenue growth, strengthening our
position against the heightened uncertainty
encountered in market conditions since the start
of the current calendar year. Our Structured
Investment business recovered from an
extremely difficult year in 2020/21, and made
a significant contribution to revenue growth.
Barker Poland Asset Management also had
another strong year, generating revenue growth
of 19%. The Wealth Management division began
to see the benefits of its recruitment drive, with
revenue growth of 14.9%.
These sources of revenue growth compensated
for other areas of our business where
performance was below that of the previous
year. Specifically, trading commissions decreased
by 10.5% (equating to £0.95 million) due to
lower volumes, our arbitrage desk made a
positive but reduced contribution (£0.67 million
down), and the investor immigration business
contracted by £0.1 million. This latter business
has subsequently closed to new applicants
following the government’s decision to shut
the Tier 1 Investor Visa route based on rising
worldwide security concerns, but we will continue
to service our existing clients. The effects of the
reduction in base rates from the previous year
continued to exert a residual downward effect
on revenues and operating profit, reducing both
by £0.1 million.
As a result of the strength in management
fees and the changing mix in our business,
broking income fell to 24.5% of revenues, from
29.7% in 2021. Our gross operating margin
also increased from 68.2% to 72.4%, reflecting
the changing mix and management actions
to improve profitability. Notwithstanding
the increase in revenues, commissions and
fees paid reduced by £0.6 million, reflecting
a strong performance by the Private Client
Department teams and actions tilting the mix
of revenue growth towards full-time employees
and away from self-employed associates.
Commissions and fees paid decreased as a
percentage of revenues from 32% to 27.8%,
although some of this gain was offset by
higher staff costs in administrative expenses.
The Wealth Management division, excluding
exceptional income and the new Solent addition,
has seen a marginal growth in revenue in the
year and the increase in both client numbers
and Assets under Administration (“AUA”) bodes
well for the future. Client numbers increased by
144 to 1,117 and AUA increased by £61 million to
£579 million. The new Solent office is now up and
running and continuing to onboard new clients
and recorded recurring revenues of £164,000
by the year-end.
The Wealth Management division is continuing
its graduate training plan which was successfully
launched last year and replicated this July,
with the idea of growing its talented financial
planners of the future. Additionally, the continual
search for advisers to join the firm who share the
same ethos on looking after clients’ long-term
and holistic needs. Working more closely with
the internal investment managers is gaining
momentum to facilitate greater client servicing
for the wider Group.
Expenses
Administrative expenses, excluding exceptional
items, increased by £1.63 million, or 8.0%, but
this increase does not represent a like-for-like
comparison due to various initiatives taken
during the height of the pandemic last year to
reduce costs. In addition, we have made further
investments to develop our new Solent office.
Adjusting for these factors, expenses increased
by 5.4%, largely driven by increases in staff costs,
including the restoration of Directors’ pay from
a voluntary pay-cut taken in the previous year.
It should be noted that with tight labour markets,
we continue to experience inflationary wage
pressures.
Strategic reportWalker Crips Group plc - Annual Report and Accounts 2022 17
2021
£’000
22
419
411
2021
£’000
(114)
419
305
2021
£’000
22
419
1,212
961
2,614
2021
£’000
1,806
(8)
(1,133)
118
783
Strategic report
Corporate governance
Financial statements
Reconciliation of operating profit to
operating profit before exceptional items
Operating profit
Operating exceptional items (note 10)
Operating profit before exceptional items
Reconciliation of profit/(loss) before tax to
profit before tax and total exceptional items
Profit/(loss) before tax
Total exceptional items (note 10)
Profit before tax and exceptional items
Adjusted EBITDA
Operating profit
Operating exceptional items (note 10)
Amortisation/depreciation (note 31)
Right-of-use assets depreciation charge (note 31)
Adjusted EBITDA
Underlying cash generated from operations
Net cash inflow from operations
Working capital (note 31)
Lease liability payments under IFRS 16 (note 31)
Cash outflow on operating exceptional items (note 10)
Underlying cash generated in the period
2022
£’000
326
1,540
1,866
2022
£’000
324
1,437
1,761
2022
£’000
326
1,540
1,165
873
3,904
2022
£’000
4,217
(2,257)
(1,052)
435
1,343
We are also reporting significantly increased
exceptional costs this year. These relate to the
restructuring and redundancy initiatives initiated
during the pandemic along with specific items
noted in the CEO's report and the Chairman’s
statement. These costs were partially offset by the
exceptional income from a confidential settlement
agreement also reported in the interim results. The
exceptional items are further explained in note 10.
Cash management
The Group is highly cash generative and recorded
a cash inflow from operations of £4.2 million
(2021: £1.8 million). Underlying cash generated
from operations, principally reflecting the
impact of lease liability payments, non-cyclical
working capital movements and cash flows from
exceptional items (see reconciliation on page 17),
was £1.34 million (2021: £0.78 million),
demonstrating cash generative ability of the
Group’s operating model. After deducting cash
deployed in investing activities and dividends
paid, cash and cash equivalents increased to
£11.11 million at year-end (2021: £8.86 million).
Financial result and alternative
performance measures
The Group’s operating profit and profit before
tax for the year of £326,000 and £324,000,
respectively (2021: £22,000 and a loss of
£114,000, respectively), reflect the continued
momentum from the first half of the year,
although the pace of revenue growth slowed as
markets declined and volatility increased towards
the end of our financial year. Nevertheless, the
Group was able to report operating profit of
£206,000 in the second half of the financial year,
up from £120,000 in the first half.
Walker Crips Group plc - Annual Report and Accounts 2022
18
Finance Director's
review continued
The annual results include operating exceptional
charges of £1,540,000, being total exceptional
charges of £1,437,000 including the profit on
disposal of our associated company Walker
Crips Property Income Limited (renamed
Crystal Property Income Limited) (2021:
£419,000). Adjusting for exceptional items (see
reconciliation on page 17 and further detail in
note 10 on page 79), the Group’s operating
profit and profit before tax for the year are £1.87
million and £1.76 million respectively (2021:
£441,000 and £305,000 respectively), and reflect
the improvement in the Group’s core business.
The Group’s adjusted EBITDA (being EBITDA
adjusted for exceptional items – page 17) is £3.9
million (2021: £2.6 million), an increase of 49.3%
demonstrating a robust current year trading
performance.
Total Assets Under Management and
Administration (“AUMA”) averaged £5.6 billion
during the year, compared with £4.9 billion in the
previous year, reflecting the recovery in equity
markets from the global pandemic. Discretionary
and Advisory Assets Under Management similarly
benefited from the market recovery, rising by the
end of the year to £3.6 billion (2021: £3.4 billion).
Total AUMA is up slightly from March 2021 levels
to £5.5 billion (2021: £5.4 billion).
Divisional performance
The Investment Management division, including
exceptional costs, delivered an operating profit
of £1.16 million for the year, compared to
£1.33 million in the previous year. Operating
profits when adjusted for exceptional costs
grew by £1.2 million to £2.9 million (2021:
£1.27 million). This reflects the strong
performance of Investment Management and
advisory fees, plus a rebound in Structured
Investments business, offset by reduced activity
in commissions, in the arbitrage and investor
immigration businesses, as well as the continuing
drag from the reduction in BoE base rate in the
previous year. Regarding the latter: the change
in the interest rate cycle, with continued
increases in base rate expected, should exert
a favourable impact on revenues and profits
during the next financial year. Nevertheless,
Management will remain focused on initiatives
to improve the division’s operating margins
and reduce reliance on interest returns. The
prospects for the Structured Investments
business remain positive as pricing conditions
have improved and certain competitors have
exited this sector, we believe that the Structured
Investments team is well-positioned to build
on its prominent market position.
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19
Regulatory own funds and
and own funds requirements
Own funds
Own shares
Share premium
Retained earnings
Other reserves
Less:
Own shares held
Regulatory adjustment
Total own funds
2022
£’000
2021
£’000
2,888
3,763
11,050
4,723
2,888
3,763
11,260
4,723
(312)
(9,804)
(312)
(10,584)
12,308
11,738
Total own funds requirement
(4,676)
(5,382)
Regulatory capital surplus
Cover on own funds as a %
7,632
6,356
263.2%
218.1%
Dividends
In view of the Group’s financial performance,
capital and liquidity position, the Board is
recommending a final dividend of 1.20 pence
per share to be paid on 7 October 2022 for those
members on the shareholders’ register on
23 September 2022. The ex-dividend date of
22 September 2022. Including the interim
dividend of 0.30 pence per share (2021: 0.15
pence per share), the total dividend for the year is
1.50 pence per share (2021: 0.75 pence per share).
Sanath Dandeniya
Finance Director
29 July 2022
The Wealth Management division has cemented
its recovery from departures of several advisers
in the previous year, and revenues have been
rejuvenated by the hiring of new advisers and
the acquisition of a client book with funds under
management. The cost-base should improve as
recruitment-related costs subside but, as yet, the
division has not returned to profit, reporting a
loss before tax of £258,000 (2021: loss before
tax of £127,000).
Our tech arm, EnOC Technologies Limited
(“EnOC”), reported an operating loss of £86,000
(2021: £122,000). EnOC’s tech capabilities are
integral to the Group’s operational efficiencies,
deploying cloud solutions to the business and we
continue to invest in its capabilities and prospects.
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
£22.11 million (2021: £22.32 million), reflecting
a net decrease of £0.21 million (2021: reduction
of £0.3 million), due to the reported profit after
tax less dividends paid. Liquidity remains strong
with cash and cash equivalents increasing over
the year to £11.1 million (2021: £8.9 million),
testimony to the Group’s underlying resilience
and the continued recovery from the pandemic.
Regulatory capital at year end, including audited
reserves for the year, is £12.3 million (2021: £11.7
million), comfortably in excess of the Group’s
capital requirements as shown in the tables
below. The finance team has also implemented
the new prudential regulatory regime.
Walker Crips Group plc - Annual Report and Accounts 2022
20
Supporting our community
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. By helping people get work
and keep work, supporting employers and
campaigning against mental health stigma,
Twining Enterprise makes a real difference to
people's lives.
A year in review
We are pleased to report that Twining Enterprise
has had a fantastic year; final figures for
2021/22 saw them supporting 1,793 clients, 57%
of which were from minority backgrounds. This
underlines the continued need for employment
support for individuals struggling with mental
health conditions as we navigate our way out
of the pandemic.
This underlines the continued need for
employment support for individuals struggling
with mental health conditions as we navigate
our way out of the pandemic.
Furthermore, 63% of programme participants
achieved a “hard” outcome, such as returning to
work or completing new skills training and 64%
of participants improved their wellbeing over the
course of their programme.
Years supporting the
people of London
27 years
Individuals supported in 2021/22
1,793
Participants achieving a “hard”
outcome, such as returning to
work or completing new skills
training
63%
Participants improving their
wellbeing over the course of the
programme
64%
No. of different projects
delivered to over 15,000
individuals
70 projects
Positive impact
In the world we live in today, it is important
for companies to understand the ideals of
good citizenship just as much as people and
governments. As a business, of course, 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
the community in which we live and participate
in positive movements to safeguard our
environment and planet. 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.
We also try to act responsibly in our daily
operations to ensure that we are as paperless
as can practically be, we utilise recycled
materials, we encourage waste recycling, we use
automated lighting and many other modern
energy and resource efficiency methods. We
have also engaged with an external adviser
to measure our carbon footprint from period
to period with the target of reaching net zero
carbon emissions by 2050 or sooner.
Human rights
We recognise our responsibility to operate with
respect to human rights. We are committed
to ensuring that the Company, its staff and
its self-employed associates, including other
businesses in our supply chain, reflect our values
and operate in compliance with applicable laws.
We do not tolerate any form of slavery, human
trafficking, bribery or corruption, both within our
workforce or within our supply chain.
We consider our suppliers to be low-risk entities,
especially as they are providers of materials
such as stationery and IT equipment, as well
as professional service providers. We carry out
a rigorous client and staff onboarding process
including interviews, criminal record checks,
credit checks and court record checks.
Strategic reportWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
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21
A huge thank you to Walker Crips! It’s only with
the continued support of generous individuals like
yourselves that we can keep helping people like Dabir
and Laila get back into work, creating brighter futures
for themselves and their families.
Oliver Jacobs
CEO, Twining Enterprise
About Twining
Twining has provided mental health and
employment support across London for over
27 years and since 2008 has delivered 70
different projects to over 15,000 individuals.
These projects have spanned a range of
employment support models, including
Individual Placement and Support (IPS)
models, peer support and job 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.
Twining’s impact
During 2021/22 alone, Twining supported
over 1,793 individuals, with 63% of them
achieving a “hard” outcome, such as
returning to work or completing new skills
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
walkercrips.co.uk/Community.
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 conditions as
effectively as possible.
Spotlight case studies
Refugee Dabir was finding it difficult to
find work in the UK after his contract was
terminated due to Covid. Anxiety around job
uncertainty caused him to seek counselling,
which led him to Twining Enterprise. Twining’s
Education Specialist supported Dabir in
finding a course that filled a critical gap in
his CV, whilst their Employment Specialist
provided psychological support throughout
his job search. He now has his dream job in
global banking!
Laila was hit particularly hard by Covid, losing
her husband to the virus and then sinking
into depression. However, with the support
of Twining Enterprise, she is now healing
through her work as a care assistant in her
local community.
Find out more
For more information about Twining
go to twiningenterprise.org.uk
Walker Crips Group plc - Annual Report and Accounts 2022 22
Principal risks and uncertainties
Approach
The Board is ultimately responsible for
establishing an effective risk management
framework to support the Group achieve its
strategic objectives. Our approach to risk
management continually evolves as we manage
the Group’s principal risks and respond to
emerging risks.
Our framework
The Group operates a three lines of defence
model as set out below.
Risk management
Effective risk management is attained by:
Promoting a strong risk management culture
and tone from the top and within, based
around our long-standing and core values
of integrity, courtesy, fairness and loyalty.
Operating a three lines of defence model.
Horizon scanning to ensure developments
in the risk landscape are identified and
proactively addressed.
Subjecting new business initiatives to robust
challenges via the Group’s New Initiative
Risk Assessment (NIRA) process, ensuring
requisite controls are embedded within any
new activities.
Comprehensive risk identification and
assessment captured within the Group’s
Risk Matrix.
Establishing risk appetites, tolerances and
limits to allow business to be conducted
within clear parameters and an apposite
balance between risk and reward.
Ongoing risk monitoring and escalation via
quantitative and qualitative management
information.
Articulation and annual assessment of
the Group’s overall approach to risk via
the Group Internal Capital Adequacy
Assessment Process (“ICAAP”) document.
Framework
Board
Responsible for establishing an effective
risk management framework.
Sets risk appetite.
Identification and assessment of
principal and emerging risks.
Audit Committee
The Audit Committee assists the Board
with the following risk management
framework activities:
Oversight of the adequacy and
effectiveness of the risk management
systems and internal control
environment.
Assessment of the effectiveness
of internal audit.
Third line
Internal Audit
Undertakes certain assurance procedures to enable reports into the Audit Committee
on the Company’s governance and risk control framework.
Provides an independent and objective appraisal of company activities, furnishing
management with analyses and recommendations.
Second line
Risk Management Committee
Evaluates, reviews and reports on:
risk appetite, strategy and tolerance, including integration with the Group’s culture,
values and behaviour;
the operation of risk management frameworks in the effective mitigation of strategic,
operational and external risks.
Defines, monitors and review key risk indicators, evaluates risk exposure, strategy and
tolerance and reviews significant risk exposures.
Reviews the ICAAP for approval by the Board.
Compliance Committee
Consider’s the Group’s regulatory obligations and determines how they should be
disseminated, engaged with and implemented.
Develops and maitains Compliance policies and ensures they are implemented and
embedded.
Alerts the boards to areas of weakness and suggests remedial actions.
Escalates persistent issues of non-compliance to the Audit Committee, pursues the
enforcement of remedial action, and where necessary, imposition of penalties upon
non-compliant individuals.
Ensures Group’s Financial Crime Framework, Suitability Framework and Training and
Competence Regime, keeps pace with regulatory expectations.
Second line control teams
Provide independent challenge and oversight of first line control activities.
Monitoring and reporting of risks to the Board and Senior Management.
Ensures first line risk owners adopt best risk control practice in their operational processes.
Includes Group Risk, Group Compliance, CASS and Financial Crime teams.
First line
First line risk owners
Perform quarterly assessment of risks within Group Risk Matrix.
Ensure risks within their areas remain robustly identified, assessed, controlled and mitigated.
Engages with professional advisers and the second line to ensure compliance with
regulatory obligations is designed and embedded in operational arrangements.
Includes Client Onboarding & Suitability, Operations, Finance, HR, T&C and Technology teams.
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Risk management developments
The following key developments will contribute
to improvements in risk management at
the Group:
Emerging risks and uncertainties
The following emerging risks and uncertainties
have been assessed as likely to have an impact on
the Group’s delivery of its strategic imperatives:
Establishment of the Financial Crime
Committee, which reports to the
Compliance Committee and will improve
oversight in this area.
Implementing the recommendations arising
from targeted reviews by independent
specialists, the Head of Group Risk, Head
of Compliance and internal audit.
Principal risks and uncertainties
The tables below detail the Group’s principal risks
and uncertainties. It is not an exhaustive list of
all the risks and uncertainties faced by the Group,
which are captured and assessed within the
Group Risk Matrix.
Changes in risk status reflect the change
in values of Pillar 2 capital requirements in the
Group Risk Matrix during the financial year ended
31 March 2022 and forward-looking assessment
of the risk landscape in the financial year ending
31 March 2023, as recommended 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’s Internal Capital Adequacy
Assessment Process.
Near-term (within 1 year)
Cost of Living Crisis, conflict in Ukraine,
failure to respond proactively and effectively
to the threats and opportunities of FCA
Consumer Duty Regulation
Medium-term (within 2-10 Years)
UK/Global political instability, UK’s
relationship with the EU
Longer-term (10 years+)
Climate risk, ageing population
Climate risk
Although we do not consider climate related
risks to be material to the Group’s business in
the short- to medium-term, we acknowledge our
responsibilities and must remain cognisant of
relevant legislation and changes in stakeholders’
attitudes and expectations. Further information
on the Group’s approach to climate change
and climate-related risks is provided in our
Environmental Strategy Report, including our
TCFD disclosures, on pages 28 to 31.
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 ICAAP. The Group’s description
of risk appetite against each category can be
mapped to the maximum levels of the Pillar 2
capital requirement as follows:
Risk appetite in
each category
Maximum Pillar 2
capital requirement
Zero/Low
Low/Medium
Medium
Medium/High
High
Less than £0.5m
£0.5m – £3m
£3m – £5m
£5m – £7m
Greater than £7m
The Board has no appetite for any single
unforeseen unmitigated risk exposure in excess
of £250,000 or multiple unforeseen exposures
which occur in any 12-month period in excess of
£750,000.
During the period, as noted in the CEO’s
statement section Challenges, there were two
matters that exceeded these tolerances, being
shortcomings in the financial crime control
framework and inappropriate conduct by an
investment manager combined with an internal
control failure. Remedial action has been taken
and investment is being made to enhance our
regulatory control frameworks.
Changes to regulatory framework
From 1 January 2022, as a Group containing
FCA regulated subsidiaries, the Group has
been subject to the rules of the FCA’s new
prudential regime for MiFID Investment firms,
the Investment Firms Prudential Regime (“IFPR”).
The IFPR aims to streamline and simplify the
prudential requirements for MiFID investment
firms and replaces the previous regime under
CRD4 and the Prudential Sourcebook for
Banks, Building Societies and Investment Firms
(“IFPRU”).
The Group’s aim is to leverage and refocus our
existing risk management framework to align
with the FCA IFPR objectives, focusing on the
prevention of harm to customers, markets and
the Group, both now and in the future.
This approach will be articulated in the Group
Internal Capital and Risk Assessment (ICARA)
process and document, which replaces the
existing ICAAP process. The Group has engaged
with its regulatory consultants to advise on
the ICARA process and its completed ICARA
document will be reviewed and challenged
by the Board by Autumn 2022.
Walker Crips Group plc - Annual Report and Accounts 2022 24
Principal risks and uncertainties continued
Risk
How it arises
Mitigation
Status
Client risk/Counterparty risk
Client failure to
settle transaction
Risk appetite
Low/Medium
Status
Unchanged
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.
Trading volumes have returned to lower
levels since the hyperactivity witnessed
at the height of the pandemic. Exposures
remain well managed by a robust and
mature control framework.
Conduct risk
Customer
outcomes
Risk appetite
Low/Medium
Status
Increased
Regulatory risk
Risk appetite
Zero/Low
Status
Increased
Liquidity risk
Customer
outcomes
Risk appetite
Zero/Low
Status
Reduced
Market risk
Market risk
Risk appetite
Low/Medium
Status
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 of the
highest standards of behaviour central
to the services of the Group, those being
honesty, integrity and fairness, or where
such standards are otherwise not met.
The risk of failure to comply with existing,
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.
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.
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.
Clear and balanced financial promotions,
suitable investment advice and complaints
management. Board and management
oversight, development of staff and
training, defined roles and responsibilities,
the tone from the top setting a fair,
positive and ethical culture. Maintaining
professional indemnity insurance.
During the year it became apparent
that the mitigating factors in place,
exacerbated by a failure in compliance
monitoring, did not prevent or detect in a
timely manner inappropriate conduct by a
self-employed associate. Remedial action
has been taken and continued investment
made in strengthening the regulatory
control environment.
Board and Management oversight,
regulatory change, environment scanning
and oversight, development of staff and
training, defined roles and responsibilities,
recovery plan, compliance monitoring
programme, documented policies and
procedures, risk management oversight
and regular contact with regulators.
Investment in the compliance function
and robust performance appraisal system.
As the regulatory landscape and
associated regulatory scrutiny continue to
expand, the Group has targeted significant
investment in regulatory compliance
initiatives to enhance its existing and
future capabilities in this area and to
underpin the development of the core
investment and wealth management
businesses. As reported elsewhere, the
Group is presently overhauling its Financial
Crime Control Framework.
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.
Settlement exposure monitoring controls
have operated as expected. The Group
continues to maintain a high proportion
of liquid assets and the return to
profitability strengthens its liquidity
position. The Treasury regularly updates
liquidity forecasts.
Proprietary trading book positions are
controlled by centrally imposed trading
limits and are regularly monitored.
Increased proprietary trading
transactional activity in the year, in
relation to the Group’s structured
investments division, was offset by lower
activity on the Arbitrage trading desk,
meaning overall market risk remained
relatively unchanged. Both remained
well managed, monitored and within
risk tolerances.
Strategic reportWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
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Risk
How it arises
Mitigation
Status
Capital adequacy risk
Capital adequacy
Risk appetite
Low/Medium
Status
Reduced
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 adverse results that erode
regulatory capital headroom.
A significant regulatory capital surplus is
maintained and regularly monitored and
stress tested based on actual performance
and business projections. Surplus cash
balances are also maintained and liquidity
requirements carefully monitored. 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 remains 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
strategy for revenue growth and margin
improvement and to reorganise and
restructure its operations to release
the full potential of its business units
and to continue to improve the robustness
of its capital position as market
conditions evolve.
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,
use or administer the operating systems;
fail to manage their resource requirements
properly or maintain inadequate security
arrangements.
Business and information system
recovery plans are approved, tested and
maintained. A data incident log records
and analyses all unforeseen events to
prevent recurrence or mitigate impact by
and these are used to improve operational
resilience. Insurance cover in place for
certain causations (e.g. financial crime and
consequential loss).
The Group continues to develop the resilience
of its operational arrangements with
robust working from home/hybrid working
arrangements being complemented by wider
reorganisation initiatives and our “simplify
and digitise” vision.
Operational risk
Business
disruption
Risk appetite
Medium
Status
Reduced
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.
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.
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.
Personnel risk is heightened in the post
pandemic recovery and continuing
consolidation in the investment and
wealth management sectors, which have
increased the competition for staff and
presented challenges for staff retention.
In mitigation, additional investment
in human resource staff and systems,
alongside increased focus on staff
engagement is ongoing.
Personnel
Risk appetite
Zero/Low
Status
Increased
The risk of losing key staff and self-
employed associates who are the drivers
of significant revenue components
within the Group. This risk can arise from
the failure to reward individuals with
challenging performance targets, an
appropriate work environment, effective
technology, and competitive levels
of reward.
Walker Crips Group plc - Annual Report and Accounts 2022 26
Section 172(1) Statement
year ended 31 March 2022
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,
the wider public 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
Beyond the short-term imperatives that the
pandemic had given rise to, 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 36 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 final and interim dividends, 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 2022 AGM, as set out in the
Chairman’s statement on pages 4 and 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 developed
and implemented systems and processes
to support the review and assessment of
competencies of certified individuals throughout
the organisation. This led to the establishment
in 2020 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 continued to provide
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, our continual training and
development programmes include 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 with
their line managers any concerns they may
have, 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 proactive 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.
The pandemic brought with it a heightened
need to ensure effective engagement with
the workforce, most of whom had to adapt to
working from home, and as Covid restrictions
were progressively relaxed and hybrid working
patterns became the norm, the health, safety
and wellbeing of staff has remained a primary
concern for Management.
These considerations have featured highly in the
planning and implementation of our decision
to relocate our Romford-based operations to
our City office, which included consulting with
each member of staff affected individually to
fully understand how they may be affected and
to ensure that steps were taken to minimise the
impact.
We have also focused on enhancing the support
provided to the workforce by our HR function. In
order to identify any improvements needed to
ensure it is fully fit for purpose, we commissioned
a thorough health check of the function by an
external HR specialist and are in the course of
implementing the recommendations made.
These have included investment in a state-of-the-
art HR administration system which will be rolled
out to staff later in the year.
We have also recruited a highly experienced new
Head of Group HR and Training & Competence,
not only to manage the enhancement plans
but also to oversee the Group’s training and
development programmes aimed at maximising
staff potential. Greater focus will also be given
to diversity and inclusion in our recruitment and
employment approaches.
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With increased industry demand for skilled and
experienced personnel brought about by the
economic recovery, it has become ever more
important to maintain our reward packages in line
with market movements and, as a consequence,
this has been another area of attention, matched
by efforts to improve the efficiency of our
working practices and procedures to minimise the
effect on our cost base.
Clients
Our clients are the core of our business, and
we 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 the increased level
of activity and sophistication of those engaged
in financial crime during the pandemic, and are
taking 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 88, the Group took an average of 15 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 are
currently undertaking a tender process for the
supply of internal audit services to the Group.
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.
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 one in
Scotland, 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 on page 8 of the CEO’s statement,
and in more detail in the “Supporting our
community” section on pages 20 and 21, 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, procedures and
practices as set out in of the CEO’s statement
(page 8). We have also considered more widely
the impact of our activities on the environment as
well as our approach to climate change, details of
which can be found in our Environmental strategy
report, which includes our disclosures under the
TCFD framework, on pages 28 to 31.
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 35 to 39.
Walker Crips Group plc - Annual Report and Accounts 2022 28
Environmental strategy (including TCFD)
year ended 31 March 2022
Governance
Strategy
Risk
management
Metrics and
targets
The Board recognises its responsibility to
help protect the planet. We are committed to
minimising the Group’s environmental impact
and to support those working to improve global
environmental sustainability.
Global temperatures continue to rise at an
alarming rate. Storms and flooding events
which previously happened once in a century
are occurring ever more frequently. The
Intergovernmental Panel on Climate Change
(“IPCC”) has warned that to limit global warming
to 1.5°C above pre-industrial levels, the world’s
carbon emissions need to be reduced by 45%
by 2030 and reach net zero by 2050.
Achievement of this goal demands collective
will and action across all sectors of the global
economy. At Walker Crips, we believe it is our
fiduciary duty and business responsibility to act
as good stewards of the planet for the benefit of
future generations. We recognise that we have
a responsibility to contribute to the transition
to a net zero economy. At the heart of our
environmental approach is a target to align to
the Paris Agreement goal to limit global warming
to well below 2°C, and preferably 1.5°C. We seek
to do this by becoming a net zero emissions
business by 2050 or sooner.
An introduction to TCFD
In 2015, the Financial Stability Board established
the Task Force on Climate-related Financial
Disclosures (“TCFD”) as a means of creating a
framework for consistent climate-related financial
risk disclosures that were increasingly requested
by investors, banks and other stakeholders. The
Board of Directors views the TCFD framework
as a critical tool for assessing and disclosing our
climate risks and opportunities across the Group.
The Task Force’s recommendations are structured
around four core operational elements:
governance, strategy, risk management and
metrics and targets. These four overarching
recommendations are supported by key
climate-related financial disclosures, referred
to as recommended disclosures, that build out
the framework with information that will help
investors and others understand how reporting
organisations assess climate-related issues. To
find out more about the Financial Stability Board
and the TCFD, please visit fsb-tcfd.org.
Walker Crips and TCFD
This is the first report outlining the Group’s efforts
towards implementing the recommendations of
the TCFD, in accordance with Listing Rule 9.8.6R,
which became effective for premium listed
companies such as ours for financial periods
beginning on or after 1 January 2021.
The disclosures below reflect a summary of
the Group’s progress to date in incorporating
climate risk and opportunity identification and
management into our overall business strategy.
The analysis informing such a process is a rapidly
evolving area for many companies, including
Walker Crips; we expect the methodology and
tools for conducting such analysis to continue
improving over time. This report represents a
significant step upon which we will continue to
develop our understanding of climate risks and
opportunities moving forward.
Governance
Appropriately for an organisation of our size, our
governance structure relating to climate-related
activities is relatively flat. This enables issues to
be escalated and dealt with swiftly at a Senior
Management level.
Board of Directors
The Board is responsible for setting the Group’s
climate-related goals and targets and agreeing
the strategy to achieve them, and has delegated
oversight of climate-related activities to the
Audit Committee. The Committee’s remit
includes:
reviewing risks and opportunities facing the
Group in relation to climate change;
considering the materiality of climate-
related risk and its financial implications;
monitoring adherence to externally
applicable sustainability codes and
principles.
Further governance arrangements
The Group is currently in the process of
establishing further governance arrangements
to support both the Board and the Audit
Committee in discharging their responsibilities
in relation to ESG matters.
A Corporate Social Responsibility (“CSR”)
Committee is being established to monitor and
review emerging CSR trends and issues that may
affect the Group, as well as to provide guidance
on the development of our sustainability
strategy whilst ensuring alignment with the
Group’s purpose, values and overall strategy. The
Committee will meet quarterly and will consist of
voluntary members of staff, including a Director,
with meetings chaired by a member appointed
by the Committee.
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Role of management
The Group’s Senior Management team is
responsible for the day-to-day management of
climate-related risks and opportunities facing the
business. During this financial year, Management
engaged an external sustainability consulting
firm to help shape the Group’s net-zero approach
to carbon emissions.
The Group is currently in the process of
developing a credible strategy accompanied by
targets and objectives to evidence an approach
which will drive down emissions and set a
meaningful target date to achieve net-zero.
Net-zero can only be achieved by significant
reductions in direct (i.e., Scope 1 & 2) and indirect
(i.e., Scope 3) carbon emissions and requires both
Group-wide commitment and senior leadership.
The key steps in the Group’s transition journey
are:
a reliable, robust, and data-based carbon
footprint providing a clear baseline;
Board-level commitment;
agreed metrics, monitoring, and reporting
against which to set targets;
a clearly articulated ambition with
associated targets, timeframe, expectations,
and actions;
a focus on operational reductions in office
premises, and on achieving sustainable
emissions reduction through an energy
management approach;
Group-wide engagement to ensure all
staff and key stakeholders understand the
ambition and the journey.
Strategy
Carbon reduction
The Group has been developing a sustainability
strategy and approach that is both in line with
wider market trends and reflects the interests and
concerns of stakeholders. For any organisation
embarking on a net-zero transition, the first step
is to calculate accurate, robust data regarding
annual carbon emissions. Assisted by our external
sustainability consultants, we have calculated and
analysed the Group’s carbon footprint across the
past three financial years (2019/20, 2020/21 and
2021/22) for each of our UK offices. Using this
data, we have been able to establish the financial
year 2019/20 as our baseline for calculation,
as this year was the last that best reflected a
“normal” operating year before the COVID-19
pandemic led the Group to adapt to a hybrid
working model from March 2020.
For more information about our sustainability
strategy and initiatives, please refer to our
CEO’s statement.
London office – projected implementation year savings
Carbon emissions
Energy
Energy cost saved
York office – projected implementation year savings
Carbon emissions
Energy
Energy cost saved
6 tCO2e
23,515 kWhs
£4,703
7 tCO2e
26,340 kWhs
£5,268
Methodology
The carbon footprint calculation we have carried
out measures the seven greenhouse gases
identified in the Greenhouse Gas Protocol and
uses the appropriate year’s Department for
Environment, Food & Rural Affairs (“DEFRA”) and
Department for Business, Energy & Industrial
Strategy (“DBEIS”) emissions factors. These
emissions are aggregated and reported as
tonnes of CO2 equivalent (“tCO2e”). This method
provides accurate, verifiable data that is both
Science Based Targets Initiative (“SBTi”) and
Streamlined Energy and Carbon Reporting
(“SECR”) compliant. The footprints include
carbon associated with Scope 1 (direct), 2
(indirect – purchased electricity and heat) and 3
(indirect from supply chain) emission sources.
Transition to net zero
Using the Group-wide carbon emissions data
calculated, Senior Management is currently
considering a possible carbon reduction timeline
to be implemented to map the pathway towards a
net-zero goal. See Metrics and targets on page 31.
Carbon objectives for London and York offices
During the 2022/23 financial year, we intend
to implement the recommendations presented
by an energy management specialist, who has
identified tangible carbon savings for both our
London and York offices. Recommended changes
to heating, lighting, cooling and IT infrastructure
are anticipated to result in a reduction in
carbon emissions and a financial saving for
the implementation year against the baseline
measurement. These savings have been factored
into the carbon reduction pathway currently
under consideration.
Stewardship of resources: Closure of
Romford office
As the Group has successfully adapted to hybrid
working, making use of technology to ensure
productivity, the Board identified that it was no
longer financially or environmentally efficient to
maintain our Romford office – the lease on which
expires in September 2022. As both our Romford
and London offices have been underutilised, with
a significant percentage of the workforce working
from home at any one time, the Board decided to
relocate all Romford-based staff to our London
office. The Romford office has already been
vacated and there are no planned job losses as a
result of the office relocation.
During the 2021/22 financial year, carbon
emissions associated with our Romford office
accounted for 22% of the Group’s overall carbon
footprint. Whilst the closure of the office will
not reduce overall Group emissions by the same
figure – due to the relocation of employees from
Romford to London – it will have a significant
impact in the first year of our net-zero transition.
WFH carbon calculator
As part of our effort to accurately calculate
the Group’s carbon emissions, including
those generated through employees working
from home (“WFH”), we have introduced an
online WFH carbon calculator tool. We have
encouraged all our workforce to make use of the
tool and have been very pleased with the level
of engagement. The data entered regarding
individuals’ energy, heating and other emissions
whilst working from home feeds into the Group’s
overall carbon emissions totals.
The WFH carbon calculator also serves as a
useful tool for employees by helping them
pinpoint where their home emissions are coming
from, as well as offering hints and tips to save
both carbon and money on their energy and
heating bills. As the calculator can be used
on an ongoing basis by employees, it directly
demonstrates how changes in habits and
behaviours can result in reduced emissions and
energy savings.
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Environmental strategy (including TCFD) continued
year ended 31 March 2022
Risk management
We are working to embed climate-related risks within our overall risk management framework, with any risks identified being subject to the same
process and managed in line with all other risks.
The Audit Committee, under delegated authority from the Board, is responsible for overseeing the effectiveness of our risk management process,
including identification of the principal and emerging risks.
We have considered the transitional and physical risks and opportunities presented by rising temperatures, climate-related policy, and emerging
technologies. For the purposes of our assessment, the time horizons we have used are as follows:
Short term: 0-5 years;
Medium term: around 10 years;
Long term: 20+ years.
When identifying climate-related risks, we consider both the risk posed to the Group as well as that posed to the climate by our operational activities. We
also consider the potential impact of climate-related risks on our clients and how these risks could impact our ability to deliver good customer outcomes.
Climate-related risks
Type of risk
Transitional –
Policy and legal
Transitional – Market
Potential impact
Increased operating costs (e.g.
higher compliance overheads)
Reduced revenue as a result of
diminished assets values and
reduced demand for service.
Risk
Adherence with additional legal
and/or regulatory requirements in
response to the climate crisis.
Time period:
Short/medium term
A transition to a lower-carbon
economy could lead to investment
performance risk within our
discretionary managed services,
potentially impacting client returns.
Time period:
Short/medium term
Management
response
We take our legal and regulatory
obligations seriously and comply
with all applicable climate-related
requirements. Our Audit Committee
monitors emerging applicable
sustainability codes and principles
within our operating jurisdiction.
In line with increasing client
expectations, we continue to
integrate ESG factors, including the
consideration of climate-related
risks, into our investment decision
making processes.
Transitional – Reputation
Perceived inadequate response by
the Group to environmental/climate-
related concerns by clients and other
stakeholders
Could result in existing/prospective
clients choosing to take their
business elsewhere, impacting on
revenues.
Our carbon net-zero strategy is
integral to our overall business
strategy.
Physical – Acute/Chronic
Time period:
Short/medium/long term
Increased severity of extreme
weather events such as storms,
as well as chronic changes such
as rising sea levels and mean
temperatures.
Time period:
Medium/long term
Disruption to business operations
and/or increased expenses.
Consideration of the Group’s
exposure to physical climate-related
risks is included as part of our
business continuity procedures.
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Climate-related opportunities
Opportunity
Opportunity to exploit changing client
preferences by developing an offering of low-
emission focussed products – such as ESG model
portfolios.
Time period:
Short/medium/long term
Potential impact
Management response
Enhanced reputation and increased revenues.
We are working to embed the consideration
of ESG factors, including climate-related
opportunities, into our investment processes.
We are updating our client profiling process
to include further questions around ESG
preferences.
Metrics and targets
Walker Crips Group carbon footprint
We measure our Scope 1 and 2 emissions in line with the GHG Reporting Protocol. Our Scope 3 emissions do not currently take into account investments
the Group makes on behalf of its clients. However, this is something Senior Management intends to incorporate in future years.
Scope 1
Refrigerants
Scope 2
Scope 3
Purchased electricity
Purchased heat
Transmission & distribution losses
Material use
Business travel – flights
Business travel – rail
Business travel – road
Employee WFH
Hotel stay
Waste disposal
Water supply & treatment
TOTAL (tCO2e)
2019/20
(tCO2e)
2019/20
(%)
2020/21
(tCO2e)
2020/21
(%)
2021/22
(tCO2e)
0.02
114.83
50.78
9.75
12.94
2.60
2.97
6.50
0.46
0.78
0.01
8.37
210.01
0.01
54.68
24.18
4.64
6.16
1.24
1.41
3.10
0.22
0.37
0.00
3.99
100
0.02
85.33
54.40
7.34
0.18
0.00
2.04
2.48
46.88
0.38
0.01
4.3
203.36
0.01
41.96
26.75
3.61
0.09
0.00
1.00
1.22
23.05
0.19
0.00
2.11
100
0.01
78.47
52.08
6.94
3.34
0.27
2.30
9.75
43.36
0.51
0.03
1.87
198.93
2021/22
(%)
0.01%
39.45
26.18
3.49
1.68
0.14
1.16
4.90
21.80
0.26
0.02
0.94
100
Target
Adhering to the current best practice, the Group is working towards a net zero target by 2050 of 90% carbon emission reductions against baseline
(2019/20), with an interim target of 50% reduction by 2030. This reduction is consistent with the Global Goal of 45% reduction in global emissions
by 2030 as recommended by the Intergovernmental Panel on Climate Change (“IPCC”). By adopting a 50% target by 2030 the Group will be
aligned to the Paris Agreement target (agreed in 2015 at COP21) of being on a trajectory to keep global heating at 1.5°C or below.
Walker Crips Group plc - Annual Report and Accounts 2022
32
Board of Directors
Our Board of
Directors deploy
their extensive
expertise and
experience into
managing the
Walker Crips Group.
Sean Lam
FCPA (Aust.), Chartered FCSI
Sanath Dandeniya
FCCA
Martin Wright
Chief Executive Officer
Finance Director
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.
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.
Membership
E
Membership
C E RI
Membership
N R
Corporate governanceWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
Corporate governance
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33
Membership key
A Audit Committee
C Compliance Committee
E Executive
N Nomination Committee
R Remuneration Committee
RI Risk Management Committee
Member
Chair
David Gelber
Clive Bouch
FCA
Hua Min Lim
Non-Executive Director
Senior Independent Director
Non-Executive Director
Clive Bouch was appointed to the
Board in March 2017 and chairs
the Audit and Remuneration
Committees. He is also a member
of the Nomination Committee.
He is an experienced Non-Executive
Director having served in this
capacity for The Steamship Mutual
London, Europe and Bermuda
Protection & Indemnity Clubs;
The Ardonagh Group Limited and
Invesco UK Limited. Previously he
was a partner in leading accounting
firms where he provided audit and
advisory services to companies in
the financial services industry.
Clive 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.
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 director
of AA4+ PLC, a closed end aircraft
leasing company, and DDCAP
Ltd, a leading arranger of Sharia
compliant financial transactions.
His previous directorships include
a 15-year stint at IPGL Ltd, an
investment holding company with a
wide range of investee companies,
for many of which he served on the
board. He retired from IPGL on
31 May 2022.
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.
Membership
A N R
Membership
A N R
Membership
N R
Walker Crips Group plc - Annual Report and Accounts 2022 34
Chairman's commentary on governance
In this, my second year as Group
Chairman, I have had cause
to reflect upon the variety of
challenges we have faced in
managing the business placed in
our care over that time and how
we have acquitted ourselves in
our stewardship of the Group.
Martin Wright
Chairman
Dear Shareholder
In this, my second year as Group Chairman,
I have had cause to reflect upon the variety
of challenges we have faced in managing
the business placed in our care over that time
and how we have acquitted ourselves in our
stewardship of the Group.
Although the worst effects of the pandemic
appear to be over and a new normal, which
has adjusted to changes in social and working
practices, is in place, it is worth reminding
ourselves that, at the start of our last financial
year, the government had only just embarked
upon its staged programme of lifting the
restrictions on social contact, business and
travel. It has, therefore, been a year of
adjustment for the Group and its stakeholders
to the changing environment.
Those relaxations have not been mirrored in
our approach to governance. On the contrary,
our determination to promote and deliver the
highest standards of conduct and integrity
from our workforce is stronger than ever, as is
our commitment to act in the best interests of
our shareholders and all other stakeholders, as
explained in more detail in the report by the
Directors on the Group’s governance which
follows and in the Section 172 Statement on
pages 26 and 27. Against that background, it
is therefore very disappointing to report the
matters referred to in my statement on page 4
and our CEO’s statement that have contributed
to the significant exceptional costs incurred.
Our successful adaptation to working from
home during the height of the pandemic has
evolved into hybrid working patterns for a large
proportion of our workforce which are likely
to become the new normal way of working,
at least for the foreseeable future, with our
focus continuing to be on the health, safety
and welfare of staff in tandem, of course, with
enhancing the quality of our services and client
experience.
A positive spin-off from this new way of working
has been the reduced need for office space
which has led to our decision to close our
Romford office and relocate the operations
based there to our City headquarters. In the
process, we have been at lengths to ensure that
the move will not be detrimental to the staff
involved, either financially or to their wellbeing.
Amongst the benefits will be a significant
net reduction in the Group’s carbon footprint
through the more efficient utilisation of space
(as is reported in our environmental disclosures
on pages 28 to 31) and other efficiencies flowing
from a closer integration between our front and
back offices.
One of the adverse developments through the
pandemic, which continues to gain momentum,
is the level of fraudulent and financial crime
activity. This is not only a major concern and
focus of attention for regulators but could
have devastating consequences for our clients
and our business should our controls not be on
highest alert. Consequently, considerable efforts
continue to be made to ensure both that our
systems, procedures and controls are as robust as
we can make them to protect against these risks
and that our staff and clients are fully cognisant
of the dangers and protocols to be observed.
The economic recovery has also highlighted
a skills shortage in our industry, leading to
heightened competition for quality staff.
Recruitment and retention of employees with
the skills and experience we need to maintain
our high standards is clearly a challenge for us
but one we are determined to overcome through
our reward structures, career development
opportunities and providing a conducive
working environment.
My purpose, in highlighting the points above, is
to demonstrate that I and my fellow Directors
are intent on ensuring that governance of the
Group is applied in an effective, relevant and
meaningful way, and is fully aligned with our
culture and values.
Accordingly, in compliance with the current UK
Corporate Governance Code, which provides
that the Directors should be subject to annual
re-election, I confirm that all current members of
the Board will be putting themselves forward for
re-election at the forthcoming Annual General
Meeting.
Martin Wright
Chairman
29 July 2022
Corporate governanceWalker Crips Group plc - Annual Report and Accounts 2022
Strategic report
Corporate governance
Financial statements
35
Report by the Directors –
on corporate governance matters
year ended 31 March 2022
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 business of the Company and its operating subsidiaries, 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 10 and 11.
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 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 22 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 38 and 39.
Particular attention was given during the year to reassessing the Group’s principal risks and the effects upon them and the business model of the pandemic
and, latterly, the impact of the Ukraine conflict on the global economy and capital markets.
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 page 26;
regular discussion at Board Meetings on culture and matters of concern to the workforce;
promoting our speak up policies and reviewing the outcomes of whistleblowing reports and 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 26 and 27 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 2022 36
Report by the Directors –
on corporate governance matters continued
year ended 31 March 2022
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 walkercrips.co.uk;
the Annual General Meeting to communicate with private and institutional investors. All Directors are available at General Meetings 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 encouraging individual shareholders to raise any questions with the Chairman, Chief Executive Officer or Senior Independent Director and
ensuring 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 26.
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.
The plan previously reported to consolidate the Group by merging the regulated entities will allow a more holistic oversight of the business as a whole.
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 walkercrips.co.uk. The Chairman of each of these committees is responsible for reporting to the Board
on how the Committee has discharged its duties. In addition, the 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 walkercrips.co.uk.
All operating subsidiaries’ Boards and other management or operational committees include at least one main Board Executive Director who serves
as the link between the Board and Management on operational decision-making.
Corporate governanceWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
Corporate governance
Financial statements
37
Division of responsibilities continued
Board attendance
The following table shows the attendance of the Directors at scheduled 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 Remuneration
Committee
Committee
Nomination
Committee
9
8
9
5
0
9
9
6
6
6
5
n/a
2
6
3
3
3
1
0
3
3
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. It also convenes regularly 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. It is fully committed to promoting talented individuals
as executives on merit, both internally and through recruitment, with the Board’s 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 (who acts as its Chairman), Clive Bouch, David Gelber and Hua Min Lim.
The Committee met once during the year to review the composition of the Board and its continued effectiveness.
As was reported last year, the Group is undergoing a reorganisation and the Nomination Committee and the Board have remained of the view that
the existing Board members should continue to serve until completion of this project. During this timeframe the Committee will also perform a thorough
Board effectiveness assessment and conduct a search to determine a successor for David Gelber.
The Committee will take full account of the Board’s policy on diversity in considering any appointments within its remit, which encompasses gender,
age, education, social and ethnic backgrounds, disability and cognitive and personal strengths, 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 Officer and Group Finance
Director respectively, and four are non-executives, including the Board Chairman. 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
32 and 33 describe the range, depth and complementary nature of their individual skills and experience, the combination of which provides a balanced and
effective Board.
Audit, risk and internal control
Audit Committee
Throughout the year, the Audit Committee comprised Clive Bouch, who acted as its Chairman, and David Gelber.
Further information about the Audit Committee, its responsibilities and activities during the year can be found in the Audit Committee report
on pages 40 to 43.
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 22 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 operating companies’ boards, overseen by the main Board, are responsible for ensuring that adequate systems and controls are in
place and that the businesses operate in accordance with all relevant legal and regulatory requirements. The Executive Directors of each Group company
are responsible for its day-to-day management.
Walker Crips Group plc - Annual Report and Accounts 2022
38
Report by the Directors –
on corporate governance matters continued
year ended 31 March 2022
Audit, risk and internal control continued
Risk management continued
The objectives of the RMC are to assist the Group and operating companies’ boards in fulfilling their corporate governance oversight responsibilities
by evaluating, reviewing and reporting on:
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.
The Board assesses 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
as communicated through the RMC. 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. In this connection,
as explained in the Chairman’s statement on pages 4 and 5, and CEO’s statement on pages 8 and 9, investment is continuing and work is in progress
to enhance our financial crime and other controls to address the weaknesses identified. The Directors consider that the controls and risk management
procedures established and to be implemented 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.
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 Joint Money Laundering Steering Group, the Financial Ombudsman Service, the Financial Services Compensation Scheme and other
UK regulatory and industry bodies.
The Committee is also responsible for interpreting new rules, guidance notes and regulations disseminated by the FCA and other regulatory and industry
bodies. In the current financial year, the Committee has been engaged with improving our Financial Crime Compliance framework, developing our Product
Governance and Environmental, Social and Governance (“ESG”) framework, interpreting incoming regulatory changes on Consumer Duty and Diversity and
Inclusion and how they can be embedded within the Group, and implementing 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
The financial year 2020/21, mainly due to the Covid pandemic, saw significant disruptions. The Group’s ability to generate income was severely impacted
by the cut in Bank of England base rate and lower AUM values leading to lower management fees. The second half of the financial year 2020/21, however,
saw the start of the recovery of the financial markets. Nearly all business units gained momentum in this period and continued this momentum to the
financial year 2021/22, demonstrating the resilience in the Group’s core business, business model, staff and management resolve.
The financial year 2021/22, the year being assessed, saw the Group returning to profitability, although this was hampered by the significant increase
in exceptional costs reported in the year. Nevertheless, Management remains committed to the Group’s strategic priorities and has confidence in its
longer-term prospects.
The Group’s strategy continues to be primarily focused on building on the existing core businesses of investment management and wealth management,
focusing on revenue growth, improving margins, investing in its people and attracting talented teams, underpinned by both improved technology and
attention to cost control.
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 because it is aligned with the Group’s planning horizon, and also takes into account
the unpredictability inherent in the financial sector. The Directors do not currently plan to revise the three-year viability statement period, but will keep
it under review.
Corporate governanceWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
Corporate governance
Financial statements
39
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 2018 UK Corporate Governance Code.
The Group, to articulate its corporate strategy, maintains a five-year forecasting model. The Directors, however, consider a three-year timeframe to be
appropriate in view of our scale, planning cycle and uncertainties in the financial services markets. There is, however, no reason to believe the five-year view
would be different, but as always, there is more uncertainty over a longer time horizon, particularly in relation to external factors.
The forecasting model, which forms part of the Group’s ICCAP process, is then subjected to a range of stress tests, including reverse stress tests. These
stress tests are devised through discussions with Senior Management and consists of two alternative stress scenarios, both directly linked to the Group’s
“base” case budget and forecasts under normal operating conditions.
The Group’s base case scenario and the two alternative stress scenarios consider the Group’s current financial position and the potential impact of
principal risks and uncertainties facing the Group. The two alternative stress scenarios considered are: (i) a “bear stress scenario” where a fall in market and
levels of activity result in a reduction in total revenue of 10%; and (ii) a “severe stress scenario” where the impact on revenues of a further significant fall in
global financial markets causes 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 January 2024.
The Directors consider the severe stress scenario to be remote in view of the prudence built into the plans and the further mitigations available to the
Directors that 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, potential sale of assets and stronger cost reductions.
Finally, a “reversed stress scenario” is performed to assess the resilience of the Group’s business model and strategy. This indicates that the Group would
be placed under significant stress if it were to lose 38% of gross income over the next 12 months.
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.
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 66.
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 executive 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, the Remuneration
Committee will in due course undertake a review of remuneration arrangements for Directors and Senior Management.
Information on the remuneration policy, how it was implemented in the year and the work of the Remuneration Committee can be found in the
Remuneration report on pages 44 to 50.
Walker Crips Group plc - Annual Report and Accounts 2022 40
Audit Committee report
year ended 31 March 2022
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.
Composition and constitution
The Board is responsible for establishing and maintaining an Audit Committee and for appointing its members.
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 Committee comprises two members, albeit one member has been a Director for more than nine years
and formerly chaired the Board. This reflects the size of the Board and scale of the business. The Board’s emphasis is to ensure 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 providing effective guidance and challenge.
Clive Bouch, who is a Chartered Accountant with recent and relevant financial experience, served as the Committee Chairman throughout the year, and
David Gelber served as the other Committee member. 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 its meetings as well as representatives of both the Group’s internal and external auditors.
The Group Chairman and Group Chief Executive are also invited to attend meetings.
The Committee’s current Terms of Reference are available for inspection on the Company’s website at wcgplc.co.uk.
Main responsibilities of the Committee
The Committee assists the Board in its oversight of the:
integrity and quality of financial reporting and disclosure;
a.
b. selection and application of accounting policies and practices;
c. 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;
i. determination of distributable reserves; and
j. other issues, if any, on which the Board may request the Committee’s opinion.
integrity of significant financial returns to regulators;
Meetings
There were six formal meetings of the Committee during the year. The Committee members’ meeting attendances are set out in the Report by the
Directors on corporate governance matters on page 37. 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 members of the Group’s workforce 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 members of the internal audit leadership team.
Committee activities
The work of the Committee during the year ended 31 March 2022 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.
e. Annual Report to consider whether, taken as a whole, it is fair, balanced and understandable and provides information relevant to shareholders’
long-term viability statement prior to Board approval;
assessment of the Group’s position and performance, business model and strategy; and
f. Group’s first report to comply with the new Task Force on Climate Related Financial Disclosures (“TCFD”) set out on pages 28 to 31.
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 challenged the appropriateness of deadlines for implementation, in response to reports on internal controls in order
to address matters identified;
c. considered the effectiveness of the systems established to identify, manage, and monitor financial and non-financial risk.
d.
instructed Management to engage independent assurance on the Group’s implementation of the new prudential regulatory regime and reporting;
and
e. challenged Management on the actions and project plans to address the weaknesses in internal control identified during the year and explained in
the Chairman’s Statement on page 4 and CEO’s statement on page 8.
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3.
External audit
The Committee:
a. assessed the qualifications, expertise and resources of PKF Littlejohn LLP (“PKF”) as the Company’s and Group’s auditor and the effectiveness
and quality of the external audit process;
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 PKF’s recommendations in respect of the internal control environment and management’s responses thereto.
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
PKF was appointed to fill a casual vacancy in December 2020 following a competitive tender process, and reappointed by shareholders’ resolution at the
2021 AGM to serve until the conclusion of the next meeting at which accounts are laid. Accordingly, a resolution to reappoint PKF as auditor will be put
to shareholders at the forthcoming AGM.
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 wcgplc.co.uk. The incumbent auditor also carried out a desktop review of the Group’s interim report and
reports to the FCA on CASS compliance for relevant Group companies. PKF is currently completing assurance services under AAF 01/20 in respect of the
Group’s service organisation controls report. 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 78.
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 continued to be outsourced to Evelyn Partners LLP (formerly named Smith & Williamson LLP) during the year.
As reported last year, as a matter of good practice, an internal audit tender process has now been initiated and is expected to be concluded later this year.
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. 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 the Group’s approach to and controls over market abuse, the Tier 1 Investor Visa service (since
discontinued), client assets procedures in relation to the FCA’s rules, the Finance Department and debtor management procedures. A new internal audit
plan will be developed and implemented on completion of the tender process referred to above.
The Committee monitors the effectiveness of the internal audit service provided by Evelyn Partners. The particular focus is on competence and capabilities,
timely reporting and the quality of communication and recommendations. The Committee also monitors any other services that Evelyn Partners may
provide to ensure the integrity and independence of the Group’s third line of defence is not compromised.
Walker Crips Group plc - Annual Report and Accounts 2022 42
Audit Committee report continued
year ended 31 March 2022
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
page 39. 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 continuing effects of the COVID-19 pandemic and the Ukraine conflict, current financial resources and capital expenditure plans, together with
ongoing compliance with the new prudential regime requirements. 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, market outlook, financial plans and projections, and budgets;
the effects of Management’s actions to protect the safety of staff and support client service in response to COVID-19 and changing work patterns;
dividend proposals and policy;
Group liquidity, noting that 90% of the Group’s regulatory financial resources at 31 March 2022 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 2022 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 intra-day 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, key assumptions 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 £21.8 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, client lists of £5.5 million, and software licences of
£0.3 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 the impairment review work the discrepancy in values was
again considered and the conclusion reached that the carrying value
remains 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 is no impairment,
with particular challenge regarding the assumptions used and the
proposed disclosures (see note 17). The Committee also considered the
procedures performed by the external auditors (see the independent
auditor’s report on page 57).
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 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 appropriateness of the
impairment charge. The Committee also considered the procedures
performed by the external auditors (see the independent auditor’s report
on page 58).
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Matter considered
Provisions
Action
The financial statements include provisions in respect of dilapidations
(£0.62 million), completion of the remediation of the financial crime
framework (£0.46 million), and customer redress and associated costs
(£0.65 million). These amounts are estimated with varying degrees
of certainty.
The Committee considered and challenged Management’s
determination of the amounts provided and related disclosures (see
Chairman’s statement on page 4, CEO’s statement on page 8, note 4
on page 74, and note 27 on page 88), concluding they were appropriate
based upon the information presently available.
Exceptional items and alternative performance measures
The Group classifies certain material items as exceptional and presents
alternative performance measures (“APMs”) to provide a clearer
understanding of the underlying trading performance of the business.
In 2021/22, the Group has reported exceptional charges totalling
£1,437,000 (2020/21: £419,000).
The exceptional items reported this year are therefore significant and
relate to business reorganisation and redundancies, the independent
review and remediation project in respect of the Group’s financial crime
control framework (see “Provisions” above), customer redress
(see “Provisions” above), and settlement income.
APMs presented are operating profit before exceptional items, profit
before tax and exceptional items, adjusted EBITDA, and underlying
cash generation from operations.
The Committee also considered the procedures followed by the external
auditors and their findings, including those in respect of provisions for
redress (see independent auditor’s report on page 58).
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 79), the reasons therefore and
the proposed disclosures, including the reconciliations provided in the
Finance Director’s review on page 17 between the IFRS reported results
and the APMs.
The Committee challenged Management regarding (i) the prominence
and equal presentation of the IFRS results and APMs, (ii) the nature of
the exceptional items and their consistency with the Group’s accounting
policy, and (iii) the disclosure of and references to the exceptional items
in note 10, the financial highlights the Chairman’s statement, the CEO’s
statement, the CFO’s review and elsewhere in the Annual Report
and Accounts. The Committee also considered the external auditor’s
findings in respect of these matters.
Based on its deliberations the Committee is satisfied with the
presentation and explanations of the exceptional items and APMs.
Performance evaluation
A formal evaluation of the Committee’s performance will be undertaken before the current year end based on feedback to a questionnaire distributed to
Committee members and others who regularly attend Audit Committee meetings and the principal areas identified for improvement addressed.
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 or other provider modules.
Approval
This report in its entirety has been approved by the Committee and signed on its behalf by:
Clive Bouch
Audit Committee Chairman
29 July 2022
Walker Crips Group plc - Annual Report and Accounts 2022
44
Remuneration report
year ended 31 March 2022
Introduction
This report details the Directors’ remuneration for the year ended 31 March 2022 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 two parts:
Part A – The Annual Statement from the Remuneration Committee Chairman; and
Part B – The Annual Remuneration Report, which is subject to shareholders’ advisory vote.
The Remuneration Policy approved by shareholders at the 2020 Annual General Meeting and effective from 1 April 2021 was replaced by an updated
Remuneration Policy approved by Shareholders at the 2021 AGM with immediate effect (28 September 2021). Both the 2020 and 2021 approved Policies
are available for inspection on the Group’s website at wcgplc.co.uk where the former can be found on pages 39 to 42 of the 2020 Annual Report and the
latter on pages 50 to 53 of the 2021 Annual Report.
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
When I reported last year, I explained that as our result was a financial loss for the year, deliberations regarding salary increases and bonus awards seemed
inapt, particularly given the challenges and suffering faced by our stakeholders and communities at large. This year we have seen a strong recovery in our
revenue generating performance and improved gross margins reflecting profitability improvement initiatives, but what otherwise would have been a strong
profits performance has been marred by exceptional charges that in large part reflect unacceptable failures in our internal control environment (see the
Chairman’s statement on page 4 and CEO’s statement on page 8). We are also experiencing inflationary pressures on salaries in line with the tight labour
market and have had to respond proportionately and promptly. These factors have impacted the Remuneration Committee’s deliberations and decisions
and I draw your attention to six key consequences:
1. The Committee did not authorise the deferred share-based discretionary awards to executive directors that were proposed last year and subject
to both shareholder approval and the business continuing to improve profitable trading.
2. No discretionary bonuses will be awarded to Executive Directors in respect of the year.
3. The formulaic bonus pool does not crystallise as profits are insufficient.
4. Executive Directors will not receive any increase in salaries.
5. The Remuneration Committee discussed, challenged and approved salary and bonus proposals for our workforce as presented by Executive
Management. Salary increases were generally in the range of 3-4% and bonuses reflected individual and team performance (including consideration
of non-financial matters). Amongst other factors, the Committee instructed Management to consider gender pay equality across the workforce and
market rates for the sector and geographical areas in which we operate when making their salary and bonus proposals.
6. Separate awards were made to staff moving to our London offices on closure of the Romford office, responding to the impact the transition has on their
finances.
The non-payment of Executives’ bonuses and their salary freeze was proactively supported by your Company’s two Executive Directors. Further, no changes
are proposed to Non-Executive Directors’ remuneration. From an overall perspective, there have been no material changes in the fixed and variable
remuneration and revenue sharing arrangements for our investment managers, associates and sales teams in respect of the year. The Company continues to
match 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.
One area Management and the Remuneration Committee have addressed over the past year is the impact of changing legislation. Consultations with
members of the workforce affected have taken place, and in particular with our self-employed associates, on proposed modifications to their reward
arrangements to align with the new MIFIDPRU Remuneration Code (SYSC 19G).
The Company does not operate a long-term incentive plan. However, consistent with the Board’s philosophy to promote share ownership and alignment
of Management incentivisation with shareholders, we intend that future proportions of variable awards above certain thresholds will be settled in shares
and subject to deferral, malus and clawback. To allow for this the Board is presenting an employee share plan for shareholders’ approval at the forthcoming
AGM. Details of this arrangement are set out in the Notice of Annual General Meeting which is being issued with this Annual Report and Accounts.
Before closing I would mention that ESG is, of course, an important topic for our stakeholders and your Board believes that addressing ESG challenges
are an integral part of Management’s day job rather than an additional area to be incentivised. Accordingly, Management’s progress in this area will
be a relevant consideration by the Remuneration Committee when assessing discretionary variable pay awards. The Remuneration Committee will also
be cognisant of Executive Management’s performance in remediating our regulatory compliance framework and internal controls and ensuring market
standards are maintained.
As you are aware, in the discharge of its duties, the Committee continues to be aided by advice from specialist financial services sector remuneration
consultants in relation to corporate governance and regulatory matters, and industry good practice. I would like to express my thanks to them for their
work during the year.
Clive Bouch
Remuneration Committee Chairman
29 July 2022
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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 2022 AGM.
Sections which have been subject to audit are noted accordingly.
Summary of Remuneration Policy and implementation in the year ended 31 March 2022
The table below summarises the Remuneration Policy which was approved by shareholders at the 2021 AGM on 28 September 2021 with effect
from that date.
Element
Salaries/Fees
Policy
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 2021/22
No changes were made in the year.
Annual Profit Share (discretionary
allocation from annual bonus pool)
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 2021/22 bonus pool thresholds were 5% of
Group profit before tax in excess of £517,000
and 15% of Group profit before tax in excess of
£1,294,000. These profit pool thresholds were
not triggered and consequently no annual profit
share awards made in the year.
Discretionary bonus
Pension
Share Incentive Plan (“SIP”)
Other benefits
The Remuneration Committee may make a
discretionary award to the Executive Directors
in addition to any allocation, or where no
award is made, from the Annual Profit Share to
reflect exceptional individual performance and
contribution to the Group.
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.
No discretionary bonuses were awarded in
the year.
Employer contributions were made at 10%
of base salary for Sean Lam and 7% of base
salary for Sanath Dandeniya.
Additional salary sacrifice contributions of
£nil and £6,000 were made for Sean Lam and
Sanath Dandeniya respectively.
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.
Matching, which had been suspended with
effect from 1 April 2020, was reinstated from
1 April 2021 at the rate of half a Matching
Share for every share purchased by the
employee.
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.
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 2022
46
Remuneration report continued
year ended 31 March 2022
Part B – Annual Remuneration Report continued
Remuneration for the year ended 31 March 2022 (audited information)
The table below sets out the remuneration received by the Directors in the year ended 31 March 2022 together with prior year comparatives and includes
a single figure for the total remuneration due, or which will become due, to each Director.
Name of Director
Executive
Sean Lam
Sanath Dandeniya
Non-Executive
Hua Min Lim
Clive Bouch
Martin Wright*
David Gelber
Total
Fixed remuneration
Variable remuneration
Basic
salary/
Fees
(Note 1)
£
Taxable
benefits
(Note 2)
£
Pension
contri-
butions
(Note 3)
£
Total
fixed
£
220,000
209,000
150,000
142,500
–
–
38,570
36,642
42,599
35,539
42,559
40,431
1,924
1,750
1,768
1,615
22,000
20,900
10,500
9,975
243,924
231,650
162,268
154,090
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
38,570
36,642
42,599
35,539
42,559
40,431
493,688
464,112
3,692
3,365
32,500
30,875
529,879
498,352
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
SIP
matching
shares
Bonus
Total
variable
Total
£
–
–
–
–
–
–
–
–
–
–
–
–
–
–
£
£
£
900
–
900
–
–
–
900
–
–
–
900
–
900
–
900
–
–
–
900
–
–
–
900
–
244,824
231,650
163,168
154,090
–
–
39,470
36,642
42,599
35,539
43,459
40,431
3,600
–
3,600
–
533,479
498,352
* Charles Russell Speechlys LLP received fees of £42,599 (2021: £35,539) 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 in the year ended 31 March 2021 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 2022
Based on the Group’s results and profitability, the Committee has not awarded any discretionary annual bonuses for 2021/22, whether payable in cash
or equity, to the Executive Directors.
Outstanding share awards
There were no share options outstanding at 31 March 2022 or 31 March 2021. There are no share option schemes or Long-Term Incentive Plans in place for
the Directors. However, as referenced in the Remuneration Committee Chairman’s Annual Statement on page 44, shareholders’ approval will be sought at
the forthcoming AGM to the introduction of an employee share scheme to facilitate the payment of bonus awards partly in shares.
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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 Beneficially Beneficially
owned at
30 June
2022
owned at
31 March
2022
owned at
31 March
2021
12,359,803
638,291
36,096
197,460
49,850
16,129
12,359,803
636,460
45,838
210,088
59,684
16,129
12,359,803
644,842
48,083
212,333
61,929
16,129
The Remuneration Policy approved by shareholders 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 base 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. There are no present
proposals to increase the level of matching, although this will be kept under review.
A total of 508,978 (2021: 300,597) new Ordinary Shares were issued to the 101 employees who participated in the SIP during the year. At 31 March 2022,
4,007,724 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
2021
31 March
2022
20,664
14,149
54,698
15,410
19,409
17,011
57,561
18,272
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 2022
48
Remuneration report continued
year ended 31 March 2022
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
2021
£
Change
2022
£
209,000
5.0%
220,000
2.7%
–
1,924
Change
5.3%
9.9%
2.6%
-21.5%
45,961
8,051
9.93%
56.32%
–
1,750
41,811
5,150
The table above shows the movement in salary and annual bonus for the Chief Executive in the current and previous financial years compared to that of
the average group employee. The Committee has chosen this comparator as it provides a better reflection of the earnings of the average Group employee
than the movement in the Group’s total wage bill, since the latter is subject to distortion by movements in the number of employees. It should be noted
that the reported year-on-year increase in the Chief Executive’s salary reflects the fact he, together with other Executive Directors, voluntarily took a 20%
salary reduction for the three months commencing 1 April 2021 in light of the uncertainties caused by the pandemic.
The table below shows the total remuneration for each of the individuals who has performed the role of Chief Executive during each of the past 10
financial years. The total remuneration figure includes any bonuses awarded based on performance in those years, such bonuses being discretionary within
the terms of the applicable remuneration policy and not based on any maximum opportunity. No long-term incentive awards were made to any of the
Executive Directors.
2012
2013
2014
2015
2016
2017
2018
2019
2020
Year
ended
31 March
2022
2021
Sean Lam
–
–
–
–
–
– £133,610 £245,517 £245,504
£231,650
244,824
Rodney FitzGerald
£174,512 £267,934 £186,769
£187,176 £189,264 £196,119
£69,843
–
–
–
–
Total remuneration
£174,512 £267,934 £186,769
£187,176 £189,264 £196,119 £203,453 £245,517
£245,504
£231,650
244,824
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 2022, of £100 invested in Walker Crips Group plc on 31 March 2012 with the value of £100 invested
over the same period in the FTSE Small Cap Index. This Index has been chosen to give a comparison with the average returns that shareholders could have
received by investing in a range of other small UK public companies.
Total shareholder return compared to FTSE Small Cap Index
£350.00
£300.00
£250.00
£200.00
£150.00
£100.00
£50.00
£0.00
WCG Plc Share Price TR
FTSE Small Cap Index
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Corporate governanceWalker Crips Group plc - Annual Report and Accounts 2022
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Corporate governance
Financial statements
49
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
2021
£’000
12,690
64
2022
£’000
13,862
383
Change
9.24%
498.44%
The total dividends 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 2021/22 of 1.20 pence per share, which equates to a total amount payable of £511,000.
Remuneration Committee governance
The Committee is governed by formal terms of reference agreed by the Board. The terms of reference were reviewed during the year and revised 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 approved by the Board on 20 July 2021 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 (Committee Chairman and also
Chairman of the Audit Committee and Senior Independent Director), David Gelber, Hua Min Lim and Martin Wright.
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 three times in the year. Matters that were considered and discussed included but were not limited to:
Proposed revisions to the Remuneration Policy for Executive Directors, including clarification of the annual profit sharing arrangements, the Committee’s
authority to make discretionary awards and the introduction of minimum shareholding requirements (approved by shareholders at the 2021 AGM).
Determination of the remuneration of the Chairman and Executive Directors.
Consideration of any annual incentive awards to Executive Directors in respect of the year to 31 March 2022.
Oversight of remuneration arrangements for the Group’s Senior Management and the policy on pay and conditions of employees throughout the Group.
Application of risk and conduct considerations to the Group’s reward process.
Consideration of the impact of the prudential remuneration code on the Group’s reward structures.
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 2022 onwards
As stated earlier in this report, a revised remuneration policy was approved by shareholders at the 2021 AGM for a period of three years from 28 September 2021.
No increases have been made to the salaries of the Executive Directors for the year from 1 April 2022.
The formulaic bonus pool in which the Executive Directors may participate under the revised policy will be based on 5% of Group profit before tax in excess
of £517,000 and 15% of Group profit before tax in excess of £1,294,000. The Committee may also award in-year discretionary bonuses for the Executive
Directors under the revised policy to reflect exceptional performance and contribution to the Group. Any such awards made, when combined with any
allocation from the foregoing bonus pool, may not exceed 100% of the Director’s annual base salary and will be predominately in shares subject to
minimum shareholding restrictions.
Fees for the Chairman and Non-Executive Directors
The Group’s approach to setting Non-Executive Directors’ fees is summarised on page 51. 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
2022
£
42,559
38,570
42,559
Walker Crips Group plc - Annual Report and Accounts 2022
50
Remuneration report continued
year ended 31 March 2022
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 2022 or proposed.
Statement of shareholder voting at General Meeting
At the 2021 and 2020 Annual General Meetings, the Directors’ Remuneration Report and the Remuneration Policy received the following proxy votes
from shareholders:
2021 AGM
Votes in favour
Votes cast against
Abstentions
2020 AGM
Votes in favour
Votes cast against
Abstentions
Directors’
Remuneration Report Remuneration Policy
Number
percentage
Number percentage
21,332,880
51,900
1,077
99.8%
0.2%
<0.1%
21,307,364
77,416
1,077
16,023,235
623,432
1,077
96.2%
3.7%
0.1%
16,023,235
623432
1,077
99.6%
0.4%
<0.1%
96.2%
3.7%
0.1%
Approval
This report was approved by the Committee and the Board and signed on its behalf by:
Clive Bouch
Remuneration Committee Chairman
29 July 2022
Corporate governanceWalker Crips Group plc - Annual Report and Accounts 2022
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51
Directors’ report
for the year ended 31 March 2022
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 2022.
Results and dividends
Results, distributions and retained profits are as follows:
Retained earnings at 1 April
Profit/(loss) for the year after taxation
Dividends paid
Retained earnings at 31 March
2022
£’000
11,260
173
(383)
2021
£’000
11,582
(258)
(64)
11,050
11,260
The Directors, having considered the impact of the pandemic and Group’s liquidity requirements, recommend the payment of a final dividend of 1.20 pence
per share (2021: 0.60 pence). The proposed final dividend is subject to shareholder approval at the AGM on 29 September 2022. If approved by shareholders,
this will be paid on 7 October 2022 to shareholders on the Company’s shareholder register at the close of business on 23 September 2022. The total dividend
paid in the year was 1.50 pence per share (2021: 0.75 pence).
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 32 and 33.
Directors’ interests
Directors’ emoluments and beneficial interests in the shares of the Company are disclosed in the Directors’ remuneration report on pages 44 to 50. Other
than noted on page 52, 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 31 March 2022: No Directors of the Group’s Parent Company were women (2021: nil); 24% of senior managers, being individuals with
responsibility for planning, directing or controlling, were women (2021: 29%); and 42% of the Group’s employees were women (2021: 40%).
Walker Crips Group plc - Annual Report and Accounts 2022
52
Directors’ report continued
for the year ended 31 March 2022
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.
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 2022, 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 2022, 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: walkercrips.co.uk.
Corporate governanceWalker Crips Group plc - Annual Report and Accounts 2022
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Financial statements
53
Carbon emission reporting
The Board recognises its responsibility to help protect the planet. We are committed to minimising the Group’s environmental impact and to support those
working to improve global environmental sustainability. The Group’s environmental strategy and carbon emissions are reported within the Environmental
strategy (including TCFD) report on page 28.
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 29 September 2022.
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 66 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
Director
29 July 2022
Walker Crips Group plc - Annual Report and Accounts 2022 54
Statement of Directors’ responsibilities
for the year ended 31 March 2022
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 UK-adopted 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 UK-adopted 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 UK-adopted 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
Director
29 July 2022
Corporate governanceWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
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Financial statements
55
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
2022 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 UK-adopted international accounting standards. 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 2022 and of the group’s
profit for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted international accounting standards;
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.
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 Directors
planned to approve the financial statements. 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.
Walker Crips Group plc - Annual Report and Accounts 2022 56
Independent auditor’s report continued
to the members of Walker Crips Group plc
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
£161,000 (2021: £122,000) for the consolidated financial statements using 0.5% of group revenue based on the 30 November 2021 management
accounts extrapolated to 31 March 2022. 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 £112,700 (2021: £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 £8,050 (2021:
£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.
Materiality for group financial statements was set at £161,000 and £113,000 for the parent company. Each significant component of the group was
audited to an overall materiality ranging between £4,200 and £140,000. Performance materiality was set at 70% of overall materiality for the group,
parent company and each significant component. We applied the concept of materiality both in planning and performing our audit, and in evaluating
the effect of misstatement.
We reassessed materiality at the end of the audit and did not find it necessary to revise our planning materiality.
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. Six 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 judgement, were of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement (whether or not due to fraud) 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.
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
Corporate governance
Financial statements
57
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.
The group’s revenue amounting to
£32,820,000 (2021: £30,348,000)
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.
Impairment of
goodwill
Refer to notes 3
(accounting policy)
and 17 (financial
disclosures) of the
group financial
statements.
Goodwill amounting to £4,388,000
(2021: £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/Asset 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.
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 gained reliance on IT controls being operating effectively on the group’s systems.
In addition, we tested key manual controls in WCIM’s revenue business cycle to
ensure they were operating effectively.
We also performed the following tests of detailed procedures tailored to each
revenue stream:
Broking income
We used data analytics to verify the commission balances in the underlying
system. The commissions revenue data was extracted and reconciled to the figures
in the final accounts providing assurance over completeness of the balance.
For a sample of trade commissions, compliance charges and other commissions,
we traced revenue recorded to contract notes and deductions from client accounts.
We tested a sample of controls to ensure these were being implemented
appropriately including monthly reconciliations, approval of client fees by the
investment manager, approval of client fee changes on the IT system and
approval of manual adjustments.
Non-broking income
We 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.
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.
Key observations:
Based on the procedures performed, we are satisfied that revenue is appropriately
recognised and classified.
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:
Benchmarked 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;
Assessed the reliability of any forecasts through a review of actual past
performance and compared to previous forecasts;
Tested the mathematical accuracy and performed sensitivity analyses of the
models;
Understood the commercial prospects of the assets, and where possible compared
assumptions with external data sources;
Assessed Management’s sensitivity analysis showing the impact of a reasonably
possible change in underlying assumptions;
Performed our own sensitivity analysis using a range of acceptable assumptions;
and
Assessed the adequacy of the disclosures within the financial statements.
Key observations:
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.
Walker Crips Group plc - Annual Report and Accounts 2022 58
Independent auditor’s report continued
to the members of Walker Crips Group plc
Area
Reason
How our scope addressed this matter
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 £5,497,000 (2021:
£6,142,000) 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
4 (Key sources
of estimation
uncertainty and
judgements) and
27 (Provisions) of
the group financial
statements.
Provisions for client payments
include redress, claims or complaints
together with associated costs,
amounting to £650,000 (2021:
£205,000) arising in the year.
Significant judgement is required to
be exercised in the assessment of the
amount of any provision that should
be carried in respect of any redress,
open claims or complaints, including
any amounts recoverable under
the group’s professional indemnity
insurance.
We obtained an understanding and tested the design and implementation of the
group’s controls over the impairment assessment process.
For intangible assets (client lists), we performed the following:
Verified amounts capitalised in the year against supporting agreements;
Challenged management’s assessment that any additions met the required
capitalisation criteria;
Performed an assessment on the appropriateness of the useful life;
Reviewed Management’s assessment of impairment indicators, considering both
internal and external sources of information; and
Assessed the sufficiency of the sensitivity analyses performed by Management,
focusing on what we considered to be reasonably possible changes in key
assumptions.
Key observations:
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 payments. Our procedures included the following:
Reviewed external legal and other professional advice obtained by Management;
Discussed with Management and reviewed relevant correspondence including the
complaints register;
Assessed and challenged Management’s conclusions through understanding
precedents set in similar cases; and
Reviewed expenses for any litigation costs.
Key observations:
Based on the procedures performed, we consider the provision for client payments to
be reasonably stated based on current information.
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.
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
Corporate governance
Financial statements
59
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
We have reviewed 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 Code specified for our review by the Listing Rules.
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 39;
Directors’ explanation as to its assessment of the entity’s prospects, the period this assessment covers and why the period is appropriate on page 38;
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 54;
Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 38;
The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 38; and
The section describing the work of the audit committee set out on page 40.
Responsibilities of directors
As explained more fully in the statement of directors’ responsibilities, 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.
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.
Walker Crips Group plc - Annual Report and Accounts 2022 60
Independent auditor’s report continued
to the members of Walker Crips Group plc
Auditor’s responsibilities for the audit of the financial statements continued
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 that 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:
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 2 years, covering the periods ending 31 March 2021 and 31 March 2022.
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 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 also provided services in relation to the preparation of the Service Auditor’s Report under AAF 01/20. Per section 5.40 of the Ethical Standard the
AAF review is a permitted service due to this being assurance work that is authorised by those charged with governance performed on operational
controls, where this work is closely linked with the audit work. Throughout the work we will not be taking the role of management or taking decisions
on behalf of the entity.
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 an on behalf of PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
29 July 2022
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022
Strategic report
Corporate governance
Financial statements
61
Consolidated income statement
year ended 31 March 2022
Revenue
Commissions and fees paid
Share of associate after tax profit
Gross profit
Administrative expenses
Exceptional items
Operating profit
Investment revenue
Finance costs
Exceptional item – Profit on disposal of associate investment
Profit/(loss) before tax
Taxation
Profit/(loss) for the year attributable to equity holders of the Parent Company
Earnings/(loss) per share
Basic and diluted
The Accounting Policies and Notes on pages 66 to 92 form part of these financial statements.
Note
5
7
8
9
10
11
12
8 & 10
14
2022
£’000
32,820
(9,110)
57
2021
£’000
30,348
(9,702)
66
23,767
20,712
(21,901)
(1,540)
(20,271)
(419)
326
9
(114)
103
324
(151)
173
22
10
(146)
–
(114)
(144)
(258)
16
0.41p
(0.61)p
Walker Crips Group plc - Annual Report and Accounts 2022
62
Consolidated statement of comprehensive income
year ended 31 March 2022
Profit/(loss) for the year
Total comprehensive income/(loss) for the year attributable to equity holders of the Parent Company
The Accounting Policies and Notes on pages 66 to 92 form part of these financial statements.
2022
£’000
173
173
2021
£’000
(258)
(258)
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022
Strategic report
Corporate governance
Financial statements
63
Consolidated statement of financial position
as at 31 March 2022
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use asset
Investment in associate
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
Deferred cash consideration
Net current assets
Long-term liabilities
Deferred cash consideration
Lease liabilities
Provision
Net assets
Equity
Share capital
Share premium account
Own shares
Retained earnings
Other reserves
Note
2022
£’000
2021
£’000
17
18
19
20
8
21
22
21
23
26
24
27
28
36
36
28
27
29
29
30
30
30
4,388
5,752
1,169
2,597
–
–
4,388
6,566
1,477
3,612
2
37
13,906
16,082
50,003
1,647
11,113
62,763
76,669
(49,625)
(132)
(414)
(1,137)
(245)
(89)
49,098
920
8,855
58,873
74,955
(47,395)
(123)
(400)
(205)
(946)
–
(51,642)
(49,069)
11,121
9,804
(29)
(2,300)
(586)
(2,915)
22,112
2,888
3,763
(312)
11,050
4,723
(33)
(2,856)
(675)
(3,564)
22,322
2,888
3,763
(312)
11,260
4,723
Equity attributable to equity holders of the Parent Company
22,112
22,322
The Accounting Policies and Notes on pages 66 to 92 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 29 July 2022.
Signed on behalf of the Board of Directors
Sanath Dandeniya
Director
29 July 2022
Walker Crips Group plc - Annual Report and Accounts 2022
64
Consolidated statement of cash flows
year ended 31 March 2022
Operating activities
Cash generated from operations
Tax paid
Net cash generated from operating activities
Investing activities
Purchase of property, plant and equipment
(Purchase)/sale of investments held for trading
Consideration paid on acquisition of intangibles
Consideration paid on acquisition of client lists
Consideration received on sale of associate
Dividends received
Dividends received from associate investment
Interest received
Net cash (used in)/generated from 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 £1,052,000 (2021: £1,133,000)
The Accounting Policies and Notes on pages 66 to 92 form part of these financial statements.
Note
31
11
8
11
15
12
2022
£’000
4,217
(120)
4,097
(119)
(342)
(93)
–
105
9
57
–
(383)
(383)
(21)
(959)
(93)
2021
£’000
1,806
(379)
1,427
(24)
78
–
(100)
–
8
64
2
28
(64)
(12)
(999)
(134)
(1,456)
(1,209)
2,258
8,855
11,113
246
8,609
8,855
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022
Strategic report
Corporate governance
Financial statements
65
Consolidated statement of changes in equity
year ended 31 March 2022
Equity as at 31 March 2020
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
Share
capital
£’000
2,888
Share
premium
account
£’000
Own
shares
Capital
held redemption
£’000
£’000
3,763
(312)
111
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Other
£’000
4,612
Retained
earnings
£’000
11,582
–
–
–
–
(258)
(258)
(64)
(64)
Total
equity
£’000
22,644
(258)
(258)
(64)
(64)
Equity as at 31 March 2021
2,888
3,763
(312)
111
4,612
11,260
22,322
Comprehensive income for the year
Total comprehensive income for the year
Contributions by and distributions to owners
Dividends paid
Total contributions by and distributions to owners
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
173
173
(383)
(383)
173
173
(383)
(383)
Equity as at 31 March 2022
2,888
3,763
(312)
111
4,612
11,050
22,112
The Accounting Policies and Notes on pages 66 to 92 form part of these financial statements.
Walker Crips Group plc - Annual Report and Accounts 2022
66
Notes to the accounts
year ended 31 March 2022
1. General information
Walker Crips Group plc (“the Company”) is the Parent Company of the Walker Crips group of companies (“the Group”). 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 1 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 UK-adopted international accounting standards in conformity with the
requirements of the Companies Act 2006.
The principal accounting policies adopted in the preparation of the consolidated financial statements are set out in note 3. The policies have been
consistently applied to all the years presented, unless otherwise stated.
The Group financial statements are presented on pages 61 to 65.
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 2022, the Group had net assets of £22.11 million
(2021: £22.32 million), net current assets of £11.1 million (2021: £9.8 million) and cash and cash equivalents of £11.1 million (2021: £8.9 million).
The Group reported an operating profit of £326,000 for the year ended 31 March 2022 (2021: £22,000), inclusive of exceptional expense of £1,540,000
(2021: £419,000), and net cash inflows from operating activities of £4.2 million (2021: £1.8 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 2022 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) expected client and revenue losses from Truro IM resignation, (ii) net interest income from managing client deposits
prudently capped at £1.2 million, and (iii) no further significant impact from the pandemic other than what is already known. The total revenue is
expected to increase by 1.27% with gains from fee income offset by the lower trading commissions. Years two and three growth expectation set
conservatively at 2%.
Base case costs prudently reflect only the actions Management has taken to date.
Key stress scenarios that the Directors have then 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 2023
and 31 March 2024.
A remote “severe 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 and include a further prudent adjustment for the estimation uncertainty in respect of certain
provisions (see note 4 on page 74).
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
Corporate governance
Financial statements
67
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 January 2024. 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 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 remeasured to fair value at the acquisition date; any gains or losses arising from such remeasurement are recognised in profit or loss.
Contingent consideration is classified either as equity or as a financial liability. Amounts classified as a financial liability are subsequently remeasured
to fair value, with changes in fair value recognised in profit or loss.
Interests in associate
An associate is an entity in which the Group has significant influence, but not control or joint control. The Group uses the equity method of accounting
by which the equity investment is initially recorded at cost and subsequently adjusted to reflect the investor’s share of the net assets of the associate.
The Group had a 33% associate investment in Walker Crips Property Income Limited (“WCPIL”). This investment was disposed fully during the period
(see note 8).
Walker Crips Group plc - Annual Report and Accounts 2022 68
Notes to the accounts continued
year ended 31 March 2022
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, when separate payments are made to acquire
clients’ assets by adding teams of investment managers, or when acquiring the ownership of client relationships from retiring in-house self-employed
investment managers.
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.
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
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69
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;
The amount of the dividend can be reliably measured; and
Gains or losses arising on disposal of trading book instruments and changes in fair value of securities held for trading purposes are both recognised in
profit and loss.
The Group does not have any long-term contract assets in relation to customers of any fixed and/or considerable lengths of time which require the
recognition of financing costs or incomes in relation to them.
Operating expenses
Operating expenses and other charges are provided for in full up to the statement of financial position date on an accruals basis.
Exceptional items
To assist in understanding its underlying performance, the Group identifies certain items of pre-tax income and expenditure and discloses them
separately in the Consolidated income statement.
Such items include:
1. profits or losses on disposal or closure of businesses;
2. corporate transaction and restructuring costs;
3. changes in the fair value of contingent 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.
Deferred income
Income received from clients in respect of future periods to the transaction or reporting date are classified as deferred income within creditors
until such time as value has been received by the client.
Foreign currencies
The individual financial statements of each of the Group’s companies are presented in Pounds Sterling, which is the functional currency of the Group
and the presentation currency of the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency (foreign currencies)
are recorded at the rates of exchange prevailing on the dates of the transactions. At each statement of financial position date, monetary assets and
liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Exchange differences arising
on the settlement of monetary items, and on the 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 2022 70
Notes to the accounts continued
year ended 31 March 2022
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.
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
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Financial statements
71
(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.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group
has transferred substantially all the risks and rewards of ownership.
Walker Crips Group plc - Annual Report and Accounts 2022 72
Notes to the accounts continued
year ended 31 March 2022
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 12-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.
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
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Financial statements
73
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.
Share-based payments
Share-based payments are remuneration payments to selected employees that take the form of an award of shares in Walker Crips Group plc. Employees
are not able to exercise such awards in full until three years after the award has been made (the vesting period).
Equity-settled share-based payments to employees are measured at fair value of the equity instruments at the date of grant. The fair value excludes the
effect of non-market-based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out
in note 37.
As the share-based payment awards are for fully paid free shares, fair value is measured as the market value of the shares at each grant date.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based
on the Group’s estimate of the number of shares that will eventually vest. At each reporting date, the Group revises its estimate of the shares expected to
vest as a result of the effect of non-market based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the Income
Statement such that the cumulative expense reflects the revised estimate.
Walker Crips Group plc - Annual Report and Accounts 2022 74
Notes to the accounts continued
year ended 31 March 2022
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 (2021: £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
Investment 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.
Key assumptions in this regard consist of the following:
1. The continuing going concern of the Company;
2. Life expectancy of clients based on the Office for National Statistics;
3. Succession plans in place for staff and investment managers;
4. Amounts of AUMA are consistent on average;
5. A growth rate of client list AUMA of a conservative 2%; and
6. A discount rate of 12%.
Provisions – estimation and judgement
The Company has provided for the estimated cost of the project relating to the upgrade of its financial crime control framework, which was subject to
an independent review that highlighted the need for significant improvement. The costs of the review and to implement the remediation are estimated
to be £595,000, of which £455,000 remains provided at year end. Management has a detailed project plan underpinning the estimate for the remaining
provision, but this includes assumptions regarding required resources which may change.
A provision has also been made for Management’s present estimate for potential customer redress and associated costs although the review remains at
an early stage. Management has engaged third-party legal and regulatory expert advice and opinion to assist in this matter and ensure a fair customer
outcome is achieved. The Group’s insurers have been kept informed of this matter although at this time no asset has been recognised for any potential
insurance recovery until the extent of cover has been formally agreed. As work remains ongoing the estimated provision is subject to change. Areas of
estimation uncertainty remain the appropriateness of the methodology and validation of input assumptions pending legal and regulatory expert advice.
In light of the uncertainty in respect of the above two provisions, for the purposes of the going concern and viability assessment, Management has
prudently applied a 50% adverse stress to the amounts provided. It is noted that there also may be downward revisions to the estimates and, in respect
of client redress, insurance recoveries pending further discussions with and the agreement of insurers.
Finally, the Company established dilapidation provisions based on quotes and reasonable estimates of the amounts for works, as well as appropriate
rates of inflation and discount rates (see below).
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, £16,000 of additional provisions were recognised, including £4,000 of interest and released a further £77,000 of excess provision,
totalling £618,000 provision at 31 March 2022.
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.
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022 Strategic report
Corporate governance
Financial statements
5. Revenue
An analysis of the Group’s revenue is as follows:
Stockbroking commission
Fees and other revenue
Investment management
Wealth management,
Financial planning and pensions
Revenue
Investment revenue (see note 11)
Total income
% of total income
Non-
broking
income
£’000
–
22,931
22,931
1,830
24,761
9
24,770
2022
Total
£’000
8,044
22,931
30,975
1,845
32,820
9
32,829
Broking
income
£’000
9,009
–
9,009
–
9,009
–
9,009
75.5%
100.0%
29.7%
Broking
income
£’000
8,044
–
8,044
15
8,059
–
8,059
24.5%
Non-
broking
income
£’000
–
19,733
19,733
1,606
21,339
10
21,349
70.3%
Timing of revenue recognition
The following table presents operating income analysed by the timing of revenue recognition of the operating segment providing the service:
75
2021
Total
£’000
9,009
19,733
28,742
1,606
30,348
10
30,358
100.0%
2022
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
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
Investment
Wealth
management management
£’000
£’000
11,894
17,917
260
1,585
404
722
–
–
30,937
1,845
Investment
Wealth
management management
£’000
£’000
10,389
16,393
161
1,425
1,089
855
20
–
28,726
1,606
Consolidated
year ended
31 March
2022
£’000
SaaS
£’000
38
–
–
–
38
12,192
19,502
404
722
32,820
Consolidated
year ended
31 March
2021
£’000
SaaS
£’000
16
–
–
–
16
10,566
17,818
1,109
855
30,348
Walker Crips Group plc - Annual Report and Accounts 2022
76
Notes to the accounts continued
year ended 31 March 2022
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 and bespoke cloud software to companies. Unallocated corporate expenses, assets and liabilities
are not considered to be allocatable accurately, or fairly, under any known basis of allocation and are therefore disclosed separately.
Walker Crips Investment Management’s activities focus predominantly on investment management of various types of portfolios and asset classes.
Walker Crips 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”) provides the regulatory and admin software, Software as a Service (“SaaS”), to their business partners, 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.
2022
Revenue
Revenue from contracts with customers
Other revenue
Total revenue
Results
Segment result
Unallocated corporate expenses
Investment revenue
Finance costs
Profit on disposal of associate investment
Profit before tax
Tax
Profit after tax
2022
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
2022
£’000
SaaS
£’000
29,811
1,126
30,937
1,845
–
1,845
38
–
38
31,694
1,126
32,820
1,160
(258)
(102)
800
(474)
326
9
(114)
103
324
(151)
173
Investment
Wealth
management management
£’000
£’000
Consolidated
year ended
31 March
2022
£’000
SaaS
£’000
466
260
5
43
–
–
471
303
71,823
77
390
52,189
235
237
72,290
4,379
76,669
52,661
1,896
54,557
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022
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Financial statements
77
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
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
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
91
304
201
71
–
–
292
375
67,297
1,138
369
48,486
328
10
2022
£’000
61
9,049
9,110
68,804
6,151
74,955
48,824
3,809
52,633
2021
£’000
63
9,639
9,702
Walker Crips Group plc - Annual Report and Accounts 2022
78
Notes to the accounts continued
year ended 31 March 2022
8. Investment in associate
Brought forward
Share of after-tax profit
Dividends
Disposals
Carried forward
2022
£’000
2021
£’000
2
57
(57)
(2)
–
–
66
(64)
–
2
The Group disposed of its 33.33% interest in its associate, Walker Crips Property Income Limited (“WCPIL”), during the year for a consideration of
£105,000. The brought forward value of the Group’s share of net assets in WCPIL was £2,000. The Board of WCPIL submitted management accounts
to 31 December 2021 reporting an after-tax profit of £171,000, giving the Group a £57,000 entitlement from which a dividend of £57,000 was paid
to the Group in the period.
9. Profit/(loss) for the year
Profit/(loss) 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
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
AAF Review
2022
£’000
303
873
862
13,862
(725)
1,143
1,260
765
790
2,540
223
2021
£’000
375
961
837
12,690
(710)
1,148
1,195
756
595
2,221
203
21,901
20,271
2022
£’000
2022
%
2021
£’000
2021
%
51
119
13
40
223
23
53
6
18
100
57
133
13
–
203
28
66
6
–
100
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022
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Financial statements
79
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.
Exceptional items included within operating profit
Change in fair value of deferred consideration
Restructuring, redundancy and other costs
Net compensation income
Financial crime control framework review and remediation
Client redress and associated costs
Operating exceptional items
Other
Profit on disposal of associate investment
Total exceptional items
2022
£’000
–
516
(221)
595
650
1,540
(103)
1,437
2021
£’000
31
388
–
–
–
419
–
419
In the prior year, the Group incurred professional fees and other expenses relating to the actions taken in response to the pandemic, including restructuring
and redundancy costs, and a contractual dispute. In addition, the Group recognised a change in fair value of deferred consideration in respect of acquired
client relationships.
In the current year, the following items have been classified as exceptions due to their materiality and non-recurring nature. These are:
a) Completion of the Group’s restructuring and redundancy activity commenced during the pandemic;
b) The Group received compensation under a confidential settlement agreement, without admission of liability by either party in relation to a dispute;
c) The costs of an independent review and resulting actions to remediate and enhance the Group’s financial crime framework. See notes 4 and 27;
d) The actions of an associate combined with an internal control failure resulted in customer detriment. Provision has been made for the present
estimate of redress and associated costs. We are working with our insurers to confirm scope of cover and any future recovery will also be treated
as an exceptional item. See notes 4 and 27; and
e) The Group disposed of its 33.33% interest in its associate, Walker Crips Property Income Limited (“WCPIL”).
In total, £1,437,000 has been expensed in the current year. The Directors acknowledge this is a significant amount but consider transparent disclosure
and explanation provides readers with an improved understanding of the Group results.
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
2022
£’000
–
9
9
2022
£’000
(93)
(11)
(10)
(114)
2021
£’000
2
8
10
2021
£’000
(134)
(2)
(10)
(146)
Walker Crips Group plc - Annual Report and Accounts 2022
80
Notes to the accounts continued
year ended 31 March 2022
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
2022
£’000
11,561
1,197
57
1,047
13,862
2021
£’000
10,643
1,074
94
879
12,690
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 39 certified self-employed account executives (2021: 40).
Please see page 46 for details of Directors’ remunerations.
The average number of staff employed during the year was:
Executive Directors
Certified 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% (2021: 19%)
Prior year adjustments
Origination and reversal of timing differences during the current period
Corporation tax is calculated at 19% (2021: 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:
Profit/(loss) before tax
Tax on profit/(loss) on ordinary activities at the standard rate UK corporation tax rate of 19% (2021: 19%)
Effects of:
Tax rate changes for deferred tax
Expenses not deductible for tax purposes
Prior year adjustment
Fixed asset differences
Other
2022
Number
2021
Number
2
54
152
208
2
60
150
212
2022
£’000
131
(66)
86
151
2022
£’000
324
62
108
21
(66)
26
–
151
2021
£’000
96
111
(63)
144
2021
£’000
(114)
(22)
–
22
111
63
(30)
144
Current tax has been provided at the rate of 19%. Deferred tax has been provided at 19% (2021: 19%).
The exceptional charge of £1,437,000 (2021: £419,000), disclosed separately on the Consolidated income statement, is tax deductible to the
value of £373,000 (2021: £80,000) 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.
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022
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Corporate governance
Financial statements
81
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 2021 of 0.60p (2020: 0.00p) per share
Interim dividend for the year ended 31 March 2022 of 0.30p (2021: 0.15p) per share
Proposed final dividend for the year ended 31 March 2022 of 1.20p (2021: 0.60p) per share
2022
£’000
255
128
383
511
2021
£’000
–
64
64
256
The proposed final dividends are subject to approval by shareholders at the Annual General Meeting and have not been included as liabilities in these
financial statements.
16. Earnings/(loss) per share
The calculation of basic earnings/(loss) per share for continuing operations is based on the post-tax profit for the financial year of £173,000
(2021: post-tax loss of £258,000) and divided by 42,577,328 (2021: 42,577,328) Ordinary Shares of 62/3 pence, being the weighted average number
of Ordinary Shares in issue during the year.
No dilution to earnings/(loss) per share in the current year or in the prior year.
The calculation of the basic earnings/(loss) per share is based on the following data:
Earnings/(loss) for the purpose of basic earnings/(loss) per share
being net profit/(loss) attributable to equity holders of the Parent Company
Number of shares
Weighted average number of Ordinary Shares for the purposes of basic earnings per share
This produced basic earnings per share of 0.41 pence (2021: basic loss per share of 0.61 pence).
17. Goodwill
Cost
At 1 April 2020
At 1 April 2021
At 31 March 2022
Accumulated impairment
At 1 April 2020
At 1 April 2021
Impaired during the year
At 31 March 2022
Carrying amount
At 31 March 2022
At 31 March 2021
2022
£’000
2021
£’000
173
(258)
2022
Number
2021
Number
42,577,328
42,577,328
£’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 2022
82
Notes to the accounts continued
year ended 31 March 2022
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”)
2022
£’000
2,901
1,487
4,388
2021
£’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 above 16% for the London York CGU value-in-use to equal the respective carrying values. Revenues would
need to fall by £341,000 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 £7.8 million (2021: £5.4 million) with headroom, after selling costs, of £4.2 million (2021: £1.7 million) after applying price earnings multiples based on
the average of the Group’s and its peers’ published results. Accordingly, this measurement is classified as fair value hierarchy Level 3 having used valuation
techniques not based on directly observable market data. A 58% decrease in BPAM’s profit after tax would result in potential impairment of £15,000.
18. Other intangible assets
Cost
At 1 April 2020
Reclassification of software as intangibles*
Additions in the year
At 1 April 2021
Reclassification of assets relating to IFRS 16
Additions in the year
At 31 March 2022
Amortisation
At 1 April 2020
Reclassification of software as intangibles*
Charge for the year
At 1 April 2021
Charge for the year
At 31 March 2022
Carrying amount
At 31 March 2022
At 31 March 2021
Software
licences Client lists
£’000
£’000
44
2,783
56
2,883
(45)
61
10,572
–
93
10,665
–
32
Total
£’000
10,616
2,783
149
13,548
(45)
93
2,899
10,697
13,596
25
2,230
204
2,459
185
2,644
3,890
–
633
4,523
677
5,200
3,915
2,230
837
6,982
862
7,844
255
424
5,497
6,142
5,752
6,566
* During the previous year, 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 or software licences should be impaired.
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022
Strategic report
Corporate governance
Financial statements
Leasehold
improvement,
furniture and Computer
software
equipment
£’000
£’000
Computer
hardware
£’000
83
Total
£’000
7,061
(5)
(2,783)
75
4,348
(73)
(50)
118
4,343
4,731
(5)
(2,230)
375
2,871
303
3,174
1,435
126
–
21
1,582
–
–
8
1,590
1,367
47
–
77
1,491
50
1,541
2,833
(121)
–
54
2,766
(73)
(50)
110
2,753
1,063
19
–
298
1,380
253
1,633
1,120
1,386
2,793
(10)
(2,783)
–
–
–
–
–
–
2,301
(71)
(2,230)
–
–
–
–
–
–
49
91
1,169
1,477
19. Property, plant and equipment
Owned fixed assets
Cost
1 April 2020
Reclassification of assets*
Reclassification of software as intangibles**
Additions in the year
At 1 April 2021
Reclassification of assets*
Dilapidation asset reassessment
Additions in the year
At 31 March 2022
Accumulated depreciation
1 April 2020
Reclassification of assets*
Reclassification of software as intangibles**
Charge for the year
1 April 2021
Charge for the year
At 31 March 2022
Carrying amount
At 31 March 2022
At 31 March 2021
* 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 2021
Additions
Lease reassessment
At 31 March 2022
Accumulated depreciation
1 April 2021
Charge for the year
At 31 March 2022
Carrying amount
At 31 March 2022
At 31 March 2021
Offices
£’000
Computer
software
£’000
Computer
hardware
£’000
4,601
104
(401)
4,304
1,319
649
1,968
2,336
3,282
744
155
–
899
469
204
673
226
275
95
–
–
95
40
20
60
35
55
Total
£’000
5,440
259
(401)
5,298
1,828
873
2,701
2,597
3,612
Walker Crips Group plc - Annual Report and Accounts 2022
84
Notes to the accounts continued
year ended 31 March 2022
21. Investments – fair value through profit or loss
Non-current asset investments
At 31 March 2020
At 31 March 2021
Loss from change in fair value
At 31 March 2022
Investments
at fair value
through
profit or loss
£’000
51
37
(37)
–
Total
£’000
51
37
(37)
–
The Group’s investment in unregulated collective investment scheme (“UCIS”) were written down in the period to £nil. The investment was to cover a
corresponding creditor of £25,000, therefore a net write-down of £12,000 was recognised in the Income Statement.
Current asset investments
Trading investments
Investments – fair value through profit or loss
As at
31 March
2022
£’000
As at
31 March
2021
£’000
1,647
920
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 2022
Financial assets held at fair value through profit and loss
At 31 March 2021
Financial assets held at fair value through profit and loss
Level 1
£’000
Level 2
£’000
Level 3
£’000
1,647
920
–
–
–
–
Total
£’000
1,647
920
Further IFRS 13 disclosures have not been presented here as the balance represents 2.148% (2021: 1.277%) of total assets. There were no transfers of
investments between any of the levels of hierarchy during the year.
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022
Strategic report
Corporate governance
Financial statements
85
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
2022
£’000
2021
£’000
42,898
1,522
5,583
50,003
2022
£’000
11,113
11,113
40,633
2,447
6,018
49,098
2021
£’000
8,855
8,855
2021
£’000
5,256
3,337
25
237
8,855
Total
£’000
(335)
32
(97)
(400)
(51)
37
(414)
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 2022 was £314,424,000
(2021: £274,145,000).
The credit quality of banks holding the Group’s cash at 31 March 2022 is analysed below with reference to credit ratings awarded by Fitch.
A+
AA-
A-
Unrated or held in cash
24. Deferred tax liability
At 1 April 2020
Use of loss brought forward
Debit to the income statement
At 1 April 2021
Use of loss brought forward
Debit to the income statement
At 31 March 2022
2022
£’000
7,837
2,959
45
272
11,113
Short-term
temporary
Capital differences
and other
£’000
allowances
£’000
(65)
–
(59)
(124)
119
–
(5)
(270)
32
(38)
(276)
(170)
37
(409)
Deferred income tax assets are recognised for tax loss carried forward to the extent that the realisation of the related tax benefit through future taxable profits
is probable. The Group did not recognise deferred income tax assets of £152 (2021: £11,000) in respect of losses amounting to £800 (2021: £58,000) that can
be carried forward against future taxable income. Losses amounting to £nil (2021: £nil) and £nil (2021: £nil) expire in 2021 and 2022, respectively.
Walker Crips Group plc - Annual Report and Accounts 2022
86
Notes to the accounts continued
year ended 31 March 2022
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
2022
£’000
11,113
42,898
1,522
108
55,641
2021
£’000
8,855
40,633
2,447
55
51,990
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022
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87
An ageing analysis of the Group’s financial assets is presented in the following table:
At 31 March 2022
Trade receivables
Cash and cash equivalent
Other debtors
Accrued interest income
Current
£’000
42,459
11,113
1,469
108
55,149
0-1
month
£’000
2-3
months
£’000
Over 3
months
£’000
Carrying
value
£’000
245
–
11
–
256
179
–
1
–
180
15
–
41
–
56
42,898
11,113
1,522
108
55,641
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 22, 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 2022, the Directors of the Company reviewed and assessed the Group’s existing assets for impairment using the IFRS 9 simplified approach
to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets and no additional impairments
have been recognised on application and no material defaults are anticipated within the next 12 months.
Concentration of credit risk
In addition, daily risk management procedures to actively monitor disproportionately large trades by a customer or market counterparty are in place.
The financial standing, pattern of trading, type and size of security or instrument traded are amongst the factors taken into consideration.
(ii) Liquidity risk
Liquidity risk 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.
2022
Trade and other payables
2021
Trade and other payables
Less than
1 year
£’000
49,625
49,625
Total
£’000
49,625
49,625
47,395
47,395
47,395
47,395
(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 2022
88
Notes to the accounts continued
year ended 31 March 2022
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 2022 using closing market prices.
A 10% fall in global equity markets would, in isolation, result in a pre-tax decrease to net assets of £164,700 (2021: £92,000). 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
2022
£’000
42,325
2,537
14
4,749
49,625
2021
£’000
39,951
3,059
28
4,357
47,395
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 15 days (2021: 14 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:
Professional
fees
£’000
Client
payments
£’000
Dilapi-
dations
£’000
Provisions falling due within one year
At start of year
Additions
Dilapidation provision transferred from more than one year
Utilisation of provision
Provisions falling due after one year
At start of year
Dilapidation provision transferred to less than one year
Utilisation or release of provision
Interest
–
595
–
(140)
455
–
–
–
–
–
205
650
–
(205)
650
–
–
–
–
–
Total as at 31 March 2022
455
650
–
16
16
–
32
675
(16)
(77)
4
586
618
Total
£’000
205
1,121
16
(205)
1,137
675
(16)
(77)
4
586
1,723
Professional fees
The Group has provided for the costs to remediate and improve its financial crime control framework. See notes 4 and 10.
Client payments
These provisions relate to expected payments to clients for redress, claims or complaints together with associated costs which in the opinion of the Board,
need providing for after taking into account the risks and uncertainties surrounding such events. The timing of these settlements are unknown but it is
expected that they will be resolved within 12 months. See notes 4 and 10.
Dilapidations
The Group, based on revised estimates, has made an additional provision of £16,000 for dilapidations in connection with acquired leasehold premises
(2021: total additional provision of £16,000), which is due within one year. 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 £586,000, including interest.
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 £525,000 per lease.
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022
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89
Total
£’000
3,802
259
(417)
93
(1,192)
2,545
2021
£’000
946
2,856
3,802
2021
£’000
1,069
266
3,898
65
5,298
2022
£’000
2021
£’000
2,888
2,888
Offices
£’000
Computer
software
£’000
Computer
hardware
£’000
3,486
104
(417)
87
(923)
2,337
261
155
–
5
(248)
173
55
–
–
1
(21)
35
2022
£’000
245
2,300
2,545
2022
£’000
340
491
2,058
54
2,943
28. Lease liabilities
Lease liabilities
At 1 April 2021
Additions
Lease reassessments
Interest
Lease payments
At 31 March 2022
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 (2021: 43,327,328) Ordinary Shares of 62/3p each
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 2021
At 31 March 2022
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 2022, this totalled £22,112,000 (2021: £22,322,000).
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 2022
90
Notes to the accounts continued
year ended 31 March 2022
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 2022 and 2021.
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 2022 under the following categories:
Own shares held
(£312,000) (2021: (£312,000))
the negative balance of the Group’s own shares, which have been
bought back and held in treasury.
Retained earnings
£11,050,000 (2021: £11,260,000)
the net cumulative earnings of the Group, which have not been
paid out as dividends, are retained to be reinvested in our core, or
developing, companies.
Other reserves
£4,723,000 (2021: £4,723,000)
the cumulative premium on the issue of shares as deferred consideration
for corporate acquisitions £4,612,000 (2021: £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
(2021: £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 after tax result
Depreciation of property, plant and equipment
Depreciation of right-of-use assets**
Decrease in debtors***
Increase in creditors***
Net cash inflow
2022
£’000
326
862
–
(347)
(57)
303
873
(915)
3,172
2021
£’000
22
837
31
(362)
(66)
375
961
(24,572)
24,580
4,217
1,806
* Revaluation (profit)/loss on proprietary positions.
** Lease liability payment associated with RoU assets were £1,052,000 (2021: £1,133,000).
*** Cash inflow from working capital movement of £2,257,000 (2021: £8,000). The movement in working capital includes provisions made in respect of accrued exceptional costs
of £1,105,000 (2021: £301,000). Actual cash outflow relating to exceptional costs in the year amounted to £435,000 (2021: £118,000).
32. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of £nil (2021: £nil) contracted but not provided for and £nil (2021: £nil) capital commitments
authorised but not contracted for.
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022
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Financial statements
91
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
2022
£’000
15
2021
£’000
15
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 £268,000 (2021: £154,000).
Fees of £30,000 (2021: £nil) were received by EnOC Technologies Ltd from CyberQuote Pte Ltd (a company, where Hua Min Lim is a shareholder) for the
service provided on normal commercial terms.
Commission of £4,245 (2021: £7,587) 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
2022
£’000
2021
£’000
458
33
–
491
432
31
–
463
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. As explained in note 4, certain provisions remain subject
to estimation uncertainty which may result in material variations in such estimates as matters are finalised.
35. Subsequent events
There are no material events arising after 31 March 2022, which have an impact on these financial statements.
36. Deferred cash consideration
Due within one year
Amounts due to personnel under recruitment contracts/acquisition agreements
Due after one year
Amounts due to personnel under recruitment contracts/acquisition agreements
2022
£’000
2021
£’000
89
29
–
33
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.
The presentation of this note was amended in this financial year to show both current and non-current liabilities for deferred cash consideration on the face
of the statement of financial position. In previous years, deferred cash consideration was only separately disclosed on the statement of financial position
under non-current liabilities, with current elements of deferred cash consideration being disclosed under other creditors in note 26.
Walker Crips Group plc - Annual Report and Accounts 2022
92
Notes to the accounts continued
year ended 31 March 2022
37. Share-based payments
The Group recognised total expenses in the year of £19,431 (2021: £nil) related to equity-settled share-based payment transactions.
Free share-based payment
The Group established a single scheme in the form of conditional share awards with a three year vesting period. No performance conditions were attached
to the scheme except that the relevant employee is employed at the vesting date. This was settled by the purchase of shares in the open market in benefit
of the employee and no newly issued or treasury shares can be used to satisfy the award.
One award was made in the financial year.
Share Incentive Plan (“SIP”)
Employees who have been employed for longer than three months and are subject to PAYE are invited to join the SIP. Employees may use funds from
their gross monthly salary (being not less than £10 and not greater than £150) to purchase Ordinary Shares in the Group (“Partnership Shares”). For
every Partnership Share purchased, the employee receives matching shares at a rate of 50%. Employees are offered an annual opportunity to top up
contributions to the maximum annual limit of £1,800 (or 10% of salary, if lower). All shares to date awarded under this scheme have been purchased
in the market monthly. It is the intention of the Directors to continue this policy in the year to 31 March 2023.
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022 93
2021
£’000
3,215
856
17,775
21,846
759
74
359
2022
£’000
–
–
21,757
21,757
758
–
335
1,093
1,192
22,850
23,038
(3,407)
(3,407)
(2,314)
(3,162)
(3,162)
(1,970)
–
–
(335)
(335)
19,443
19,541
2,888
3,763
(312)
8,381
4,723
2,888
3,763
(312)
8,479
4,723
19,443
19,541
Strategic report
Corporate governance
Financial statements
Company balance sheet
as at 31 March 2022
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 assets/(liabilities)
Long-term liabilities
Landlord contribution to leasehold improvements
Net assets
Equity
Share capital
Share premium account
Own shares
Retained earnings
Other reserves
Equity attributable to equity holders of the Company
Note
42
41
43
44
45
46
49
48
48
48
48
48
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 profit for the financial year of £285,000 (2021: after-tax loss of £523,000).
The financial statements of Walker Crips Group plc (Company registration no. 01432059) were approved by the Board of Directors and authorised
for issue on 29 July 2022.
Signed on behalf of the Board of Directors:
Sanath Dandeniya
Finance Director
Walker Crips Group plc - Annual Report and Accounts 2022
94
Company statement of changes in equity
year ended 31 March 2022
Equity as at 31 March 2020
Total comprehensive loss for the period
Contributions by and distributions to owners
Dividends paid
Total contributions by and distributions to owners
Called up
share
capital
£’000
Share
premium
account
£’000
Own
shares
held
£’000
2,888
3,763
(312)
–
–
–
–
–
–
–
–
–
Other
£’000
4,723
–
–
–
Equity as at 31 March 2021
2,888
3,763
(312)
4,723
Total comprehensive income for the period
Contributions by and distributions to owners
Dividends paid
Total contributions by and distributions to owners
–
–
–
–
–
–
–
–
–
–
–
–
Retained
earnings
£’000
9,066
(523)
(64)
(64)
8,479
285
(383)
(383)
Total
equity
£’000
20,128
(523)
(64)
(64)
19,541
285
(383)
(383)
Equity as at 31 March 2022
2,888
3,763
(312)
4,723
8,381
19,443
The Accounting Policies and Notes on pages 95 to 102 form part of these financial statements.
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022
Strategic report
Corporate governance
Financial statements
95
Notes to the Company accounts
year ended 31 March 2022
38. 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 39).
The financial statements are presented in the currency of the primary activities of the Parent Company (its functional currency). For the purpose of the
financial statements, the results and financial position are presented in GBP sterling (£). The principal accounting policies have been summarised below.
They have all been applied consistently throughout the year and the preceding year.
The Parent Company has chosen to adopt the disclosure exemption in relation to the preparation of a cash flow statement under FRS 102.
Going concern
After conducting enquiries, the Directors believe that the Parent Company has adequate resources to continue in existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in preparing the financial statements. The Parent Company’s business activities, together
with the factors likely to affect its future development, performance and position, 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
331/3% per annum on cost
The gain or loss on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the
asset and is recognised in income. The residual values and estimated useful life of items within property, plant and equipment are reviewed at least
at each financial year end. Any shortfalls in carrying value are impaired immediately through profit or loss.
Intangible assets
Client lists
Client lists are recognised when it is probable that future economic benefits will flow to the Parent Company and the cost of the asset can be measured
reliably whilst the risk and rewards have also transferred into the Parent Company’s ownership.
Intangible assets classified as client lists are recognised when acquired as part of a business combination or when separate payments are made to
acquire clients’ assets by adding teams of investment managers.
The cost of acquired client lists and businesses generating revenue from clients and investment managers are capitalised. These costs are amortised on
a straight-line basis over their expected useful lives of three to twenty years. The amortisation period and amortisation method for intangible assets are
reviewed at least each financial year end. All intangible assets have a finite useful life.
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 2022 96
Notes to the Company accounts continued
year ended 31 March 2022
38. Significant accounting policies continued
Financial instruments
Financial assets and financial liabilities are recognised in the balance sheet when the Parent Company becomes a party to the contractual provisions
of the instrument. Section 11 of FRS 102 has been applied in classifying financial instruments depending on the nature of the instrument held.
Revenue
Income consists of profits distribution from Barker Poland Asset Management LLP, interest received or accrued over time and dividend income recorded
when received.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Debtors
Other debtors are classified as basic financial instruments and measured at initial recognition at transaction price. Debtors are subsequently measured
at amortised cost using the effective interest rate method. A provision is established when there is objective evidence that the Group will not be able
to collect all amounts due.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits, together with other short-term highly liquid investments, which are readily
convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the Parent Company after deducting all of its liabilities. Equity instruments issued by the
Parent Company are recorded at the proceeds received, net of direct issue costs.
Leases
Rentals under operating leases are charged on a straight-line basis over the lease term even if the payments are not made on such a basis.
Benefits received as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term.
39. 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 20 years
to be both appropriate and in line with our peers. There were no acquisitions made in the period to 31 March 2022.
On 1 April 2021, the Company transferred the net book value of client list assets, as well as corresponding liabilities to a fully owned subsidiary Walker Crips
Investment Management Limited to reflect the correct substance of historical transactions that created them on the balance sheet of the Company (see
note 42). The adjustment had no impact on the financial performance or position of the Group.
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40. Profit for the year
Profit for the financial year of £285,000 (2021: loss of £523,000) is after an amount of £51,000 (2021: £57,000) 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
2022
£’000
2021
£’000
175
25
–
200
147
12
3
162
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
41. Property, plant and equipment
Cost
At 1 April 2021
Asset transfers on 1 April 2021*
At 31 March 2022
Depreciation
At 1 April 2021
Asset transfers on 1 April 2021*
Charge for the year
At 31 March 2022
Net book value
At 31 March 2022
At 31 March 2021
2022
Number
2021
Number
2
4
6
2
4
6
Leasehold
improvements,
furniture and Computer
software
equipment
£’000
£’000
1,674
(1,674)
–
818
(818)
–
–
–
856
858
–
858
858
–
–
858
–
–
Total
£’000
2,532
(1,674)
858
1,676
(818)
–
858
–
856
* The cost and accumulated depreciation of leasehold additions, property dilapidation assets and liabilities were transferred on 1 April 2021 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.
Walker Crips Group plc - Annual Report and Accounts 2022
98
Notes to the Company accounts continued
year ended 31 March 2022
42. Other intangible assets
Cost
At 1 April 2021
Asset transfers on 1 April 2021*
At 31 March 2022
Amortisation
At 1 April 2021
Asset transfers on 1 April 2021*
Charge for the year
At 31 March 2022
Net book value
At 31 March 2022
At 31 March 2021
Client lists
£’000
5,076
(5,076)
–
1,861
(1,861)
–
–
–
Total
£’000
5,076
(5,076)
–
1.861
(1,861)
–
–
–
3,215
3,215
* On 1 April 2021, the Company transferred the net book value of client list assets, as well as corresponding liabilities to a fully owned subsidiary Walker Crips Investment
Management Limited to reflect the correct substance of historical transactions that created them on the balance sheet of the Company. 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.
43. Investments measured at cost less impairment
Subsidiary undertakings
2022
£’000
21,757
2021
£’000
17,775
During the year, the Company made an investment of £250,000 in Walker Crips Wealth Management Limited, an indirect 100% owned subsidiary of the
Group. The Company also recognised at £41,352 the investment value at cost of Investorlink Limited, an historically owned dormant subsidiary, which was
not previously recognised in monetary terms in investments.
In addition, on 1 April 2021, the Company transferred the carrying value of intangible assets, property related assets and related liabilities to its wholly
owned subsidiary, Walker Crips Investment Management Limited (“WCIM”). The transaction was funded in WCIM by raising an amount of £3,690,000
by way of a capital contribution from the Company. The Company recognised the capital contribution as an increase in its investment in WCIM by
£3,690,000.
A complete list of subsidiary undertakings can be found in note 54.
44. Trade and other receivables
Amounts owed by Group undertakings
Prepayments and accrued income
2022
£’000
758
–
758
2021
£’000
751
8
759
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 45.
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45. Deferred taxation
At 1 April
Use of Group Relief
(Charge)/credit to the income statement
At 31 March
2022
£’000
74
(14)
(60)
–
2021
£’000
179
(40)
(65)
74
Deferred tax has been provided at 25% (2021: 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.
46. Trade and other payables
Accruals and deferred income
Amounts due to subsidiary undertakings
Other creditors
2022
£’000
61
3,270
76
3,407
2021
£’000
142
2,730
290
3,162
47. 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 marketplace
where financial risk is inherent in the core businesses of investment management and financial services.
The Group considers its financial risks arising from its use of financial instruments to fall into three main categories:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
Further information on the disclosures and policies carried out by the Parent Company and the Group are made in note 25 of the Consolidated financial statements.
Walker Crips Group plc - Annual Report and Accounts 2022
100
Notes to the Company accounts continued
year ended 31 March 2022
47. Risk management policies continued
(i) Credit risk
Maximum exposure to credit risk:
Cash
Other debtors
As at 31 March
2022
£’000
335
758
1,093
The credit quality of banks holding the Group’s cash at 31 March 2022 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
2022
£’000
–
335
–
335
2022
£’000
758
–
–
–
–
* These disclosures were omitted in the prior year. The correction of these items in prior year do not affect profit or loss or the statement of financial position in the prior
or current year. These amounts are for disclosure purposes only.
(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
2022
£’000
3,407
–
3,407
2022
£’000
3,407
–
–
3,407
(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.
2021
£’000
359
751*
1,110
2021
£’000
–
359
–
359
2021
£’000
751*
–
–
–
–
2021
£’000
3,162
–
3,162
2021
£’000
3,162
–
–
3,162
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022
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48. Called-up share capital
Called-up, allotted and fully paid
43,327,328 (2021: 43,327,328) Ordinary Shares of 62/3p each
No new shares were issued in the year to 31 March 2022 or the prior year.
2022
£’000
2021
£’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 2021
At 31 March 2022
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.
Apart from share capital and share premium, the Parent Company holds reserves at 31 March 2022 under the following categories:
Own shares held
(£312,000) (2021: (£312,000))
the negative balance of the Parent Company’s own shares that have
Retained earnings
£8,381,000 (2021: £8,479,000)
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.
Other reserves
£4,723,000 (2021: £4,723,000)
the cumulative premium on the issue of shares as deferred
consideration for corporate acquisitions £4,612,000 (2021: £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 (2021: £111,000).
49. Creditors: amounts falling due after more than one year
Landlord contribution to leasehold improvements
2022
£’000
–
–
2021
£’000
335
335
The landlord contribution towards leasehold improvements was transferred on 1 April 2021 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.
Walker Crips Group plc - Annual Report and Accounts 2022
102
Notes to the Company accounts continued
year ended 31 March 2022
50. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of £nil (2021: £nil) contracted but not provided for and £nil (2021: £nil) capital commitments
authorised but not contracted for.
Lease commitments
The Company did not have any annual commitments under non-cancellable operating leases (2021: £nil).
51. 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 £491,000 (2021: £463,000).
52. 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.
53. Subsequent events
There are no material events arising after 31 March 2022, which have an impact on these financial statements.
54. 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 Limited2
United Kingdom
Management services
Walker Crips Wealth Management Limited2
United Kingdom
Financial services advice
Ebor Trustees Limited2
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 Limited2
United Kingdom
Holding company
Ebor Pensions Management Limited2
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 Limited1
United Kingdom
Nominee company
WCWB (PEP) Nominees Limited1
United Kingdom
Nominee company
WCWB (ISA) Nominees Limited1
United Kingdom
Nominee company
WCWB Nominees Limited1
United Kingdom
Nominee company
Walker Crips Consultants Limited1
United Kingdom
Dormant company
Walker Crips Ventures Limited1
United Kingdom
Financial services advice
The registered office for companies and associated undertakings is:
1 Old Change House, 128 Queen Victoria Street, London, England, EC4V 4BJ.
2 Apollo House, Eboracum Way, York, England, YO31 7RE.
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%
Financial statementsWalker Crips Group plc - Annual Report and Accounts 2022
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103
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 & Remuneration 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 2022 Walker Crips Group plc
Old Change House,
128 Queen Victoria Street,
London
EC4V 4BJ
020 3100 8000
walkercrips.co.uk
client.services@wcgplc.co.uk