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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Walker Crips Group Plc | LSE:WCW | London | Ordinary Share | GB00B1YMRV88 | ORD 6 2/3P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 20.50 | 20.00 | 21.00 | 20.50 | 20.50 | 20.50 | 165,252 | 08:00:07 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Security Brokers & Dealers | 31.61M | 418k | 0.0098 | 20.92 | 8.73M |
From Apr 2022 to Apr 2024
TIDMWCW
RNS Number : 9109K
Walker Crips Group plc
23 December 2022
23 December 2022
Walker Crips Group plc
("Walker Crips", the "Company" or the "Group")
Results for the six months ended 30 September 2022
Highlights
-- Total revenues increased by 2.3% to GBP16.06 million (2021: GBP15.69 million) -- Gross profit increased by 11.6% to GBP12.28 million (2021: GBP11.00 million)
-- Operating profit of GBP162,000 (2021: GBP120,000) and profit before tax of GBP145,000 (2021: GBP54,000)
-- Operating profit pre-exceptional items ([3]) of GBP162,000 (2021: GBP232,000) -- Profit before tax pre-exceptional items ([3]) of GBP145,000 (2021: GBP166,000) -- Adjusted EBITDA of GBP1.13 million (2021: GBP1.29 million) ([1]) -- Underlying cash generated from operations of GBP1,610,000 (2021: GBP548,000) ([2]) -- Cash and cash equivalents of GBP10.6 million (2021: GBP8.38 million)
-- Assets Under Management ("AUM") decreased by 13.1% to GBP3.1 billion (March 2022: GBP3.6 billion)
-- Total Assets Under Management and Administration ("AUMA") decreased by 10.8% to GBP4.9 billion (March 2022: GBP5.5 billion)
-- Interim dividend 0.25 pence per share (2021: 0.30 pence per share)
[1] Adjusted EBITDA represents earnings before exceptional items ([3]) , interest, taxation, depreciation and amortisation on an IFRS basis. The Directors present this result as it is a metric widely used by stakeholders when considering an entity's financial performance. A full reconciliation is provided in the Chairman's statement.
[2] Underlying cash generated from operations shows the cash generated from operations adjusted for lease liability payments under IFRS 16, non-cyclical working capital movements and cash exceptional items. The Directors consider that this metric helps readers understand the cash generating performance of the Group. A full reconciliation to reported results is presented in the Chairman's statement.
[3] Exceptional items are disclosed in note 10 to the accounts and a full reconciliation to reported results is presented in the Chairman's statement.
Martin Wright, Chairman of Walker Crips, commented:
"A strong contribution from our structured products business together with the positive income effect of the rising interest rate environment helped mitigate the reduction in investment management revenues and trading commissions that are reflective of lower market levels, resulting in much improved reported gross profits. However, this improvement has been offset by the inflationary impact on costs, particularly salaries, reflecting the tight labour market, and additional costs taken on in the period. The difficult economic environment and inflationary cost pressures remain a challenging headwind and our focus continues to be on revenue growth, improving operating efficiency and systems, and cost control."
For further information, please contact:
Walker Crips Group plc Tel: +44 (0)20 3100 8000 Craig Harrison, Media Relations Four Communications Tel: +44 (0)20 3920 0555 Jonathan Atkins walkercrips@fourcommunications.com Singer Capital Markets (Broker) Tel: +44 (0)20 7496 3000 Justin McKeegan / George Tzimas
Further information on Walker Crips Group is available on the Company's website: www.walkercrips.co.uk
Chairman's statement
Introduction
Markets continue to be challenging on the back of falls in financial markets that have led to AUMA reducing to GBP4.9 billion, down 10.9% from GBP5.5 billion in March 2022. This has inevitably impacted our results, with traditional trading commissions and investment management fees falling. However, this reduction has been offset by the strong performance of our structured products team and increased interest margins on client deposits, leading to much improved reported gross profits. Pressures on our cost base, particularly salaries, have dented this improvement such that the Group reports an operating profit of GBP162,000 for the first six months compared to GBP120,000 in the same period last year (GBP232,000 when adjusted for exceptional items). The results are further explained in the trading update below.
The Group balance sheet and capital base remain sufficiently robust to support our short- and medium-term strategy and pay an interim dividend to shareholders. As at the reporting date, the Group's net assets are GBP21.7 million (September 2021: GBP22.1 million; March 2022: GBP22.1 million) and cash and cash equivalents GBP10.6 million (September 2021: GBP8.4 million; March 2022: GBP11.1 million). Our focus continues to be on revenue growth, improving operating efficiency and the robustness of our infrastructure and cost control.
During the period, the Group has made progress on a number of ongoing initiatives, particularly the project to improve our regulatory and compliance framework. In terms of strategy, your Board is clear that the Group needs to grow its core business in both investment management and wealth management. It is also clear and determined that the central infrastructure supporting that business will be robust and fit for purpose, to avoid the repetition of shortcomings resulting in exceptional costs that have beset the business over the last eighteen months or so, as well as keeping pace with changes. This has meant taking some decisions that are long term and which involve incurring costs before the benefits are seen. In addition, during the period we have made good progress on several other key areas of regulatory importance, including a project to implement and embed the 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. Further, in the annual report and accounts for the year to 31 March 2022, I explained that the Group had identified the need to make redress payments to a small number of customers as a result of the inappropriate and unacceptable actions of one associate. Significant progress with the redress calculation methodology, discussions with insurers and importantly discussions with the clients affected has been made and we expect to bring this matter to a final resolution in the very near future.
Group performance
Revenue for the period was GBP16.06 million (2021: GBP15.69 million), an increase of 2.3%. Breaking this down, broking income, on the back of significant market uncertainties, reduced by GBP1.1 million compared to the same period last year. Non-broking income, with improved performance from our structured investment division and retained margin on managed deposits, offset by a reduction in management fees and arbitrage profits, saw an increase of GBP1.5 million in the same period. Improved performance from our inhouse revenue generators helped in increasing the Group gross margin in the period from 70.2% to 76.5%.
The Group reported an operating profit of GBP162,000 and a profit before tax of GBP145,000, up 35.0% and up 168.5%, respectively, compared to the same period last year (operating profit 2021: GBP120,000; profit before tax 2021: GBP54,000). However, adjusting for exceptional items in the prior year, the Group's operating profit and profit before tax were down GBP70,000 (30.2%) and GBP21,000 (12.7%) respectively. I note that there are no exceptional items in the current half-year results.
Adjusted EBITDA declined by GBP158,000 (or 12.3%) to GBP1.13m, caused by pressures on costs which outweigh the increase in revenue. Administrative expenses, excluding salaries and exceptional items, increased by GBP224,000 (or 4.7%). Salaries, whilst in line with the budget, saw an increase of GBP1,121,000 (or 18.8%) in the period. It should be noted that, in line with the strategy, this combination of inflationary pressures and the need to reward our people fairly, coupled with our ongoing investment in key personnel, training and systems, means we are likely to see further increases in our cost-base in the second half of this financial year. Our cost base is closely monitored by management who are very much focused on ways to improve margins and operating efficiencies.
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Reconciliation of operating profit to operating profit
before exceptional items
Unaudited Unaudited Audited
September September March
2022 2021 2022
GBP'000 GBP'000 GBP'000
----------------------------------------- ----------------------- ---------------------- --------------------------
Operating profit 162 120 326
Operating exceptional items (note
10) - 112 1,540
Operating profit before exceptional
items 162 232 1,866
----------------------------------------- ----------------------- ---------------------- --------------------------
Reconciliation of profit before tax to profit
before tax and exceptional items
Unaudited Unaudited Audited
September September March
2022 2021 2022
GBP'000 GBP'000 GBP'000
----------------------------------------- ----------------------- ---------------------- --------------------------
P rofit before tax 145 54 324
Exceptional items (note 10) - 112 1,437
Profit before tax and exceptional
items 145 166 1,761
----------------------------------------- ----------------------- ---------------------- --------------------------
Adjusted EBITDA
Unaudited Unaudited Audited
September September March
2022 2021 2022
GBP'000 GBP'000 GBP'000
----------------------------------------- ----------------------- ---------------------- --------------------------
Operating profit 162 120 326
Operating exceptional items (note
10) - 112 1,540
Amortisation / depreciation 560 563 1,165
Right-of-use-assets depreciation
charge 408 493 873
Adjusted EBITDA 1,130 1,288 3,904
----------------------------------------- ----------------------- ---------------------- --------------------------
Underlying cash generated from
operations
Unaudited Unaudited Audited
September September March
2022 2021 2022
GBP'000 GBP'000 GBP'000
----------------------------------------- ----------------------- ---------------------- --------------------------
Net cash inflow from operations 25 213 4,217
Working capital 1,559 768 (2,257)
Lease liability payments under IFRS
16 (278) (545) (1,052)
Cash outflow on operating exceptional
items 304 112 435
Underlying cash generated in the
period 1,610 548 1,343
----------------------------------------- ----------------------- ---------------------- --------------------------
Investment Management
The Group's Investment Management division saw its revenue increase by 2% to GBP15.1 million (September 2021: GBP14.8 million) compared to the same period last year. The increase was largely driven by the continuing success of our Structured Investment division and the increased retained interest on managed deposits offsetting declines in management fees and trading commissions. The increase in revenue, however, did not translate directly to an increase in operating profits. The division reported an operating profit of GBP616,000, down 10.5% compared to last year (September 2021: GBP688,000), reflective of the pressures on salaries and costs generally, including increased regulatory compliance requirements.
The downturn in global market indices, as well as economic uncertainties, are likely to impact the investment management division in the second half of this financial year, however rising interest rates, our strong position in the structured investments market and our steady Barker Poland arm should provide us with much needed stability as we navigate through this period.
Wealth Management
Our Wealth Management division recorded total revenues of GBP949,000, up 11.6% from the same period last year. The year-on-year increase in revenue is partly down to our investment in new advisers last year. The Wealth Management division is focused on generating revenue growth, both organically and through the recruitment of new advisers. In the short-term, as noted, the associated costs and time needed to bed-down new advisers, have a negative short-term impact on profitability which, together with the inflationary impact on costs, means the division reported an operating loss of GBP162,000 (September 2021: loss of GBP240,000 before exceptional items).
Group strategy
The underlying performance of the Group and diversity of our product range reflects a level of resilience in financial performance that enables the Group to focus on its prime objectives of growing revenue and improving gross margins in investment management and wealth management. As referenced above, this is coupled with realising operational efficiencies and, at the same time, taking decisions to invest to improve our central infrastructure regulatory and compliance framework for the long term.
Dividends
The Board has declared an interim dividend of 0.25 pence per share (2021: 0.30 pence per share), which will be paid on 20 January 2023 to shareholders on the register on 6 January 2023. The ex-dividend date will be 5 January 2023. The reduced interim dividend reflects the reduction in performance compared to the prior year when adjusted for exceptional items.
Our aim is always to reward shareholders for their continued support and pay dividends when appropriate. The Board will continue to monitor the Group's progress, and set the final dividend based on performance, capital headroom, market outlook and short-term and long-term cash flow considerations.
Outlook
There is little doubt that we have a difficult period ahead. The second half of the year will face headwinds from the various macro-economic uncertainties, which are beyond the Group's control. Rising inflation and interest rates, coupled with the uncertain UK political landscape, is unlikely to be market friendly, but your Board remains cautiously optimistic that our strategy will overcome these short-term issues and that the Group will emerge with an improved infrastructure and a platform for growth across our disciplines.
Martin Wright
Chairman
23 December 2022
Walker Crips Group plc
Walker Crips Group plc
Condensed consolidated income statement
For the six months ended 30 September 2022
Unaudited Unaudited Audited
September September March
2022 2021 2022
Notes GBP'000 GBP'000 GBP'000
--------------------------------------- ------ ------------------- ------------------- ------------------
4,
Revenue 7 16,057 15,690 32,820
Commissions and fees paid 8 (3,774) (4,725) (9,110)
Share of after-tax profit of associate 9 - 43 57
---------------------------------------- ------ ------------------- ------------------- ------------------
Gross profit 12,283 11,008 23,767
Administrative expenses (12,121) (10,776) (21,901)
Exceptional items 10 - (112) (1,540)
---------------------------------------- ------ ------------------- ------------------- ------------------
Operating profit 4 162 120 326
Investment revenue 28 - 9
Finance costs (45) (66) (114)
Exceptional item - profit on disposal
of associate investment - - 103
---------------------------------------- ------ ------------------- ------------------- ------------------
Profit before tax 145 54 324
Taxation (28) (10) (151)
Profit for the period attributable
to equity holders of the Parent
Company 117 44 173
---------------------------------------- ------ ------------------- ------------------- ------------------
E arnings per share
--------------------------------------- ------ ------------------- ------------------- ------------------
0.2
Basic and diluted 5 7p 0.10p 0.41p ---------------------------------------- ------ ------------------- ------------------- ------------------
Walker Crips Group plc
Condensed consolidated statement of comprehensive income
For the six months ended 30 September 2022
Unaudited Unaudited Audited
September September March
2022 2021 2022
GBP'000 GBP'000 GBP'000
-------------- ----------- ---------------
Profit for the period 1 17 44 173
------------------------------------------- -------------- ----------- ---------------
Total comprehensive income for the
period attributable to equity holders
of the Parent Company 1 17 44 173
------------------------------------------- -------------- ----------- ---------------
Walker Crips Group plc
Condensed consolidated statement of financial position
As at 30 September 2022
Unaudited Unaudited Audited
September September March
2022 2021 2022
Notes GBP'000 GBP'000 GBP'000
---------------------------------- ------ --------------------- --------------------- -----------------
Non-current assets
Goodwill 4,388 4,388 4,388
Other intangible assets 5,387 6,169 5,752
Property, plant and equipment 1,015 1,330 1,169
Right-of-use-assets 2,336 3,120 2,597
Investment in associate 9 - 19 -
Investments - fair value through
profit or loss 12 - 37 -
13,126 15,063 13,906
---------------------------------- ------ --------------------- --------------------- -----------------
Current assets
Trade and other receivables 30,2 66 30,061 50,003
Investments - fair value through
profit or loss 13 1,413 1,011 1,647
Cash and cash equivalents 10, 623 8,376 11,113
42,302 39,448 62,763
---------------------------------- ------ --------------------- --------------------- -----------------
Total assets 55,428 54,511 76,669
---------------------------------- ------ --------------------- --------------------- -----------------
Current liabilities
Trade and other payables (29,528) (27,680) (49,625)
Current tax liabilities (225) (278) (132)
Deferred tax liabilities (349) (306) (414)
Provisions (27) (64) (1,137)
Lease liabilities (166) (621) (245)
Dividends payable ( 511) (53) -
Deferred cash consideration (37) - (89)
---------------------------------- ------ --------------------- --------------------- -----------------
(30,843) (29,002) (51,642)
---------------------------------- ------ --------------------- --------------------- -----------------
Net current assets 11,459 10,446 11,121
---------------------------------- ------ --------------------- --------------------- -----------------
Long-term liabilities
Deferred cash consideration (16) (33) (29)
Lease liabilities (2,287) (2,690) (2,300)
Provisions (564) (675) (586)
---------------------------------- ------ --------------------- --------------------- -----------------
(2,867) (3,398) (2,915)
---------------------------------- ------ --------------------- --------------------- -----------------
Net assets 21,718 22,111 22,112
---------------------------------- ------ --------------------- --------------------- -----------------
Equity
Share capital 2,888 2,888 2,888
Share premium account 3,763 3,763 3,763
Own shares (312) (312) (312)
Retained earnings 10,656 11,049 11,050
Other reserves 4,723 4,723 4,723
Equity attributable to equity holders
of the Parent Company 21,718 22,111 22,112
------------------------------------------ --------------------- --------------------- -----------------
Walker Crips Group plc
Condensed consolidated statement of cash flows
For the six months ended 30 September 2022
Unaudited Unaudited Audited
September September March
2022 2021 2022
Notes GBP'000 GBP'000 GBP'000
--------------------------- ---------------------------- ------------------------------- --------------------------
Operating activities
Cash generated from
operations 15 25 213 4,217
Tax paid - - (120)
--------------------------- ---------------------------- ------------------------------- --------------------------
Net cash generated from
operating
activities 25 213 4,097
--------------------------- ---------------------------- ------------------------------- --------------------------
Investing activities
Purchase of property,
plant and equipment (30) (24) (119)
(Purchase) / sale of
investments held
for trading (221) 63 (342)
Consideration paid on
acquisition of
intangibles (9) - (93)
Dividends received 24 - 9
Dividends received from
associate investment - 26 57
Consideration received on
sale of associate - - 105
Interest received 5 - -
--------------------------- ---------------------------- ------------------------------- --------------------------
Net cash (used in) /
generated from
investing activities (231) 65 (383)
--------------------------- ---------------------------- ------------------------------- --------------------------
Financing activities
Dividends paid - (202) (383)
Interest paid (6) (10) (21)
Repayment of lease
liabilities * (239) (489) (959)
Repayment of lease
interest * (39) (56) (93)
--------------------------- ---------------------------- ------------------------------- -------------------------- Net cash used in financing activities (284) (757) (1,456) --------------------------- ---------------------------- ------------------------------- -------------------------- Net (decrease) / increase in cash and cash equivalents ( 490) (479) 2,258 Net cash and cash equivalents at beginning of period 11,113 8,855 8,855 --------------------------- ---------------------------- ------------------------------- -------------------------- Net cash and cash equivalents at end of period 10, 623 8,376 11,113 --------------------------- ---------------------------- ------------------------------- --------------------------
* Total IFRS 16 lease liability payments of GBP278,000 (September 2021: GBP545,000; March 2022: GBP1,052,000).
Walker Crips Group plc
Condensed consolidated statement of changes in equity
For the six months ended 30 September 2022
Share Own
Share premium shares Capital Retained Total
capital account held redemption Other earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Equity as at
31 March 2021 2,888 3,763 (312) 111 4,612 11,260 22,322
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Total
comprehensive
income for
the
period - - - - - 44 44
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Contributions
by and
distributions
to owners
Dividends paid - - - - - (255) (255)
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Total
contributions
by and
distributions
to owners - - - - - (255) (255)
Equity as at
30 September
2021 2,888 3,763 (312) 111 4,612 11,049 22,111
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Total
comprehensive
income for
the
period - - - - - 129 129
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Contributions
by and
distributions
to owners
Dividends paid - - - - - (128) (128)
Total
contributions
by and
distributions
to owners - - - - - (128) (128)
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Equity as at
31 March 2022 2,888 3,763 (312) 111 4,612 11,050 22,112
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Total
comprehensive
income for
the
period - - - - - 117 117
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Contributions
by and
distributions
to owners
Dividends paid
and payable - - - - - (511) (511)
Total
contributions
by and
distributions
to owners - - - - - (511) (511)
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Equity as at
30 September
2022 2,888 3,763 (312) 111 4,612 10,656 21,718
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Walker Crips Group plc
Notes to the condensed consolidated financial statements
For the six months ended 30 September 2022
1. General information
Walker Crips Group plc ("the Company") is the Parent Company of the Walker Crips group of companies ("the Group"). The Company is a public limited company incorporated in England and Wales under the Companies Act 2006. The Company's registered office is at Old Change House, 128 Queen Victoria Street, London EC4V 4BJ.
2. Basis of preparation and significant accounting policies
Basis of preparation
The Group's consolidated financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS"). These condensed financial statements are presented in accordance with IAS 34 Interim Financial Reporting. They do not include all disclosures that would otherwise be required in a complete set of financial statements; however, selected explanatory notes are included for events and transactions that are significant to an understanding of the Group's financial position and performance.
The condensed consolidated financial statements have been prepared on the basis of the accounting policies and methods of computation set out in the Group's consolidated financial statements for the year ended 31 March 2022 and therefore should be read in conjunction with the Group's audited financial statements for that year. The interim financial information is unaudited and does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.
The Group's financial statements for the year ended 31 March 2022 have been reported on by the auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not draw attention to any matters by way of emphasis. They also did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The interim financial information has neither been audited nor reviewed pursuant to guidance issued by the Audit Procedures Board.
The interim condensed consolidated financial statements are presented in GBP sterling (GBP) and are rounded to the nearest thousand, unless stated otherwise.
Going concern
The Directors are satisfied that the Group has sufficient resources to continue in operation for a period of at least twelve months from the date of this report. Accordingly, the Directors continue to adopt the going concern basis in preparing the condensed consolidated financial statements.
As at 30 September 2022, the Group had net assets of GBP21.7 million (31 March 2022: GBP22.1 million), net current assets of GBP11.5 million (31 March 2022: GBP11.1 million) and net cash and cash equivalents of GBP10.6 million (31 March 2022: GBP11.1 million). The Group reported an operating profit of GBP162,000 for the period to 30 September 2022 (30 September 2021: GBP120,000), and net cash generated from operating activities of GBP25,000 (30 September 2021: 213,000).
The Directors consider the going concern basis to be appropriate following their assessment of the Group's financial position and its ability to meet its obligations as and when they fall due. In making the going concern assessment, the Directors have taken the following into account:
- Capital structure and liquid resources; - Trading performance in the six-month period to 30 September 2022;
- The base case and stressed cash flow forecasts over the financial reporting periods ending 31 March 2023 and 31 March 2024;
- Stress tests, including reversed stress test scenarios, to assess the Group's ability to withstand significant market-wide events; and
- The principal risks facing the Group.
Key assumptions that the Directors have made in preparing the base case cash flow forecasts are that:
- Revenues reflect the impact of (i) reduced trading activity, (ii) higher retained interest income from managing client deposits, (iii) no further significant impact from the pandemic other than that already known, and (iv) the FTSE 100 index remaining at the lower 7000 range for a large part of the next 12 months; and
- Base case costs prudently reflect only the actions Management has taken to date and inflation of 10% over the period to 31 March 2024
Key stress scenarios that the Directors have considered include:
- A 'bear stress scenario' representing a 10% fall in income compared to the base case scenario in reporting periods ending 31 March 2023 and 31 March 2024;
- A 'severe stress scenario' representing a 20% fall in commission income and 15% fall in fee income compared to the base case for each forecast period; and
- Both stress scenarios assume no mitigating actions.
Our reverse stress testing further indicates that revenues would have to decline by 25.4% over the next 18 months compared to base case to reach our liquidity and pillar 1 regulatory capital ratio thresholds. These reverse stresses make no allowance for any mitigating actions available to the Group and the Directors consider them to be remote scenarios.
Although the pandemic remains a risk, the Directors believe that the stress conditions assessed demonstrate the Group's financial resilience and operating flexibility. At the report date, the Directors were not aware of any material uncertainties that would cast doubt over the Group's ability to continue as a going concern.
Taxation
The tax charge in the income statement represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on the taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date. The amount of taxable profit in the current period has been estimated.
Deferred tax is calculated at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised based on tax rates that have been enacted or substantively enacted by the statement of financial position date.
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to do so and presented as a net number on the face of the statement of financial position.
Use of estimates and judgements
Estimates and judgements used in the preparation of these interim condensed consolidated financial statements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable.
There have been no material revisions to the nature and amounts of estimates of numbers reported in prior periods. The effects of COVID-19 have not made any significant changes to various methodologies adopted by the Group in assessing judgments and estimates made in the preparation of these interim condensed consolidated financial statements.
Key sources of estimates and judgements that have a significant impact on the carrying values of assets and liabilities are discussed below:
Impairment of goodwill - estimation and judgement
The Group tests biannually whether goodwill allocated to each of the cash-generating units have suffered any impairment. Impairment tests are carried out more frequently if there are events or changes in circumstances that indicate that the carrying amount of the asset may exceed the recoverable amount.
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 and inputs involve judgements and create estimation uncertainty.
The last annual test was performed for the six months ending 30 September 2022. The carrying amount of goodwill at the statement of financial position date was GBP4.4 million (31 March 2022: GBP4.4 million).
Other intangible assets - judgement
Acquired client lists are capitalised based on current fair values. When the Group purchases client relationships from other corporate entities, a judgement is made as to whether the transaction should be accounted for as a business combination or a separate purchase of intangible assets. In making this judgement, the Group assesses the acquiree against the definition of a business combination in IFRS 3. Payments to newly recruited Investment Managers are capitalised when they are judged to be made for the acquisition of client relationship intangibles. The useful lives are estimated by assessing the historic rates of client retention, the ages and succession plans of the Investment Managers who manage the clients and the contractual incentives of the Investment Managers. The Directors conduct a review of indicators of impairment and also consider a life of up to twenty years to be both appropriate and in line with industry peers.
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.
No intangible asset acquisitions were made in the period to 30 September 2022.
Provisions - estimation and judgement
The Group has made provisions for dilapidations under four leases for its offices. The Group did not enter into any new property leases in the period but terminated two of its 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.
Remaining provisions made at the year ended 31 March 2022 in relation to upgrading our financial crime control framework and customer redress and associated costs have been transferred to trade and other payables given the progress made during the period in resolving these matters.
IFRS 16 "Leases" - estimation and judgement
IFRS 16 requires certain judgements and estimates to be made and those significant judgements are explained below:
- Following a review of all leases, the Group has opted to use single discount rates for leases with reasonably similar characteristics. The discount rates used have had an impact on the right-of-use asset values, lease liabilities on initial recognition and lease finance costs included within the income statement and statement of financial position.
- IFRS 16 defines a lease term as the non-cancellable period of a lease, together with the options to extend or terminate a lease if the lessee is reasonably certain to exercise the lease options available at the time of reporting. Where a lease includes the option for the Group to extend the lease term, the Group has exercised the judgement, based on current information, that such leases will be extended to the full length available, and this is included in the calculation of the value of the right of use assets and lease liabilities on initial recognition and valuation at the reporting date.
3. Changes in significant accounting policies
The accounting policies applied in these interim condensed consolidated financial statements are consistent with those applied in the Group's consolidated financial statements as at and for the year ended 31 March 2022.
4. Revenue and segmental analysis
For segmental reporting purposes, the Group currently has three operating segments:
- Investment Management, being portfolio-based transaction execution and investment advice; - Wealth Management, being financial planning and pension advice; and
- Software as a Service ("SaaS"), comprising provision of regulatory and admin software to regulated companies.
Walker Crips Investment Management's activities focus predominantly on investment management of various types of portfolios and asset classes.
Walker Crips Wealth Management provides advisory and administrative services to clients in relation to their financial planning, life insurance, inheritance tax and pension arrangements.
EnOC Technologies Limited ("EnOC") provides cloud-based software solutions to our business partners including all Walker Crips Group's regulated entities. Fees payable by subsidiary companies to EnOC have been eliminated on consolidation.
These activities are the basis on which the Group reports its primary segment information. Unallocated corporate expenses are disclosed separately. Revenues between Group entities and reportable segments are excluded from the below analysis.
Investment Wealth SaaS Total
Revenue Management Management
GBP'000 GBP'000 GBP'000 GBP'000
----------- -------------------------- ---------------------------- ------------------------------ -------------------------- -----------------------
6 months
to
30
September
2022 15,100 949 8 16,057
----------- -------------------------- ---------------------------- ------------------------------ -------------------------- -----------------------
6 months
to 30
September
2021 14,810 850 30 15,690
----------- -------------------------- ---------------------------- ------------------------------ -------------------------- -----------------------
Year to 31
March
2022 30,937 1,845 38 32,820
----------- -------------------------- ---------------------------- ------------------------------ -------------------------- -----------------------
Operating Unallocated Operating
profit Costs profit
/ (loss)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- -------------------------- ---------------------------- ------------------------------ -------------------------- -----------------------
6 months
to
30
September
2022 616 (162) (61) (2 31) 162
----------- -------------------------- ---------------------------- ------------------------------ -------------------------- -----------------------
6 months
to 30
September
2021 688 (16) (41) (511) 120
----------- -------------------------- ---------------------------- ------------------------------ -------------------------- -----------------------
Year to 31
March
2022 1,160 (258) (102) (474) 326
----------- -------------------------- ---------------------------- ------------------------------ -------------------------- -----------------------
5. Earnings per share
The calculation of basic earnings per share for continuing operations is based on the post-tax profit for the period of GBP117,000 (2021: post-tax profit of GBP44,000) and on 42,577,328 (2021: 42,577,328) ordinary shares of 6 2/3p, being the weighted average number of ordinary shares in issue during the period. There is no dilution applicable to the current period.
6. Dividends
The interim dividend of 0.25 pence per share (2021: 0.30 pence per share) is payable on 20 January 2023 to shareholders on the register at the close of business on 6 January 2023. The associated ex-dividend date is 5 January 2023. The interim dividend has not been included as a liability in this interim report.
7. Total income
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2022 2021 2022
GBP'000 GBP'000 GBP'000
----------------------------- ----------- ----------- -------------
Revenue from contracts with
customers 15,138 15,221 31,694
Other revenue 919 469 1,126
----------------------------- ----------- ----------- -------------
16,057 15,690 32,820
----------------------------- ----------- ----------- -------------
Investment revenue 28 - 9
----------------------------- ----------- ----------- -------------
16,085 15,690 32,829
----------------------------- ----------- ----------- -------------
The Group's income can also be categorised as follows for the purpose of measuring a key performance indicator; the ratio of non-broking income to total income.
Six months % Six months % Year %
ended ended ended
30 September 30 September 31 March
2022 2021 2022
Income GBP'000 GBP'000 GBP'000
Broking 2,956 18 4,099 26 8,059 25
Non-broking 13,129 82 11,591 74 24,770 75
16,085 100 15,690 100 32,829 100
-------------- ---- -------------- ---- ---------- ----
8. Commissions and fees paid
Commissions and fees paid comprise:
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2022 2021 2022
GBP'000 GBP'000 GBP'000
---------------------------- ----------- ----------- -------------
To authorised external
agents 3 25 61
To self-employed certified
persons 3,771 4,700 9,049
---------------------------- ----------- ----------- -------------
3,774 4,725 9,110
---------------------------- ----------- ----------- -------------
9. Investment in associate
Six months Six months
Six months ended ended ended
30 September 31 March 30 September
2022 2022 2021
GBP'000 GBP'000 GBP'000
----------- --------------------------------------- ------------------------------------- --------------------------------------
Brought
forward - 19 2
Share of
after-tax
profit - 14 43
Dividends - (31) (26)
Disposals - (2) -
----------- --------------------------------------- ------------------------------------- --------------------------------------
Carried
forward - - 19
------------ -------------------------------------- ------------------------------------- --------------------------------------
Associate
The Group disposed of its 33.33% interest in its associate, Walker Crips Property Income Limited ("WCPIL"), in the previous financial year.
10. Exceptional items
As a result of their materiality, the Directors disclose certain amounts separately in order to present results which are not distorted by significant non-recurring events. There are no reported exceptional items for the six months to 30 September 2022.
Exceptional items included within Six months Year ended
operating profit ended 30 31 March
September 2022
2021
GBP'000 GBP'000
-------------------------------------------- ------------------------------ -----------------------------
Restructuring, redundancy and other
costs (note a) 336 516
Net compensation income (note b) (224) (221)
Financial crime control framework review
and remediation (note c) - 595
Client redress and associated costs
(note d) - 650
Operating exceptional items 112 1,540
-------------------------------------------- ------------------------------ -----------------------------
Other exceptional items
Profit on disposal of associate investment
(note e) - (103)
Total exceptional items 112 1,437
-------------------------------------------- ------------------------------ -----------------------------
During the year to 31 March 2022, the following items were classified as exceptions due to their materiality and non-recurring nature.
a) Completion of the Group's restructuring and redundancy activity commenced during the pandemic;
b) The Group received compensation under a confidential settlement agreement, without admission of liability by either party in relation to a dispute;
c) The estimated costs of an independent review and resulting actions to remediate and enhance the Group's financial crime framework;
d) The estimated costs for redress and related costs resulting from the actions of an associate.
e) The Group disposed of its 33.33% interest in its associate, Walker Crips Property Income Limited ("WCPIL").
11. Tax
Tax is charged at 19% for the six months ended 30 September 2022 (2021: 19%) representing the best estimate of the average annual effective tax rate expected to apply for the full year, applied to the pre-tax income of the six-month period.
12. Non-current investments - fair value through profit or loss
Investments at
fair value through
profit or loss Total
GBP'000 GBP'000
At 30 September 2021 37 37
------------------------------- -------------------------- --------------------------
Change in value in the period (37) (37)
At 31 March 2022 - -
------------------------------- -------------------------- --------------------------
At 30 September 2022 - -
------------------------------- -------------------------- --------------------------
In the year to 31 March 2022, the Group's investment in unregulated collective investment schemes ("UCIS") was written down to GBPnil.
13. Current investments - fair value through profit or loss
As at As at As at
30 September 30 September 31 March
2022 2021 2022
GBP'000 GBP'000 GBP'000
---------------------------------- --------------- --------------- -----------------------
Trading investments
Investments - fair value through
profit or loss 1,413 1,011 1,647
---------------------------------- --------------- --------------- -----------------------
Financial assets at fair value through profit or loss represent investments in equity securities and collectives that present the Group with an opportunity for a return through dividend income, interest and trading gains. The fair values of these securities are based on quoted market prices.
14. Fair values
The following provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. The majority of trading investments fall within this category;
- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). The Group does not hold financial instruments in this category; and
- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). A small population of trading investments fall within this category.
The following tables analyse within the fair value hierarchy to the Group's investments measured at fair value.
Level 1 Level 3 Total
GBP'000 GBP'000 GBP'000
---------------------- -------------------------------- ------------------------------- ---------------------------
At 30 September 2022
Financial assets held
at fair
value through profit
and loss 1,381 32 1,413
---------------------- -------------------------------- ------------------------------- ---------------------------
1,381 32 1,413
---------------------- -------------------------------- ------------------------------- ---------------------------
At 30 September 2021
Financial assets held
at fair value
through profit and
loss 1,011 37 1,048
---------------------- -------------------------------- ------------------------------- ---------------------------
1,011 37 1,048
---------------------- -------------------------------- ------------------------------- ---------------------------
At 31 March 2022
Financial assets held
at fair value
through profit and
loss 1,647 - 1,647
---------------------- -------------------------------- ------------------------------- ---------------------------
1,647 - 1,647
---------------------- -------------------------------- ------------------------------- ---------------------------
Further IFRS 13 disclosures have not been presented here as the balance represents 2.550% (2021: 1.922%) of total assets.
15. Cash generated from operations
Unaudited Unaudited Audited
September September March
2022 2021 2022
GBP'000 GBP'000 GBP'000
Operating profit for
the period 162 120 326
Adjustments for:
Amortisation of
intangibles 374 397 862
Net change in fair
value of financial
instruments at fair
value through
profit
or loss 454 (152) (347)
Share of associate
profit - (43) (57)
Depreciation of
property, plant
and equipment 186 166 303
Depreciation of
right-of-use assets 408 493 873
Decrease /
(increase) in
debtors
* 19,736 19,085 (915) (Decrease) / increase in creditors * (21, 295) (19,853) 3,172 Net generated from operations 25 213 4,217 --------------------- -------------------------------- ----------------------------------- --------------------
* GBP1,559,000 cash outflow from working capital movement (30 September 2021: GBP768,000 outflow; 31 March 2022: GBP2,257,000 inflow).
16. Contingent liability
From time to time, the Group receives complaints or undertakes past business reviews, the outcomes of which remain uncertain and/or cannot be reliably quantified based upon information available and circumstances falling outside the Group's control. Accordingly, contingent liabilities arise, the ultimate impact of which may also depend upon availability of recoveries under the Group's indemnity insurance and other contractual arrangements. Other than the complaints deemed to be probable, the Directors presently consider a negative outcome to be remote or a reliable estimate of the amount of a possible obligation cannot be made.
17. Subsequent events
There are no material events arising after 30 September 2022, which have an impact on these unaudited financial statements.
Directors' responsibility statement
The Directors confirm that to the best of their knowledge:
(a) The condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU;
(b) The half-year Chairman's Statement (constituting the interim management report) includes a fair review of the information required by DTR 4.2.7R; and
(c) The half-year Chairman's Statement includes a fair review of the information required by DTR 4.2.8R as far as applicable.
On behalf of the Board
Sean Lam
Chief Executive Officer
23 December 2022
Walker Crips Group plc
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(END) Dow Jones Newswires
December 23, 2022 05:00 ET (10:00 GMT)
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