Making
investment
rewarding
for our clients, our shareholders and our staff
Annual Report and Accounts 2023
A technology driven financial
services company
Walker Crips Group offers
investment management and
financial planning services,
pensions administration and
cloud-based technology
solutions.
We support our clients through
the challenging and ever-changing
investment environment by providing
them with our expertise and utilising
the latest technology.
Inverness
Offices in the UK
10
Clients across the UK
28,062
York
Wymondham
Birmingham
Epping
Bristol
Newbury
Solent
Truro
London
(head office)
In our long history of managing
investments spanning over a century,
we have supported our clients through
numerous challenging periods. Walker
Crips and its predecessors have been
actively trading shares for clients on the
London Stock Exchange since before the
outbreak of the First World War in 1914.
Our team consists of dedicated individuals who strive to
continuously improve and provide a valuable service to our
clients, helping them nurture and grow their investments to
achieve their life goals.
We remain committed to enhancing our technological
capabilities to bolster our offering, increase efficiencies
and deliver value to all our stakeholders.
Strategic report
At a glance
Financial highlights
Key performance indicators
Chairman’s statement
CEO’s statement
Our business model and strategy
Our people and culture
Market analysis
Finance Director’s review
Our offices across the UK
Supporting our community
Principal risks and uncertainties
Section 172(1) Statement
Environmental strategy (including TCFD)
Corporate governance
Board of Directors
Chairman’s introduction to
corporate governance report
Report by the Directors – on
corporate governance matters
Audit Committee report
Remuneration report
Directors’ report
Statement of Directors’ responsibilities
Financial statements
IFC
02
03
04
06
08
10
12
14
17
18
20
25
28
32
34
35
40
44
52
55
56
62
Independent auditor’s report to the
members of Walker Crips Group plc
Consolidated income statement
Consolidated statement of
comprehensive income
63
Consolidated statement of financial position 64
Consolidated statement of cash flows
65
Consolidated statement of changes in equity 66
Notes to the accounts
67
95
Company balance sheet
96
Company statement of changes in equity
Notes to the Company accounts
97
Officers and professional advisers
103
This report forms part of our wider communications suite. But as part of our
commitment to being a sustainable business operating in the right manner,
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
be empowering our online experience and ensuring that you get the same
Walker Crips experience of our Annual Reports online.
Walker Crips Group plc Annual Report and Accounts 2023 | 01
Strategic report
Corporate governance
Financial statements
Financial highlights
A challenging year in the face of headwinds but we maintain
our focus on the key drivers of revenue generation, cost
management, cash conversion, and operational and financial
resilience, including making important investments in our
people and technology.
Revenue
Assets Under Management
Cash and cash equivalents
Total revenues decreased 3.7% to
£31.6m
(2022: £32.8 million).
Assets Under Management (“AUM”)
decreased by 13.9% to
£3.1bn
(2022: £3.6 billion).
Cash and cash equivalents of
£13.14m
(2022: £11.11 million).
Adjusted EBITDA
Operating profit
Proposed final dividend
Adjusted EBITDA decreased 16.7% to
Operating profit increased 200.5% to
Proposed final dividend of
£3.25m
(2022: £3.90 million)**.
£625,000
(2022: £208,000 – restated****), albeit fell
36.8% to £1,179,000 (2022: £1,866,000) when
adjusted for operational exceptional items*.
0.25p per share
(2022: 1.20 pence per share), bringing the total
dividends for the year to 0.50 pence per share
(2022: 1.50 pence per share).
Underlying cash generated
Profit before tax
Underlying cash generated from
operations improved 174.4% to
£3.36m
(2022: £1.23 million – restated)***.
Profit before tax increased 206.8% to
£632,000
(2022: £206,000 – restated), though fell 32.7%
to £1,186,000 (2022: £1,761,000) when adjusted
for total exceptional items*.
1.20
0.60
*
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.
0.33
**
Adjusted EBITDA represents earnings before interest, taxation, depreciation and amortisation, and
exceptional items. The Directors present this result as it is a metric widely used by stakeholders when
considering an entity’s financial performance. A full reconciliation to IFRS results is provided in the Finance
Director’s review.
*** Underlying cash generated from operations represents the cash generated from operations adjusted for
lease liability payments under IFRS 16, non-cyclical working capital movements and operational exceptional
items. The Directors consider that this metric helps readers understand the cash generating performance of
the Group. A full reconciliation to the IFRS results is provided in the Finance Director’s review.
**** As explained in the Finance Director’s review and note 38 of the accounts, the prior year results have been
restated to correct an error regarding the recording of an obligation to HMRC in respect of Stamp Duty
Reserve Tax.
02 | Walker Crips Group plc Annual Report and Accounts 2023
0.25
0.00
2019
2020
2021
2022
2023
Strategic report
Corporate governance
Financial statements
Key performance indicators
Performance in 2023 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.
Revenue
Operating profit / (loss)
Transaction volume
£31.6m
£0.63m
2023
2022
2021
£31.6m
£32.8m
2023
2022
£0.21m restated
£30.3m
2021
(£0.14m) restated
112,243
£0.63m
2023
112,243
124,421
2022
2021
277,402
Commentary
An overall 3.7% decrease in total revenue
reflecting the mix of economic and political
uncertainty, and higher interest rate environment.
Commentary
Year-on-year improvement in IFRS profitability,
but this metric masks the true downturn in
operating performance due to lower exceptional
items year on year.
Commentary
Elevated risk of recession, rising inflation and
cost of living, rising interest rates and UK political
uncertainty have all played a part in dampening
market confidence, leading to lower trading volumes.
Operating profit before
exceptional items
Total dividends paid and proposed
for the current year (pence per share)
£1.18m
2023
2022
2021
£1.18m
£0.44m
£0.44m
0.50p
2023
0.50p
£1.86m
2022
2021
0.75p
1.50p
Commentary
The reduction in revenue and inflationary
pressures on costs has resulted in a 36.8% fall
in pre-exceptional operating profits.
Commentary
Reduced dividend in line with reduction in
underlying profitability.
Breakdown of AUMA
£5.0bn
Commentary
The Group’s Assets Under Management and Administration (“AUMA”) as at 31 March 2023 is 9.1%,
down on prior year, reflecting stagnant financial markets and some customers re-deploying assets due
to market uncertainty and cost-of-living pressures.
Type of asset
a. Administration
b. Advisory
c. Discretionary
Total
2023
£’bn
1.892
1.410
1.710
£ 5.0
2022
£’bn
1.895
1.632
1.930
£5.5
2021
£’bn
1.974
1.523
1.863
£5.4
For further information, please contact:
Walker Crips Group plc
Craig Harrison, Media Relations
Tel: +44 (0)20 3100 8000
Four Agency
Jonathan Atkins
walkercrips@four.agency
Singer Capital Markets
Justin McKeegan / Jalini Kalaravy
Tel: +44 (0)20 3920 0555
Tel: +44 (0)20 7496 3000
Further information on Walker Crips Group
is available on the Company’s website:
walkercrips.co.uk
Walker Crips Group plc Annual Report and Accounts 2023 | 03
Strategic report
Corporate governance
Financial statements
Chairman’s statement
Although pleasing to report a
year-on-year improvement in IFRS
profitability, the underlying business
has experienced reduced trading
commissions, lower management
fees, and increased costs in the
challenging and uncertain economic
conditions we faced during the year.
We continue to focus on investing in our
people and technology to drive the key
initiatives that improve our working
environment, customer service and
ultimately operating margins.
Martin Wright
Chairman
The Group continues to be profitable despite
challenging economic conditions in the UK and
across the world. The aftermath of the pandemic,
the unprovoked war in Ukraine and the uncertain
UK political arena have contributed to supply
shortages and heightened demand leading to
substantial inflation and the consequent increased
cost of living. In response, the BoE has raised UK
base rates 13 times since December 2021 when
the base rate stood at 0.1% to its current level
of 5%. We have benefited from the continued
strong performance of our structured investments
business and a substantial increase in the Group’s
revenues from managing clients’ trading cash in
the higher interest rate environment. However,
these positive contributions have not fully offset
the decline in commissions and management
fees experienced by our investment management
business in the last financial year, with Average
Assets Under Management and Administration
having fallen by 8.7% to £5.1 billion. A more
detailed explanation of our results is set out
in the Finance Director’s review.
Notwithstanding the pressures reflected in
our financial results, I am pleased to report
that the Group has made good operational
progress towards completing previously noted
strategic initiatives, particularly improvements
in our regulatory and compliance framework.
We have also concluded the material redress
exercise affecting a small number of customers
where financial harm was caused by the
inappropriate actions of one of our former
self -employed investment managers, with
settlements made post year end and all fully
provided for in the results.
It is therefore disappointing once again to report
exceptional charges, this time relating to an historic
oversight in failing to account for stamp duty on
certain trades (Stamp Duty Reserve Tax or SDRT),
for which voluntary disclosure has been made
to HMRC and the final quantification exercise
remains ongoing, and intangible asset write downs
following the departure of several self-employed
investment manager associates occurring towards
our reporting year end. Some reduction in our
investment manager headcount was expected
given the tighter regulatory operating environment
(and our determination to ensure we stay within
it) and our deliberate curtailing of certain higher
risk investment services. Nevertheless, we are
disappointed to part company with certain of our
long-standing colleagues and we wish them well
in their future pursuits.
The SDRT obligation has arisen over a number
of years due to a failure in our procedures
and controls. The Board is determined to
minimise the risk of such events recurring. The
strengthening of our second and third lines of
defence in recent years is an important step in
this aim, and this will now be complemented
by a critical review of key transaction reporting
controls, risk indicators, use of systems and
exception reporting. This will be completed
over the coming months. In addition, we
have concluded that strengthening our senior
management team to address these important
issues is a priority and a search will begin soon.
As this issue is material and has arisen over
several years, we have presented restated
comparative financial results and statements
of financial position as explained in note 38
and throughout the report and accounts
where applicable.
04 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Our values
We serve our clients with the following values
Integrity
Courtesy
Fairness
Loyalty
Highlight
Celebrating
International
Women’s Day
Directors, account executives
and staff
I would like to thank my fellow Directors, our
investment managers and advisers and all
members of staff for their efforts, resilience and
continued commitment to the highest levels of
client service, support and diligence.
As noted above, we have made significant pay
improvements, following a comprehensive
benchmarking review. Nevertheless, the business
does face challenges and we will continue to make
the necessary changes and investments that
make Walker Crips an attractive place to work and
improve the quality, competencies and bench-
strength across our workforce.
Outlook
The Board accepts there are administrative
and operational challenges to be addressed.
However, the results continue to demonstrate
underlying operational and financial resilience
and your Board’s commitment to invest in the
Group’s people, technology, growth initiatives and
importantly customer services. As noted above,
I remain confident in the outlook for the business
and its longer-term prospects.
Martin Wright
Chairman
31 July 2023
What does this mean for our future? The higher
interest rate environment provides some economic
hedge during the present economic uncertainty
and the strength of our finances means we can
and will continue to invest in growth and further
integration of our core businesses, in customer
service, and in margin improvement initiatives
that strengthen our customer propositions and
our operating and financial resilience. This also
means continued investment in our people,
particularly salary rises and benefits reflective
of their significant and valued contributions to
our business and the present upward cost-of-
living pressures, and as always in technology. We
also continue to strengthen our regulatory and
compliance infrastructure, to ensure compliance
with regulation and the consequent reduction in
future exposure to expensive compliance failings
like those that have plagued us in recent years.
We also continue, of course, to embrace regulatory
change. In that context, we have made good
progress responding to the FCA’s new regulatory
initiative, “the Consumer Duty” which places
increased emphasis on delivering good outcomes
for retail customers, a principle close to our heart
and our mission. In his report, our CEO sets out
further detail on the initiatives we are pursuing and
importantly our commitment to the environment.
I remain optimistic about the future outlook for the
business and its long-term prospects.
Dividend
Our aim is always to reward our shareholders for
their continued support. In that light, having taken
into account the current economic environment
and reported results, the Board will recommend
for shareholders’ approval at the forthcoming
AGM a reduced final dividend of 0.25 pence per
share (2022: 1.20 pence) payable on 6 October
2023 to those shareholders on the register at the
close of business on 22 September 2023, with an
ex-dividend date of 21 September 2023.
On International Women’s
Day (8th March) members
came together to celebrate
the incredible achievements of
women and their contributions
to our society.
Purple was the dress code of the day in
both the London and York offices as we
reflected on how to best continue building
an equitable and inclusive workplace – and
enjoyed some delicious food!
It was a day to remember, and we are proud
to have celebrated such an important
occasion. A big shout out to all our talented
female colleagues!
Walker Crips Group plc Annual Report and Accounts 2023 | 05
Strategic report
Corporate governance
Financial statements
CEO’s statement
It is a privilege to be working
alongside a great group of
investment managers, financial
planners, advisers and staff, who
diligently serve our customers and
who value good customer outcomes.
The past year has been dominated
by Russia’s invasion of Ukraine and
the cost-of-living crisis, to name
but two major events that have
had far-reaching consequences,
affecting industries and economies
worldwide. We witnessed supply
chain disruptions, market volatility
and shifts in consumer behaviour.
But our people dug deep, stayed
the course, and continued to
support our customers and our
Group through it all.
Innovating, digitising
and focusing on customer
outcomes.
Sean Lam
Chief Executive Officer
An important focus over the past year was on
the new Consumer Duty regulation which serves
to set higher and clearer standards of consumer
protection across the financial services industry,
and requires firms to put customers’ needs first.
We must 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. As
principles, these have of course always been
at the heart of our services, but the detailed
application of the new regulations has required
a raft of changes to the way in which we do
business. We have sought, and continue to seek,
to put customers first in everything we do and, if
there are any shortfalls in this goal, to learn from
those and deliver ever-improving outcomes for
our customers.
It is important to build revenue, manage costs
and improve margins, but as a regulated firm
it is also crucial to have in place a control
environment that oversees our regulatory,
operational and governance obligations. Our
Non-Executive Directors provide the Board
members with a high level of challenge and
scrutiny, and the firm has in place departments
that manage risk, regulatory and anti-financial
crime oversight. The regulatory and anti-financial
crime oversight departments have seen a large
increase in full-time staff headcount, to help us
remain updated and compliant with regulations.
We have also created a Self-Initiated Regulatory
Review Regime (“SIR”) where we select certain
topics that are a priority to the FCA and engage
regulatory consultants to independently review
our control processes for the area(s) selected.
In recent years, we have been de-risking our
business, ending products or services where the
rewards received do not sufficiently outweigh the
risks taken, like private placings and broker-to-
broker transactions.
Our strict approach to regulatory compliance
and the embedding of a good regulatory culture,
where “Compliance is Everyone’s Responsibility”,
is very important to the firm. We strive for Walker
Crips to be an attractive workplace where top
quality individuals want to conduct business and
embrace our customer centric, entrepreneurial,
technology focused and compliant culture.
We continue to leverage on our own technology,
creating bespoke systems that are appropriate
for the business, and we shall drive forward
with our programme of digitisation and
enhancements, from onboarding to risk
management, from efficiency initiatives to
regulatory compliance.
Group’s performance
Our Investment Management division has had a
challenging year, as described in the Chairman’s
statement, and we also up-resourced our
regulatory teams, especially within compliance,
financial crime, and operations, with more
specialists to tackle the deluge of regulations,
upgrade systems, enhance change processes and
also pay significantly higher salary rises than we
ever did before, to try to counter the cost-of-living
crisis that our staff has had to endure. However,
the firm’s core investment management business
remains sound and therefore we have invested in
business development, to help grow our customer
base and increase Assets Under Management,
increasing contribution to our top line, while
managing our costs from here on out. For more
information, please see the section Our business
model and strategy.
Our Structured Investment division continues
to go from strength to strength, and is a core
competency of the firm, providing well-crafted
structured products to customers through financial
advisers. We look forward to adding structured
deposits into our suite of products, expanding
our breadth of offering and providing another
investment avenue to financial advisers and our
customers. We are pushing on with our plans to
simplify and digitise this business further, making
ourselves more efficient and putting ourselves on a
footing where we can achieve greater scale.
06 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
We are committed to sustainability and
environmental responsibility because we recognise
the urgent need to address climate change and
mitigate our environmental impact. We also believe
that our commitment to sustainable practices will
present us with opportunities for innovation and cost
efficiencies.
Mental health charity
As a Group, we continue to support
twiningenterprise.org.uk, the mental health
charity. In addition to financial support, we also
try to use our technology for good, through
technology philanthropy. If you wish to find out
more, or want to support Twining financially,
please visit walkercrips.co.uk/community.
Conclusion
We shall continue 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 and providing a safe and enjoyable
place to work and be part of. We are optimistic
about the future because we believe that we
have the right strategies, the right talent and the
right mindset to overcome the challenges and
create opportunities. We remain committed to
delivering sustainable growth, creating value for
our stakeholders and making a positive impact
on society.
Sean Lam
Chief Executive Officer
31 July 2023
Highlight
Wear it Green Day
On 18th May, the CSR Action
Group encouraged all staff to
wear green and make a small
donation in support of The
Mental Health Foundation’s
Mental Health Awareness Week.
The Mental Health Foundation works
towards good mental health for all; focusing
on prevention and protecting people’s
mental health. The money raised on the day
will help deliver vital research and develop
solutions to improve prevention and
treatment for the 1 in 6 people affected by
mental health problems every week.
At the time of writing, members have
donated £78 through their generous
donations. The Just Giving page is still open
if anyone still wishes to make a contribution.
Don’t forget, if ever you wish to talk to
someone about your own mental health,
the Walker Crips Mental Health First Aiders
are always on hand for a confidential chat.
Our Financial Planning division has been growing
by bringing on highly experienced financial
planners, to serve our existing customers and to
take on new customers. Our Barker Poland Asset
Management division continues to generate
steady revenues for the Group. The Financial
Planning and the Pensions divisions are working
together to expand our service offerings to
ensure we are anticipating and responding to our
customers’ needs.
Our teams continue to provide excellent service
and support to our customers, and I thank our
people and customers for their commitment to
Walker Crips.
Corporate responsibility
If we want our children to see tomorrow, like we
saw yesterday, then let’s not destroy today. We
must safeguard our planet for our children, and
for our children’s children. I wish to reiterate my
message from last year, that 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.
Walker Crips Group plc Annual Report and Accounts 2023 | 07
Strategic report
Corporate governance
Financial statements
Our business model and strategy
Our mission
Our mission is to make investment rewarding for our customers,
our shareholders and our staff and give our customers a fair deal.
We support our investment advisers and our staff by being a
technology-driven financial services company.
Our financial services offering is delivered through three distinct divisions within the Group:
Investment Management, Financial Planning* and Pensions Administration.
Our business model
Investment
management
Structured
investments
Our core
business
Collectives
model portfolio
Financial
planning
Pensions
administration
*
Previously referred to as Wealth Management.
08 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Investment Management
Investment Management is delivered through
three sub-divisions namely, Investment
Management Services, Structured
Investments and Share Dealing.
Our strategy with the Investment Management
division is to refocus on our core service offering
of discretionary (both bespoke and model
portfolios), advisory managed, advisory and
execution only share dealing. We have also
been deliberate in curtailing some of the higher
risk investment services as well as services that
are no longer commercially viable due to the
significant increase in the cost of regulation to
remain compliant, and the increase in the cost
of administration, operations, staffing, systems
and capital.
We have invested in business development, to
help grow our customer base and increase Assets
Under Management, increasing contribution
to our top line, while making every effort to
manage our costs. Taking into consideration the
significant inflationary pressures and the cost
of doing business, we have carefully reviewed
our tariff and endeavoured to right-price our
fees, commission and supplementary tariff.
We have resisted adjusting our tariff for many
years and many of the cost items have remained
unchanged for decades, but we had to take this
decision to make appropriate adjustments, whilst
still ensuring that we are giving fair value to our
customers.
Arising from our Target Market Analysis review,
as a result of the new Consumer Duty regulation,
we have adjusted the boundaries of our service
types. Discretionary shall be for the larger
portfolios, Service First Model Portfolios for the
medium, and a multi-asset model portfolio for
the smaller portfolios. By doing so, the cost to
the firm arising from the complexity and the
effort of managing the above categories will
be balanced by the fees and/or commission
that a customer pays for each service type, and
thereby seeking to avoid foreseeable harm to the
customer, at least from the perspective of cost.
Advisory Managed and Advisory shall remain
for customers who require advice, and Execution
Only for customers who wish to make their own
investment decisions.
Structured Investments
Structured Investments continues to be a
popular investment product to financial
advisers.
It is a core competency of the firm and the team
provides well-crafted structured products to
customers through financial advisers. We are
now adding structure deposits into our suite of
products, expanding our breadth of offering and
providing another investment avenue to financial
advisers and our customers. We are also pushing
ahead with our plans to simplify and digitise this
business further, making ourselves more efficient
and putting ourselves on a footing where we can
achieve greater scale.
Share Dealing
Share Dealing is the execution only dealing
arm of the firm.
We offer customers the flexibility of making a
quick phone call to our team to trade, or if they
wish, they could also trade UK shares, which are
liquid, online. Whilst most firms are turning, or
have turned, away certificated dealing, we are
looking at possibly expanding our dealing in
certificated securities, and offering it as a unique
selling proposition.
Financial Planning
Financial Planning operates through our
offices in York, London and Fareham.
Our financial planners make time and effort
to understand our customers’ circumstances
and requirements, in order to be able to advise
and help them realise their financial goals.
We provide 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. Our strategy
continues to be one of controlled growth, and we
have recently added two financial planners to
the team of nine financial planners in the Group.
Pensions Administration
Pensions Administration continues to hold
steady, providing Self-Invested Personal Pensions
(“SIPP”) and Small Self-Administered Schemes
(“SSAS”) services to our customers.
Walker Crips Group plc Annual Report and Accounts 2023 | 09
1-2-1 lifestyle coaching where employees
can access sessions with a lifestyle coach.
Personal training where employees can
access 1-2-1 sessions with a personal trainer
who will assess their fitness and discuss
individuals’ goals and thereafter create a
personalised plan.
Nutritional consultation, savings and
discounts on brands, technology, travel,
gym membership, day outs and attractions.
We implemented a new Human Resources
Information System (“HRIS”), which also
generates a wellbeing survey quarterly to
‘pulse-check’ how our employees are doing,
thereby allowing HR to be proactive in
addressing areas of concern.
Strategic report
Corporate governance
Financial statements
Our people and culture
Our people are
the backbone of
our business, and
we promote a
culture that values
Diversity, Equity
and Inclusion and
staff wellbeing.
We proactively address mental
health challenges, and we equip our
workforce with necessary awareness
and tools, and promote better
health. Recruiting, retaining staff
and fulfilling training needs are
also crucial in helping to fulfil these
objectives.
Wellbeing
Our goal is to respond effectively to work-related
mental health issues, and where possible, to
prevent them from occurring or worsening,
providing support to our staff throughout their
employment with us, access to assistance
and voicing their concerns with assurance of
professional support. These initiatives aim to
provide a supportive environment to our staff:
24/7 helpline where employees can access
a range of support with financial and/or
legal worries, support for carers and other
life events.
24/7 remote GPs where employees have
quick access to GP appointments via video
consultation.
Mental health support which includes
unlimited support available for employees
who are experiencing mental health issues,
bereavements and other matters.
Physiotherapy that offers personalised
treatment to all our employees via video
consultation.
Medical second opinion which is available
in person or via video consultation where
employees can gain a second opinion and a
review of their medical record on diagnoses
and/or treatment plan.
Financial and legal support where
employees can receive advice in areas such
as credit and debt, budgeting, mortgages,
insurance and state benefits.
Access to wellbeing contents including
podcasts, webinars and a wellbeing
calendar.
360° wellbeing score where employees can
assess their scores and view suggestions
tailored to them based on their assessment.
10 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Training
Diversity, Equity and Inclusion
Our industry requires our workforce to be
experienced and qualified specialists in the
areas of financial services, and continuing to
be experienced and qualified. For that purpose,
we implemented a new Learning Management
System (“LMS”) which contains over a thousand
courses, accessible through mobile devices, for
our employees’ development.
We are committed to developing a diverse
workforce and a healthy work environment
derived from people of different background,
race, religion, and gender, resulting in a rich
culture where every employee is treated fairly,
is respected and has the opportunity to fulfil
their potential and contribute to the success of
the Group.
We encourage inclusivity at work by also
acknowledging and sharing the various key
dates and celebrations of different cultures and
religions amongst our employees via our internal
newsletter, promoting multicultural respect and
celebrating our differences.
We are committed to and encourage diversity,
equity, and inclusion among our people and to
prevent less favourable treatment or financial
reward through direct or indirect discrimination,
harassment, victimisation of employees or job
applicants on the grounds of the Equality Act
2010 protected characteristics. We are certified
as a Disability Confident Committed employer,
which means we are committed to:
ensure our recruitment process is inclusive
and accessible
communicating and promoting vacancies
offering an interview to disabled people who
meet the minimum criteria for the job
anticipating and providing reasonable
adjustments as required
supporting any existing employee who
acquires a disability or long-term health
condition, enabling them to stay in work and
continue to be productive.
At Walker Crips, we work to highlight and remove
biases within our recruitment practices. There
is training for management in recognising
unconscious bias and what may result in
others being treated less favourably or even
discriminated against. To address unconscious
biases and their negative effects in the
workplace, the training provides identification of
which biases are being held and the actions that
reinforce them. Our approach is to encourage
employees to take time to self-reflect and record
when they have experienced biases; training and
transparency in hiring are some of the ways we
have adapted to address bias.
A key principle of the Equality Act 2010 is the
concept of equal pay for equal work and earlier
this year we reviewed our employee data with
the objective to ensure that men and women
in the same job performing equal work must
receive equal pay, unless any differences in
remuneration can be justified, and we can
confirm that this principle applies to more than
just basic pay, but also includes all benefits.
Our vision is to improve our recruitment strategy
to further fair representation across all groups.
We believe in bringing together different
perspectives, ideas and approaches, and this
leads to increased innovation and improved
performance. We have already implemented a
graduate scheme where we can develop younger
generations, which started last year. We have
also streamlined our apprenticeship scheme
and have formed numerous relationships with
learning providers to further our goal of offering
more apprenticeship schemes. We also offer a
work experience scheme for those in school –
please see our careers page and testimonials
of our graduates and apprentices at
walkercrips.co.uk/Careers.
Management are proud and privileged to be
working alongside all the members of the Walker
Crips family, and are grateful for all their hard
work and their dedication to our clients and to
the Group.
Walker Crips Group plc Annual Report and Accounts 2023 | 11
Strategic report
Corporate governance
Financial statements
Market analysis
Market and macroeconomic
backdrop
Global equity markets over the 2022/23 financial
year were mixed, ranging from small single-
digit gains in selective regional developed
markets, including Japan and wider Europe, to
near double-digit losses across regions typically
associated with higher growth such as the US
and broader emerging countries. This trend
shifted more recently, driven largely by the
technology sector, where investors expressed
significant interest in Artificial Intelligence. Fixed
income markets generally suffered as yields were
forced higher from central banks aggressively
hiking interest rates to combat stubborn
inflation. By the end of June, there had been a
total of 90 increases by central banks globally
since the start of the year and this contributed to
price declines for existing bond holders.
Inflation was the key theme for the period, with
the price of goods and services rising significantly
across developed markets and reaching 10.1%
year on year in the UK to March 2023. This was
following a peak in inflation in the US in Q2 and
in Europe in Q4 in 2022. Most components of
inflation have seen an increase, but the prices
of electricity and gas was a heavy influence,
both of which have subsequently subsided. The
UK has suffered prolonged inflation relative to
its developed counterparts, largely as lower gas
prices have taken longer to feed through, due to
the regulator fixing prices.
To combat this elevated inflation, the world’s
leading central banks embarked on rapid interest
rate increases, which began with the Bank of
England in late 2021. As the UK has taken longer
to overcome its inflation dilemma, further
rate increases are expected until policymakers
are convinced that this is under control. More
broadly, the pace and direction of interest
rates will also be dictated by the scale of any
upcoming economic weakness or fragility in
employment data.
Labour markets have been surprisingly resilient
with unemployment rates remaining at multi-
decade lows and wage growth well above
average. This is despite UK labour market figures
also showing a record number of people not
working due to long-term sickness, which now
stands at more than 2.5 million people. There
continues to be excess demand from businesses
that are struggling to find workers, many
of whom also left the workforce and retired
early during the pandemic. Notwithstanding
a slowdown in growth, we are not yet seeing
meaningful job cuts, enabling companies to
maintain their profit margins, although this may
change in the period ahead.
Regarding economies, there are multiple
leading indicators highlighting elevated risk
of recession such as the status of financial
conditions, consumer confidence levels, business
expectations and factory orders. The highly
observed US yield curve, which measures the
difference between 10-year and two-year
treasury yields, inverted in March 2022, and
this has often been a precursor for recession, on
average just under two years after the event.
Consensus real GDP increase forecasts for 2023
currently range between 0.2% and 1.3% across
principal developed markets, which is much
lower than average levels. Governments are still
spending, with large volumes driven partly by
the green transition and infrastructure spending.
Companies will also have to publish how they
intend to reduce their emissions to help the UK
reach net zero by 2050. We expect this trend to
continue, noting much further investment and
resources are needed to meet this goal.
Household debt as a percentage of GDP
has broadly been declining from the heights
experienced during the pandemic and to levels
back below early 2020. However, in the US for
example, consumers also built up to $2.5 trillion
of savings over this period and recent data shows
this will be almost entirely depleted by the end
of the year, leaving less of a buffer during a
potentially more challenging economic period.
This is an important consideration given that US
consumers drive over two-thirds of the economy.
The balance sheets of the major developed
world central banks reached a peak of around
$26 trillion in 2022 and we have since seen
this decrease, with central banks embarking on
quantitative tightening in order to reduce the
debt burden. This is expected to continue and
has generally been a headwind for markets. It
has also been compounded by banks generally
reducing their credit availability following the
collapse of several large banks earlier in the
year and in anticipation of more challenging
times ahead.
The financial year contained a multitude of
market events that required navigation. Shortly
before the start of the period, Russia had invaded
Ukraine and since then there has been little sign
of a resolution. Any escalation in geopolitical risk
has negatively impacted sentiment and supply
constraints contributed to a substantial rise in
the price of oil, which had been another factor
driving inflation higher.
There were a series of large bank collapses
starting with Silicon Valley Bank (“SVB”) in the
US, which failed in March following its poorly
structured balance sheet and run on deposits
from its customers. This was the largest bank
collapse since Washington Mutual during the
2008 financial crisis.
Shortly after, Credit Suisse, the second largest
bank in Switzerland, was bought by rival UBS
following its financial difficulties. Then in May,
the US encountered its second-largest bank
failure in history when First Republic was rescued
by JP Morgan Chase given its liquidity struggles.
It is important to note, both SVB and First
Republic were concentrated particularly on high-
growth startup businesses, and therefore their
issues were less impactful to the broader public,
unlike the systemic nature of the credit crunch.
Since then, regulation has increased and many
banks have in fact better capitalised and tidied
their balance sheets.
In the lead-up to June, investors became
concerned about the prospect of a US debt
default. Negotiations went down to the wire
as the Treasury Department had warned that
it would be unable to pay all its bills if a deal
was not reached. President Biden subsequently
signed a bill that suspended the $31.4 trillion
debt ceiling, removing concerns over a US
default. The bill signing marked a symbolic
end to a potential economic crisis.
Artificial Intelligence “AI” has been a hot topic
coming into 2023. Positive sentiment acted
as a tailwind for Apple, now valued at over $3
trillion. This is larger than the entirety of all but
six countries’ economies in isolation. Chat GPT
became the fastest consumer app to reach
one million users in just five days, and only two
months to reach the 100 million user milestone.
AI is likely to transform the finance industry
and automate many tasks such as sentiment
analysis, named entity recognition and news
classification. This will be a huge development in
the industry and may be one of the determinants
in how financial roles are likely to change
alongside the impact this will have on everyday
lives. It could also be one of the catalysts needed
to help boost productivity, a key component of
economic growth.
Many companies are experimenting with AI’s
uses although generally management teams
are hesitant to roll this out to customer-facing
applications. The first stage for many will be
the automation of manual processes, which
has many concerned about the impact it may
have on the labour market. The World Economic
Forum expects that by 2025, AI will automate
75 million jobs globally, however consequently a
further 133 million new jobs are expected to be
added in their place. Ultimately it will be down to
those who look to prepare and embrace what AI
can bring to their business, to enable a smooth
transition. At Walker Crips, we pride ourselves on
being a technology-driven business and welcome
advancements in AI.
12 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Inflation was the
key theme for the
period, with the
price of goods and
services rising
significantly across
developed markets.
Developments in China continue to be of key
importance given its position as the world’s
largest economy, accounting for around 18%
of global GDP and still increasing. China’s
post-pandemic recovery was not as strong
as expected with the manufacturing sector
remaining weak. Political tensions also remain
elevated with President Xi Jinping and his
administration promoting a more assertive
approach to foreign policy. The trade war
between the US and China has led to the country
comprising a much smaller share of US imports
following an increase in trade with Vietnam.
There have also been hints of a growing desire
for China to bring Taiwan under mainland
control.
One increasing talking point with clients has
been the next UK general election, which will
take place before the end of January 2025. The
UK has suffered a volatile political backdrop as
many of the more recent Prime Ministers have
taken office following the resignation of their
predecessors. The 49-day premiership of Liz
Truss was one which rattled markets following
her plans for radical large-scale borrowing and
tax cuts which were heavily criticised both
domestically and by international investors in the
UK market. Looking forward as it stands today,
the opinion polls reveal that the Labour Party are
very much in favour and we continue to watch for
how this unfolds and the impact this may have
on markets.
Market outlook
Looking at the period ahead, much of our
outlook centres back to the direction and pace
of inflation. We believe developed economies
have now passed the inflation peak and that
the trend is generally disinflation from here. The
market will, however, likely remain sensitive to
the pace at which inflation declines, as this will
be a key driver to when interest rate hikes will
cease, hold and eventually start to fall. We do
not, however, believe that in this new economic
regime we will see interest rates go back to near
zero, where they were the decade before and
during the pandemic. Central banks are acutely
aware that they cannot continue with loose
monetary policy driven by low interest rates and
quantitative easing indefinitely, particularly in
an environment of elevated inflation, but also in
consideration of debt levels, noting that debt is
now significantly more expensive to service.
We acknowledge the economic backdrop is likely
to remain fragile, with shallow recessions largely
anticipated across developed economies. Despite
this challenging economic backdrop, we still
see opportunities for investors across markets.
The rise in interest rates has led to increasingly
attractive yields on offer from fixed income
markets and we see this area of the market
having a more important role across portfolios,
particularly in providing an element of defence,
following heightened recession risk.
There is also potential for capital growth when
interest rate hikes stabilise and cuts are on the
horizon.
Within equity markets, we believe there is ample
opportunity within the UK, noting the broader
market is trading on much cheaper valuations
than other developed markets, and that a rising
interest rate environment has generally favoured
the UK, given its concentration in energy and
financial sectors. Emerging markets are also an
area of increasing opportunity, given numerous
economies are not exposed to the same
inflationary challenges. Many had peaked earlier
in the cycle and central banks generally have
more scope to cut interest rates, where required.
We believe quality businesses with recurring
revenues and strong balance sheets could
prove resilient during any upcoming economic
weakness. We feel it is, however, important to
remain diverse in terms of region and sector,
given the vastly changing environment.
Property markets have faced declines with prices
being particularly exposed to higher interest
rates, which have weighed on affordability.
Mortgage rates are forecast to remain high for
the remainder of the year, however, two-thirds
of UK households do not have a mortgage. For
those that do, many fixed their mortgages during
the pandemic, although those on ultra-low fixed
rates will be due for renewal at much higher rates
in the coming years.
Alternative assets remain crucial in providing
diversification and can offer an element of
capital preservation in adverse market events.
Some areas such as infrastructure and specialist
property exhibit inflation-hedging characteristics
due to their cash flows being index-linked.
These are, of course, valuable during periods
of elevated inflation. We are also cognisant of
the impact of the green energy transition and
the opportunities within the renewable energy
sector.
In summary, there will always be reasons to be
sceptical about the future, whether it is concerns
of economic decline, policy error from central
banks, political developments or otherwise. We,
however, remain optimistic on the longer-term
outlook for markets and their ability to deliver
returns in excess of inflation over a market cycle.
We believe that with potentially heightened
near-term volatility, managing well-diversified
portfolios and having a dynamic view of the
market outlook will be critical in the upcoming
period.
Shane Bennett
Head of Investment Strategy
31 July 2023
Walker Crips Group plc Annual Report and Accounts 2023 | 13
Strategic report
Corporate governance
Financial statements
Finance Director's review
A challenging year but we maintain
our focus on the key drivers of revenue
generation, cost management, cash
conversion, and operational and
financial resilience, including important
investments in our people and technology.
Sanath Dandeniya
Finance Director
Financial performance
The year to March 2023 was challenging, with
the post-pandemic market recovery dampened
by uncertain UK political and other world events,
including the impact of higher inflation and
interest rates, and the continuing war in Ukraine.
These are reflected in our results. Market pressures
depressed trading commissions and management
fees, and inflationary pressures together
with continued investment in strengthening
our regulatory and compliance functions are
increasing our cost base. These impacts were
partially mitigated by significantly improved
margins on administering clients’ trading cash
balances in the rising interest rate environment,
and the continued strong performance of our
structured products business leading to an overall
improvement in the reported gross margin.
As referenced in the Chairman’s statement, we
have also incurred material exceptional charges,
one of which has led us to present restated
comparative results, and I comment on these in
more detail later in this report.
The outcome is that although reporting an
improved Group profit before tax of £632,000
(2022: £206,000 – as restated), when adjusted
for exceptional items, there has been a marked
year-on-year reduction in reported pre-tax,
pre-exceptional profits of £1,186,000 (2022:
£1,761,000). Further explanation of these
headline results is provided below.
Against this background, Management
continues to focus on revenue generation, cost
management, cash conversion, and operational
and financial resilience. However, like others, we
continue to face significant upward cost pressures,
particularly regarding workforce remuneration.
In a tight and competitive labour market we are
seeing increased mobility and naturally must
compete in retaining and attracting key talent
and supporting our most value-adding people
in response to the cost-of-living challenges they
face. Investment in our people is therefore a
positive and important step in ensuring
Walker Crips remains an attractive place to be
(see pages 10 and 11 for further details of our
engagement with staff). Further, our focus on
strengthened regulatory compliance, including
implementation of the MIFIDPRU remuneration
requirements, together with the Board’s conscious
de-risking decision that has led to a cessation
of certain services, has meant we have recently
parted company with a number of our associates,
with its consequent impact on future revenues.
We remain positive and committed to our strategy
with a number of key initiatives expected to bear
fruit in the coming year.
Total revenue
Total revenue decreased by 3.7% to £31.6 million
(2022: £32.8 million). Revenue generation, whilst
one of our key objectives, has been stifled by
the political and macro economic environment
and its impact on market confidence. In terms
of how this affects our business, there are two
key impacts. One is that our management fees
are based upon market values therefore the
reduction in the overall value of the market
will have a proportionate effect on our asset-
based fee income. And secondly, the market
uncertainty leading to lower trading volumes and
proportionally reducing our commission income.
A segmented analysis of revenues is provided in
notes 5 and 6.
Assets Under Management and Administration
fell by 8.2% to £5 billion and, in turn,
management fee income saw a fall of 8.3% to
£17.7 million, down £1.6 million from last year.
Overall commission income saw a decrease of
25.9% to £6 million, down £2.1 million from last
year. The shortfall in fee and commission income
was partly offset by our Structured Investment
business, which continues to perform well with
income increasing by 11.4% from the previous
year to £3.9 million and, on the back of increased
interest rates, higher revenues on managing
clients’ trading cash funds which contributed an
additional £2.5 million.
Our arbitrage dealing desk also made a positive
but lower contribution of £97,000 (2022:
£419,000) as profitability was impacted by mark
to market unrealised losses on certain positions,
within risk limits, spanning the year end. Our Tier1
business, which is now closed for new investors,
recorded a 20% fall in income to £778,000 (2022:
£979,000) and this trend is expected to continue
as the business line is wound down.
Barker Poland Asset Management continued to be
a valuable contributor, having a relatively stable
year although fee income still fell by 4.6% to £2.2
million (2022: £2.3 million) compared to last year.
Our Financial Planning division continued to grow
revenues and its client base from the continued
recruitment drive reported last year. This division
saw overall income up by 5.1% from last year
to £1.9 million (2022: £1.8 million) and income
growth has continued post year end.
As a result of changes in revenue lines, and more
specifically the drop in transaction volumes
impacting trading commission, coupled with
higher revenues on managing clients’ trading
cash balances, broking income fell to 18.9%
of revenues, from 24.5% in 2022. Our gross
operating margin increased to 76.6% from
72.5% in 2022, demonstrating the benefits of
the continued trend away from self-employed
to employed investment professionals which
is a key, albeit longer-term, transition as part
of Management’s plans to improve margins.
Consistent with these trends and initiatives, the
commission and fees ‘paid away’ decreased by
20.3% from last year, partially offset by higher
salaries and staff-related costs.
As noted above, we recently parted company
with five self-employed investment managers.
The impact on the reported results for the year
was to record an exceptional charge of £423,000
reflecting the write down of attributable
intangible asset balances (see note 10), and the
estimated reduction in the projected reported
gross margin for the coming year is £0.9 million.
The full impact of this is factored into our going
concern and cash forecasting models.
14 | Walker Crips Group plc Annual Report and Accounts 2023
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 before tax to profit before
tax and total exceptional items
Profit 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
* The restatement of the 2022 figures is explained in note 38
2022
(restated)
£000
208*
1,658*
1,866
206*
1,555*
1,761
208*
1,658*
1,165
873
3,904
4,217
(2,375)*
(1,052)
435
1,225
2022
(previously
reported)
£’000
326
1,540
1,866
324
1,437
1,761
326
1,540
1,165
873
3,904
4,217
(2,257)
(1,052)
435
1,343
2023
£000
625
554
1,179
632
554
1,186
625
554
1,301
771
3,251
3,539
156
(332)
–
3,363
Expenses
Administrative expenses, excluding exceptional
items, salaries, depreciation and amortisation,
increased by 3.5% in the year, with a general
increase in a number of areas offset by favourable
spend variances on trade settlement, irrecoverable
VAT, and FCA fees and levies. Salary costs, owing
to a combination of investment in advisers,
upskilling and pay rises, saw an increase of 7.8%,
and the current cost-of-living crisis triggered by the
rising inflation will see this increase further next
year. The Board is fully committed to retaining and
supporting our loyal and committed workforce
and this is reflected in salary increases awarded
for the coming year.
Given trends in workforce mobility, Management
reviewed the useful economic life of intangible
assets linked to self-employed investment
managers. Based upon updated experience and
review of the contractual arrangements in place,
the estimated useful lives were shortened which
resulted in £133,000 of additional amortisation
expensed in the year, which is not treated as an
exceptional item.
Management will keep trends in workforce
mobility and their impact on the amortisation of
intangible assets under review.
The Group is again reporting operating
exceptional costs this year totalling £554,000
(2022: £1,658,000 – as restated), noting they
relate to two matters quite distinct to those
reported in the prior year (see note 10). First, as
explained in the Chairman’s statement, a system
and monitoring issue relating to Stamp Duty
Reserve Tax (“SDRT”) was recently discovered
which, following initial investigation, was
voluntarily disclosed to HMRC. Communications
with HMRC and our work to quantify the
obligation continue, but we presently estimate
the cost of repayment, potential penalties
and related costs to be £878,000. The second
exceptional item is the write down of the
remaining unamortised intangible asset in respect
of departing self-employed associates which
amounted to £423,000.
Due to the materiality of the SDRT obligation and
the fact that it arose over a number of years, we
have concluded that prior-year reported results
should be restated to correct this fundamental
error and more accurately reflect associated costs.
Accordingly, charges of £131,000 and £118,000
have now been recorded as exceptional items in
the current and prior year respectively, with the
balance of the provision reflected as a reduction
in the previously reported 31 March 2021 reserves.
The matter has only recently been identified
and so the provision remains our current best
estimate, to be adjusted as the matter, including
discussions with HMRC, is finalised. As work to
quantify the cost remains ongoing, we have
addressed our present understanding of the
estimation uncertainty by including an allowance
for a 80% deterioration in the estimated cost in
our going concern and viability stress testing. The
actions we are taking to address the weaknesses
in the control environment are explained in the
Chairman’s statement (page 4) and the Risk
management section (page 20).
Regarding exceptional items, we have now settled
the material redress obligation we reported last
year.
Cash management
The Group remains cash generative and recorded
a cash inflow from operations of £3.5 million
(2022: £4.2 million), generally reflecting the
poorer trading conditions experienced this year.
However, the 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 adjacent reconciliation)
showed a significant year-on-year improvement
to £3.4 million (2022: £1.2 million – as restated)
Underlying cash generation was greatly helped
by the renegotiation of our London office lease,
which included a new rent-free period that
reduced lease payments by £561,000 compared
to the previous year, and £922,000 in cash
generated from our proprietary trading activity,
which saw our investments on the statement
of financial position also reduce to £1,276,000
(2022: £1,647,000).
After deducting cash deployed in investing
activities and dividends paid, cash and cash
equivalents increased to £13.1 million at year end
(2022: £11.1 million) As noted previously, since
year end we have settled the redress obligations
reported in the previous year, at a net of insurance
cash outlay of £0.7 million.
Financial result and alternative
performance measures
The Group reported operating profit and profit
before tax for the year of £625,000 and £632,000,
respectively (2022: £208,000 and £206,000 – as
restated, respectively).
Walker Crips Group plc Annual Report and Accounts 2023 | 15
Strategic report
Corporate governance
Financial statements
Finance Director’s review continued
Regulatory own funds and own funds
requirements
Own funds
Share capital
Share premium
Retained earnings
Other reserves
Less:
Own shares held
Regulatory adjustments
Total own funds
2022
(restated)
£000
2022
(previously
reported)
£000
2,888
3,763
10,303*
4,723
(312)
(9,804)
11,561
2,888
3,763
11,050
4,723
(312)
(9,804)
12,308
2023
£000
2,888
3,763
10,104
4,723
(312)
(8,800)
12,366
Total own funds requirement
(4,854)
(4,676)
(4,676)
Regulatory capital surplus
Cover on own funds as a %
Pillar 2 requirement
Regulatory capital surplus
Cover on own funds as a %
7,512
254.8%
(7,227)
5,139
171.1%
6,885
247.3%
(7,014)
4,547
164.8%
7,632
263.2%
(7,014)
5,294
175.5%
* The restatement of the 2022 figures is explained in note 38
Adjusting for exceptional items (see page 15 for
reconciliations and further detail in note 10), the
Group’s operating profit and profit before tax
for the year are £1.18 million and £1.19 million,
respectively (2022: £1.87 million and £1.76 million,
respectively). The Group’s adjusted EBITDA (being
EBITDA adjusted for exceptional items – see page
15 for reconciliation) is £3.3 million (2022: £3.9
million), a decrease of 16.7%.
Explanations for the reported results have been
provided earlier and, notwithstanding the lower
reported pre-exceptional operating profitability
consistent with market and inflationary pressures,
and the SDRT obligation, Management are
pleased with the Group’s financial resilience
which allows it to remain focused on the Group’s
strategic priorities, as further explained in the
Chairman’s and CEO’s respective reports.
Total Assets Under Management and
Administration (“AUMA”) averaged £5.1 billion
during the year (2022: £5.6 billion). The drop
in AUMA values is caused by a combination of
stagnant market, clients withdrawing funds for
alternative deployment and some attrition in the
client base. Discretionary and Advisory Assets
Under Management fell by 13.9% year on year to
£3.1 billion (2022: £3.6 billion).
Divisional performance
The Investment Management division, including
exceptional costs, delivered an operating profit
of £1.55 million for the year, compared to £1.04
million (as restated) in the previous year. Adjusting
for exceptional items, the division reported an
operating profit of £2.12 million (2022: £2.7
million – as restated). The division was adversely
affected by the lower fee and commission income
generated in the year, partially offset by higher
retained margin on the administration of clients’
trading cash balances, and inflationary cost
pressures. On a positive note, notwithstanding
the impact of parting company with certain self-
employed associates, the division continues to
focus on growing its client and income base and
since year end has made two new key business
development hires with benefits expected to
emerge in the next financial year. The Structured
Investments business, having delivered two very
successful years, is expected to continue to grow
and generate income and margins for the division.
The impact of the Consumer Duty regulation,
with the Group standardising its charges across
all similar client groups, on a standalone basis, is
expected to be an overall net positive.
On 1 April, the Investment Management division
transferred internally generated intellectual
property in relation to a proprietary web-
based software system to its subsidiary EnOC
Technologies Limited (“EnOC”). The transfer
allows EnOC staff to take on the costs and
16 | Walker Crips Group plc Annual Report and Accounts 2023
obligations of developing and maintaining the
system and package it to be marketed both
within the Group for its continued use as well
as marketing it externally. The move does not
impact the Investment Management division’s
functionality as EnOC will continue to support
the division and its growth plans. Reflecting the
change, there will be an impact on future internal
recharges between EnOC and the division.
The Financial Planning division continued to
increase its adviser base with several key hires in
the year and more in the pipeline. The division saw
a 5.1% increase in total revenue, but presently
reports a loss reflecting the continued investment
in the new financial planners and advisers and
time for the client base to build up.
Our tech arm, EnOC, reported an operating
loss of £128,000 (2022: £102,000). 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, consisting solely
of equity capital, provides a stable platform to
support the Group’s strategic plan and initiatives.
At year end, net assets are £21.2 million (2022:
£21.4 million – as restated; 2021: £21.7 million
– as restated), reflecting a net decrease of £0.2
million (2022: reduction of £0.3 million – as
restated), due to the reported profit after tax, less
dividends paid. Liquidity remains strong, with cash
and cash equivalents increasing over the year
to £13.1 million (2022: £11.1 million). Regulatory
capital at year end, including audited reserves for
the year, is £12.4 million (2022: £11.5 million – as
restated), comfortably in excess of the Group’s
capital requirements for both Pillar 1 and Pillar 2,
as shown in the adjacent table.
Dividends
In view of the Group’s financial performance,
capital and liquidity position, the Board
recommends a final dividend of 0.25 pence per
share to be paid on 6 October 2023 for those
members on the shareholders’ register on 22
September 2023, the ex-dividend date being 21
September 2023. Including the interim dividend of
0.25 pence per share (2022: 0.30 pence per share),
the total dividend paid and proposed in respect of
the year is 0.50 pence per share (2022: 1.50 pence
per share).
Sanath Dandeniya
Finance Director
31 July 2022
Strategic report
Corporate governance
Financial statements
Highlights
Our offices across the UK
London
Walker Crips Structured Investments was
awarded the prestigious title of “Best
Distributor UK & Ireland” at the SRP Europe
Awards for the second successive year. The
team collected the award at a black-tie
ceremony in London in March 2023. The SRP
Europe Awards are highly prestigious prizes
across a range of categories covering the
whole of the structured products industry
internationally. This award is a testament to
the team’s commitment and hard work.
Truro
Our Truro team have had a busy year. After
relocating to a new office in the centre of
town, the team was bolstered by the arrival of
Shane Bennett as Walker Crips’ new Head of
Investment Strategy in January 2023. Shane
joined from Exeter-based Cathedral Financial
Management, where he spent more than
a decade having started with the firm as a
Research Analyst before rising through the
ranks to become Head of Investment. Our new
Truro office is located on Walsingham Place,
arguably Truro’s finest street which is often
referred to as the “Jewel in Truro’s Crown”
dating back to the early nineteenth century.
In November, our Truro team attended the
annual Cornwall Christmas Fair in support
of the Cornwall Community Foundation,
hosted by the Eden Project. Over the past 30
years, they have raised over £850,000 for
communities in Cornwall and the Isles of Scilly.
This year’s event broke all previous records,
raising an impressive £74,000.
York
In June 2022 a group from our York office
participated in the Wharfedale Ton, a cycling
event that takes in 100 miles and over 4,500
feet of ascent. Starting and finishing in
Ilkley, the ride takes a very scenic route into
the North Yorkshire countryside. Now in its
seventh year, this annual charity event is
widely supported by many local businesses.
In addition to the event’s supported charity,
Marie Curie Cancer Care Hospice in Bradford,
our team also chose to raise funds for another
local organisation, OSCAR’s Paediatric Brain
Tumour Charity, which provides support and
care for children who face brain tumours,
funds research to drive down diagnosis time
and increase survival rate and, importantly,
improves children’s quality of life during and
after treatment. The team managed to raise
over £500 in sponsorship for the charity.
Our York office also sponsored the
Bishopthorpe White Rose Club’s Under
13 girls’ football team over the course of
the 2022/23 season. The team enjoyed
remarkable success, winning the City of
York Girls League for the first time in their
history in April, before going on to complete
a notable “Double” by winning the inaugural
York City Football Club Foundation girls-
only tournament in June. Their remarkable
achievements are a testament to their talent,
dedication and teamwork. Walker Crips is
proud to support grassroots girls’ football and
celebrate the success of these young athletes.
Walker Crips operates 10 offices
throughout the UK, headed and
staffed by dedicated individuals.
As we reflect on the past year, we
are share some highlights from
around the regions below.
Epping
Andrew Powell from the Walker Crips Epping
office drove more than 1,000 km to Gorzow
in Poland to aid Ukrainian refugees displaced
by the Russian invasion with donations of
food and supplies. The aid mission was
a resounding success, with people from
all backgrounds and businesses joining in
the effort and offering supplies, storage,
transportation and on-site support.
It was an incredibly
rewarding
experience being
able to help out and
to actually see that
all of the supplies
and donations were
going to the right
place.
Andrew Powell Chartered FCSI
Investment Director
Walker Crips Group plc Annual Report and Accounts 2023 | 17
Strategic report
Corporate governance
Financial statements
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 local
employers, and other forms of support. By
helping people secure work and keep work,
supporting employers and campaigning against
mental health stigma, Twining Enterprise makes
a real difference to people’s lives and wider
society.
A year in review
We are delighted to report that Twining
Enterprise has had another incredible year.
It has just concluded its flagship Individual
Placement and Support programme (IPS Works),
supporting individuals with common mental
health challenges move towards employment or
training.
Since its launch in 2017, IPS Works has supported
2,051 clients, well exceeding its original targets
– and thanks to the support of its community-
based referral partners Twining was especially
successful in engaging people from ethnic
minority groups (66%) and women (64%).
This reflects the supreme effort the team
made to engage with seldom-heard groups.
Data from an independent evaluation of
IPS Works showed that of those exiting the
programme, 53% found employment, 31%
entered education or training, and 17% moved
from being economically inactive to searching for
work. Of the clients the evaluation surveyed who
had found employment, a huge 96% said they
were happy with what they had achieved, 73%
reported improved confidence and 63% reported
improved wellbeing.
Twining has also kick-started the next phase of
its Developing Futures e-mentoring programme
for 18–24-year-olds, from minority backgrounds,
who are struggling with their mental health. Over
the next two years Twining aims to support up
to 240 young people using highly experienced
volunteer mentors from some of the UK’s top
corporates.
Furthermore, Twining has just launched a
significant new programme to support people
with mental and physical health challenges
find, and retain, positive employment. To do
this, they have forged a strategic partnership
with Shaw Trust, enabling them to provide these
employment support services across North and
West London. It looks forward to implementing
similar projects and partnerships in the coming
year, following the Government’s initiative to get
more people with disabilities into meaningful
work.
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.
About Twining Enterprise
Twining has provided mental health and
employment support across London for over 28
years and since 2008 has delivered 70 different
projects to over 15,000 individuals. These
projects have spanned a range of empirically
tested employment support models, including
IPS models, peer support and job retention.
These projects also continue to innovate by
adopting digital interventions to reach more
in-need people. They have in-depth experience in
London boroughs across North and West London
with strong statutory, community and employer
relationships built up over the years.
Twining’s services
Twining supports individuals to become
responsible for themselves, financially
independent, have a sense of purpose and
engage with others and their local communities.
They achieve this through 1-2-1 and group
interventions, individually tailored support,
coaching and mentoring. Specific services
offered include careers advice and guidance,
support with CV writing and applications, mock
job interview practice, skills-training in stress
management, welfare benefits advice, in-work or
return to work support and advocacy support.
Twining also engages with local and national
employers to help business owners and
managers to positively address mental health
at work and recruit and retain staff with mental
health conditions as effectively as possible, as
well as identify and create job opportunities for
its clients.
18 | Walker Crips Group plc Annual Report and Accounts 2023
Years supporting the
people of London
28 years
Individuals supported in 2022/23
2,000+
across our different
programmes
Percentage of ethnic minority groups
engaged on its flagship employment
support programme (IPS Works)
66%
Percentage of clients exiting the
IPS Works programme who found
employment
53%
Percentage of clients who found
employment who were happy with
what they had achieved
96%
Percentage of clients who found
employment who reported improved
confidence
73%
Percentage of clients who found
employment who reported improved
wellbeing
63%
Strategic report
Corporate governance
Financial statements
We continue to be hugely grateful to Walker Crips for the
invaluable support you provide us with! It’s only with your
continued and generous help that we can keep helping clients
like Mehmet and Anita find and remain in work, creating
brighter futures for themselves and their families.
Oliver Jacobs
CEO, Twining Enterprise
Spotlight case studies
Mehmet dreamt of fulfilling his dream to become a Chartered Accountant, but was beset by mental
health challenges and spent considerable time under close psychiatric care. Despite significant
periods of time away from work, which knocked his confidence, the unconditional support of his
Twining Enterprise employment specialist meant that Mehmet applied for and secured his ideal
accounting job!
Anita had been working in hospitality but was feeling increasingly down and unhappy with how
she was being treated by her managers. She wanted to change her career path to work in an office
environment and found her way to Twining Enterprise and her dedicated employment specialist.
With his support and guidance, she has managed to secure a temporary to permanent position in the
property sector!
Find out more
For more information about
Twining Enterprise please go to
twiningenterprise.org.uk.
Walker Crips Group plc Annual Report and Accounts 2023 | 19
Strategic report
Corporate governance
Financial statements
Principal risks and uncertainties
Approach
The Board is ultimately responsible for
establishing a risk management framework
to control, mitigate and manage the various
risks faced by the Group and allow it to achieve
its strategic objectives. Our approach to risk
management is continually evolving to meet the
ever-present principal risks and new threats and
opportunities that may arise in the short, medium
and long term.
Our framework
The Group operates a three lines of defence
model as set out opposite.
Risk management
Effective risk management is attained by:
Promotion of a strong risk culture and tone
from the top and within, based around our
long-standing and core values of integrity,
courtesy, fairness and loyalty.
Horizon scanning to ensure any
developments in the risk landscape are
appropriately addressed by the business.
Ensuring new initiatives are robustly
challenged via the Group’s New Initiative
Risk Assessment (“NIRA”) process, with the
requisite controls embedded within any new
activities.
Framework
Board
Responsible for establishing a sound and
effective risk management framework.
Sets risk appetite.
Identification and robust 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
This executive committee assists the Group and subsidiary boards in fulfilling their corporate
governance oversight responsibilities.
Establishment of risk appetites, tolerances
Evaluates, reviews and reports on:
and limits to allow business to be conducted
within clear parameters and maintain an
appropriate balance between risk and
reward.
Ongoing risk monitoring via quantitative
and qualitative management information.
Operation of a three lines of defence model.
Comprehensive risk identification and
assessment as part of the Group Risk Matrix
and Risk of Harms Assessment.
Articulation and annual assessment of
the Group’s overall approach to risk via the
Group Internal Capital and Risk Assessment
Process (“ICARA”) document under FCA
MIFIDPRU rules.
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.
Compliance Committee
This executive committee has the following objectives:
To provide regulatory oversight to the Group, ensuring compliance with all regulatory
obligations of the FCA, FOS, FSCS, LSE and other UK regulatory bodies relevant to the Group.
To provide challenge to all levels of leadership in the Group.
To cultivate a culture of compliance and ensure that the Company is delivering good
customer outcomes.
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.
Ensure first line risk owners adopt best practice in their risk management 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.
Includes Client Onboarding & Suitability, Operations, Finance, HR, T&C and Technology teams.
20 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Our approach to
risk management
is continually
evolving to meet
the ever-present
principal risks and
new threats and
opportunities that
may arise in the
short, medium and
long term.
Risk appetite
The Group’s risk appetite is defined as both the
amount and type of risk the Group is prepared
to take or retain in the pursuit of its strategy, as
established in the Group ICARA. The Group’s
description of risk appetite against each category
can be mapped to the maximum levels of
MIFIDPRU Assessment A capital requirement as
follows:
Risk appetite in
each category
Maximum MIFIDPRU
Assessment A
capital requirement
Zero/Low
Low/Medium
Medium
Medium/High
High
Less than £0.5m
£0.5m – £3m
£3m – £5m
£5m – £7.5m
Greater than £7.5m
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.
As reported in the Chairman’s statement and
Finance Director’s review, during the period
there was one matter that exceeded these
tolerances, being the identification of a historic
under-recording and payment of Stamp Duty
Reserve Tax (“SDRT”) continuing over a number
of years and in relation to a certain subset of
client securities transactions. The matter is being
investigated and assessed in conjunction with
our external tax advisers, and communication
already made with relevant tax authorities.
Enhancements have been made to the internal
control environment.
In recent years we have experienced a number
of significant costs due to key controls not
operating as they should such that issues
have not been identified on a timely basis.
Accordingly, we have concluded that a fresh
and critical review of key transactions initiation,
execution, processing and reporting controls,
key risk indicators, use of systems and exception
reporting is required. This will be completed
over the coming months. In addition we have
concluded that senior management bandwidth
is too narrow and we will strengthen the
management team.
Risk management developments
During the period there were the following
key developments which will contribute to
improvements in risk management within the
Group:
A Market Abuse Risk Assessment was
conducted, leading to a de-risking exercise
and driving improvements to trade
surveillance and anti-market abuse systems
and controls. Key changes include enhanced
pre-trade controls and post-trade alerts,
a revised personal account dealing policy
and the rollout of Group-wide market abuse
training.
An enhanced Compliance Risk Assessment
was conducted which is driving the
development of a new and enhanced
Compliance Monitoring Programme
(“CMP”).
Customer Onboarding headcount within the
first line of defence has been increased.
A new horizon scanning reg-tech tool was
implemented, driving efficiencies in this key
area.
Production of the first Group Internal
Capital and Risk Assessment (“ICARA”)
process and document and submission of
the MIF007 ICARA return to FCA.
Consumer Duty related initiatives will drive
improvements in the control framework
surrounding our customer proposition in
areas such as product governance, suitability
and the treatment of vulnerable clients.
Principal risks and uncertainties
The tables below detail the principal risks and
uncertainties we have identified. 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 developments
identified as part of the Group Risk Matrix and
Risk of Harms Assessment during the financial
year ended 31 March 2023 and forward-looking
assessment of the risk landscape in the financial
year ending 31 March 2024, 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 ICARA.
Walker Crips Group plc Annual Report and Accounts 2023 | 21
Strategic report
Corporate governance
Financial statements
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.
Conduct risk
Customer
outcomes
Risk appetite
Low/Medium
Status
Increased
The risk that clients or the wider
market suffer detriment as a result of
inappropriate behaviour or actions by staff
or business partners. This risk can arise
when representatives of the Group are not
given sufficient training or awareness of
the highest standards of behaviour central
to the services of the Group, those being
honesty, integrity and fairness.
Clear and balanced financial promotions,
suitable investment advice and complaints
management. Board and management
oversight, development of staff and
training, strong corporate governance with
defined roles, ensuring the tone from the
top sets a fair, positive and ethical culture.
Regulatory risk
Risk appetite
Zero/Low
Status
Increased
The risk of failure to comply with new or
amended regulations incurring fines and
causing reputational detriment. Failure by
Management to recognise the scope and
impact of new or amended regulations on
the business model and resources needed
to implement change.
Board oversight, development of staff
and training, strong corporate governance
with defined roles, recovery plan,
monitoring the Group’s performance
relative to competitors, compliance
monitoring programme, regulatory
development oversight, documented
policy and procedures and regular contact
with regulators. Peer comparison and
communication, increased compliance
personnel and early gap analyses
conducted.
Challenging markets resulted in more
muted trading activity which, coupled with
robust exposure management policies
and procedures, ensured lower overdue
settlement obligations throughout the
period.
The FCA’s regulatory priority, the creation
of a new Consumer Duty, represents a
paradigm shift in its expectations of how
we interact, support and achieve good
customer outcomes for our customers.
The Group has developed a comprehensive
project plan to deliver on its obligations
under the Consumer Duty and is on track
to meet the key requirements for the
31 July 2023 implementation deadline.
The compliance risk environment remains
complex and continuously evolving with
the FCA taking an increasingly tougher
and more data-driven approach to ensure
firms are appropriately identifying and
mitigating risks of harm to clients, the
firm’s own viability and wider markets. The
Group continues to adapt and enhance
its approach to these challenges and is
committed to investing in staff resources,
technology, process change and targeted
use of external regulatory consultants,
to ensure we adopt good practice
compliance and can demonstrate this. The
overhaul of the Group’s Financial Crime
Control framework, which commenced
in the prior year, is materially completed.
Enhancement initiatives in relation to the
control frameworks for the safeguarding
of Client Money and Assets and
Transaction Reporting commenced during
the year, and are ongoing.
Liquidity risk
Risk appetite
Zero/Low
Status
Reduced
The risk that the Group is unable to meet
its payment obligations associated with
its financial liabilities as they fall due.
This risk can arise in the stockbroking
business, where large amounts of trade
values are being settled daily and can lead
to a funding requirement due to a delay
in market delivery or late settlement by
clients.
Maintenance of surplus liquid resources
cash flow forecasting, experienced
management team monitoring settlement
performance and liquid financial trading
book that can be realised. Group entities
settle intercompany balances regularly
and are not reliant on intra-group funding.
The Group’s liquidity position continued
to improve with cash balances having
increased year on year to 31 March 2023
by 18%, and budgetary projections
forecasting cash balances at a similar level
at the next financial year end.
22 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Risk
Market risk
Risk appetite
Low/Medium
Status
Unchanged
Business model risk
Risk appetite
Medium/High
Status
Heightened
How it arises
Mitigation
Status
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 trading book positions incur losses
on negative price movement.
Trading book positions are tightly
controlled by centrally imposed trading
limits and are regularly monitored.
The Group’s business is concentrated in
the provision of investment management,
financial planning and stockbroking to its
client. The Group accepts and manages
the market, liquidity, credit, operational,
reputational and regulatory risks of
participating in this business, as explained
in other sections of this Risk Matrix. The
scale and concentration of the business
model does however expose the Group
to economic cycles as follows:
The Group’s management fee revenues
are highly correlated to the value of
AUMA, which can be impacted by market
levels and client attrition.
The Group’s commission income is driven
by customer trading volumes which can be
negatively impacted in times of consumer
uncertainty and weakened confidence.
The Group’s revenues from managing
clients’ trading cash balances are
correlated with the amounts of cash held
and interest rate levels. Reducing interest
rates and/or clients deciding to deploy
trading cash balances elsewhere reduces
this income source.
Competitor action and people retention.
For example, a material proportion
of the Group’s client base is through
arrangements with self-employed
investment managers, who may decide to
move to competitors and influence their
clients to move with them, leading to client
attrition.
Salaries and revenue share arrangements
comprise a significant part of the cost
base. A tight employment market, such as
that presently persisting in the financial
services market, applies significant upward
pressures on costs, particularly in the
higher inflationary environment.
The Group’s business, although
concentrated in financial services, has
multiple sources of income that in part
complement each other. For example, in
the last financial year market conditions
have favoured our continuing revenue
streams arising from managing client
trading cash balances and our structured
products business at a time when the
same market conditions have negatively
impacted management fees and trading
commissions. Also, a large part of the
Group’s Portfolio management fees are
accrued on a daily basis which dampens
the immediate downward impact on
management fee income in declining/
volatile markets.
The Group is solely equity financed and
seeks to maintain capital prudently
more than economic and regulatory
prudential requirements. This provides a
buffer to absorb periods of weak financial
performance through market cycles.
Economic and regulatory capital
requirements and headroom are
regularly monitored based on actual
performance and business projections.
Regulatory capital requirements and
capital adequacy are also reviewed
through the Internal Capital and Risk
Assessment Process and related stress
testing. New business initiatives are
examined and stress tested prior to
implementation. Surplus cash balances
are also maintained, and liquidity
requirements carefully monitored.
Executive Management remains
focused on new business initiatives and
cost management.
Increased proprietary trading book
activity in the year, in relation to the
Group’s Structured Investments division,
was offset by lower proprietary trading
activity on the Arbitrage trading desk,
meaning overall market risk remained
unchanged. Both remained well managed,
monitored and within risk tolerances.
From a technical perspective the Group
has improved its regulatory capital
surplus over the year with the positive
contributions from reported profits
generated in the year, and a reduction
in the capital deduction in relation to
intangible assets, partially offset by the
capital reduction resulting from dividend
distributions and the SDRT provision on
opening reserves.
However, the Group continues to report
exceptional items and, as explained in
the Finance Director’s review, underlying
trading results have deteriorated with
reductions in trading commissions
and management fees. This has been
significantly, but not fully, mitigated by
higher revenues on administration of client
trading cash balances in the increased
interest rate environment.
The Group is also experiencing inflationary
pressures on its cost base. The Group
remains focused on the need to grow its
core investment and wealth planning
businesses. Central infrastructure will
continue to require enhancement to
support this, incurring costs ahead of
benefits, alongside investment in business
development initiatives.
Budgetary projections for the year ended
31 March 2024 forecast the continued
positive impact of contribution to earnings
from, and reliance upon, the higher
interest rate environment and related
revenues for managing clients’ trading
cash balances. Key interest rate and
inflation assumptions are set out in the
going concern and viability disclosures
(see pages 39 and 68).
Walker Crips Group plc Annual Report and Accounts 2023 | 23
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Corporate governance
Financial statements
Principal risks and uncertainties continued
Risk
How it arises
Mitigation
Status
Operational risk
Business
disruption
Risk appetite
Medium
Status
Unchanged
Cyber security
Risk appetite
Zero/Low
Status
Unchanged
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 if we
fail to effectively control or administer
the operating systems at the root of
operations, fail to manage resource
requirements properly, maintain
inadequate security arrangements,
or fail to operate effective business
recovery plans.
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, failure to provide effective
training and failure to maintain effective
controls.
Personnel
Risk appetite
Zero/Low
Status
Increased
The risk of losing key staff and self-
employed investment managers who are
the drivers of significant components
within the Group. This risk can arise
from the failure to reward individuals
with challenging performance targets,
and competitive levels of financial
compensation.
Business and information system
recovery plans are approved, tested and
maintained. Data incident log records
and analyses all unforeseen events to
prevent recurrence or mitigate impact
by increasing operational resilience.
Insurance cover in place for certain
causations (e.g. financial crime and
consequential loss).
The Group has maintained its focus on
building operational resilience during
the period. The creation of a centralised
outsourcing/supplier register, upgrade of ISP
infrastructure, and development of virtual
infrastructure for cloud PC roll out were
amongst several initiatives undertaken to
enhance our capabilities to deliver critical
business services to customers.
Senior management oversight, in-depth
cyber security training programme, policies
and procedures (including working from
home policies), encryption and protection
software installed, prevention procedures,
segregation of duties between front and
back office, system authority and payment
limits and system access controls and
heightened employee awareness based
on experience to match the greater risk
presented by recent threats reported in the
sector. Insurance cover in place for certain
causations (e.g. cyber crime, data losses).
Succession and contingency planning
and appropriate compensation levels
to reward and retain staff. Investment
in staff through training, key person
insurance cover and contractual restrictive
covenants.
The cyber threat landscape continues
to generate risks, which we continually
monitor, manage and mitigate through
investment in our cyber defence
capabilities, utilising our knowledge
and experience as a technology-driven
financial services business.
The Group continues to manage the
challenges of staff turnover resulting
from highly competitive employment
markets. A comprehensive remuneration
benchmarking exercise was conducted
in April 2023, with base salaries uplifted
where assessed to be below market levels
to improve employee retention.
A new HR system, training management
system and appraisal and performance
management process were also
implemented in the period, significantly
upgrading our people management
capabilities.
24 | Walker Crips Group plc Annual Report and Accounts 2023
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Corporate governance
Financial statements
Section 172(1) Statement
year ended 31 March 2023
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 transaction
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
Notwithstanding the short-term imperatives
brought about by a rapidly changing economic
and political environment, 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 by the Directors on
corporate governance matters.
The interests of our shareholders were considered
as part of the Board’s decision-making
throughout the year, including 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 2023 AGM,
as set out in the Chairman’s statement on pages
4 to 5.
The Group’s workforce
The Board recognises that, as a services business,
our workforce is our greatest asset. Consequently,
our recruitment, development and remuneration
structures are designed to support our culture
and our people and to reward good conduct and
performance at individual and business levels. Our
workforce comprises both directly employed staff
and self-employed investment managers, 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. Further information on the ways in which
two-way communication with the workforce
has been developed in the year can be found on
pages 10 to 11.
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 and to measure
performance, receive feedback and to 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.
Walker Crips Group plc Annual Report and Accounts 2023 | 25
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Corporate governance
Financial statements
Section 172(1) Statement continued
year ended 31 March 2023
We have also focused on enhancing the support
provided to the workforce by our HR function
and identifying any improvements needed
to ensure it is fully fit for purpose. To this end,
within the last year we have made substantial
progress in improving the Group’s people
function and the Group’s training developmental
programmes. This has been achieved through
the implementation of a Human Resources
Information System (“HRIS”) in which we track
the end-to-end life-cycle of an employee. This
has made our process more streamlined; we can
clearly map out an employee’s journey from
talent attraction through to the recruitment and
our Application Tracking System (“APS”) then
allows us to collaborate and communicate within
one platform, easily capturing a candidate’s
journey from day one to onboarding, performance
assessment, MI tracking, etc. within HRIS.
A positive and proactive approach has been
taken 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 development. As other steps
forward, we have individualised training for
our workforce, established new relationships
with learning providers, better utilised the
apprenticeship levy and opened more
opportunities for apprentices. We have also
introduced a new graduate programme and
implemented a new learning management
system to track and upskill our workforce. More
information on these developments can be found
on pages 10 and 11.
With our employees at the forefront of our
organisation, our goal is to become an employer
of choice within the industry, where individuals
are supported and given the best opportunity
to succeed within their roles. We have placed
great emphasis on wellbeing and although the
COVID restrictions are no longer a feature of the
working environment, hybrid working patterns
have become the norm for the large part of our
workforce, and the health, safety and wellbeing
of staff has remained a primary concern for
Management. Details of the ways in which we
support our staff are also provided on page 10.
Another area of focus in the last year has been
Diversity, Equity and Inclusion. We want a true
representation of today’s society within our
workforce where each individual’s differences are
celebrated and welcomed. We have improved our
recruitment practices and have been certified
as a Disability Confident Committed employer
(again, more details are available on page 11).
We operate within a competitive industry where
there is high demand for skilled and experienced
professionals. Consequently, we carried out a
salary benchmarking exercise earlier this calendar
year as it was clear that, in order to retain our
staff and attract top talent, our reward package
needed to be in line with market standards
and any gaps addressed. In essence, we are on
a journey towards making the Group an even
better place in which to work and improving our
employee value proposition.
Information on our implementation of the
MIFIDPRU pay rules and the launch of the
Deferred Bonus Plan for the payment of
share-based incentives can be found in the
Remuneration report on page 44.
Clients
Our clients lie at the heart of our business, and we
strive to enhance their experience when dealing
with us. Our investment professionals undergo
continuous professional development in order
to remain fit and proper to service and advise
our clients to the highest standards. Following
the deployment of our new Group website and
several investment managers’ microsites last
year, this year we released an update to our
Client Portal. The revamped Client Portal has
been developed as a responsive platform,
providing clients with easy and consistent access
to their investment portfolios across desktop,
tablet and mobile devices. We have also released
a major update to the Walker Crips mobile phone
app across both the iOS and Android platforms.
The updated app now provides clients with all
the functionality afforded within our web-based
Client Portal.
We have continued to further digitise through
the launch of our online onboarding process for
services offered to retail clients by Walker Crips
Investment Management Limited (“WCIM”). The
online onboarding platform was initially launched
to accept individual online applications for our
execution-only share dealing service, but has since
been enhanced to accommodate applications for
discretionary, advisory and model portfolio service
account types. Our development team is now
working on further enhancements to incorporate
Individual Savings Account (“ISA”) and joint
applications, as well as applications for other
entities (e.g. trusts, companies, charities etc).
The online application process streamlines the
entire onboarding journey, making it quicker
and more efficient for clients to be successfully
onboarded. Anti-Money Laundering (“AML”) and
identity verification checks are integrated into the
online process, reducing the requirement for our
Onboarding team to carry out the process manually
for each applicant. The online onboarding process
also allows for applicants to upload any requested
AML or identity documentation as part of the
process, greatly reducing the time it can take for an
account to be established.
26 | Walker Crips Group plc Annual Report and Accounts 2023
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Corporate governance
Financial statements
These new developments reflect our
commitment to providing a modern, user-
friendly experience for our clients, and align with
our mission to leverage technology to deliver
exceptional financial services while safeguarding
against financial crime.
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, 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, including
compliance with the FCA’s associated rules. 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 actively monitors
and reports to the Executive Management
Committee and Board on various aspects of
our conduct to ensure the best outcomes for
our clients. We have reviewed our client feedback
channels and are making enhancements to
provide clients with further opportunities
to provide us with feedback, including the
introduction of client surveys at different
touchpoints during a client’s life-cycle and
encouraging clients to leave online reviews (e.g.
Google Reviews). Client feedback is invaluable
to us, and we use it to address any perceived
shortcomings and implement improvements
wherever possible.
Our wholehearted commitment to the
protections for clients under the Consumer
Duty initiative and in delivering fair and positive
outcomes from their dealings with the Group are
addressed in more detail in the Chairman’s and
Chief Executive’s statements and elsewhere in
this Annual Report.
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 89, the Group took an average of 11 days to
settle supplier invoices in the year, down from 15
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. During
the year we concluded the 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
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 £12.5 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.
We strive to maintain good relationships with the
landlords of our office premises and have been
successful in negotiating the best possible terms
for the completion or renewal of our property
leases and in the termination of our lease on the
Romford offices in the year following our decision
to relocate its operations to our London offices.
We simply do our best to be regarded as good
tenants.
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 it is meeting FCA regulatory
expectations, and to assist the regulator in
meeting its own statutory regulatory objectives.
Communities and environment
As shown on inside front cover, the Group has
offices in various locations in England, and in
Scotland and Wales, and sees itself as a member
of the local communities in which it operates.
The conduct of the Group’s people, especially in
relation to local supplier and client relationships,
and their determination to be good, responsible
and supportive neighbours, are prime ways in
which local communities are impacted by our
activities. Individual offices have participated in
various local initiatives such as charitable events,
sponsorship of local sports clubs and recycling
drives.
As disclosed on page 7 of the CEO’s statement,
and in more detail in the “Supporting our
community” section on pages 18 to 19, 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 on page 7 of the CEO’s
statement. 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 2023 | 27
Strategic report
Corporate governance
Financial statements
Environmental strategy (including TCFD)
year ended 31 March 2023
The Board remains committed to
addressing the urgent challenges
posed by environmental
sustainability, acknowledging
the indisputable evidence that
global temperatures are rising at
an alarming rate, contributing
to more frequent and severe
weather events. The scientific
consensus, as emphasised by the
Intergovernmental Panel on Climate
Change (“IPCC”), asserts that
limiting global warming to 1.5°C
above pre-industrial levels
is essential.
As a responsible company, we recognise our
fiduciary duty to act as custodians of the planet,
safeguarding the interests of future generations.
We understand that meaningful progress
necessitates collective will and concerted efforts
across all sectors of the global economy. Walker
Crips is resolute in its determination to contribute
to the transition towards a net-zero economy.
Central to our environmental approach is our
commitment to aligning with the goals of the
Paris Agreement, aiming to limit global warming
to well below 2°C, and ideally to 1.5°C. To fulfil
this commitment, we maintain the target set
in the last financial year to become a net-zero
emissions business by 2050, or sooner.
What is TCFD?
In response to the growing demand from
investors, banks and stakeholders for consistent
climate-related financial risk disclosures, the
Financial Stability Board established the Task
Force on Climate-related Financial Disclosures
(“TCFD”) in 2015. Recognising the importance of
this framework, the Board of Directors continues
to embrace the TCFD recommendations as a
crucial tool for assessing and disclosing climate
risks and opportunities across our operations.
The TCFD framework is structured around four
fundamental operational elements: governance,
strategy, risk management and metrics and
targets. These pillars provide a comprehensive
framework that enables us to evaluate and report
on climate-related issues effectively. The TCFD’s
recommended disclosures further complement
these core elements, providing specific guidance
on the information that organisations should
provide to assist stakeholders in evaluating
climate-related risks and opportunities.
For more information about the Financial
Stability Board and the Task Force on
Climate-related Financial Disclosures,
please visit the official TCFD website at
https://www.fsb-tcfd.org/.
Walker Crips and TCFD
This is the second 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 following disclosures provide an overview
of the Group’s ongoing efforts in integrating
climate risk and opportunity identification and
management into our overarching business
strategy. As with many companies, including
Walker Crips, the analysis underpinning
this process is a rapidly evolving field, and
we anticipate continued advancements in
methodologies and tools for conducting such
assessments.
Governance
The Group recognises the importance of
climate-related activities and has implemented
a streamlined governance structure to address
them effectively. This structure allows for
escalation and resolution of any issues that arise,
enabling the senior management team to take
action.
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:
A Corporate & Social Responsibility Action Group
has been 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 Action
Group meets quarterly and consists of voluntary
members of staff (known as Staff Champions)
who not only contribute ideas, but also positively
promote any initiatives implemented and
encourage behavioural change if necessary.
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. At the end of the 2022/23
financial year, a second annual Carbon Footprint
Report was produced following the initial report
produced at the end of the 2021/22 financial
year which analysed and calculated the Group’s
carbon footprint across three years 2019-22 for
all its UK offices.
The Group’s net-zero target 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 remain:
a reliable, robust and data-based carbon
footprint providing a clear baseline;
Board-level commitment;
agreed metrics, monitoring and reporting
reviewing risks and opportunities facing the
against which to set targets;
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
During the year the Group has established
further governance arrangements to support
both the Board and the Audit Committee in
discharging their responsibilities in relation to
ESG matters.
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; and
Group-wide engagement to ensure all
staff and key stakeholders understand the
ambition and the journey.
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
28 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Governance
Strategy
Risk
management
Metrics and
targets
Strategy
Carbon reduction
The Group continues to develop 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. Last year we calculated
and analysed the Group’s carbon footprint across
the previous three financial years (2019/20,
2020/21 and 2021/22) for each of our UK offices.
Using this data, we defined 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.
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.
Variations in data collection and
measurement
Available data was used to produce the Carbon
Footprint Report for previous years at the
end of the 2021/22 financial year. However,
the data collection process has subsequently
been enhanced for the 2022/23 financial year
to provide more granular detail and include
additional emission sources not included in last
year’s initial report. This has resulted in variations
and, in some cases, increases in carbon emissions
identified for the previous three financial years.
Full carbon accounting requires a significant
amount of data collection, especially the data
associated with Scope 3 carbon emissions – i.e.
those which are related to indirect emissions from
the organisation’s supply (or, more accurately,
value) chain – both upstream and downstream.
These include, for example, the purchase of goods
and services (such as paper, food & drink, data
services, couriers etc.), business travel (e.g. flights,
cars and taxis, rail), staff commuting and working
from home, hotel stays, waste generated and
water used. The data collection relating to these
activities has, for the 2022/23 financial year,
been more complete, resulting in a more accurate
carbon footprint.
Carbon reduction activities
Corporate & Social Responsibility Action
Group established with carbon reduction
initiatives as part of its remit;
supplier/contractor questionnaire has been
issued to main suppliers/contractors to
establish their environmental policies and
assist in more accurately recording the
Group’s Scope 3 emissions in future;
LED lighting with motion sensors employed
in most offices to reduce energy usage;
more robust recycling process implemented
in London office being rolled-out across the
branches;
air conditioning temperature in office comms
rooms increased to reduce energy usage;
reducing paper consumption across all offices,
with staff encouraged not to print unless
necessary;
all used printer cartridges are recycled;
recycling programme in place for all coffee
pods used in meeting rooms for client
meetings;
timers have been installed on kitchen water
heaters;
IT equipment automatically set to go to
standby mode when not in use;
heating, ventilation and air conditioning
systems in London and York offices only
operate during office hours;
glass/chinaware used in all offices and staff
are encouraged to use reusable water bottles;
dishwashers only operated by cleaning staff in
the evenings;
battery recycling now available in London
office;
all electronic equipment disposed of via WEEE
regulations;
Government cycle2work scheme promoted to
all staff; and
bicycle parking and shower facilities promoted
to staff (where applicable).
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; and
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.
Walker Crips Group plc Annual Report and Accounts 2023 | 29
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Corporate governance
Financial statements
Environmental strategy (including TCFD)
continued
year ended 31 March 2023
Climate-related risks
Type of risk
Transitional –
Policy and legal
Risk
Potential impact
Management response
Adherence to additional legal and/or
regulatory requirements in response
to the climate crisis.
Increased operating costs (e.g.
higher compliance overheads).
Time period:
Short/medium term
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.
Transitional – Market
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
Reduced revenue as a result of
diminished asset values and reduced
demand for services.
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.
Climate-related opportunities
Opportunity
Potential impact
Management response
Opportunity to exploit changing client
preferences by developing an offering of low-
emission products – such as ESG model portfolios.
Time period:
Short/medium/long term
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.
30 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
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 consider investments the Group makes on
behalf of its clients.
2019/20 (tCO2e)
2020/21 (tCO2e)
2021/22 (tCO2e)
2022/23 (tCO2e)
Scope 1
Scope 1
Refrigerants
Purchased electricity
Purchased heat
Scope 3
Material use
Business travel – flights
Business travel – road
Business travel – rail
Employee commute
Road/rail
Employee WFH
Hotel stay
Waste
Total equipment,
lighting & heating
consumption per
year (kWh)
Disposal and
recycling
Water
Supply & treatment
0.02
114.83
50.78
12.94
2.60
6.50
2.97
274.16*
0.02
85.33
54.40
0.18
0.00
2.48
2.04
93*
0.01
78.47
52.08
3.34
0.27
9.75
2.30
90*
0.46
46.88
43.36
0.78
0.01
8.37
0.38
0.01
4.30
0.51
0.03
1.87
TOTAL (tCO2e)
474.42**
289.02**
281.99**
* Emission source not included in previously published Carbon Footprint Report.
** Adjusted total.
All offices
Total Carbon tCO2e
Carbon per FTE
Carbon per m2
2019/20
474.42
1.97
0.21
2020/21
289.02
1.20
0.13
2021/22
281.99
1.17
0.12
0.01
65.51
36.73
7.24
0.88
40.31
6.07
91.96
44.75
3.77
-1.56
0.46
296.14
2022/23
296.14
1.23
0.13
The primary reason for the increase in carbon emissions in the year is the increase in travel, both commute to office and for business purposes where previous
years were impacted by travel restrictions and partial lockdowns. Despite the 5% year-on-year increase in emissions in 2022/23, we remain on course to reach
our target as set out below, having so far achieved a 37.6% reduction in annual carbon emissions from our pre-COVID baseline year of 2019/20.
Target
Adhering to the current best practice, the Group continues to work 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 is 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.
Total Carbon tCO2e and Target 50% reduction by 2030 (all offices)
Total Carbon tCO2e
Target 50% reduction by 2030
500
400
300
200
100
0
2 019/2 0
2 02 0/21
2 021/2 2
2 02 2/2 3
2 02 3/24
2 024/2 5
2 02 5/26
2 026/27
2 027/2 8
2 02 8/2 9
2 02 9/3 0
Walker Crips Group plc Annual Report and Accounts 2023 | 31
Strategic report
Corporate governance
Financial statements
Board of Directors
Our Board of
Directors deploys its
extensive expertise
and experience into
managing the Walker
Crips Group.
Sean Lam
FCPA (Aust.), Chartered FCSI
Sanath Dandeniya
FCCA
Martin Wright
Group Chief Executive Officer
Group 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, was
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,
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
C
E
RI
Membership
C
E
RI
Membership
N
R
32 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Membership key
A Audit Committee
C Compliance Committee
E Executive
N Nomination Committee
R Remuneration Committee
RI Risk Management Committee
David Gelber
Clive Bouch
FCA
Hua Min Lim
Chair
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,
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 2023 | 33
Strategic report
Corporate governance
Financial statements
Chairman's introduction to
corporate governance report
Dear Shareholder
I am pleased to introduce our Corporate Governance Report for this reporting period.
The Group’s governance structure is key to the formulation and implementation of a strategy for the development of the business. Having emerged
from the pandemic relatively unscathed, the business over the last 12 months has had a number of other challenges to contend with, most notably the
impact on the global economy of the Ukraine conflict, rampant inflation and interest rates at levels not seen in decades. Your Board fully recognises the
considerable pressures that the resulting increase in the cost of living have placed on our clients, our staff and all other stakeholders.
Our culture, amplified in the following report, remains encapsulated in making investment rewarding for our clients, our shareholders and our staff and
giving our customers a fair deal. Consequently, our continued resolve to deliver the most favourable outcomes for all of our stakeholders has remained the
determining factor in our decision-making processes. This has included the implementation of the new Consumer Duty, which has given us the opportunity
to look afresh at and to improve the manner in which we achieve the objective of delivering good outcomes.
In terms of compliance with the 2018 UK Corporate Governance Code, the Board continues to take a proportionate approach in applying the Code’s
provisions. The report explains where the Company complies and where and why alternative arrangements are adopted.
As far as our most important resource – our workforce – is concerned, this philosophy has manifested itself in enhancing our consultation and
communication processes to ensure staff wellbeing is approached in a caring and effective way, encouraging employees to realise their potential through
training and development programmes and providing reward structures that recognise their individual contributions to our success. More about these and
other Human Resources initiatives can be found on pages 10 to 11.
In my commentary last year, I referred to the skills shortage in our industry which had led to heightened competition for quality staff. Another of the
challenges alluded to in my opening remarks has been the recruitment and retention of employees with the skills and experience we need to maintain our
high standards of customer service. This involves investment in our people. The Board is convinced that this investment is essential for both the immediate
and longer-term future of the business, for the ultimate benefit of clients and shareholders, as well as the workforce as a whole.
I have referred in my statement on pages 4 to 5 to more exceptional cost items. The Board has been and is determined to implement the required
improvements in our regulatory and compliance framework. Linked to this is adherence to the letter and spirit of the wider regulatory framework, including
the additional constraints imposed by the Consumer Duty. Here too we will support management where investment is necessary or difficult decisions are
required.
These are some of the ways in which our commitment to good governance have been applied. Good governance is a cornerstone of the Consumer Duty.
The objective of this regulation is to prevent consumer harm and to facilitate good consumer outcomes, an objective that has been long-established in the
Group’s culture and the behavioural standards we have strived to maintain.
We are keeping a close eye on developments in the area of corporate governance reform, in particular those arising from the BEIS and FRC consultations
focused on reporting, audit and internal controls, which are due to be implemented for accounting periods on or after 1 January 2025.
I trust that the matters I have addressed above and the other information given elsewhere in this Annual Report continue to demonstrate that I and my
fellow Directors are determined that the Group’s governance is applied in a relevant, proportionate and meaningful way in line with our declared values.
That being so, 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
31 July 2023
34 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Report by the Directors –
on corporate governance matters
year ended 31 March 2023
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 8 and 9.
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 20 to 24;
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 39 and 67.
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’ and the HR department’s regular engagement with the workforce as explained further on pages 10 and 11;
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 and through our Group Head of HR, which the Board believes provides timely and relevant
communication and awareness of key matters. Details of the methods used are also given in the “Our people and culture” section on pages 10 to 11 and the
Section 172 Statement on pages 25 to 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 2023 | 35
Strategic report
Corporate governance
Financial statements
Report by the Directors –
on corporate governance matters continued
year ended 31 March 2023
Board leadership and Company purpose continued
Engagement with shareholders
The Board recognises the importance of regular, meaningful, transparent and effective communications with shareholders. This is principally achieved through:
the Company’s Interim and Annual Reports and Accounts, which include a detailed review of the business and future developments and are publicly
available on the Company’s website at 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 25.
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 certain regulated entities will allow a more holistic oversight of the business as a whole.
This plan remains on the Company’s forward-looking agenda.
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.
36 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
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
11
10
10
10
0
11
11
Audit
Committee
7
7
7
7
n/a
7
7
Remuneration
Committee
2
2
2
2
0
2
2
Nomination
Committee
1
1
1
1
0
n/a
n/a
1 Hua Min Lim, who is based in Singapore, is provided with 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 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 to 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 24.
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 2023 | 37
Strategic report
Corporate governance
Financial statements
Report by the Directors –
on corporate governance matters continued
year ended 31 March 2023
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 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.
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 recent years we have
experienced too many large costs that have arisen due to key procedures and controls not operating as they should and such failures persisting over time. The
Board is determined to address this. Accordingly, in addition to the strengthening of our second and third lines of defence in recent years, we have decided that
a fresh review of all key transaction reporting controls, key risk indicators, use of systems and exception reporting is required. This will be completed over the
coming months. In addition we have concluded that senior management bandwidth is too narrow and we will strengthen the management team.
The Directors consider that the controls and risk management procedures established and to be implemented will be 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.
Compliance Committee
The Executive Compliance Committee provides regulatory oversight to the Group, monitors compliance with all regulatory matters and considers regulatory
updates and guidance notes from the FCA, the Joint Money Laundering Steering Group, the Financial Ombudsman Service, the Financial Services
Compensation Scheme, the London Stock Exchange and other UK regulatory and industry bodies.
The Committee’s aim is to cultivate a culture of compliance, to ensure that the Group is delivering good customer outcomes and to provide challenges to all
levels of leadership.
The Committee is responsible for considering law, regulation and guidance while determining how it should be disseminated, engaged with, and implemented
across the Group.
In the current financial year, the Committee has been focused on Financial Crime Compliance framework enhancements and developing and strengthening its
framework for the new Consumer Duty regulation.
The Committee also ensures all compliance policies, procedures, processes and guidance are properly implemented and regularly reviewed.
James Hiett, Head of Group Compliance, acts as the Committee’s Chairman.
Prospects
The financial year 2022/23 saw the Group continuing to be profitable, but with a decline in pre-exceptional items operating results. Reported results were
yet again hampered by the significant exceptional costs reported in the year. Nevertheless, Management remains committed to the Group strategy and
has confidence in the longer-term prospects for the Group. Action is taken to remediate the causes of exceptional items when they have been due to control
weaknesses.
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The Group’s strategy focuses on revenue growth, cost control and investment in staff and systems. Key areas of the Group’s strategy are:
1. Nurture and promote our core business
This is our largest revenue generator, providing clients with investment, wealth, pensions and collectives advice and the creation of structured investments
and structured deposits for clients, IFAs and counterparties. We aim to grow both organically by home-growing investment managers as well as
attracting new investment managers with established client lists.
2. Companion services including higher margin alternative investment business
This subset of our core Investment Management business is where we create innovative and higher margin new business lines.
3. Software as a Service (“SaaS”) that looks to 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.
The Group prepares five-year projections for business planning purposes, its Internal Capital Adequacy and Risk Assessment ("ICARA") and its 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 in future but will keep it under review as income sources evolve and the related risks and rewards are assessed.
Viability statement
The Directors regularly consider the Group’s financial position and projected liquidity and financing requirements. For the purposes of this viability statement
they have assessed the outlook of the Group by reference to its current financial position, recent and historical trading performance, the principal risks and
mitigating factors (see pages 20 to 24), and three-year projections (see above).
The Group’s forecasting model, which forms part of the ICARA process, is subjected to stress tests. These stress tests are devised through discussions with
senior management and consist of two alternative stress scenarios, both directly applied to the Group’s “base” case budget and projections which assume
normal operating conditions. Key assumptions underpinning the base case projections are set out in the going concern disclosure in note 2 on page 67. The
stress tests seek to respond to the business model risks disclosed on page 23. A reverse stress test is also performed. The stress scenarios do not include any
mitigating actions that would be taken by management were they to emerge.
The Group’s base case projections and the two 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”: representing a 10% reduction in management
fees and trading commissions, with the consequent reduction in revenue sharing based costs, compared to the base case in the reporting periods ending 31
March 2025 and 31 March 2026, and (ii) a “severe stress scenario”: representing a 15% fall in management fees and trading commissions and UK base rates
1% (absolute) lower compared to the base case in the reporting periods ending 31 March 2025 and 31 March 2026, together with an 80% deterioration in the
SDRT obligation provision (see Chairman’s statement on page 4 and Finance Director’s review on page 14) assumed to be settled in December 2023.
Liquidity and regulatory capital resource requirements exceed the minimum thresholds in both the base case and bear scenarios. In the severe stress scenario,
although the Group has positive liquidity throughout the period, the negative impact on our prudential capital ratio is such that it is projected to fall below the
regulatory requirement in June 2025. Were the interest rate stress also to be applied to the bear scenario a regulatory capital shortfall is projected to occur in
September 2025. The Directors consider these scenarios to be remote in view of the prudence built into the base case projections and that further mitigations
available to the Directors are not reflected therein. Such mitigating actions within Management ’s control include reduction in proprietary risk positions,
delayed capital expenditure, further reductions in discretionary spend, not paying planned dividends and reductions in employee headcount. Other mitigating
actions may include disposal of businesses, stronger cost reductions and the potential to seek shareholder support.
The reverse 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 25% of gross income over the next 12 months. 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.
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 capital requirements imposed by 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 67.
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. Accordingly, the Remuneration Committee will in due course undertake a
broader review of remuneration arrangements for Directors and senior management. As explained in the Remuneration report on pages 44 to 51, a review of
Executive Directors’ base salaries was undertaken during the year.
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 51.
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Audit Committee report
year ended 31 March 2023
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 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 Group 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 walkercrips.co.uk.
Main responsibilities of the Committee
The Committee assists the Board in its oversight of the:
integrity and quality of financial reporting and disclosure;
a.
b. selection and application of accounting policies and practices;
c. 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 seven formal meetings of the Committee during the year. The Committee members’ meeting attendances are set out in the Report by the
Directors on corporate governance matters on page 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 Group
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 2023 fell into three main areas:
1. Accounting, financial and non-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. viability statement prior to Board approval;
e. TCFD disclosures; and
f. Annual Report to consider whether, taken as a whole, it is fair, balanced and understandable, includes all required disclosures and provides
information relevant to shareholders’ assessment of the Group’s position and performance, business model and strategy.
2.
Internal controls
The Committee:
1. 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 Group Compliance and Group Risk;
2. agreed with the internal audit service providers the programme of internal audit reviews and any modifications thereto;
3. reviewed actions taken, and challenged the appropriateness of deadlines for implementation, in response to reports on internal controls in order
to address matters identified; and
4. considered the effectiveness of the systems established to identify, manage and monitor financial and non-financial risk. In respect of this matter
and the failure of controls giving rise to the Stamp Duty Reserve Tax obligation, as reported in the Chairman’s statement (page 4), the Finance
Director’s review (page 14), and elsewhere in the Annual Report and Accounts, in addition to the continuing strengthening of our second and third
lines of defence, the Board has decided that a fresh review of all key transactions reporting controls, risk indicators, use of systems and exceptions
reporting is required. This will be completed over the coming months. The Board has also concluded that senior management bandwidth is too
narrow and the management team should be strengthened.
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3.
External audit
The Committee:
1. 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;
2. reviewed PKF’s audit plan, audit approach, scope of work to be carried out and audit findings;
3. reviewed the auditor’s independence and objectivity, including compliance with the Group’s non-audit services policy;
4. approved PKF’s audit and non-audit fees;
5. reviewed PKF’s recommendations in respect of the internal control environment and management’s responses thereto; and
6. reported to the Board on the audit process, the effectiveness of the external auditor, the results of the external audit, and made a
recommendation to the Board on the re-appointment of the external auditor.
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 key matters raised by the FRC for 2022/23 reports.
External auditor
PKF was reappointed as the Group’s external auditor by shareholders’ resolution at the 2022 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 walkercrips.co.uk. PKF also carried out a desktop review of the Group’s Interim Report and reports to the FCA
on CASS compliance for relevant Group companies, as well as providing assurance services under AAF 01/20 in respect of the Group’s service organisation
controls report. No other services have been provided by the auditor during the year. Details of external audit and non-audit fees are disclosed in note 9 to
the financial statements on page 79.
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. Attention is drawn to the
Auditor’s report on pages 56 to 61 and, in particular, the emphasis of matter highlighting the uncertainty regarding the provision for stamp duty.
Internal audit
The internal audit tender process reported last year as having been initiated at that time involved a rigorous evaluation of potentially suitable internal audit
service providers, presentations from short-listed candidates to the Committee, Board and members of senior management and rigorous interrogation of
their submitted proposals. This concluded with unanimous support for the appointment of Grant Thornton UK LLP (Grant Thornton) as the Group’s internal
auditors with effect from 1 December 2022. The previous incumbent, Evelyn Partners LLP (formerly Smith & Williamson LLP) was retained beyond that date
to complete its agreed programme and submitted its closing report to the Committee in January 2023 to bring its engagement to an end.
The internal audit function reports directly to the Committee. The internal audit plan and scope of work is reviewed and approved by the Committee as a
matter of course each year and is modified, as necessary, during the course of the year in the event of changed priorities. 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, Evelyn Partners completed its reviews of the Group’s approach to and controls over market abuse, the Tier 1 Investor Visa Service
(since discontinued), the Finance Department and debtor management procedures and, to conclude its engagement, reviewed and reported on the
implementation by Management of the consequent recommendations it had made. Grant Thornton then carried out its first review and reported to the
Committee on the implementation of the fraud and financial crime controls enhancement project. Since the year end, Grant Thornton has also reviewed
and reported on regulatory transaction reporting by and the cyber security controls of the Group’s main operating company, Walker Crips Investment
Management Limited.
The Committee monitors the effectiveness of the internal audit service provided by the external providers, with particular focus on competence and
capabilities, timely reporting and the quality of communication and recommendations. The Committee also monitors any other services that the internal
auditors may provide to ensure the integrity and independence of the Group’s third line of defence is not compromised. The Committee is pleased with the
level of engagement, insight and quality of reporting in respect of Grant Thornton’s work to date.
Walker Crips Group plc Annual Report and Accounts 2023 | 41
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Audit Committee report continued
year ended 31 March 2023
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 Ukraine conflict, current financial resources and capital expenditure plans, together with ongoing compliance with regulatory
prudential 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 actions management are taking to strengthen the control environment and mitigate instances of control failings resulting in significant liabilities
that have occurred in recent years and are described elsewhere in this and prior reports;
dividend proposals and policy;
Group liquidity, noting that 90% of the Group’s regulatory financial resources at 31 March 2023 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 2023 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 £21.9 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 £4.5 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 auditor 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 auditor (see the independent auditor’s report on pages 56
to 61).
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 Group has taken an exceptional
charge of £0.4 million (see note 10) to write down client list intangibles
associated with departing self-employed investment managers. Estimated
useful economic lives have also been reviewed by Management, with
changes resulting in an additional amortisation charge of £0.6 million
compared with the prior year. The Committee reviewed Management’s
supporting papers in respect of indicators of impairment, reasonableness
of amortisation periods and appropriateness of the impairment charges
(exceptional and non-exceptional), challenging underlying assumptions.
The Committee also considered the procedures performed by the external
auditors (see the independent auditor report on page 59).
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Matter considered
Provisions
Action
The financial statements include provisions in respect of dilapidations
(£0.65 million) and estimated obligations in respect of Stamp Duty Reserve
Tax (“SDRT”) (£0.9 million). These amounts are estimated with varying
degrees of certainty. In view of the materiality of the SDRT obligation and
the fact it arose over several years, prior year reported results have been
restated to correct this fundamental error.
The Committee considered and challenged Management’s determination
of the amounts provided, accounting treatment and related disclosures
(see Chairman’s statement on page 4, Finance Director’s review on page
14, note 27 on pages 89 and 90, and note 38 on page 94), concluding they
were appropriate based upon the information presently available.
As noted previously, the auditor’s report contains an emphasis of matter in
respect of the uncertainty regarding the SDRT provision.
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
2022/23, the Group has reported exceptional charges totalling £554,000
(2021/22: £1,555,000 - restated).
The exceptional items reported this year therefore continue to be
significant and relate to write down of values attributable to client list
intangible assets and provision for estimated SDRT due to HMRC. Related
to this latter provision, prior period reported results have been restated to
correct the fundamental error and, as noted earlier, the auditor’s report
contains an emphasis of matter paragraph.
APMs presented are operating profit before exceptional items, profit
before tax and exceptional items, adjusted EBITDA and underlying cash
generation from operations.
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 80), the reasons therefor and the
proposed disclosures, including the reconciliations provided in the Finance
Director’s review on page 15 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 Finance Director’s review and elsewhere in the Annual
Report and Accounts, including the restatement of prior years’ reported
results. 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. The Committee in
particular noted the uncertainty surrounding the estimated SDRT provision
and its impact on the going concern and viability statement considerations
(see page 39 and notes 10 and 38).
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 any areas identified for improvement.
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
31 July 2023
Walker Crips Group plc Annual Report and Accounts 2023 | 43
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Financial statements
Remuneration report
year ended 31 March 2023
Introduction
This report details the Directors’ remuneration for the year ended 31 March 2023 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 walkercrips.co.uk where the former can be found on pages 39 to 42 of the 2020 Annual Report and
the latter on pages 49 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
As explained in the Chairman’s and CEO’s statements and the Finance Director’s review, this year has been difficult given the challenging and uncertain
external environment, and the resulting reduced market confidence and operating results. It is also disappointing that again the Group reports exceptional
charges, including one related to a legacy issue caused by procedures and controls failings resulting in a material obligation in respect of underpaid Stamp
Duty Reserve Tax. However, the Board and Management have taken and continue to take action to improve our regulatory and compliance functions and
strengthen our framework of systems and internal controls, and are focused on improving our operating model through ceasing certain higher risk service
offerings and investing in our people. On the latter point, I reported last year that we were experiencing inflationary pressures, particularly regarding
the competitive employment market in the financial services sector. This pressure has continued, exacerbated by current higher levels of inflation, and
therefore investing in our people and ensuring they are fairly rewarded has been a priority. The Committee is responsible for determining the reward
practices on a Group-wide basis and continues to review the overall remuneration for all levels of employees across the Group. Whether it relates to the war
in Ukraine, the cost-of-living crisis or the volatile stock market, this financial year has been a turbulent time for many and our workforce has dealt with these
pressures admirably. These factors and the Group’s results have impacted the Remuneration Committee’s decisions, and I would highlight the following:
1. The Committee has not awarded discretionary bonuses to the Executive Directors, also noting that the formulaic bonus pool does not crystallise as
profits are insufficient. This decision was influenced by the downturn in operating results, a continued high level of exceptional charges, control failings
and lower year-on-year dividends to shareholders.
2. The Committee is highly supportive of the work our new Head of Group HR is spearheading on behalf of the Group as outlined in the section on
“Our people and culture” on pages 10 and 11 and in the Section 172 (1) Statement on pages 25 and 26. A key task completed during the year was a
comprehensive benchmarking review of the employed workforce’s (including Executive Directors’) remuneration and rewards. The review confirmed our
concern that we were behind market and informed our decision to award increases, taking effect from 1 April 2023, averaging 9% across the workforce.
We continue to pay all employees at or above the national living wage, which is in excess of the national minimum wage. Base salary increases of 10%
were awarded to the two Executive Directors.
3. The Committee considered and approved the bonus pools recommended by Management in respect of those employees eligible to receive such
awards, taking into account input from our Risk and Compliance functions as to whether any reductions were necessary for poor conduct or other
relevant reasons. For higher performing employees, a proportion of their awards have been made in shares under the Deferred Bonus Plan approved by
shareholders at the last AGM.
The Committee will continue to keep pay levels under review, taking into account workforce pay and policies as required by the UK Corporate Governance
Code, the Group’s performance and the interests of shareholders. In conducting any review of Executive Directors’ fixed pay levels the Committee will take
into account the continued development of remuneration arrangements for other firms in the sector of similar size and complexity.
I reported last year that consultations had been conducted with members of the workforce, and in particular our self-employed associates, on proposed
modifications to their reward arrangements to align with the new MIFIDPRU Remuneration Code. These were fully implemented. For our employed
workforce, although we are not subject to imposed maximum ratios of variable to fixed reward, as required by the rules we have specified a maximum ratio
in respect of such rewards. It should be noted that our shareholder approved Directors’ Remuneration Policy restricts Executive Directors’ variable pay to
not more than 100% of fixed pay.
The Committee is aware that stakeholders are increasingly expecting environmental, social and governance measures ("ESG") to be embedded within
remuneration frameworks for senior management. As reported last year, your Board believes that addressing ESG challenges is an integral part of
Management’s day job rather than an additional area to be incentivised. As part of the review of annual bonuses, the Committee considered the Group’s
progress, particularly in laying the foundations to achieving our net-zero targets. As noted in the TCFD report on page 28, the Group’s carbon emissions
have increased year on year reflecting the increase in travel, both commute to office and for business purposes where previous years were impacted by
travel restrictions and partial lockdowns. The Audit Committee has challenged Management on the Group’s plans, noting Management’s assertion that
the Group remains on course to reach its target.
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As we look forward to the coming year, the Committee will continue to support executive management and our Head of Group HR in improving our levels of
employee engagement and ensuring the Group remains an attractive place to work. Reward levels will be kept under review, including whether the existing
formulaic profit share arrangements remain appropriate. The current Directors’ Remuneration Policy is due to expire at the 2024 AGM and the Committee
will review the current policy to ensure it remains aligned with the Group’s strategy, emerging market practice, regulatory developments, the expectations
of the UK’s Corporate Governance Code and of our shareholders. Any proposed changes to the policy, including to the formulaic profit share arrangements,
will be presented for shareholder consideration at the 2024 AGM.
I hope that you find the information in this annual statement and the Directors’ Remuneration report clear and useful.
Clive Bouch
Remuneration Committee Chairman
31 July 2023
Walker Crips Group plc Annual Report and Accounts 2023 | 45
Strategic report
Corporate governance
Financial statements
Remuneration report continued
year ended 31 March 2023
Part B – Annual Remuneration Report
The Remuneration Committee presents its Annual Remuneration Report, which will be put to an advisory shareholder vote at the 2023 AGM. Sections
which have been subject to audit are noted accordingly.
Summary of Remuneration Policy and implementation in the year ended 31 March 2023
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
Annual Profit Share (discretionary
allocation from annual bonus pool)
Discretionary Bonus
Pension
Share Incentive Plan ("SIP")
Other benefits
Policy
How implemented in 2022/23
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.
No changes were made in the year in respect
of the 2022/23 salaries/fees. The impact of the
review conducted in the year on 2023/24 salaries
and fees is disclosed later in this report.
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 2022/23 bonus pool thresholds were 5% of
Group profit before tax in excess of £559,000
and 15% of Group profit before tax in excess of
£1,397,000. These profit pool thresholds were
not triggered, and consequently no annual profit
share awards made in the year.
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.
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.
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.
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.
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.
On review, the matching rate was increased
to one-to-one from 1 April 2023.
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.
46 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Part B – Annual Remuneration Report continued
Remuneration for the year ended 31 March 2023 (audited information)
The table below sets out the remuneration received by the Directors in the year ended 31 March 2023 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
Basic
salary/
Fees
(Note 1)
£
220,000
220,000
150,000
150,000
–
–
38,570
38,570
42,559
42,559
42,559
42,559
493,688
493,688
Fixed remuneration
Taxable
benefits
(Note 2)
£
Pension
contri-
butions
(Note 3)
£
2,124
1,924
1,950
1,768
–
–
–
–
–
–
–
–
4,074
3,692
22,000
22,000
10,500
10,500
–
–
–
–
–
–
–
–
32,500
32,500
Total
Fixed
£
244,124
243,924
162,450
162,268
–
–
38,570
38,570
42,559
42,559
42,559
42,559
530,262
529,879
Year
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Variable remuneration
SIP
Matching
Shares
Total
Variable
Bonus
£
–
–
–
–
–
–
_
–
–
–
–
–
–
–
£
900
900
900
900
–
–
900
900
–
–
900
900
3,600
3,600
£
900
900
900
900
–
–
900
900
_
–
900
900
3,600
3,600
Total
£
245,024
244,824
163,350
163,168
–
–
39,470
39,470
42,559
42,559
43,459
43,459
533,862
533,479
* Charles Russell Speechlys LLP received fees of £42,559 (2022: £42,559) for the services of Martin Wright who is a partner in that firm.
Note 1: Basic salary/Fees
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 2023
Based on the Group’s results and profitability, the Committee has not awarded any discretionary annual bonuses for 2022/23, whether payable in cash
or equity, to the Executive Directors.
Outstanding share awards
There were no share options outstanding at 31 March 2023 or 31 March 2022. 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 was obtained
at the 2022 AGM to the introduction of the Walker Crips Group Deferred Bonus Plan 2022, an employee share scheme to facilitate the payment of bonus
awards partly in shares.
Walker Crips Group plc Annual Report and Accounts 2023 | 47
Strategic report
Corporate governance
Financial statements
Remuneration report continued
year ended 31 March 2023
Directors’ shareholding and share interests (audited information)
The interests of the Directors and their connected persons in the share capital of the Company are shown in the table below.
Director
Hua Min Lim
Sean Lam
Sanath Dandeniya
David Gelber
Clive Bouch
Martin Wright
Beneficially
owned at
31 March
2022
12,359,803
636,460
45,838
210,088
59,684
16,129
Beneficially
owned at
31 March
2023
12,359,803
660,133
57,874
227,715
71,898
16,129
Beneficially
owned at
30 June
2023
12,359,803
671,748
69,910
245,342
84,112
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. On further review, the
matching rate has been increased to its pre-pandemic level of one-to-one from 1 April 2023.
A total of 587,948 (2022: 508,978) new Ordinary Shares were issued to the 92 employees who participated in the SIP during the year. At 31 March 2023,
3,864,027 (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
2022
19,409
17,011
57,561
18,272
31 March
2023
22,203
20,132
60,686
21,393
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.
48 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Part B – Annual Remuneration Report continued
Chief Executive remuneration
Percentage change in the remuneration of the Chief Executive
Chief Executive
Salary
Bonus
Benefits
Average per employee (£)
Salary
Bonus
2022
£
220,000
–
1,924
45,961
8,051
Change
5.3%
–
9.9%
9.93%
56.32%
2023
£
220,000
–
2,124
48,441
7,109
Change
0%
10.40%
5.40%
-11.70%
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 in 2022 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.
Sean Lam
Rodney FitzGerald
Total remuneration
2013
–
£267,934
£267,934
2014
–
£186,769
£186,769
2015
–
2016
–
£187,176 £189,264
£187,176 £189,264
2018
2017
£133,610
–
£196,119
£69,843
£196,119 £203,453
2019
2020
2021
£245,517 £245,504 £231,650
–
£245,517 £245,504 £231,650
–
–
Year
ended
31 March
2023
245,025
245,025
2022
244,824
–
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 2023, of £100 invested in Walker Crips Group plc on 31 March 2013 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
FTSE Small Cap Index
WCG plc share price TR
£250.00
£200.00
£150.00
£100.00
£50.00
£0.00
2 0 1 3
2 0 1 4
2 0 1 5
2 0 1 6
2 0 1 7
2 0 1 8
2 0 1 9
2 0 2 0
2 0 2 1
2 0 2 2
2 0 2 3
Walker Crips Group plc Annual Report and Accounts 2023 | 49
Strategic report
Corporate governance
Financial statements
Remuneration report continued
year ended 31 March 2023
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
2022
£’000
14,475
383
2023
£’000
13,462
617
Change
4.37%
61.10%
The total dividends paid in 2022/23 consisted of a final dividend for 2021/22 of 1.20 pence per share (2020/21: 0.60 pence per share) and an interim
dividend for 2022/23 of 0.25 pence per share (2021/22: 0.30 pence per share) As explained on page 5, the Directors are recommending a final dividend for
2022/23 of 0.25 pence per share, which equates to a total amount payable for the year of £106,000.
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 Chair 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 twice in the year. Matters that were considered and discussed included but were not limited to:
Review of information on wider workforce pay including salaries, budgets and incentive outcomes
Review and discussion of the remuneration benchmarking survey
Determination of the remuneration of the Chairman and Executive Directors
Annual review of remuneration for material risk takers across the Group
Review of annual risk and compliance reports on variable pay awards to ensure alignment with the firm’s risk appetite
Review of the general principles of the regulatory Remuneration Policy
Review and approve the Directors' Remuneration report for shareholder approval
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 2023 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 having been made to the salaries of the Executive Directors for the year from 1 April 2023, in exercise of its discretionary powers, the
Committee approved the award of a basic salary increase of 10% to each of the Executive Directors from 1 April 2023. There are no plans to review the
Executive Directors’ salaries before 1 April 2024.
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 £600,000 and 15% of Group profit before tax in excess of £1,500,000. The Committee may also award in-year discretionary bonuses for the Executive
Directors under the existing 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 predominantly in shares subject to
minimum shareholding restrictions.
50 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Part B – Annual Remuneration Report continued
Fees for the Chairman and Non-Executive Directors
The Group’s approach to setting Non-Executive Directors’ fees is summarised on page 46. These fees are reviewed periodically by the Board and
revisions have been made that take effect from 1 April 2023. A summary of fees for Non-Executive Directors in respect of the year ended 31 March 2023
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
2023
£
42,559
38,570
42,559
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 were increased to £42,559 per annum with effect from his appointment as Chairman on
9 September 2020 and remained at that level until increased by the Board to £55,000 per annum from 1 April 2023. 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 and are subject to VAT.
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 fees, which were set from 1 April 2021 at £42,559 per annum, remained at that level until increased to £50,000 per annum
from 1 April 2023. He is also reimbursed for expenses incurred on behalf of the Group and receives a contribution by the Group to the SIP.
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 fees of £38,570 per annum for the year
remained unchanged from 2021/22 but have been increased to £50,000 per annum from 1 April 2023. He is also reimbursed for expenses incurred on
behalf of the Group and receives a contribution by the Group to the SIP.
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 2023 or proposed.
Statement of shareholder voting at General Meetings
At the 2022 and 2021 Annual General Meetings, the Directors’ Remuneration report and the Remuneration Policy, at the 2021 Annual General Meeting
only, received the following proxy votes from shareholders:
2022 AGM
Votes in favour
Votes cast against
Abstentions
2021 AGM
Votes in favour
Votes cast against
Abstentions
Directors’ Remuneration report
Remuneration Policy
Number
Percentage
Number
Percentage
15,483,543
8,424
Nil
21,332,880
51,900
1,077
99.9%
0.1%
0.0%
99.8%
0.2%
<0.1%
n/a
n/a
n/a
21,307,364
77,416
1,077
n/a
n/a
n/a
99.6%
0.4%
<0.1%
Approval
This report was approved by the Committee and the Board and signed on its behalf by:
Clive Bouch
Remuneration Committee Chairman
31 July 2023
Walker Crips Group plc Annual Report and Accounts 2023 | 51
Strategic report
Corporate governance
Financial statements
Directors’ report
for the year ended 31 March 2023
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 2023.
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
* The restatement of the 2022 figures is explained in note 38.
2023
£’000
10,303
418
(617)
10,104
As restated
2022
£’000
10,631
55*
(383)
10,303
The Directors, having considered the impact of the pandemic and Group’s liquidity requirements, recommend the payment of a final dividend of 0.25
pence per share (2022: 1.20 pence). The proposed final dividend is subject to shareholder approval at the AGM on 27 September 2023. If approved by
shareholders, this will be paid 06 October 2023 to shareholders on the Company’s shareholder register at the close of business on 22 September 2023.
The total dividend paid and proposed in the year was 0.50 pence per share (2022: 1.50 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 to new investment advisers in return for the rights to or purchase of a client list 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 47 and 48.
Other than noted on page 55, 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 2023: No Directors of the Group’s Parent Company were women (2022: nil); 24% of senior managers, being individuals with
responsibility for planning, directing or controlling, were women (2022: 24%); and 38% of the Group’s employees were women (2022: 42%).
52 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Health and safety policy
The Board has a policy of adopting procedures, appropriate to its activities, to monitor, maintain and, where relevant, improve health and safety standards
to safeguard the Group’s staff.
None of the Group’s activities involve any significant health and safety risks. During the year there were no injuries, illnesses or dangerous occurrences
which needed to be reported under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995.
Eligible employees can benefit from the Group’s permanent health insurance scheme in the event of long-term illness preventing them from carrying out
their function.
Insurance and indemnification of Directors
The Group has put in place insurance to cover its Directors and officers which gives appropriate cover for legal action brought against any of them. In
addition, the Group’s Articles of Association provide for the ability of the Group to grant qualifying third-party indemnity provisions (as defined in section
234 of the Companies Act 2006) for the benefit of the Directors in relation to certain losses and liabilities which they may incur (or have incurred) in
connection with their duties, powers or office.
Ordinary and special business
Resolutions will be placed before the Annual General Meeting to confer authority on the Group to allot equity securities of up to an aggregate nominal
amount of £946,162 and to authorise and empower the Group to allot equity securities.
The Companies Act 2006 permits a public group to purchase its own shares in accordance with the powers contained in its Articles of Association and
with the authority of a resolution of shareholders. The Directors believe that the Group should be authorised to take advantage of these provisions and,
therefore, pursuant to the power contained in the Group’s Articles of Association, it is intended to propose a special resolution at the forthcoming Annual
General Meeting to confer authority on the Group to purchase up to a maximum in aggregate of 10% of the Ordinary Shares of 6 2/3 pence each in the
share capital of the Group at a price or prices which will not be less than 6 2/3 pence and which will not be more than 5% above the average of the middle
market quotation derived from the London Stock Exchange Daily Official List for the 10 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 2023, 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
3,496,694
3,496,694
3,496,692
As at 30 June 2023, 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
3,496,694
3,496,694
3,496,692
Percentage
8.21
8.21
8.21
Percentage
8.21
8.21
8.21
MIFIDPRU 8 disclosures
The Group’s disclosures are published annually on our website and provide further details about our Remuneration Policy and practices and regulatory
capital resources and requirements.
Walker Crips Group plc Annual Report and Accounts 2023 | 53
Strategic report
Corporate governance
Financial statements
Directors’ report continued
for the year ended 31 March 2023
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 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 27 September 2023.
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 67 for further details). Accordingly, the Directors continue to adopt the going
concern basis for the preparation of the financial statements.
Subsequent events
Details of significant events occurring after the end of the reporting period are given in note 35.
Approval
This report has been approved by the Board and signed on its behalf by:
Sanath Dandeniya FCCA
Director
31 July 2023
54 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Statement of Directors’ responsibilities
for the year ended 31 March 2023
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 FCCA
Director
31 July 2023
Walker Crips Group plc Annual Report and Accounts 2023 | 55
Strategic report
Corporate governance
Financial statements
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
2023 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 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 2023 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 director’s 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.
Emphasis of matter – Uncertainty regarding provision for Stamp Duty Reserves Tax
We draw attention to note 38 of the financial statements, which describes the uncertainty surrounding the provision established by management in
respect of the group’s liability in connection with unpaid Stamp Duty Reserves Tax.
Our opinion is not modified in this respect.
56 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
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 £158,000
(2022: £161,000) for the consolidated financial statements using 0.5% of group revenue based on the 31 March 2023 financial statements. 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 £110,600 (2022: £112,700).
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of 5% of overall materiality at £7,900 (2022:
£8,050) 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.
The materiality for the parent company was set at £112,000. Each significant component of the group was audited to an overall materiality ranging
between £7,000 and £137,000. 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 and the impairment of intangible assets.
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.
Walker Crips Group plc Annual Report and Accounts 2023 | 57
Strategic report
Corporate governance
Financial statements
Independent auditor’s report continued
to the members of Walker Crips Group plc
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
£31,612,000 (2022: £32,820,000) consists
of broking income and non-broking income
from the following activities:
Stockbroking;
Investment management;
Financial planning;
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.
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.
58 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Area
Reason
How our scope addressed this matter
Impairment of
goodwill
Refer to notes 3
(accounting policy)
and 17 (financial
disclosures) of the
group financial
statements.
Goodwill amounting to £4,388,000 (2022:
£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 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 cash generating units.
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;
Assessed the adequacy of the disclosures within the financial
statements; and
Where appropriate, challenged the assumptions used by management.
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.
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 £4,507,000 (2022: £5,497,000) arise in
respect of acquired client lists.
We obtained an understanding and tested the design and
implementation of the group’s controls over the impairment assessment
process.
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.
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;
Assessed the sufficiency of the sensitivity analyses performed by
management, focusing on what we considered to be reasonably
possible changes in key assumptions; and
Where appropriate, challenged the assumptions used by management.
Key observations:
Based on the procedures performed, the carrying value of intangible
assets (client lists) is appropriately stated.
Walker Crips Group plc Annual Report and Accounts 2023 | 59
Strategic report
Corporate governance
Financial statements
Independent auditor’s report continued
to the members of Walker Crips Group plc
Other information
The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The
directors are responsible for the other information contained within the annual report. Our opinion on the group and parent company financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial
statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent
with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not
visited by us; or
the parent company financial statements and the part of the directors’ remuneration report to be audited are not in agreement with the accounting
records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Corporate governance statement
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 on whether they have a reasonable expectation that the group will be able to continue in operation and meet its liabilities set out
on page 55;
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 55;
Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 37;
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.
60 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
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 those arising from the Companies Act
2006, Listing Rules, Corporate Governance Code, the rules of the Financial Conduct Authority (“FCA”) and the financial reporting framework. Several
components within the group are authorised and regulated by the FCA and we considered the extent to which non-compliance with the FCA regulations
might have a material effect on the group’s financial statements.
We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the group and parent
company with those laws and regulations. These procedures included but were not limited to making enquiries of management and those responsible
for legal and compliance matters, review of minutes of the Board and papers provided to the audit committee to identify any indications of non-
compliance, and review of legal / regulatory correspondence with the FCA.
We also identified the possible risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-
rebuttable presumption of a risk of fraud arising from management override of controls, that there was a potential for management bias in relation
to the recognition of income, the assessment of any impairment of goodwill and client lists. 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:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Other matters which we are required to address
We were appointed by the audit committee on 14 December 2020 to audit the financial statements for the period ending 31 March 2021 and subsequent
financial periods. Our total uninterrupted period of engagement is 3 years, covering the periods ending 31 March 2021 and 31 March 2023.
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 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.
For and on behalf of PKF Littlejohn LLP
Carmine Papa
Senior Statutory Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
31 July 2023
Walker Crips Group plc Annual Report and Accounts 2023 | 61
Strategic report
Corporate governance
Financial statements
Consolidated income statement
year ended 31 March 2023
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 before tax
Taxation
Profit for the year attributable to equity holders of the Parent Company
Earnings per share
Basic and diluted
* The restatement of the 2022 figures is explained in note 38.
The following Accounting Policies and Notes form part of these financial statements.
Note
5
7
8
9
10
11
12
10
14
16
2023
£’000
31,612
(7,264)
–
24,348
(23,169)
(554)
625
95
(88)
–
632
(214)
418
As restated
2022
£’000
32,820
(9,110)
57
23,767
(21,901)
(1,658)*
208
9
(114)
103
206
(151)
55
0.98p
0.13p*
62 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Consolidated statement of comprehensive income
year ended 31 March 2023
Profit for the year
Total comprehensive income/(loss) for the year attributable to equity holders of the Parent Company
* The restatement of the 2022 figures is explained in note 38.
The following Accounting Policies and Notes form part of these financial statements.
2023
£’000
418
418
As restated
2022
£’000
55*
55*
Walker Crips Group plc Annual Report and Accounts 2023 | 63
Strategic report
Corporate governance
Financial statements
Consolidated statement of financial position
as at 31 March 2023
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
Total non-current assets
Current assets
Trade and other receivables
Investments – fair value through profit or loss
Cash and cash equivalents
Total current assets
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
Equity attributable to equity holders of the Parent Company
* The restatement of the 2022 figures is explained in note 38.
Note
17
18
19
20
22
21
23
26
24
27
28
36
36
28
27
29
29
30
30
30
2023
£’000
4,388
4,648
989
2,340
–
–
As restated
2022
£’000
As restated
2021
£’000
4,388
5,752
1,169
2,597
–
–
4,388
6,566
1,477
3,612
2
37
12,365
13,906
16,082
36,301
1,276
13,138
50,715
63,080
(36,849)
(269)
(371)
(878)
(341)
(94)
(38,802)
11,913
(71)
(2,389)
(652)
(3,112)
21,166
2,888
3,763
(312)
10,104
4,723
21,166
50,003
1,647
11,113
62,763
76,669
(49,625)
(132)
(414)
(1,884)*
(245)
(89)
(52,389)
10,374
(29)
(2,300)
(586)
(2,915)
21,365
2,888
3,763
(312)
10,303*
4,723
21,365
49,098
920
8,855
58,873
74,955
(47,395)
(123)
(400)
(834)*
(946)
–
(49,698)
9,175
(33)
(2,856)
(675)
(3,564)
21,693
2,888
3,763
(312)
10,631*
4,723
21,693
The following Accounting Policies and Notes form part of these financial statements.
The financial statements of Walker Crips Group plc (Company registration no. 01432059) were approved by the Board of Directors and authorised for issue
on 31 July 2023.
Signed on behalf of the Board of Directors
Sanath Dandeniya FCCA
Director
31 July 2023
64 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Consolidated statement of cash flows
year ended 31 March 2023
Operating activities
Cash generated from operations
Tax paid
Net cash generated from operating activities
Investing activities
Purchase of property, plant and equipment
Purchase 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 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 £332,000 (2022: £1,052,000).
The following Accounting Policies and Notes form part of these financial statements.
Note
31
11
8
11
15
12
2023
£’000
3,539
(120)
3,419
(150)
(205)
(183)
–
–
47
–
48
(443)
(617)
(2)
(246)
(86)
(951)
2,025
11,113
13,138
2022
£’000
4,217
(120)
4,097
(119)
(342)
(93)
–
105
9
57
–
(383)
(383)
(21)
(959)
(93)
(1,456)
2,258
8,855
11,113
Walker Crips Group plc Annual Report and Accounts 2023 | 65
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Corporate governance
Financial statements
Consolidated statement of changes in equity
year ended 31 March 2023
Equity as at 31 March 2020
Comprehensive loss for the year – as restated
Total comprehensive loss for the year – as restated
Contributions by and distributions to owners
Dividends paid
Total contributions by and distributions to owners
Share
capital
£’000
2,888
Share
premium
account
£’000
3,763
Own
shares
held
£’000
(312)
Capital
redemption
£’000
111
Other
£’000
4,612
Retained
earnings
£’000
11,110*
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(415)*
(415)*
(64)
(64)
Total
equity
£’000
22,172
(415)
(415)
(64)
(64)
Equity as at 31 March 2021
2,888
3,763
(312)
111
4,612
10,631
21,693
Comprehensive income for the year – as restated
Total comprehensive income for the year – as restated
Contributions by and distributions to owners
Dividends paid
Total contributions by and distributions to owners
Equity as at 31 March 2022
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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
55*
55*
(383)
(383)
55
55
(383)
(383)
2,888
3,763
(312)
111
4,612
10,303
21,365
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
418
418
(617)
(617)
418
418
(617)
(617)
Equity as at 31 March 2023
2,888
3,763
(312)
111
4,612
10,104
21,166
* The restatement of the 2022 and 2021 figures is explained in note 38.
The following Accounting Policies and Notes form part of these financial statements.
66 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Notes to the accounts
year ended 31 March 2023
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 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 62 to 66.
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.
As explained in note 38, the Group has identified an obligation in respect of Stamp Duty Reserve Tax which has arisen over a number of years and was not
identified due to a procedures and controls failure. In view of the significance of this amount, prior year results have been restated to correct this error.
There are a number of standards, amendments to standards and interpretations which have been issued by the IASB that are effective in future
accounting periods that the Group has decided not to adopt early.
The following amendments are effective for the period beginning on or after 1 January 2023:
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
Definition of Accounting Estimates (Amendments to IAS 8); and
Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).
The following amendments are effective for the period beginning on or after 1 January 2024:
IFRS 16 Leases (Amendment – Liability in a Sale and Leaseback);
IAS 1 Presentation of Financial Statements (Amendment – Classification of Liabilities as Current or Non-current); and
IAS 1 Presentation of Financial Statements (Amendment – Non-current Liabilities with Covenants).
The Group is currently assessing the impact of these new accounting standards and amendments. The Group does not believe that the amendments
to IAS 1 will have a significant impact on the classification of its liabilities, as it does not have convertible debt instruments.
The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the Group.
Going concern
The financial statements of the Group have been prepared on a going concern basis. At 31 March 2023, the Group had net assets of £21.2 million
(2022: £21.4 million – as restated), net current assets of £11.9 million (2022: £10.4 million – as restated) and cash and cash equivalents of £13.1 million
(2022: £11.1 million). The Group reported an operating profit of £625,000 for the year ended 31 March 2023 (2022: £208,000 – as restated), inclusive of
operating exceptional expense of £554,000 (2022: £1,658,000 – as restated), and net cash inflows from operating activities of £3.4 million (2022: £4.1
million).
The Directors consider the going concern basis to be appropriate following their assessment of the Group’s financial position and its ability to meet its
obligations as and when they fall due. In making the going concern assessment the Directors have considered:
The Group’s three-year base case projections based on current strategy, trading performance, expected future profitability, liquidity, capital solvency
and dividend policy.
The outcome of stress scenarios applied to the Group’s base case projections prior to deployment of management actions.
The principal risks facing the Group and its systems of risk management and internal control.
The Group’s ability to generate positive operating cash flow during the year to 31 March 2023 and projected future cash flows.
Walker Crips Group plc Annual Report and Accounts 2023 | 67
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Financial statements
Notes to the accounts continued
year ended 31 March 2023
2. Basis of preparation continued
Going concern continued
Key assumptions that the Directors have made in preparing the base case cash projections are:
Management fees and trading commissions growth of 2% having adjusted for expected client attrition in respect of the recent self-employed
investment manager departures (see Finance Director’s review on page 14).
UK base rates increasing to 6% over the next remainder of 2023 and then reducing over the next 24 months to 3%.
Inflation embedded into the first year based on known salary awards and latest experience regarding payroll costs, then running at 5% thereafter.
Key stress scenarios that the Directors have then considered include:
A “bear stress scenario”: representing a 10% reduction in management fees and trading commissions, with the consequent reduction in revenue sharing
based costs, compared to the base case in the reporting periods ending 31 March 2025 and 31 March 2026.
A “severe stress scenario”: representing a 15% fall in management fees and trading commissions and UK base rates 1% (absolute) lower compared to
the base case in the reporting periods ending 31 March 2025 and 31 March 2026, together with an 80% deterioration in the SDRT obligation provision
with an estimated expectation to settled in December 2023.
Liquidity and regulatory capital resource requirements exceed the minimum thresholds in both the base case and bear scenarios. In the severe stress
scenario, although the Group has positive liquidity throughout the period, the negative impact on our prudential capital ratio is such that it is projected
to fall below the regulatory requirement in June 2025. Were the interest rate stress also to be applied to the bear scenario a regulatory capital shortfall
is projected to occur in September 2025. The Directors consider these scenarios to be remote in view of the prudence built into the base case projections
and that further mitigations available to the Directors are not reflected therein. Such mitigating actions within Management’s control include reduction in
proprietary risk positions, delayed capital expenditure, further reductions in discretionary spend, not paying planned dividends and reductions in employee
headcount. Other mitigating actions may include disposal of businesses, stronger cost reductions and potential to seek shareholder support.
Based on the assessment of the Group’s financial position and its ability to meet its obligations as and when they fall due , the Directors do not consider
there are material uncertainties that cast significant doubt on the Group’s ability to continue as a going concern in the 12-month period from the date of
approval of the Annual Report and Accounts. However, set out in note 38 are the uncertainties related to the provision made to settle unpaid stamp duty.
Standards and interpretations affecting the reported results or the financial position
The accounting standards adopted are consistent with those of the previous financial year. Amendments to existing IFRS standards did not have a material
impact on the Group’s Consolidated Income Statement or the Statement of Financial Position.
The Group does not expect standards yet to be adopted by the UK Endorsement Body (“UKEB”) to have a material impact in future years.
3. Significant accounting policies
Basis of consolidation
The Group financial statements consolidate the financial statements of the Group and companies controlled by the Group (its subsidiaries) made up to
31 March each year. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its powers to direct relevant activities of the entity. Subsidiaries are fully consolidated from the date on which control
is obtained and no longer consolidated from the date that control ceases; their results are in the consolidated financial statements up to the date that
control ceases.
Entities where the interest is 49% or less are assessed for potential treatment as a Group company against the control tests outlined in IFRS 10, being
power over the investee, exposure or rights to variable returns and power over the investee to affect the amount of investors’ returns. At the reporting date
there were no entities where the Group had an interest below 49%.
All intercompany balances, income and expenses are eliminated on consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values,
at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree.
The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 Business Combinations are
recognised at their fair value at the acquisition date.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquiree
is 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.
68 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
3. Significant accounting policies continued
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 has no associate investments. The Group’s 33% associate investment in Walker Crips Property Income Limited (“WCPIL”) was disposed of in the
previous year (see note 8).
Intangible assets
(a) Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred, the amount of any non-controlling interest
in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired.
If the total of consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less than the fair value
of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognised directly in the income statement.
Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is not amortised
but is reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed in future
periods.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (“CGUs”), or groups of
CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest
level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment.
The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value-in-use and the fair value less
costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.
(b) Client lists
Client lists are recognised when it is probable that future economic benefits will flow to the Group and the cost of the asset can be measured reliably whilst
the risks and rewards have also transferred into the Group’s ownership.
Intangible assets classified as client lists are recognised when acquired as part of a business combination, when separate payments are made to acquire
clients’ assets by adding teams of investment managers, or when acquiring the ownership of client relationships from retiring in-house self-employed
investment managers.
Some client list acquisitions are linked to business combination acquisitions such as those related to the historical acquisition of Barker Poland Asset
Management LLP and others are related to the purchase of client lists related to individual investment manager or investment management team
recruitment-related costs.
The cost of acquired client lists and businesses generating revenue from clients and investment managers are capitalised. These costs are amortised
on a straight-line basis over their expected useful lives of three to 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.
In the current financial year, the estimated useful economic lives of all client lists associated with self-employed investment managers were revised so that
no client list was amortised for periods longer than six years from 1 April 2022.
Amortisation of intangible fixed assets is included within administrative expenses in the consolidated income statement.
At each statement of financial position date, the Group reviews the carrying amounts of its intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.
(c) Software licences
Computer software which is not an integral part of the related hardware is recognised as an intangible asset when the Group is expected to benefit from
future use of the software and the costs are reliably measured and amortised using the straight-line method over a useful life of up to five years.
Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not ready to use are not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs of disposal and value-in-use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). Prior impairments of non-financial assets (other
than goodwill) are reviewed for possible reversal at each reporting date.
Own shares held
Own shares consist of treasury shares which are recognised at cost as a deduction from equity shareholders’ funds. Subsequent consideration received
for the sale of treasury shares is also recognised in equity with any difference being taken to retained earnings. No gain or loss is recognised on sale of
treasury shares.
Walker Crips Group plc Annual Report and Accounts 2023 | 69
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Corporate governance
Financial statements
Notes to the accounts continued
year ended 31 March 2023
3. Significant accounting policies continued
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 Financial Planning are accrued evenly over the period to which they relate with the
performance obligation fulfilled over the same period.
Fees earned from structured investments are recognised on the date the underlying security of the structured investment is traded and settled, with the
execution of the trade being the performance obligation at that point in time.
Fees earned from software offering, Software as a Service (“SaaS”), are accrued evenly over the period to which they relate with the performance
obligation fulfilled over the same period.
Other incomes:
Interest is recognised as it accrues in respect of the financial year.
Dividend income is recognised when:
– 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 non-cash consideration; and
4. non-recurring items considered individually for classification as exceptional by virtue of their nature or size.
The separate disclosure of these items allows a clearer understanding of the Group’s trading performance on a consistent and comparable basis, together
with an understanding of the effect of non-recurring or large individual transactions upon the overall profitability of the Group. The exceptional items
arising in the current period are explained in note 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 retranslation of monetary items, are included in the consolidated income statement for the period.
Where consideration is received in advance of revenue being recognised, the date of the transaction reflects the date the consideration is received.
70 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
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 33 1/3% per annum on cost
over the term of the lease
33 1/3% per annum on cost
Right-of-use assets held under contractual arrangements are depreciated over the lengths of their respective contractual terms, as prescribed under IFRS 16.
The gain or loss on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset
and is recognised in income. The residual values and estimated useful life of items within property, plant and equipment are reviewed at least at each
financial year end. Any shortfalls in carrying value are impaired immediately through profit or loss.
Taxation
The tax expense for the period comprises current and deferred tax.
Tax is recognised in the income statement, except to the extent that it relates to items recognised directly in equity. In this case the tax is also recognised
directly in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the
countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken
in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. However, the deferred tax is not accounted for if it arises from initial recognition of an asset
or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted, or substantially enacted, by the end of the reporting period and are
expected to apply when the related deferred income tax asset is realised, or the deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilised.
Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, associates and joint arrangements,
except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that
the temporary difference will not reverse in the foreseeable future. Generally, the Group is unable to control the reversal of the temporary difference for
associates, unless there is an agreement in place that gives the Group the ability to control the reversal of the temporary difference not recognised.
Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries, associates and joint arrangements
only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the
temporary difference can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, and
when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different
taxable entities where there is an intention to settle the balances on a net basis.
Financial assets and liabilities
Financial assets and liabilities are recognised in the Consolidated Statement of Financial Position when the Group becomes a party to the contractual
provisions of the instrument.
At initial recognition, the Group measures a financial asset or financial liability at its fair value plus or minus transaction costs. Transaction costs of
financial assets and financial liabilities carried at fair value through profit or loss (“FVTPL”) are expensed in the income statement. Immediately after initial
recognition, an expected credit loss allowance (“ECL”) is recognised for financial assets measured at amortised cost, which results in an accounting loss
being recognised in profit or loss when an asset is newly originated.
The Group does not use hedge accounting.
a) Financial assets
Classification and subsequent measurement
The Group classifies its financial assets in the following measurement categories:
fair value through profit or loss (“FVTPL”);
fair value through other comprehensive income (“FVTOCI”); or
amortised cost.
Financial assets are classified as current or non-current depending on the contractual timing for recovery of the asset. The classification depends on the
purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
Walker Crips Group plc Annual Report and Accounts 2023 | 71
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Corporate governance
Financial statements
Notes to the accounts continued
year ended 31 March 2023
3. Significant accounting policies continued
(i) Debt instruments
Classification and subsequent measurement of debt instruments depend on:
the Group’s business model for managing the asset; and
the cash flow characteristics of the asset.
Business model: The business model reflects how the Group manages the assets in order to generate cash flows. That is, whether the Group’s objective
is solely to collect the contractual cash flows from the assets, to collect both the contractual cash flows and cash flows arising from the sale of assets, or
solely or mainly to collect cash flows arising from the sale of assets. Factors considered by the Group include past experience on how the contractual cash
flows for these assets were collected, how the assets’ performance is evaluated, and how risks are assessed and managed.
Cash flow characteristics of the asset: Where the business model is to hold assets to collect contractual cash flows, the Group assesses whether the
financial instruments’ contractual cash flows represent solely payments of principal and interest (“the SPPI test”). In making this assessment, the Group
considers whether the contractual cash flows are consistent with a basic lending instrument.
Based on these factors, the Group classifies its debt instruments into one of two measurement categories:
Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest
(“SPPI”), and that are not designated at FVTPL, are measured at amortised cost. Amortised cost is the amount at which the financial asset is measured at
initial recognition minus the principal repayments, plus or minus the cumulative amortisation, using the effective interest rate method, of any difference
between that initial amount and the maturity amount, adjusted by any ECL recognised. The effective interest rate is the rate that discounts estimated
future cash payments or receipts through the expected life of the financial asset to the gross carrying amount. Interest income from these financial assets
is included within investment revenues using the effective interest rate method.
Fair value through profit or loss (“FVTPL”): Assets that do not meet the criteria for amortised cost or fair value through other comprehensive income
(“FVTOCI”) are measured at fair value through profit or loss.
Reclassification
The Group reclassifies debt instruments when and only when its business model for managing those assets changes. The reclassification takes place from
the start of the first reporting period following the change.
Impairment
The Group assesses on a forward-looking basis the expected credit loss (“ECL”) associated with its debt instruments held at amortised cost. The Group
recognises a loss allowance for such losses at each reporting date. On initial recognition, the Group recognises a 12-month ECL. At the reporting date,
if there has been a significant increase in credit risk, the loss allowance is revised to the lifetime expected credit loss.
The measurement of ECL reflects:
an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes;
the time value of money; and
reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and
forecasts of future economic conditions.
The Group adopts the simplified approach to trade receivables and contract assets, which allows entities to recognise lifetime expected losses on all assets,
without the need to identify significant increases in credit risk (i.e. no distinction is needed between 12-month and lifetime expected credit losses).
(ii) Equity instruments
Investments are recognised and derecognised on a trade date basis where a purchase or sale of an investment is under a contract whose terms require
delivery of the instrument within the timeframe established by the market concerned, and are initially measured at fair value.
The Group subsequently measures all equity investments at fair value through profit and loss. Changes in the fair value of financial assets at FVTPL are
recognised in revenue within the Consolidated Income Statement.
(iii) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with financial institutions, and other short-term, highly liquid investments with original
maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Bank overdrafts are shown within current liabilities in the statement of financial position.
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.
72 | Walker Crips Group plc Annual Report and Accounts 2023
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Financial statements
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.
The matching option was reinstated to one-to-one from 1 April 2023 from the previous one-half for every Partnership Share purchased. All shares awarded
under this scheme have been purchased in the market by the Trustees of the SIP.
Provisions
Provisions 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 an interest expense.
Long-term liabilities – deferred cash and shares consideration
Amounts payable to personnel under recruitment contracts in respect of the client relationships, which transfer to the Group, are treated as long-term
liabilities if the due date for payment of cash consideration is beyond the period of one year after the year-end date. The value of shares in all cases is
derived by a formula based on the value of client assets received in conjunction with the prevailing share price at the date of issue which in turn determines
the number of shares issuable.
Pension costs
The Group contributes to defined contribution personal pension schemes for selected employees. For defined contribution schemes, the Group pays
contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further
payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expenses when they are due. Prepaid
contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. The contribution rate is based
on annual salary and the amount is charged to the income statement on an accrual basis.
Dividends paid
Equity dividends are recognised when they become legally payable. Dividend distribution to the Company’s shareholders is recognised as a liability in the
Group’s financial statements in the period in which the dividends are approved by the Company’s shareholders. There is no requirement to pay dividends
unless approved by the shareholders by way of written resolution where there is sufficient cash to meet current liabilities, and without detriment of any
financial covenants, if applicable.
Walker Crips Group plc Annual Report and Accounts 2023 | 73
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Financial statements
Notes to the accounts continued
year ended 31 March 2023
3. Significant accounting policies continued
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 maximum 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, adjusted 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
makes 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.
74 | Walker Crips Group plc Annual Report and Accounts 2023
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Financial statements
3. Significant accounting policies continued
Financial assets and liabilities continued
b) Financial liabilities continued
Share-based payments
Share-based payments are remuneration payments to selected employees that take the form of an award of shares in Walker Crips Group plc. Employees
are not able to exercise such awards in full until a period of two to five years, based on the terms of each individual award (the vesting period).
Equity-settled share-based payments to employees are measured at fair value of the equity instruments at the date of grant. The fair value excludes the effect
of non-market-based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 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.
4. Key sources of estimation uncertainty and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical
experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual
experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Impairment of goodwill – estimation and judgement
Determining whether goodwill is impaired requires an estimation of the fair value less costs to sell and the value-in-use of the cash-generating units
to which goodwill has been allocated. The fair value less costs to sell involves estimation of values based on the application of earnings multiples and
comparison to similar transactions. The value-in-use calculation requires the entity to estimate the future cash flows expected to arise from the cash-
generating unit and apply a discount rate in order to calculate present value. The assumptions used and inputs involve judgements and create estimation
uncertainty. These assumptions have been stress-tested as described in note 17. The carrying amount of goodwill at the balance sheet date was
£4.4 million (2022: £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, two intangible asset client lists were 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.
Key assumptions in this regard consist of the following:
1. The continuing going concern of the Company;
2. Life expectancy of clients based on the Office for National Statistics;
3. Succession plans in place for staff and investment managers;
4. Amounts of AUMA are consistent on average;
5. A growth rate of client list AUMA of a conservative 2%; and
6. A discount rate of 12%.
Provisions – estimation and judgement
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to settle
that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the statement of financial
position date, and are discounted to present value where the effect is material.
IFRS 16 “Leases” – estimation and judgement
IFRS 16 requires certain judgements and estimates to be made and those significant judgements are explained below.
The Group has opted to use single discount rates for leases with reasonably similar characteristics. The discount rates used have had an impact on the
right-of-use assets’ values, lease liabilities on initial recognition and lease finance costs included within the income statement.
Where a lease includes the option for the Group to extend the lease term, the Group has exercised the judgement, based on current information, that such
leases will be extended to the full length available, and this is included in the calculation of the value of the right-of-use assets and lease liabilities on initial
recognition and valuation at the reporting date.
Provision for dilapidations – estimation and judgement
The Group has made provisions for dilapidations under six leases for its offices. The Group did not enter into any new property leases in the period but
allowed the lapse of two existing lease agreements. The amounts of the provisions are, where possible, estimated using quotes from professional building
contractors. The property, plant and equipment elements of the dilapidations are depreciated over the terms of their respective leases. The obligations in
relation to dilapidations are inflated using an estimated rate of inflation and discounted using appropriate gilt rates to present value. The change in liability
attributable to inflation and discounting is recognised in interest expense.
Walker Crips Group plc Annual Report and Accounts 2023 | 75
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Financial statements
Notes to the accounts continued
year ended 31 March 2023
4. Key sources of estimation uncertainty and judgements continued
Provision for stamp duty liability – estimation and judgement
The Group has identified an obligation in respect of Stamp Duty Reserve Tax which has arisen over a number of years and was not identified due to a
procedures and controls failure. In view of the significance of this amount, prior year results have been restated (see notes 10, 27 and 38).
5. Revenue
An analysis of the Group’s revenue is as follows:
Stockbroking commission
Fees and other revenue*
Investment Management
Wealth Management,
Financial Planning & Pensions
Revenue
Investment revenue (see note 11)
Total income
% of total income
Broking
income
£’000
6,008
–
6,008
–
6,008
–
6,008
18.9%
Non-
broking
income
£’000
–
23,665
23,665
1,939
25,604
95
25,699
81.1%
2023
Total
£’000
6,008
23,665
29,673
1,939
31,612
95
31,707
100.0%
Broking
income
£’000
8,044
–
8,044
15
8,059
–
8,059
24.5%
Non-
broking
income
£’000
–
22,931
22,931
1,830
24,761
9
24,770
75.5%
2022
Total
£’000
8,044
22,931
30,975
1,845
32,820
9
32,829
100.0%
* Includes £3.2 million (2022: 0.8 million) of interest income from managing client trading cash funds.
Timing of revenue recognition
The following table presents operating income analysed by the timing of revenue recognition of the operating segment providing the service:
2023
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
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
Investment
Management
£’000
Financial
Planning &
Wealth
Management
£’000
10,104
16,295
75
3,183
29,657
272
1,666
1
–
1,939
Investment
Management
£’000
Financial Planning
& Wealth
Management
£’000
11,894
17,917
404
722
30,937
260
1,585
–
–
1,845
Consolidated
year ended
31 March
2023
£’000
10,392
17,961
76
3,183
31,612
Consolidated
year ended
31 March
2022
£’000
12,192
19,502
404
722
32,820
SaaS
£’000
16
–
–
–
16
SaaS
£’000
38
–
–
–
38
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Corporate governance
Financial statements
6. Segmental analysis
For segmental reporting purposes, the Group currently has three operating segments; Investment Management, being portfolio-based transaction
execution and investment advice; Financial Planning, being financial planning, wealth management and pensions administration; and Software as a
Service (“SaaS”), comprising provision of regulatory and admin software and bespoke cloud software to companies. Unallocated corporate expenses,
assets and liabilities are not considered to be allocatable accurately, or fairly, under any known basis of allocation and are therefore disclosed separately.
Walker Crips Investment Management’s activities focus predominantly on investment management of various types of portfolios and asset classes.
Walker Crips Financial Planning provides advisory and administrative services to clients in relation to their wealth management, financial planning, life
insurance, inheritance tax and pension arrangements.
EnOC Technologies Limited (“EnOC”) provides 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.
2023
Revenue
Revenue from contracts with customers
Other revenue
Total revenue
Results
Segment result
Unallocated corporate expenses
Investment revenue
Finance costs
Profit before tax
Tax
Profit after tax
2023
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
Management
£’000
Financial
Planning
& Wealth
Management
£’000
26,339
3,258
29,657
1,938
1
1,939
SaaS
£’000
16
–
16
1,553
(310)
(128)
Consolidated
year ended
31 March
2023
£’000
28,353
3,259
31,612
1,115
(490)
625
95
(88)
632
(214)
418
Investment
Management
£’000
Financial
Planning &
Wealth
Management
£’000
368
273
10
58
Consolidated
year ended
31 March
2023
£’000
378
331
SaaS
£’000
–
–
57,255
1,163
406
58,824
39,546
247
329
4,256
63,080
40,122
1,792
41,914
Walker Crips Group plc Annual Report and Accounts 2023 | 77
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Financial statements
Notes to the accounts continued
year ended 31 March 2023
6. Segmental analysis continued
2022 – as restated
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 – as restated
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
Management
£’000
Financial Planning
& Wealth
Management
£’000
29,811
1,126
30,937
1,845
–
1,845
Consolidated
year ended
31 March
2022
£’000
31,694
1,126
32,820
SaaS
£’000
38
–
38
1,042*
(258)
(102)
682
(474)
208
9
(114)
103
206
(151)
55
Investment
Management
£’000
Financial Planning
& Wealth
Management
£’000
466
260
5
43
Consolidated
year ended
31 March
2022
£’000
471
303
SaaS
£’000
–
–
71,823
1,180**
390**
52,936*
248**
237
73,393
3,276
76,669
53,421
1,883
55,304
* The restatement of the 2022 figures is explained in note 38.
** The prior year disclosed amounts for these segments have been corrected. The correction is a disclosure matter only, and is not an adjustment that relates to an accounting
error affecting the income statement or balance sheet in the prior year of the Group or any of its subsidiaries.
7. Commissions and fees paid
Commissions and fees paid comprises:
To authorised external agents
To self-employed certified persons
78 | Walker Crips Group plc Annual Report and Accounts 2023
2023
£’000
3
7,261
7,264
2022
£’000
61
9,049
9,110
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Corporate governance
Financial statements
8. Investment in associate
Brought forward
Share of after-tax profit
Dividends
Disposals
Carried forward
The Group disposed of its 33.33% interest in its associate, Walker Crips Property Income Limited (“WCPIL”), in the prior year.
9. Profit for the year
Profit for the year on continuing operations has been arrived at after charging:
Depreciation of property, plant and equipment (see note 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
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
2023
£’000
–
–
–
–
–
2023
£’000
331
771
970
14,475
(248)
994
1,387
831
3,442
216
23,169
2022
£’000
2
57
(57)
(2)
–
2022
£’000
303
873
862
13,862
(725)
1,143
1,260
790
3,310
223
21,901
2023
£’000
84
119
13
–
216
2023
%
39
55
6
–
100
2022
£’000
2022
%
51
119
13
40
223
23
53
6
18
100
Walker Crips Group plc Annual Report and Accounts 2023 | 79
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Corporate governance
Financial statements
Notes to the accounts continued
year ended 31 March 2023
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
Restructuring, redundancy and other costs
Net compensation income
Financial Crime Control framework review and remediation
Client redress and associated costs
SDRT liability to HMRC
Accelerated amortisation
Operating exceptional items
Other
Profit on disposal of associate investment
Total exceptional items
* The restatement of the 2022 figures is explained in note 38.
2023
£’000
As restated
2022
£’000
–
–
–
–
131
423
554
–
554
516
(221)
595
650
118*
–
1,658
(103)
1,555
In the current year, the following items have been classified as exceptional items due to their materiality and non-recurring nature. These are:
a) SDRT liability to HMRC resulting from a system monitoring error where stamp duty was omitted from certain client contracts. A voluntary disclosure to
HMRC will be made and we presently estimate the cost of repayment, potential penalties and related costs, net of tax, to be £878,000. This has been
allocated to the years ending 31 March 2023, 31 March 2022 and prior period. As the error spans several years and is regarded as fundamental, prior
reported results have been restated. Further details of the provision and estimation uncertainty are included further in note 27. Customers were not
adversely impacted by this error.
b) As explained in the Chairman’s statement and the Finance Director’s review, during the year, a number of self-employed investment managers with
intangible assets linked to client lists advised their intention to leave the Group which resulted in the Group changing the useful economic life of each
asset to align with the revised expected timeline of future benefits. This resulted in an additional £423,000 of amortisation expensed in the current
year.
In the prior year, the Group classified the costs relating to restructuring, redundancy, enhancing the Group’s Financial Crime Control framework, customer
redress and related costs as exceptional items. Compensation income received under a confidential settlement agreement and the proceeds from the
disposal of the Group’s 33.33% interest in its former associate, Walker Crips Property Income Limited, were also classified as exceptional items.
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
80 | Walker Crips Group plc Annual Report and Accounts 2023
2023
£’000
48
47
95
2023
£’000
(86)
3
(5)
(88)
2022
£’000
–
9
9
2022
£’000
(93)
(11)
(10)
(114)
Strategic report
Corporate governance
Financial statements
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
2023
£’000
11,943
1,262
60
1,210
14,475
2022
£’000
11,561
1,197
57
1,047
13,862
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 32 certified self-employed account executives (2022: 39).
The average number of staff employed during the year was:
Executive Directors
Certification and approved staff
Other staff
The table incorporates the new staff classification under the Senior Managers and Certification Regime (“SM&CR”).
14. Taxation
The tax charge is based on the profit for the year of continuing operations and comprises:
UK corporation tax at 19% (2022: 19%)
Prior year adjustments
Origination and reversal of timing differences during the current period
Corporation tax is calculated at 19% (2022: 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 before tax
Tax on profit on ordinary activities at the standard rate UK corporation tax rate of 19% (2022: 19%)
Effects of:
Tax rate changes for deferred tax
Expenses not deductible for tax purposes
Prior year adjustment
Fixed asset differences
Other
2023
Number
2
49
155
206
2022
Number
2
54
152
208
2023
£’000
228
(7)
(46)
175
2023
£’000
632
120
(8)
64
(14)
65
(13)
214
2022
£’000
131
(66)
86
151
As restated
2022
£’000
206*
39*
108
21
(66)
26
23*
151
* The restatement of the 2022 figures is explained in note 38. The above reconciliation has been updated to present the reconciling items between 19% of profit before tax to
the actual tax charge, based on the prior year adjustment.
Current tax has been provided at the rate of 19%. Deferred tax has been provided at 25% (2022: 25%).
The exceptional charge of £554,000 (2022: £1,555,000 – as restated), disclosed separately on the consolidated income statement, is tax deductible to the
value of £105,000 (2022: £296,000 – as restated) of corporation tax. Classifying these credits/costs as exceptional has no effect on the tax liability.
In the Spring Budget 2021, the Government announced that from 1 April 2023 the UK corporation tax rate will increase from 19% to 25%. This will have a
consequential effect on the Group’s future tax charge.
Walker Crips Group plc Annual Report and Accounts 2023 | 81
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Financial statements
Notes to the accounts continued
year ended 31 March 2023
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:
2022
Final dividend for the year ended 31 March 2022 of 1.20p (2021: 0.60p) per share
Interim dividend for the year ended 31 March 2023 of 0.25p (2021: 0.30p) per share
Proposed final dividend for the year ended 31 March 2023 of 0.25p (2022: 1.20p) per share
2023
£’000
511
106
617
106
2022
£’000
255
128
383
511
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 per share
The calculation of basic earnings per share for continuing operations is based on the post-tax profit for the financial year of £418,000 (2022: £55,000 – as
restated) and divided by 42,577,328 (2022: 42,577,328) Ordinary Shares of 6 2/3 pence, being the weighted average number of Ordinary Shares in issue
during the year.
No dilution to earnings per share in the current year or in the prior year.
The calculation of the basic earnings per share is based on the following data:
Earnings for the purpose of basic earnings per share
being net profit attributable to equity holders of the Parent Company
* The restatement of the 2022 figures is explained in note 38.
Number of shares
Weighted average number of Ordinary Shares for the purposes of basic earnings per share
This produced basic earnings per share of 0.98 pence (2022: 0.13 pence – as restated).
17. Goodwill
Cost
At 1 April 2021
At 1 April 2022
At 31 March 2023
Accumulated impairment
At 1 April 2021
At 1 April 2022
Impaired during the year
At 31 March 2023
Carrying amount
At 31 March 2023
At 31 March 2022
82 | Walker Crips Group plc Annual Report and Accounts 2023
2023
£’000
418
As restated
2022
£’000
55*
2023
Number
2022
Number
42,577,328
42,577,328
£’000
7,056
7,056
7,056
2,668
2,668
–
2,668
4,388
4,388
Strategic report
Corporate governance
Financial statements
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”)
2023
£’000
2,901
1,487
4,388
2022
£’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 17% for the London York CGU value-in-use to equal the respective carrying values. Revenues would need
to fall by 37.4% 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 £10 million (2022: £7.8 million) with headroom, after selling costs, of £6.7 million (2022: £4.2 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 27% decrease in BPAM’s profit after tax across five years would result in reducing
the headroom to a negligible value.
18. Other intangible assets
Cost
At 1 April 2021
Reclassification of assets relating to IFRS 16
Additions in the year
At 1 April 2022
Reclassification of assets relating to IFRS 16
Additions in the year
At 31 March 2023
Amortisation
At 1 April 2021
Charge for the year
At 1 April 2022
Charge for the year
Charge for the year – exceptional cost (note 10)*
At 31 March 2023
Carrying amount
At 31 March 2023
At 31 March 2022
Software
licences
£’000
Client lists
£’000
2,883
(45)
61
2,899
(22)
45
2,922
2,459
185
2,644
137
–
2,781
141
255
10,665
–
32
10,697
–
266
10,963
4,523
677
5,200
833
423
6,456
4,507
5,497
Total
£’000
13,548
(45)
93
13,596
(22)
311
13,885
6,982
862
7,844
970
423
9,237
4,648
5,752
The intangible assets are amortised over their estimated useful lives in order to determine amortisation rates. “Client lists” are assessed on an asset-by-
asset basis and are amortised over periods of three to twenty years and “Software licences” are amortised over five years. During the year an exercise was
undertaken which resulted in modifications to the estimated useful lives of certain client assets associated with self-employed investment managers. The
result of this exercise is an increased amortisation charge of £423,000 compared to the prior year.
There are no indications that the value attributable to client lists or software licences should be further impaired.
Walker Crips Group plc Annual Report and Accounts 2023 | 83
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Financial statements
Notes to the accounts continued
year ended 31 March 2023
19. Property, plant and equipment
Owned fixed assets
Cost
1 April 2021
Reclassification of assets*
Dilapidation asset reassessment
Additions in the year
At 1 April 2022
Additions in the year
At 31 March 2023
Accumulated depreciation
1 April 2021
Charge for the year
1 April 2022
Charge for the year
At 31 March 2023
Carrying amount
At 31 March 2023
At 31 March 2022
Leasehold
improvement,
furniture and
equipment
£’000
Computer
software
£’000
Computer
hardware
£’000
2,766
(73)
(50)
110
2,753
99
2,852
1,380
253
1,633
297
1,930
922
1,120
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,582
–
–
8
1,590
52
1,642
1,491
50
1,541
34
1,575
67
49
Total
£’000
4,348
(73)
(50)
118
4,343
151
4,494
2,871
303
3,174
331
3,505
989
1,169
* Adjustments were made in the prior 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.
20. Right-of-use assets
Cost
1 April 2022
Additions
At 31 March 2023
Accumulated depreciation
1 April 2022
Charge for the year
At 31 March 2023
Carrying amount
At 31 March 2023
At 31 March 2022
Offices
£’000
4,304
346
4,650
1,968
518
2,486
2,164
2,336
Computer
software
£’000
Computer
hardware
£’000
899
168
1,067
673
233
906
161
226
95
–
95
60
20
80
15
35
Total
£’000
5,298
514
5,812
2,701
771
3,472
2,340
2,597
84 | Walker Crips Group plc Annual Report and Accounts 2023
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Corporate governance
Financial statements
21. Investments – fair value through profit or loss
Non-current asset investments
The Group did not hold any non-current asset investments at the reporting date.
Current asset investments
Trading investments
Investments – fair value through profit or loss
As at
31 March
2023
£’000
As at
31 March
2022
£’000
1,276
1,647
Financial assets at fair value through profit or loss represent investments in equity securities and collectives that present the Group with opportunity for
return through dividend income, interest and trading gains. The fair values of these securities are based on quoted market prices and the Group is able to
liquidate these assets at short notice.
The following provides an analysis of financial instruments that are measured after initial recognition at fair value, grouped into Levels 1 to 3 based on the
degree to which the fair value is observable:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. The Group’s financial
assets held at fair value through profit and loss under current assets fall within this category;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices). The Group does not hold financial instruments in this category; and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable
market data (unobservable inputs). The Group’s financial assets held at fair value through profit and loss under non-current assets fall within this category.
At 31 March 2023
Financial assets held at fair value through profit and loss
At 31 March 2022
Financial assets held at fair value through profit and loss
Level 1
£’000
1,276
1,647
Level 2
£’000
Level 3
£’000
–
–
–
–
Total
£’000
1,276
1,647
Further IFRS 13 disclosures have not been presented here as the balance represents 2.022% (2022: 2.148%) of total assets. There were no transfers of
investments between any of the levels of hierarchy during the year.
22. Trade and other receivables
Amounts falling due within one year:
Due from clients, brokers and recognised stock exchanges at amortised cost
Other debtors at amortised cost
Prepayments and accrued income
2023
£’000
28,554
2,148
5,599
36,301
2022
£’000
42,898
1,522
5,583
50,003
Walker Crips Group plc Annual Report and Accounts 2023 | 85
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Corporate governance
Financial statements
Notes to the accounts continued
year ended 31 March 2023
23. Cash and cash equivalents
Cash deposits held at bank, repayable on demand without penalty
2023
£’000
13,138
13,138
2022
£’000
11,113
11,113
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 2023 was £267,258,000
(2022: £314,424,000).
The credit quality of banks holding the Group’s cash at 31 March 2023 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 2021
Use of loss brought forward
Debit to the income statement
At 1 April 2022
Use of loss brought forward
Debit to the income statement
At 31 March 2023
2023
£’000
5,400
7,738
–
–
13,138
Short-term
temporary
differences
and other
£’000
(276)
(170)
37
(409)
2
41
(366)
2022
£’000
7,837
2,959
45
272
11,113
Total
£’000
(400)
(51)
37
(414)
2
41
(371)
Capital
allowances
£’000
(124)
119
–
(5)
–
–
(5)
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 £12,362 (2022: £152) in respect of losses amounting to £65,063 (2022:
£800) that can be carried forward against future taxable income. Losses amounting to £nil (2022: £nil) and £nil (2022: £nil) expire in 2023 and 2024,
respectively.
86 | Walker Crips Group plc Annual Report and Accounts 2023
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Corporate governance
Financial statements
25. Financial instruments and risk profile
Financial risk management
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives
and policies to the Group’s Risk function. The Board receives period reports from the Group Risk team through which it reviews the effectiveness of the
processes put in place and the appropriateness of the objectives and policies it sets. The Group’s internal auditors also review the risk management policies
and processes and report their findings to the Audit Committee.
Procedures and controls are in place to identify, assess and ultimately control the financial risks faced by the Group arising from its use of financial
instruments. Steps are taken to mitigate identified risks with established and effective procedures and controls, operating systems, management
information and training of staff.
The Group’s risk appetite, along with the procedures and controls mentioned above, are laid out in the Group’s Internal Capital Adequacy and Risk
Assessment ("ICARA").
The overall risk appetite for the Group is considered by Management to be low, despite operating in a marketplace where financial risk is inherent in
investment management and financial services.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and
flexibility. The Group considers its financial risks arising from its use of financial instruments to fall into three main categories:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
Financial risk management is a central part of the Group’s strategic management which recognises that an effective risk management programme
can increase a business’s chances of success and reduce the possibility of failure. Continual assessment, monitoring and updating of procedures and
benchmarks are all essential parts of the Group’s risk management strategy.
(i) Credit risk management practices
The Group’s credit risk is the risk of loss through default by a counterparty and, accordingly, the Group’s definition of default is primarily attributable to
its trade receivables or pledged collateral which is the risk that a client, market counterparty or recognised stock exchange will be unable to pay amounts
to settle a trade in full when due. Other credit risks, such as free delivery of securities or cash, are not deemed to be significant. Significant changes in the
economy or a particular sector could result in losses that are different from those that the Group has provided for at the year-end date.
All financial assets at the year end were assessed for credit impairment and no material amounts have arisen having evaluated the age of overdue debtors,
the quality of recourse to third parties and the availability of mitigation through the disposal of liquid collateral in the form of marketable securities. The
Group’s write-off policy is driven by the historic dearth of instances where material irrecoverable losses have been incurred. Where the avenues of recourse
and mitigation outlined above have not been successful, the outstanding balance, or residual balance if sale proceeds do not fully cover an exposure, will
be written off.
The Board is responsible for oversight of the Group’s credit risk. The Group accepts a limited exposure to credit risk but aims to mitigate and minimise
the risk through various methods. There is no material concentrated credit risk as the exposures are spread across a substantial number of clients
and counterparties.
Trade receivables (includes settlement balances)
Settlement risk arises in any situation where a payment of cash or transfer of a security is made in the expectation of a corresponding delivery of a security
or receipt of cash. Settlement balances arise with clients, market counterparties and recognised stock exchanges.
In the vast majority of cases, control of the stock purchased will remain with the Group until client monetary balances are fully settled.
Where there is an absence of securities collateral, clients are usually required to hold sufficient funds in their managed deposit account prior to the trade
being conducted. Holding significant amounts of client money helps the Group to manage credit risks arising with clients. Many of our clients also hold
significant amounts of stock and other securities in our nominee subsidiary company, providing additional security should a specific transaction fail to be
settled and the proceeds of such securities disposed of can be used to settle all outstanding obligations.
In addition, the client side of settlement balances is 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
2023
£’000
13,138
28,554
2,148
591
44,431
2022
£’000
11,113
42,898
1,522
108
55,641
Walker Crips Group plc Annual Report and Accounts 2023 | 87
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Corporate governance
Financial statements
Notes to the accounts continued
year ended 31 March 2023
25. Financial instruments and risk profile continued
An ageing analysis of the Group’s financial assets is presented in the following table:
At 31 March 2023
Trade receivables
Cash and cash equivalent
Other debtors
Accrued interest income
Current
£’000
27,910
13,138
2,141
591
43,780
0-1
month
£’000
555
–
2
–
557
2-3
months
£’000
58
–
–
–
58
Over 3
months
£’000
31
–
5
–
36
Carrying
value
£’000
28,554
13,138
2,148
591
44,431
Expected credit loss
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables
and contract assets. To measure expected credit losses on a collective basis, trade receivables and contract assets are grouped based on similar credit risk
and ageing. The contract assets have similar risk characteristics to the trade receivables for similar types of contracts.
The Group undertakes a daily assessment of credit risk which includes monitoring of client and counterparty exposure and credit limits. New clients are
individually assessed for their creditworthiness using external ratings where available and all institutional relationships are monitored at regular intervals.
As at 31 March 2023, the Directors of the Company reviewed and assessed the Group’s existing assets for impairment using the IFRS 9 simplified approach
to measuring expected credit losses using a lifetime expected credit loss provision for trade receivables and contract assets and no additional impairments
have been recognised on application and no material defaults are anticipated within the next 12 months.
Concentration of credit risk
In addition, daily risk management procedures to actively monitor disproportionately large trades by a customer or market counterparty are in place.
The financial standing, pattern of trading, type and size of security or instrument traded are amongst the factors taken into consideration.
(ii) Liquidity risk
Liquidity risk arises from the Group's management of working capital and the finance charges and principal repayments on its debt instruments. It is the
risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group's policy is to maintain sufficient cash to allow it
to meet its liabilities when they become due.
Historically, sufficient underlying cash has been prevalent in the business for many years as the Group is normally cash-generative. The risk of unexpected
large cash outflows could arise where significant amounts are being settled daily of which only a fraction forms the commission earned by the Group.
This could be due to clients settling late or bad deliveries to the market or CREST, also resulting in a payment delay from the market side. The Group also
commits in advance to product providers to purchase future structured product issues at the future market price. The Group then markets such products in
advance of the issue, which under normal business conditions means there is limited liquidity and market risk at the time of product launch.
The Group’s policy with regard to liquidity risk is to carefully monitor balance sheet structure and borrowing limits, including:
monitoring of cash positions on a daily basis;
exercising strict control over the timely settlement of trade debtors; and
exercising strict control over the timely settlement of market debtors and creditors.
The Group holds its cash and cash equivalents spread across a number of highly rated financial institutions. All cash and cash equivalents are short-term
highly liquid investments that are readily convertible to known amounts of cash without penalty.
The Group and its subsidiaries Walker Crips Investment Management Limited and Barker Poland Asset Management LLP are in scope of the FCA’s basic
liquid assets requirements and these are monitored by management on a daily basis.
The table below analyses the Group’s cash outflow based on the remaining period to the contractual maturity date.
2023
Trade and other payables
2022
Trade and other payables
Less than
1 year
£’000
36,849
36,849
Total
£’000
36,849
36,849
49,625*
49,625*
49,625*
49,625*
* The restatement of the 2022 figures is explained in note 38.
As at 31 March 2023 the Group had commitments in respect of future structured product issues of £10 million.
(iii) Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates or equity prices, on financial assets and liabilities will affect the Group’s
results. They relate to price risk on fair value through profit or loss trading investments and are subject to ongoing monitoring.
88 | Walker Crips Group plc Annual Report and Accounts 2023
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Corporate governance
Financial statements
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 2023 using closing market prices.
A 10% fall in the value of trading financial instruments would, in isolation, result in a pre-tax decrease to net assets of £127,600 (2022: £164,700). 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
2023
£’000
28,012
4,028
9
4,800
36,849
2022
£’000
42,325
2,537
14
4,749
49,625
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 11 days (2022: 15 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:
Provisions falling due within one year
At 1 April 2020
Additions
Utilisation of provisions
At 1 April 2021
Additions
Dilapidation provision transferred from
more than one year
Utilisation of provision
At 1 April 2022
Additions
Reclassification to trade and other payables
Release of provisions
Utilisation of provisions
Professional
fees
£’000
Client
payments
£’000
Dilapidations
£’000
Stamp Duty
liability and
related costs
£’000
–
–
–
–
595
–
(140)
455
–
(90)
(20)
(345)
–
178
55
(28)
205
650
–
(205)
650
96
(746)
–
–
–
–
–
–
16
16
–
32
–
–
(32)
–
472*
157*
–
629
118*
–
–
747
131
–
–
878
Total
£’000
650
212
(28)
834
1,379
16
(345)
1,884
227
(836)
(20)
(377)
878
Walker Crips Group plc Annual Report and Accounts 2023 | 89
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Financial statements
Notes to the accounts continued
year ended 31 March 2023
27. Provisions continued
Provisions falling due after one year
At 1 April 2020
Additions
At 1 April 2021
Dilapidation provision transferred from
more than one year
Utilisation of provisions
Interest
At 1 April 2022
Additions
Dilapidation provision transferred to less than one year
Utilisation or release of provisions
Interest
Total as at 31 March 2023
* The restatement of the 2022 figures is explained in note 38.
Professional
fees
£’000
Client
payments
£’000
Dilapidations
£’000
Stamp Duty
liability and
related costs
£’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
659
16
675
(16)
(77)
4
586
61
–
–
5
652
652
Total
£’000
659
16
675
(16)
(77)
4
586
61
–
–
5
652
–
–
–
–
–
–
–
–
–
–
–
–
878
1,530
The Group, based on revised estimates, made an additional provision of £66,000 (including interest) for dilapidations in connection with acquired
leasehold premises (2022: total additional provision of £16,000). These costs are expected to arise at the end of each respective lease.
The Group had five leased properties, all of which had contractual dilapidation requirements. The dilapidation provisions in relation to these leases range
from net present values as at the year end of £12,000 to £557,000 per lease.
As explained in the Chairman’s statement and Finance Director’s review, the Group identified a control failing which has resulted in a liability to HMRC in
respect of Stamp Duty Reserve Tax. The matter has been voluntarily disclosed to HMRC. The scale of the matter only became apparent subsequent to the
year end and the exercise to fully quantify the liability remains ongoing. Management have therefore estimated the liability based upon preliminary review
of historic transactions records, categorisation of transactions as subject to Stamp Duty Reserve Tax or not and sample checks of transactions within
those categories. Assumptions have also been applied regarding potential penalties, interest and costs to complete the exercise. Management has sought
independent professional advice in respect of these matters. Estimation uncertainty therefore exists in respect of these assumptions and early stage of the
work, and until full sample checks are complete and discussions concluded with HMRC. Whilst it is therefore not possible to conclude on the exact range of
estimation uncertainty error, a deterioration in the provision of 80% has been included in the going concern and viability stress tests pending full resolution
of the matter.
Provisions made at year end 31 March 2022 and adjustments in the current year in relation to customer redress (client payments) and associated costs
were transferred to trade and other payables as the outcome of both are nearing completion and there is certainty over the cost outlay. The customer
redress obligations were settled in full post year end.
90 | Walker Crips Group plc Annual Report and Accounts 2023
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Corporate governance
Financial statements
28. Lease liabilities
Lease liabilities
At 1 April 2022
Additions
Lease reassessments
Interest
Lease payments
At 31 March 2023
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 6 2/3 p each
Offices
£’000
2,337
345
–
80
(200)
2,562
Computer
software
£’000
173
168
–
5
(198)
148
Computer
hardware
£’000
35
–
–
1
(16)
20
2023
£’000
341
2,389
2,730
2023
£’000
426
958
1,549
–
2,933
2023
£’000
2,888
Total
£’000
2,545
513
–
86
(414)
2,730
2022
£’000
245
2,300
2,545
2022
£’000
340
491
2,058
54
2,943
2022
£’000
2,888
The Group’s Articles were amended in 2010 since when there has been no authorised share capital. Shareholders have no restrictions on their holdings
except for certain investment managers who were awarded shares in the Group soon after joining as part of the consideration for their client relationships.
These holdings cannot be sold for a period of four to six years from commencement date.
The following movements in share capital occurred during the year:
At 1 April 2022
At 31 March 2023
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 2023, this totalled £21,166,000 (2022: £21,365,000 – as restated;
2021: £21,693,000 – as restated).
The Group’s objectives when managing capital are to:
safeguard the Group’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other
stakeholders;
maintain a strong capital base to support the development of the business;
optimise the distribution of capital across the Group’s subsidiaries, reflecting the requirements of each company;
strive to make capital freely transferable across the Group where possible; and
comply with regulatory requirements at all times.
The Group has been assessed as constituting a MIFIDPRU Investment Firm group and has been classified as a non-small non-interconnected (non-SNI)
Investment Firm group and performs an Internal Capital Adequacy and Risk Assessment process ("ICARA"), which is presented to the FCA on request.
Walker Crips Group plc Annual Report and Accounts 2023 | 91
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Financial statements
Notes to the accounts continued
year ended 31 March 2023
29. Called-up share capital continued
The Group’s capital, for accounting purposes, is defined as the total of share capital, share premium, retained earnings and other reserves. Total capital
at 31 March 2023 was £21.2 million (2022: £21.4 million – as restated). Regulatory capital is derived from the Group’s Internal Capital Adequacy and
Risk Assessment (“ICARA”), which is a requirement of the Investment Firm Prudential Regime ("IFPR"). The ICARA draws on the Group’s risk management
process that is embedded within all areas of the Group. The Group’s objectives when managing capital are to comply with the capital requirements set by
the Financial Conduct Authority, to safeguard the Group’s ability to continue as a going concern.
Capital adequacy and the use of regulatory capital are monitored daily by the Group’s management. In addition to a variety of stress tests performed
as part of the ICARA process, and daily reporting in respect of treasury activity, capital levels are monitored and forecast to ensure that dividends and
investment requirements are managed and appropriate buffers are held against potential adverse business conditions.
Regulatory capital
No breaches were reported to the FCA during the financial years ended 31 March 2023 and 2022.
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 2023 under the following categories:
Own shares held
(£312,000) (2022: (£312,000))
the negative balance of the Group’s own shares, which have
Retained earnings
£10,104,000 (2022: £10,303,000 – as
restated; 2021: £10,631,000 – as restated)
Other reserves
£4,723,000 (2022: £4,723,000)
been bought back and held in treasury.
the net cumulative earnings of the Group, which have not been
paid out as dividends, are retained to be reinvested in our core,
or developing, companies.
the cumulative premium on the issue of shares as deferred
consideration for corporate acquisitions £4,612,000 (2022:
£4,612,000) and non-distributable reserve into which amounts
are transferred following the redemption or purchase of the
Group’s own shares.
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/(increase) in debtors***
(Decrease)/increase in creditors***
Net cash inflow
The restatement of the 2022 figures is explained in note 38.
*
** Lease liability payments associated with RoU assets were £332,000 (2022: £1,052,000).
*** Cash outflow from working capital movement of £156,000 (2022: £2,375,000 inflow – as restated)
**** Revaluation loss/(profit) on proprietary positions.
2023
£’000
625
1,393
–
575
–
331
771
13,662
(13,818)*
3,539
As restated
2022
£’000
208*
862
–
(347)
(57)
303
873
(915)
3,290*
4,217
32. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of £nil (2022: £nil) contracted but not provided for and £nil (2022: £nil) capital commitments
authorised but not contracted for.
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:
92 | Walker Crips Group plc Annual Report and Accounts 2023
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Corporate governance
Financial statements
Commission and fees received from Directors and their close family members
2023
£’000
20
2022
£’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 £280,000 (2022: £268,000).
Fees of £9,000 (2022: £30,000) 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 £7,043 (2022: £4,245) was earned by the Group from Phillip Securities (HK) Limited (a Phillip Brokerage Pte Limited company, where Hua
Min Lim is a shareholder) having dealt on standard commercial terms. Additionally, some custody services are provided by Phillip Securities Pte Ltd (in
Singapore, where Hua Min Lim is a Director), again all on standard commercial terms, both these items being included in revenue. Transactions between
the Group and its subsidiaries, which are related parties, have been eliminated on consolidation and are accordingly not disclosed. Remuneration of the
Directors who are the key Management personnel of the Group is disclosed in the table below.
Key management personnel compensation
Short-term employee benefits
Post-employment benefits
Share-based payment
2023
£’000
459
32
–
491
2022
£’000
458
33
–
491
34. Contingent liabilities
In 2021 a former associate brought a claim against Walker Crips Investment Management Limited in the Employment Tribunal. A hearing of a preliminary
issue took place in 2022 and the Tribunal found in favour of the company. The former associate appealed that decision and in 2023, whilst many of the
appeal grounds were not upheld, certain points were referred back to the Employment Tribunal to reconsider. The company does not consider that the
claims are justified and intends to continue to defend them robustly.
From time to time, the Group receives complaints or undertakes past business reviews, the outcomes of which remain uncertain and/or cannot be reliably
quantified based upon information available and circumstances falling outside the Group’s control. Accordingly, contingent liabilities arise, the ultimate
impact of which may also depend upon availability of recoveries under the Group’s indemnity insurance and other contractual arrangements. Other than
any cases where a financial obligation is deemed to be probable and thus provision is made, the Directors presently consider a negative outcome to be
remote. As a result, no further disclosure has been made in these financial statements. Provisions made remain subject to estimation uncertainty, which
may result in material variations in such estimates as matters are finalised.
35. Subsequent events
There are no material events arising after 31 March 2023, 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
2023
£’000
94
71
2022
£’000
89
29
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.
37. Share-based payments
The Group recognised total expenses in the year of £nil (2022: £19,431) related to equity-settled share-based payment transactions.
No award was made in the financial year and the prior year award was forfeited due to termination of employment.
Share Incentive Plan (“SIP”)
Employees who have been employed for longer than three months and are subject to PAYE are invited to join the SIP. Employees may use funds from their
gross monthly salary (being not less than £10 and not greater than £150) to purchase Ordinary Shares in the Group (“Partnership Shares”). In the current
year, for every Partnership Share purchased, the employee received matching shares at a rate of 50%. The matching option was increased to 100%
on 1 April 2023 and will remain at this rate to 31 March 2024. Employees are offered an annual opportunity to top up contributions to the maximum
annual limit of £1,800 (or 10% of salary, if lower). All shares to date awarded under this scheme have been purchased in the market at the prevailing share
price on a monthly basis.
Walker Crips Group plc Annual Report and Accounts 2023 | 93
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Corporate governance
Financial statements
Notes to the accounts continued
year ended 31 March 2023
38. Prior period adjustments
During the year, the Group discovered errors in how it accounted for Stamp Duty Reserve Tax (“SDRT”) on certain transactions undertaken on behalf of
clients. Following the discovery of this error, the Group undertook an investigation of the various transactions impacted by the error. This investigation
is ongoing, but based on the latest available information, management’s current estimate of the liability due and payable by the Group is £878,000,
including professional support costs. This amount also includes an estimate of interest and penalties that HMRC may charge on any amounts due and is
net of taxation.
The error has been corrected by restating each of the affected financial statement line items for the prior periods.
As the investigation is ongoing, there remains uncertainty surrounding both the quantum of the liability in respect of the SDRT due, as well as the interest
and penalties that HMRC may charge.
The amounts of the error for the current year and the two preceding financial years ending 31 March on the following bases:
SDRT liability to HMRC (see notes 10 and 28)
Current year
2023
£
131,000
Prior year
2022
£
118,000
Prior year
2021
£
157,000
2020 and
prior
£
472,000
The provision arising in respect of 2022 has been accounted for as a prior year adjustment and increases the exceptional costs as previously reported in
that year by £118,000 to £1,658,000, with a similar reduction in that year’s previously reported profit and total comprehensive income for the year to
£55,000.
The cumulative provision arising before 1st April 2020 of £472,000 has been treated as a prior period reduction in previously reported reserves as at 31
March 2020, and together with £157,000 in 2021 and £118,000 attributable to 2022, a reduction of the previously reported reserves as at 31 March 2022
is shown in the table below.
On page 3, the restated operating loss for the year ended 31 March 2021 of £0.14 million is disclosed. This represents the previously reported operating
profit of £22,000 reduced by the estimated SDRT provision of £157,000 relating specifically to that year.
Consolidated statement of financial
position extract
Provisions
Net assets
Retained earnings
Total equity
2021
£'000
(205)
22,322
11,260
22,322
Change
£'000
(629)
(629)
(629)
(629)
Restated
2021
£'000
(834)
21,693
10,631
21,693
2022
£'000
(1,137)
22,112
11,050
22,112
Change
£'000
(747)
(747)
(747)
(747)
Restated
2022
£'000
(1,884)
21,365
10,303
21,365
94 | Walker Crips Group plc Annual Report and Accounts 2023
Strategic report
Corporate governance
Financial statements
Company balance sheet
as at 31 March 2023
Non-current assets
Investments measured at cost less impairment
Current assets
Trade and other receivables
Deferred tax asset
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Net current liabilities
Net assets
Equity
Share capital
Share premium account
Own shares
Retained earnings
Other reserves
Equity attributable to equity holders of the Company
Note
42
43
44
45
47
47
47
47
47
2023
£’000
21,907
21,907
801
1
95
897
22,804
2022
£’000
21,757
21,757
758
–
335
1,093
22,850
(3,889)
(3,889)
(3,407)
(3,407)
(2,992)
(2,314)
18,915
19,443
2,888
3,763
(312)
7,853
4,723
18,915
2,888
3,763
(312)
8,381
4,723
19,443
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 £89,000 (2022: after-tax profit of £285,000).
The financial statements of Walker Crips Group plc (Company registration no. 01432059) were approved by the Board of Directors and authorised for issue
on 31 July 2023.
Signed on behalf of the Board of Directors:
Sanath Dandeniya FCCA
Director
31 July 2023
Walker Crips Group plc Annual Report and Accounts 2023 | 95
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Financial statements
Company statement of changes in equity
year ended 31 March 2023
Equity as at 31 March 2021
Total comprehensive income for the period
Contributions by and distributions to owners
Dividends paid
Total contributions by and distributions to owners
Called up
share
capital
£’000
2,888
–
Share
premium
account
£’000
3,763
–
–
–
–
–
Own
shares
held
£’000
(312)
–
–
–
Other
£’000
4,723
–
–
–
Equity as at 31 March 2022
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
–
–
–
–
–
–
–
–
–
–
–
–
Equity as at 31 March 2023
2,888
3,763
(312)
4,723
The following Accounting Policies and Notes form part of these financial statements.
Retained
earnings
£’000
8,479
285
(383)
(383)
8,381
89
(617)
(617)
7,853
Total
equity
£’000
19,541
285
(383)
(383)
19,443
89
(617)
(617)
18,915
96 | Walker Crips Group plc Annual Report and Accounts 2023
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Corporate governance
Financial statements
Notes to the Company accounts
year ended 31 March 2023
39. Significant accounting policies
The separate financial statements of Walker Crips Group plc, the Parent Company, are presented as required by the Companies Act 2006.
The financial statements have been prepared under the historical cost convention except for the modification to a fair value basis for certain financial
instruments as specified in the accounting policies below, and in accordance with Financial Reporting Standard (FRS 102), the Financial Reporting Standard
applicable in the UK and the Republic of Ireland, and the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Management
to exercise judgement in applying the Parent Company’s accounting policies (see note 40).
The financial statements are presented in the currency of the primary activities of the Parent Company (its functional currency). For the purpose of the
financial statements, the results and financial position are presented in GBP Sterling (£). The principal accounting policies have been summarised below.
They have all been applied consistently throughout the year and the preceding year.
The Parent Company has chosen to adopt the disclosure exemption in relation to the preparation of a cash flow statement under FRS 102.
Going concern
After conducting enquiries, the Directors believe that the Parent Company has adequate resources to continue in existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in preparing the financial statements. The Parent Company’s business activities, together
with the factors likely to affect its future development, performance and position, have been assessed.
Property, plant and equipment
Fixtures and equipment are stated at historical cost less accumulated depreciation and provision for any impairment. Depreciation is charged so as to
write-off the cost or valuation of assets over their estimated useful lives using the straight-line method on the following bases:
Computer hardware
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.
Impairment of non-financial assets
At each reporting date, the Parent Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. For the purposes of assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash flows (cash-generating units). If there is an indication of possible impairment, the recoverable amount of any
affected asset (or group of related assets) is estimated and compared with its carrying amount. If the estimated recoverable amount is lower, the carrying
amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in profit or loss.
Taxation
The tax expense represents the sum of the tax currently payable and any deferred tax.
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid or recovered using the tax rates and laws that have
been enacted or substantively enacted by the balance sheet date. Current tax charges arising on the realisation of revaluation gains recognised in the
statement of comprehensive income are also recorded in this statement.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events
that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date.
A deferred tax asset is regarded as recoverable and therefore recognised only when, on the basis of all available evidence, it can be regarded as probable
that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Deferred tax assets and
liabilities are not discounted.
Own shares held
Own shares consist of treasury shares which are recognised at cost as a deduction from equity shareholders’ funds. Subsequent consideration received
for the sale of treasury shares is also recognised in equity with any difference being taken to retained earnings. No gain or loss is recognised on sale of
treasury shares.
Financial instruments
Financial assets and financial liabilities are recognised in the balance sheet when the Parent Company becomes a party to the contractual provisions
of the instrument. Section 11 of FRS 102 has been applied in classifying financial instruments depending on the nature of the instrument held.
Revenue
Income consists of profits distribution from Barker Poland Asset Management LLP, interest received or accrued over time and dividend income recorded
when received.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.
Walker Crips Group plc Annual Report and Accounts 2023 | 97
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Corporate governance
Financial statements
Notes to the Company accounts continued
year ended 31 March 2023
39. Significant accounting policies continued
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.
40. Key sources of estimation uncertainty and judgements
The preparation of financial statements in conformity with generally accepted accounting practice requires Management to make estimates and
judgements that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the balance sheet date
and the reported amounts of revenues and expenses during the reporting period.
41. Profit for the year
Profit for the financial year of £89,000 (2022: profit of £285,000) is after an amount of £23,000 (2022: £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
2023
£’000
186
14
3
203
2022
£’000
175
25
–
200
In the current year, employee costs include the costs of the Non-Executive Directors and a proportion of Executive Directors. The remaining Executive
Directors’ employee costs are borne by Walker Crips Investment Management Limited.
The monthly average number of staff employed during the year was:
Executive Directors
Non-Executive Directors
42. Investments measured at cost less impairment
Subsidiary undertakings
2023
Number
2
4
6
2023
£’000
21,907
2022
Number
2
4
6
2022
£’000
21,757
During the year, the Company made an investment of £150,000 in Walker Crips Financial Planning Limited, an indirect 100% owned subsidiary
of the Group.
A complete list of subsidiary undertakings can be found in note 52.
98 | Walker Crips Group plc Annual Report and Accounts 2023
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Corporate governance
Financial statements
43. Trade and other receivables
Amounts owed by Group undertakings
Prepayments and accrued income
Taxation and social security
2023
£’000
799
–
2
801
2022
£’000
758
–
–
758
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.
44. Deferred taxation
At 1 April
Use of Group Relief
Credit/(charge) to the income statement
At 31 March
2023
£’000
–
(29)
30
1
2022
£’000
74
(14)
(60)
–
Deferred tax has been provided at 25% (2022: 19%).
In the Spring Budget 2021, the Government announced that from 1 April 2023, the UK corporation tax rate will increase from 19% to 25%. This will have a
consequential effect on the Company’s future tax charge.
45. Trade and other payables
Accruals and deferred income
Amounts due to subsidiary undertakings
Other creditors
2023
£’000
99
3,744
46
3,889
2022
£’000
61
3,270
76
3,407
46. Risk management policies
Procedures and controls are in place to identify, assess and ultimately control the financial risks faced by the Parent Company arising from its use of
financial instruments. Steps are taken to mitigate identified risks with established and effective procedures and controls, efficient systems and the
adequate training of staff.
The Parent Company’s risk appetite, along with the procedures and controls mentioned above, are laid out in the Group’s Internal Capital Adequacy and
Risk Assessment ("ICARA").
The overall risk appetite for the Parent Company and for the Group as a whole is considered by Management to be low, despite operating in a marketplace
where financial risk is inherent in the core businesses of investment management and financial services.
The Group considers its financial risks arising from its use of financial instruments to fall into three main categories:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
Further information on the disclosures and policies carried out by the Parent Company and the Group is given in note 25 of the consolidated financial
statements.
Walker Crips Group plc Annual Report and Accounts 2023 | 99
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Financial statements
Notes to the Company accounts continued
year ended 31 March 2023
46. Risk management policies continued
(i) Credit risk
Maximum exposure to credit risk:
Cash
Other debtors
As at 31 March
2023
£’000
95
799
894
The credit quality of banks holding the Company’s cash at 31 March 2023 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
2023
£’000
–
95
–
95
2023
£’000
799
–
–
–
–
2022
£’000
335
758
1,093
2022
£’000
–
335
–
335
2022
£’000
758
–
–
–
–
(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
2023
£’000
3,889
–
3,889
2023
£’000
3,889
–
–
3,889
2022
£’000
3,407
–
3,407
2022
£’000
3,407
–
–
3,407
The Company is in a net liability position, but this is primarily driven by an intercompany creditor balance with its subsidiary. This is deemed to not affect
liquidity as the subsidiary is 100% owned and controlled by the Company.
(iii) Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates or equity prices will affect the Group’s income.
These relate to price risk breached on available-for-sale and trading investments and closely monitored using limits to prevent significant losses.
Fair value of financial instruments
No financial instruments at fair value were held by the Parent Company in the current or prior financial year.
100 | Walker Crips Group plc Annual Report and Accounts 2023
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Financial statements
47. Called-up share capital
Called-up, allotted and fully paid
43,327,328 (2021: 43,327,328) Ordinary Shares of 6 2/3 p each
No new shares were issued in the year to 31 March 2023 or the prior year.
2023
£’000
2,888
2022
£’000
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 2022
At 31 March 2023
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
Apart from share capital and share premium, the Parent Company holds reserves at 31 March 2023 under the following categories:
Own shares held
(£312,000) (2022: (£312,000))
the negative balance of the Parent Company’s own shares that
Retained earnings
£7,853,000 (2022: £8,381,000)
Other reserves
£4,723,000 (2022: £4,723,000)
have been bought back and held in treasury.
the net cumulative earnings of the Parent Company, which have
not paid out as dividends, retained to be reinvested in our core
or new business.
the cumulative premium on the issue of shares as deferred
consideration for corporate acquisitions £4,612,000 (2022:
£4,612,000) and non-distributable reserve into which amounts
are transferred following the redemption or purchase of the
Group’s own shares.
48. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of £nil (2022: £nil) contracted but not provided for and £nil (2022: £nil) capital commitments
authorised but not contracted for.
49. 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 (2022: £491,000).
50. 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.
51. Subsequent events
There are no material events arising after 31 March 2023 which have an impact on these financial statements.
Walker Crips Group plc Annual Report and Accounts 2023 | 101
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Financial statements
Notes to the Company accounts continued
year ended 31 March 2023
52. Subsidiaries and associates
Group
Trading subsidiaries
Principal place
of business
Principal activity
Class and percentage
of shares held
Walker Crips Investment Management Limited1
United Kingdom
Investment management
London York Fund Managers Limited2
United Kingdom
Management services
Walker Crips Financial Planning Limited
(formerly Walker Crips Financial Planning Limited)2
Ebor Trustees Limited2
EnOC Technologies Limited1
United Kingdom
Financial services advice
United Kingdom
Pensions management
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
Ordinary Shares 100%
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
Walker Crips Trustees Limited1
W.B. Nominees Limited1
WCWB (PEP) Nominees Limited1
WCWB (ISA) Nominees Limited1
WCWB Nominees Limited1
Walker Crips Consultants Limited1
Walker Crips Ventures Limited1
United Kingdom
Agency stockbroking
United Kingdom
Dormant company
United Kingdom
Dormant company
United Kingdom
Nominee company
United Kingdom
Nominee company
United Kingdom
Nominee company
United Kingdom
Nominee company
United Kingdom
Dormant company
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%
102 | Walker Crips Group plc Annual Report and Accounts 2023
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Corporate governance
Financial statements
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
Walker Crips Group plc Annual Report and Accounts 2023 | 103
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Financial statements
104 | Walker Crips Group plc Annual Report and Accounts 2023
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Corporate governance
Financial statements
Design and Production
www.carrkamasa.co.uk
Walker Crips Group plc Annual Report and Accounts 2023 | 105
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