TIDMWCW
RNS Number : 8126V
Walker Crips Group plc
16 December 2021
Walker Crips Group plc
("Walker Crips", the "Company" or the "Group"),
Results for the six months ended 30 September 2021
Highlights
-- Total revenues of GBP15.69 million representing growth of
9.3% on the comparative period last year (2020: GBP14.35
million)
-- Adjusted EBITDA GBP1.29 million (2020: GBP0.81 million) ([1])
-- Underlying cash generated from operations GBP0.55 million (2020: GBP0.17 million) ([2])
-- Operating profit pre-exceptional items ([3]) GBP232,000
(2020: operating loss of GBP272,000) and operating profit
post-exceptional items ([3]) 120,000 (2020: operating loss of
GBP374,000)
-- Profit before tax pre- exceptional items ([3]) GBP166,000
(2020: loss before tax GBP349,000) and profit before tax
post-exceptional items ([3]) GBP54,000 (2020: loss before tax
GBP451,000)
-- Net cash position of GBP8.38 million (2020: GBP7.81 million)
-- Assets Under Management ("AUM") increased by 5.9% to GBP3.6
billion from March 2021 (2020: GBP3.1 billion)
-- Total Assets Under Management and Administration ("AUMA")
increased by 5.6% to GBP5.7 billion from March 2021 (2020: GBP4.8
billion)
-- Interim dividend increased to 0.30 pence per share (2020: 0.15 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
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:
The Group reports a small profit at the half-year compared to
the prior period loss, and continues to generate positive adjusted
EBITDA ([1]) and underlying operating cash ([2]) , which enable
continued support of our revenue and growth initiatives. Headwinds
include inflationary cost pressures and our focus continues to be
on revenue growth, improving operating efficiency 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 3697 4200
Mark Knight
walkercrips@fourcommunications.com
Singer Capital Markets Tel: +44 (0)20 7496 3000
Will Goode / George Tzimas
Further information on Walker Crips Group is available on the
Company's website: www.walkercrips.co.uk
Chairman's statement
Introduction
The Group reports an operating profit at the half-year, which is
explained more fully in the trading update below. Behind the
headline figures, progress is being made on a number of fronts.
Specifically, the Group continues to implement its restructuring
strategy to improve operating margins for the Investment Management
division and its renewed growth strategy for the Wealth Management
division. Tangible progress is being made and we will remain
focused on this objective, noting that it will take time to execute
fully and bring further improvement in profitability, particularly
given the cost pressures we are currently experiencing. The
increase in reported revenue is pleasing and reflects the
continuing broad improvement across most business lines that we saw
in the second half of last year.
AUMA recovered to GBP5.7 billion, up 5.6% from March 2021
(GBP5.4 billion). The Group balance sheet and capital base remain
sufficiently robust to support our growth strategy and the payment
of a modest interim dividend. As at the reporting date, the Group's
net assets are GBP22.1 million (September 2020: GBP22.3 million;
March 2021: GBP22.3 million) and net cash surplus is GBP8.4 million
(September 2020: GBP7.8 million; March 2021: GBP8.9 million). The
Group capital surplus remains above 200%.
Group performance
The Group's revenue is GBP1.34 million (9.3%) up compared to the
comparative period last year, this has been principally driven by
the recovery in markets seen since the second half of the prior
year. Breaking this down, broking commissions income rose by
GBP115,000 (2.9%) and non-broking income by GBP1.2 million (11.8%).
Within non-broking income, an improved performance from our
structured products service was largely offset by reduced
profitability from our arbitrage desk and lower interest income on
client deposits. Pre-exceptional items, operating profit and profit
before tax are GBP232,000 (2020: loss of GBP272,000) and GBP166,000
(2020: loss of GBP349,000), respectively.
The increase in revenues and operating margin has led to a
GBP481,000 (60%) improvement in reported adjusted EBITDA and
GBP378,000 (223%) improvement in underlying cash generation.
Although the actions we are taking to improve operating margins are
beginning to come through, with the reported gross margin now 70.2%
compared to 68.6% in the prior period, this improvement is offset
by a GBP659,000 increase in administrative expenses before
exceptional items. The period-on-period increase also reflects the
fact that the Directors took a three-month 20% voluntary pay
reduction last year. Additionally, the growth strategy for our
Wealth Management division means we invest in new teams before they
start generating revenue. Adjusting the investment made in new
teams and the prior period voluntary pay reduction, pre-exceptional
administrative expenses have risen by 3%, which is in line with the
rise in CPI over the 12 months to September 2021. However, we are
experiencing inflationary pressures in many areas, including
salaries. We are also reviewing and investing in our business and
compliance functions as we implement improvements and respond to
new regulations, which will add extra costs to our operations in
the second half of the year.
The reorganisation of our business continues, with further
redundancies concluded in the period in connection with the ongoing
project to rationalise the number of regulated entities. We report
such related costs of GBP336,000 (2020: GBP102,000) as exceptional
items. In addition, following a successful legal challenge in
connection with establishing client ownership, we recognised
exceptional income, net of related costs, of GBP224,000. After
exceptional items, the Group's operating result is a profit of
GBP120,000 (2020: loss of GBP374,000), profit before tax of
GBP54,000 (2020: loss of GBP451,000) and profit after tax of
GBP44,000 (2020: loss of GBP366,000).
Reconciliation of operating profit / (loss) to operating profit / (loss) before exceptional
items
Unaudited Unaudited Audited
September September March
2021 2020 2021
GBP'000 GBP'000 GBP'000
--------------------------------------- --------------------------- ------------------------ ----------------------
Operating profit / (loss) 120 (374) 22
Exceptional items (note 10) 112 102 419
Operating profit / (loss) before
exceptional items 232 (272) 441
--------------------------------------- --------------------------- ------------------------ ----------------------
Reconciliation of profit / (loss) before tax to profit / (loss)
before tax and exceptional
items
Unaudited Unaudited Audited
September September March
2021 2020 2021
GBP'000 GBP'000 GBP'000
--------------------------------------- --------------------------- ------------------------ ----------------------
Profit / (loss) profit before tax 54 (451) (114)
Exceptional items (note 10) 112 102 419
Profit / (loss) before tax and
exceptional items 166 (349) 305
--------------------------------------- --------------------------- ------------------------ ----------------------
Adjusted EBITDA
Unaudited Unaudited Audited
September September March
2021 2020 2021
GBP'000 GBP'000 GBP'000
--------------------------------------- --------------------------- ------------------------ ----------------------
Operating profit / (loss) 120 (374) 22
Exceptional items (note 10) 112 102 419
Amortisation / depreciation 563 604 1,212
Right-of-use-assets depreciation
charge 493 475 961
Adjusted EBITDA 1,288 807 2,614
--------------------------------------- --------------------------- ------------------------ ----------------------
Underlying cash generated by the Group
Unaudited Unaudited Audited
September September March
2021 2020 2021
GBP'000 GBP'000 GBP'000
--------------------------------------- --------------------------- ------------------------ ----------------------
Net cash inflow from operations 213 5 1,806
Working capital 768 618 (8)
Lease liability payments under IFRS 16 (545) (555) (1,133)
Exceptional items (note 10) 112 102 419
Underlying cash generated in the
period 548 170 1,084
--------------------------------------- --------------------------- ------------------------ ----------------------
Investment Management
The Group's Investment Management division returned an operating
profit of GBP688,000 for the six-month period compared to
GBP285,000 in the previous year. As noted above, significantly
higher income from fees, commissions and structured products were
partially offset by reduced income from the arbitrage desk, reduced
interest income and exceptional costs. The actions underlying the
significant exceptional costs should contribute positively in the
second half of the year, helping mitigate current cost pressures
and initiatives noted previously. There are likely to be further
exceptional costs as we continue to progress the Group
restructuring programme.
The development of the Group's model portfolio service ("MPS")
capabilities continued during the period, with all MPS teams
enjoying steady growth in AUM due both to performance and organic
growth. Our various MPS teams in Barker Poland Asset Management
LLP, and offices in York, London and Truro contributed their
knowledge and expertise to our 'Investment Senate', chaired by our
CIO, which oversaw the asset allocation and security selection of
the Group's York-based "Service First" model portfolio brand.
Wealth Management
Our Wealth Management division's turnover increased by 5.46% to
GBP850,000 with AUM increasing by 17.2% to GBP438 million compared
to March 2021. The division has also benefited from exceptional
income arising from a successful legal challenge relating to client
ownership. Since the start of the financial year a new team of
financial planners has joined. Although the costs of the new team
have contributed to the division reporting a loss for the period,
new clients are now being onboarded and revenue is being generated,
which should contribute to improved performance in the second half
of the year.
Group strategy
We remain confident in our strategy to grow our core business
and commercialise our technological capabilities. The Investment
Management division's project to improve operating margins will be
a long-term exercise, with the overall impact on operating margins
likely to be positive, but is unlikely to be smooth, from reporting
period to reporting period. The Wealth Management division is
focused on generating organic revenue growth and through the
recruitment of new revenue-generating advisers, which may lead to
short-term drags due to recruitment costs and the time needed to
bed-down new advisers, and the acquisition of client-lists.
Headwinds also include the inflationary cost pressures we face,
including salaries and recruitment, and the investment in our
compliance infrastructure. The initiatives are key to building a
business that is sustainably profitable and competitive, whilst
recognising the need to restore performance as quickly as
possible.
Dividends
The Board has declared an interim dividend of 0.30 pence per
share (2020: 0.15 pence per share), which will be paid on 7 January
2022 to shareholders on the register on 24 December 2021. The
ex-dividend date will be 23 December 2021.
Our aim is to always reward shareholders for their continued
support. 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.
Our community
We believe that even during challenging times, it is important
that we continue to support our chosen charities. In addition to
providing financial support, we endeavour to do more by using our
technological capabilities for good, by engaging in technology
philanthropy, using technology as a catalyst to boost the efforts
of charitable organisations, working with them to design, deploy
and maintain those systems.
Our partner charity's mission, www.twiningenterprise.org.uk, is
to combat mental health stigma and to assist people who are
struggling with mental health issues around work. Their goal is to
ensure that everyone suffering from mental health issues can find
employment and cope with the challenges of working life, to support
employers and raise awareness around mental health in general, and
to reduce stigma and discrimination. The mission and efforts of
Twining were proven to be especially crucial, as highlighted during
this pandemic.
We urge you to join us by signing on to support Twining in their
mission, staying informed of their latest news and activities, and
support them financially by going to www.enoc.pro/community.
Outlook
There is little doubt that we have a difficult year ahead.
Despite reporting a small profit for the first half, we are clearly
not out of the pandemic driven uncertainties and there are
inflationary and regulatory cost pressures on the business. We are
resolute in our determination to address these challenges, to
continue to progress our key initiatives and to maintain the
delivery of high standards of customer service.
Martin Wright
Chairman
16 December 2021
Walker Crips Group plc
Condensed consolidated income statement
For the six months ended 30 September 2021
Unaudited Unaudited Audited
September September March
2021 2020 2021
Notes GBP'000 GBP'000 GBP'000
----------------------------------------- ------ ------------------- ------------------ -----------------
Revenue 4, 7 15,690 14,350 30,348
Commissions and fees paid 8 (4,725) (4,543) (9,702)
Share of after-tax profit of associate 9 43 38 66
------------------------------------------ ------ ------------------- ------------------ -----------------
Gross profit 11,008 9,845 20,712
Administrative expenses (10,776) (10,117) (20,271)
Exceptional items 10 (112) (102) (419)
------------------------------------------ ------ ------------------- ------------------ -----------------
Operating profit / (loss) 4 120 (374) 22
Investment revenue - 2 10
Finance costs (66) (79) (146)
------------------------------------------ ------ ------------------- ------------------ -----------------
Profit / (loss) before tax 54 (451) (114)
Taxation (10) 85 (144)
Profit / (loss) for the period
attributable to equity holders of the
Parent Company 44 (366) (258)
------------------------------------------ ------ ------------------- ------------------ -----------------
Earnings / (loss) per share
----------------------------------------- ------ ------------------- ------------------ -----------------
Basic and diluted 5 0.10p (0.86)p (0.61)p
------------------------------------------ ------ ------------------- ------------------ -----------------
Condensed consolidated statement of comprehensive income
For the six months ended 30 September 2021
Unaudited Unaudited Audited
September September March
2021 2020 2021
GBP'000 GBP'000 GBP'000
------------- ----------------- -----------------
Profit / (loss) for the period 44 (366) (258)
----------------------------------------------------- ------------- ----------------- -----------------
Total comprehensive income / (loss) for the period
attributable to equity holders of the Parent
Company 44 (366) (258)
----------------------------------------------------- ------------- ----------------- -----------------
Condensed consolidated statement of financial position
As at 30 September 2021
Unaudited Unaudited Audited
September September March
2021 2020 2021
Notes GBP'000 GBP'000 GBP'000
----------------------------------------- ------ --------------------- -------------------- ----------------
Non-current assets
Goodwill 4,388 4,388 4,388
Other intangible assets 6,169 6,397 6,566
Property, plant and equipment 1,330 2,076 1,477
Right-of-use-assets 3,120 4,049 3,612
Investment in associate 9 19 4 2
Investments - fair value through profit
or loss 12 37 50 37
15,063 16,964 16,082
----------------------------------------- ------ --------------------- -------------------- ----------------
Current assets
Trade and other receivables 30,061 17,985 49,098
Investments - fair value through profit
or loss 13 1,011 958 920
Cash and cash equivalents 8,376 7,831 8,855
39,448 26,774 58,873
----------------------------------------- ------ --------------------- -------------------- ----------------
Total assets 54,511 43,738 74,955
----------------------------------------- ------ --------------------- -------------------- ----------------
Current liabilities
Trade and other payables (27,680) (15,753) (47,395)
Current tax liabilities (278) (337) (123)
Deferred tax liabilities (306) (225) (400)
Bank overdrafts - (24) -
Provisions (64) (183) (205)
Lease liabilities (621) (1,131) (946)
Dividends payable (53) - -
----------------------------------------- ------ --------------------- -------------------- ----------------
(29,002) (17,653) (49,069)
----------------------------------------- ------ --------------------- -------------------- ----------------
Net current assets 10,446 9,121 9,804
----------------------------------------- ------ --------------------- -------------------- ----------------
Long-term liabilities
Deferred cash consideration (33) (15) (33)
Lease liabilities (2,690) (3,133) (2,856)
Dilapidation provision (675) (659) (675)
----------------------------------------- ------ --------------------- -------------------- ----------------
(3,398) (3,807) (3,564)
----------------------------------------- ------ --------------------- -------------------- ----------------
Net assets 22,111 22,278 22,322
----------------------------------------- ------ --------------------- -------------------- ----------------
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 11,049 11,216 11,260
Other reserves 4,723 4,723 4,723
Equity attributable to equity holders of the
Parent Company 22,111 22,278 22,322
------------------------------------------------- --------------------- -------------------- ----------------
Condensed consolidated statement of cash flows
For the six months ended 30 September 2021
Unaudited Unaudited Audited
September September March
2021 2020 2021
Notes GBP'000 GBP'000 GBP'000
------------------------- ------------------------------- ------------------------------ --------------------------
Operating activities
Cash generated from
operations 15 213 5 1,806
Tax paid - (109) (379)
------------------------- ------------------------------- ------------------------------ --------------------------
Net cash generated from
/ (used in) operating
activities 213 (104) 1,427
------------------------- ------------------------------- ------------------------------ --------------------------
Investing activities
Purchase of property,
plant and equipment (24) (46) (24)
Sale / (purchase) of
investments held for
trading 63 (200) 78
Consideration paid on
acquisition of client
lists - - (100)
Dividends received - - 8
Dividends received from
associate investment 26 34 64
Interest received - 2 2
------------------------- ------------------------------- ------------------------------ --------------------------
Net cash generated from
/ (used in) from
investing activities 65 (210) 28
------------------------- ------------------------------- ------------------------------ --------------------------
Financing activities
Dividends paid (202) - (64)
Interest paid (10) (9) (12)
Government grant - 76 -
received (#)
Repayment of lease
liabilities * (489) (485) (999)
Repayment of lease
interest * (56) (70) (134)
------------------------- ------------------------------- ------------------------------ --------------------------
Net cash used in
financing activities (757) (488) (1,209)
------------------------- ------------------------------- ------------------------------ --------------------------
Net (decrease) /
increase in cash and
cash equivalents (479) (802) 246
Net cash and cash
equivalents at
beginning of period 8,855 8,609 8,609
------------------------- ------------------------------- ------------------------------ --------------------------
Net cash and cash
equivalents at end of
period 8,376 7,807 8,855
------------------------- ------------------------------- ------------------------------ --------------------------
Cash and cash
equivalents 8,376 7,831 8,855
Bank overdrafts - (24) -
------------------------- ------------------------------- ------------------------------ --------------------------
8,376 7,807 8,855
------------------------- ------------------------------- ------------------------------ --------------------------
# Grant received of GBP76,000 under the Government backed
Coronavirus Job Retention Scheme repaid to HMRC in November
2020.
* Total IFRS 16 lease liability payments of GBP545,000 (30
September 2020: GBP555,000; 31 March 2021: GBP1,133,000).
Condensed consolidated statement of changes in equity
For the six months ended 30 September 2021
Own
Share Share premium shares Total
capital account held Capital redemption Other Retained earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Equity as at
31 March 2020 2,888 3,763 (312) 111 4,612 11,582 22,644
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Total
comprehensive
loss for the
period - - - - - (366) (366)
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Contributions
by and
distributions
to owners
Dividends paid - - - - - - -
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Total - - - - - - -
contributions
by and
distributions
to owners
Equity as at
30 September
2020 2,888 3,763 (312) 111 4,612 11,216 22,278
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Total
comprehensive
income for
the period - - - - - 108 108
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Contributions
by and
distributions
to owners
Dividends paid - - - - - (64) (64)
Total
contributions
by and
distributions
to owners - - - - - (64) (64)
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
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
and payable - - - - - (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
--------------- --------------------- --------------------- --------------------- --------------------- --------------------- ------------------------- -------------------------
Notes to the condensed consolidated financial statements
For the six months ended 30 September 2021
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 2021 therefore should be
read in conjunction with the Group's audited financial statements
for the year ended 31 March 2021. 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
2021 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.
The Directors have considered the guidance of the UK Financial
Reporting Council and events relating to the spread of coronavirus
(COVID-19) in preparing these interim condensed consolidated
financial statements.
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 2021, the Group had net assets of GBP22.1m
(31 March 2021: GBP22.3m), net current assets of GBP10.5m (31 March
2021: GBP9.8m) and net cash and cash equivalents of GBP8.4 million
(31 March 2021: GBP8.9 million). The Group reported an operating
profit of GBP120,000 for the period to 30 September 2021, inclusive
of exceptional expenses of GBP112,000 (30 September 2020: operating
loss of GBP374,000, inclusive of exceptional expenses of
GBP102,000), and net cash generated from operating activities of
GBP213,000 (30 September 2020: net cash used in operating
activities of GBP104,000).
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 2021;
- The base case and stressed cash flow forecasts over the
financial reporting periods ending 31 March 2022 and 31 March
2023;
- 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) continued low base rates on
income for managing client deposits, (ii) no further significant
impact from the pandemic other than what is already known, and
(iii) 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.
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 2022 and 31 March 2023;
- 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 26% 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.
Government grant
The Group, initially having taken advantage of the Government
backed Coronavirus Job Retention Scheme ("CJRS"), repaid the grant
in full in November 2020.
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 annually 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 year ending 31 March
2021. The carrying amount of goodwill at the statement of financial
position date was GBP4.4 million (31 March 2021: 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 2021.
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 assets 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.
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. The amounts of the provisions are, where
possible, estimated using quotes from professional building
contractors. The property, plant and equipment elements of the
dilapidations are depreciated over the terms of their respective
leases. The liabilities in relation to dilapidations are inflated
using an estimated rate of inflation and discounted using
appropriate gilt rates to present value. The change in liability
attributable to inflation and discounting is recognised in interest
expense.
Impact of accounting standards to be applied in future
periods
There are a number of standards and interpretations which have
been issued by the International
Accounting Standards Board that are effective for periods
beginning subsequent to 31 December
2021 that the Group has decided not to adopt early. The Group
does not believe these standards and interpretations will have a
material impact on the financial statements once adopted.
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 2021.
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 the regulatory and
admin software, software as a service, to regulated companies
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.
Revenue Investment Management Wealth Management SaaS Total
GBP'000 GBP'000 GBP'000 GBP'000
----------- -------------------------- ------------------------------ ------------------------------ ---------------------------- -------------------------
6 months
to 30
September
2021 14,810 850 30 15,690
----------- -------------------------- ------------------------------ ------------------------------ ---------------------------- -------------------------
6 months
to 30
September
2020 13,542 806 2 14,350
----------- -------------------------- ------------------------------ ------------------------------ ---------------------------- -------------------------
Year to 31
March
2021 28,726 1,606 16 30,348
----------- -------------------------- ------------------------------ ------------------------------ ---------------------------- -------------------------
Operating Unallocated Operating
profit / Costs profit / (loss)
(loss)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------- -------------------------- ------------------------------ ------------------------------ ---------------------------- -------------------------
6 months
to 30
September
2021 688 (16) (41) (511) 120
----------- -------------------------- ------------------------------ ------------------------------ ---------------------------- -------------------------
6 months
to 30
September
2020 285 (17) (78) (564) (374)
----------- -------------------------- ------------------------------ ------------------------------ ---------------------------- -------------------------
Year to 31
March
2021 1,333 (127) (127) (1,057) 22
----------- -------------------------- ------------------------------ ------------------------------ ---------------------------- -------------------------
5. Earnings / (loss) per share
The calculation of basic earnings / (loss) per share for
continuing operations is based on the post-tax profit for the
period of GBP44,000 (2020: post-tax loss of GBP366,000) and on
42,577,328 (2020: 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 0.30 pence per share (2020: 0.15 pence
per share) is payable on 7 January 2022 to shareholders on the
register at the close of business on 24 December 2021. The
associated ex-dividend date is 23 December 2021. 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
2021 2020 2021
GBP'000 GBP'000 GBP'000
--------------------------------------- ----------- ----------- -------------
Revenue from contracts with customers 15,221 13,360 28,384
Other revenue 469 990 1,964
--------------------------------------- ----------- ----------- -------------
15,690 14,350 30,348
--------------------------------------- ----------- ----------- -------------
Investment revenue - 2 10
--------------------------------------- ----------- ----------- -------------
15,690 14,352 30,358
--------------------------------------- ----------- ----------- -------------
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 ended % Six months % Year %
30 September 2021 ended ended
30 September 31 March
2020 2021
Income GBP'000 GBP'000 GBP'000
Broking 4,099 26 3,984 28 9,009 30
Non-broking 11,591 74 10,368 72 21,349 70
15,690 100 14,352 100 30,358 100
------------------- ---- -------------- ---- ---------- ----
8. Commissions and fees paid
Commissions and fees paid comprise:
Six months Six months
ended 30 ended 30 Year ended
September September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
------------------------------------ ----------- ----------- -------------
To authorised external agents 25 36 63
To self-employed certified persons 4,700 4,507 9,639
------------------------------------ ----------- ----------- -------------
4,725 4,543 9,702
------------------------------------ ----------- ----------- -------------
9. Investment in associate
Six months ended Six months ended Six months ended
30 September 31 March 30 September
2021 2021 2020
GBP'000 GBP'000 GBP'000
----------- --------------------------------------- ------------------------------------- --------------------------------------
Brought
forward 2 4 -
Share of
after-tax
profit 43 28 38
Dividends (26) (30) (34)
------------ --------------------------------------- ------------------------------------- --------------------------------------
Carried
forward 19 2 4
------------ --------------------------------------- ------------------------------------- --------------------------------------
Associate
The Group has a 33% (2020: 33%) interest in its associate,
Walker Crips Property Income Limited ("WCPIL"), a company
incorporated and operating in the United Kingdom. The Board of
WCPIL submitted management accounts to 30 September 2021 reporting
a profit after tax of GBP129,000, from which a dividend of
GBP26,000 was paid to the Group in the period.
10. Exceptional items
As a result of their materiality, the Directors have decided to
disclose certain amounts separately in order to present results
which are not distorted by significant non-recurring events.
Six months Six months Year ended
ended 30 ended 30 31 March
September September 2021
2021 2020
GBP'000 GBP'000 GBP'000
---------------------- ------------------------------ ------------------------------ ------------------------------
Changes in the value
of deferred
consideration - - 31
Redundancies 336 102 388
Compensation income
(net) (224)
112 102 419
---------------------- ------------------------------ ------------------------------ ------------------------------
During the period to 30 September 2021, as part of the
restructuring programme the Group continued to make certain
positions redundant. The cost of the redundancy exercise is
classified as exceptional due to its nature and materiality. Also,
the Group recognised the monetary value of settlement terms net of
costs, which were agreed post-period-end, following a successful
legal challenge relating to client ownership, which the Group takes
very seriously.
In the period to 31 March 2021, the financial impact of a change
in the fair value of deferred consideration resulting from latest
financial performance was classified as exceptional due to its
nature.
In the period to 31 March 2021, the Group incurred professional
fees and other expenses relating to the actions taken in response
to the pandemic, including redundancy costs and those relating to
the Group reorganisation. These costs were classified as
exceptional due to its nature and materiality.
11. Tax
Tax is charged at 19% for the six months ended 30 September 2021
(2020: 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 2020 50 50
------------------------------- ----------------------------- -----------------------------
Disposals in the period (10) (10)
------------------------------- ----------------------------- -----------------------------
Change in value in the period (3) (3)
At 31 March 2021 37 37
------------------------------- ----------------------------- -----------------------------
At 30 September 2021 37 37
------------------------------- ----------------------------- -----------------------------
Investments at fair value through profit or loss
The Group's investments include GBP37,000 unregulated collective
investment scheme ("UCIS") investments held in relation to a number
of customer complaints.
13. Current investments - fair value through profit or loss
As at As at As at
30 September 30 September 31 March
2021 2020 2021
GBP'000 GBP'000 GBP'000
------------------------------------------------- --------------- --------------- ---------------------
Trading investments
Investments - fair value through profit or loss 1,011 958 920
------------------------------------------------- --------------- --------------- ---------------------
Financial assets at fair value through profit or loss represent
investments in equity securities and collectives that present the
Group with opportunity for return through dividend income, interest
and trading gains. The fair values of these securities are based on
quoted market prices.
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 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).
The Group's investments held in non-current assets 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 2021
Financial assets held
at fair value
through profit and
loss 1,011 37 1,048
---------------------- -------------------------------- ------------------------------- ---------------------------
1,011 37 1,048
---------------------- -------------------------------- ------------------------------- ---------------------------
At 30 September 2020
Financial assets held
at fair value
through profit and
loss 958 50 1,008
---------------------- -------------------------------- ------------------------------- ---------------------------
958 50 1,008
---------------------- -------------------------------- ------------------------------- ---------------------------
At 31 March 2021
Financial assets held
at fair value
through profit and
loss 920 37 957
---------------------- -------------------------------- ------------------------------- ---------------------------
920 37 957
---------------------- -------------------------------- ------------------------------- ---------------------------
Further IFRS 13 disclosures have not been presented here as the
balance represents 1.922% (2020: 2.305%) of total assets.
15. Cash generated from operations
Unaudited Unaudited Audited
September September March
2021 2020 2021
GBP'000 GBP'000 GBP'000
Operating profit
/ (loss) for
the period 120 (374) 22
Adjustments
for:
Amortisation of
intangibles 397 304 837
Changes in the
fair value of
deferred
consideration - - 31
Net change in
fair value of
financial
instruments at
fair value
through profit
or loss (152) (120) (362)
Share of
associate
profit (43) (38) (66)
Depreciation of
property, plant
and equipment 166 300 375
Depreciation of
right-of-use
assets 493 475 961
Decrease /
(increase) in
debtors * 19,085 6,533 (24,572)
(Decrease) /
increase in
creditors * (19,853) (7,075) 24,580
Net generated
from operations 213 5 1,806
----------------- ----------------------------------- ----------------------------------- ----------------------
* GBP768,000 cash outflow from working capital movement (30
September 2020: GBP542,000 outflow; 31 March 2021: GBP8,000
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 2021,
which have an impact on these unaudited financial statements save
in respect of the compensation income explained in note 10.
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 yearly report from the Chairman (constituting the
interim management report) includes a fair review of the
information required by DTR 4.2.7R; and
(c) The half yearly report from the Chairman 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
16 December 2021
Walker Crips Group plc
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END
IR KELFFFLLXFBL
(END) Dow Jones Newswires
December 16, 2021 02:00 ET (07:00 GMT)
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