TIDMWCW
RNS Number : 8089H
Walker Crips Group plc
31 July 2023
31 July 2023
Walker Crips Group plc
("Walker Crips", the "Company" or the "Group")
Final results for the year ended 31 March 2023
Walker Crips Group plc, the investment management and wealth
management services, pensions administration and regulation
technology Group, announces audited results for the year ended 31
March 2023.
Financial highlights
A challenging year in the face of headwinds but we maintain our
focus on the key drivers of revenue generation, cost management,
cash conversion, and operational and financial resilience,
including making important investments in our people and
technology.
-- Total revenues decreased 3.7% to GBP31.6 million (2022: GBP32.8 million).
-- Operating profit increased 200.5% to GBP625,000 (2022:
GBP208,000 - restated****), albeit fell 36.8% to GBP1,179,000
(2022: GBP1,866,000) when adjusted for operational exceptional
items*.
-- Profit before tax increased 206.8% to GBP632,000 (2022:
GBP206,000 - restated), though fell 32.7% to GBP1,186,000 (2022:
GBP1,761,000) when adjusted for total exceptional items*.
-- Adjusted EBITDA decreased 16.7% to GBP3.25 million (2022: GBP3.90 million)**.
-- Underlying cash generated from operations improved 174.4% to
GBP3.36 million (2022: GBP1.23 million - restated)***.
-- Cash and cash equivalents of GBP13.14 million (2022: GBP11.11 million).
-- Assets Under Management ("AUM") decreased by 13.9% to GBP3.1 billion (2022: GBP3.6 billion)
-- Proposed final dividend of 0.25 pence per share (2022: 1.20
pence per share), bringing the total dividends for the year to 0.50
pence per share (2022: 1.50 pence per share).
* Exceptional items are disclosed in note 10 to the accounts and
a full reconciliation to IFRS results is presented in the Finance
Director's review.
** Adjusted EBITDA represents earnings before interest,
taxation, depreciation and amortisation, and exceptional items. The
Directors present this result as it is a metric widely used by
stakeholders when considering an entity's financial performance. A
full reconciliation to IFRS results is provided in the Finance
Director's review.
*** Underlying cash generated from operations represents the
cash generated from operations adjusted for lease liability
payments under IFRS 16, non-cyclical working capital movements and
operational exceptional items. The Directors consider that this
metric helps readers understand the cash generating performance of
the Group. A full reconciliation to the IFRS results is provided in
the Finance Director's review.
**** As explained in the Finance Director's review and note 38
of the accounts, the prior year results have been restated to
correct an error regarding the recording of an obligation to HMRC
in respect of stamp duty reserve tax.
For further information, please contact:
Walker Crips Group plc Tel: +44 (0)20 3100 8000
Craig Harrison, Media
Relations
Four Agency
Jonathan Atkins Tel: +44 (0)20 3920 0555
walkercrips@four.agency
Singer Capital Markets Tel: +44 (0)20 7496 3000
Justin McKeegan / Jalini
Kalaravy
Further information on Walker Crips Group is available on the
Company's website: www.walkercrips.co.uk
Chairman's statement
"Although pleasing to report a year-on-year improvement in IFRS
profitability, the underlying business has experienced reduced
trading commissions, lower management fees, and increased costs in
the challenging and uncertain economic conditions we faced during
the year. We continue to focus on investing in our people and
technology to drive the key initiatives that improve our working
environment, customer service and ultimately operating margins and
profitability, including fully embracing regulatory change and
preparations for the new Consumer Duty regulation."
Martin Wright
Chairman
The Group continues to be profitable despite challenging
economic conditions in the UK and across the world. The aftermath
of the pandemic, the unprovoked war in Ukraine and the uncertain UK
political arena have contributed to supply shortages and heightened
demand leading to substantial inflation and the consequent
increased cost of living. In response, the BoE has raised UK base
rates 13 times since December 2021 when the base rate stood at 0.1%
to its current level of 5%. We have benefited from the continued
strong performance of our structured investments business and a
substantial increase in the Group's revenues from managing clients'
trading cash in the higher interest rate environment. However,
these positive contributions have not fully offset the decline in
commissions and management fees experienced by our investment
management business in the last financial year, with Average Assets
under Management and Administration having fallen by 6.4% to GBP5.1
billion. A more detailed explanation of our results is set out in
the Finance Director's review.
Notwithstanding the pressures reflected in our financial
results, I am pleased to report that the Group has made good
operational progress towards completing previously noted strategic
initiatives, particularly improvements in our regulatory and
compliance framework. We have also concluded the material redress
exercise affecting a small number of customers where financial harm
was caused by the inappropriate actions of one of our former
self-employed investment managers, with settlements made post year
end and fully provided for in the results.
It is therefore disappointing once again to report exceptional
charges, this time relating to an historic oversight in failing to
account for stamp duty on trades (Stamp Duty Reserve Tax or SDRT),
for which voluntary disclosure has been made to HMRC and the final
quantification exercise remains ongoing, and intangible asset write
downs following the departure of several self-employed investment
manager associates occurring towards our reporting year end. Some
reduction in our investment manager headcount was expected given
the tighter regulatory operating environment (and our determination
to ensure we stay within it) and our deliberate curtailing of
certain higher risk investment services. Nevertheless, we are
disappointed to part company with certain of our long-standing
colleagues and we wish them well in their future pursuits.
The SDRT obligation has arisen over a number of years due to a
failure in our procedures and controls. The Board is determined to
minimise the risk of such events recurring. The strengthening of
our second and third lines of defence in recent years is an
important step in this aim, and this will now be complemented by a
critical review of key transaction reporting controls, risk
indicators, use of systems and exception reporting. This will be
completed over the coming months. In addition, we have concluded
that strengthening our senior management team to address these
important issues is a priority and a search will begin soon. As
this issue is material and has arisen over several years, we have
presented restated comparative financial results and statements of
financial position as explained in note 38 and throughout the
report and accounts where applicable.
What does this mean for our future? The higher interest rate
environment provides some economic hedge during the present
economic uncertainty and the strength of our finances means we can
and will continue to invest in growth and further integration of
our core businesses, in customer service, and in margin improvement
initiatives that strengthen our customer propositions and our
operating and financial resilience. This also means continued
investment in our people, particularly salary rises and benefits
reflective of their significant and valued contributions to our
business and the present upward cost of living pressures, and as
always in technology. We also continue to strengthen our regulatory
and compliance infrastructure, to ensure compliance with regulation
and the consequent reduction in future exposure to expensive
compliance failings like those that have plagued us in recent
years.
We also continue, of course, to embrace regulatory change. In
that context, we have made good progress responding to the FCA's
new regulatory initiative, "the Consumer Duty" which places
increased emphasis on delivering good outcomes for retail
customers, a principle close to our heart and our mission. In his
report, our CEO sets out further detail on the initiatives we are
pursuing and importantly our commitment to the environment. I
remain optimistic about the future outlook for the business and its
long-term prospects.
Dividend
Our aim is always to reward our shareholders for their continued
support. In that light, having taken into account the current
economic environment and reported results, the Board will recommend
for shareholders' approval at the forthcoming AGM a reduced final
dividend of 0.25 pence per share (2022: 1.20 pence) payable on 6
October 2023 to those shareholders on the register at the close of
business on 22 September 2023, with an ex-dividend date of 21
September 2023.
Directors, Account Executives and staff
I would like to thank my fellow directors, our investment
managers and advisers and all members of staff for their efforts,
resilience and continued commitment to the highest levels of client
service, support and diligence.
As noted above we have made significant pay improvements
following a comprehensive benchmarking review. Nevertheless, the
business does face challenges and we will continue to make the
necessary changes and investments that make Walker Crips an
attractive place to work and improves the quality, competencies and
bench-strength across our workforce.
Outlook
The Board accepts there are administrative and operational
challenges to be addressed. However, the results continue to
demonstrate underlying operational and financial resilience and
your Board's commitment to invest in the Group's people,
technology, growth initiatives and importantly customer services.
As noted above, I remain confident in the outlook for the business
and its longer-term prospects.
Martin Wright
Chairman
31 July 2023
CEO's statement
Innovating, Digitising and Focussing on Customer Outcomes
Sean Lam
Chief Executive Officer
Innovating, Digitising and Focussing on Customer Outcomes
It is a privilege to be working alongside a great group of
investment managers, financial planners, advisers, and staff, who
diligently serve our customers and who value good customer
outcomes. The past year has been dominated by Russia's invasion of
Ukraine and the cost-of-living crisis, to name but two major events
that have had far-reaching consequences, affecting industries and
economies worldwide. We witnessed supply chain disruptions, market
volatility, and shifts in consumer behaviour. But our people dug
deep, stayed the course, and continued to support our customers and
our Group through it all.
An important focus over the past year was on the new Consumer
Duty regulations which serves to set higher and clearer standards
of consumer protection across the financial services industry, and
requires firms to put customers' needs first. We must take all
reasonable steps to avoid causing foreseeable harm to customers,
enabling them to pursue their financial objectives, and always act
in good faith towards them. As principles, these have of course
always been at the heart of our services, but the detailed
application of the new regulations has required a raft of changes
to the way in which we do business. We have sought, and continue to
seek, to put customers first in everything we do and, if there are
any shortfalls in this goal, to learn from those and deliver
ever-improving outcomes for our customers.
It is important to build revenue, manage costs, and improve
margins, but as a regulated firm it is also crucial to have in
place a control environment that oversees our regulatory,
operational and governance obligations. Our Non-Executive Directors
provide the Board members with a high level of challenge and
scrutiny, and the firm has in place departments that manage risk,
regulatory and anti-financial crime oversight. The regulatory and
anti-financial crime oversight departments have seen a large
increase in full-time staff headcount, to help us remain updated
and compliant with regulations. We have also created a
Self-Initiated Regulatory Review Regime (SIR) where we select
certain topics that are a priority to the FCA and engage regulatory
consultants to independently review our control processes for the
area(s) selected.
In recent years, we have been de-risking our business, ending
products or services where the rewards received does not
sufficiently outweigh the risks taken, like private placings and
broker-to-broker transactions. Our strict approach to regulatory
compliance and the embedding of a good regulatory culture where,
"Compliance is Everyone's Responsibility", is very important to the
firm. We strive for Walker Crips to be an attractive workplace
where top quality individuals want to conduct business and embrace
our customer centric, entrepreneurial, technology focused and
compliant culture.
We continue to leverage on our own technology, creating bespoke
systems that are appropriate for the business, and we shall drive
forward with our programme of digitisation and enhancements, from
onboarding to risk management, from efficiency initiatives to
regulatory compliance.
Group's Performance
Our Investment Management division has had a challenging year,
as described in the Chairman's statement, and we also up-resourced
our regulatory teams especially within compliance, financial crime,
and operations with more specialists to tackle the deluge of
regulations, upgrade systems, enhance change processes and also pay
significantly higher salary rises than we ever did before, to try
to counter the cost-of-living crisis that our staff has had to
endure. However, the firm's core investment management business
remains sound and therefore we have invested in business
development, to help grow our customer base and increase assets
under management, increasing contribution to our top line, while
managing our costs from here on out. For more information, please
see the section under Business Model and also under Strategy.
Our Structured Investment division continues to grow from
strength to strength, and is a core competency of the firm,
providing well-crafted structured products to customers through
financial advisers. We look forward to adding structured deposits
into our suite of products, expanding our breadth of offering and
providing another investment avenue to financial advisers and our
customers. We are pushing on with our plans to simplify and
digitise this business further, making ourselves more efficient and
putting ourselves on a footing where we can achieve greater
scale.
Our Financial Planning division has been growing by bringing on
highly experienced Financial Planners, to serve our existing
customers, and to take on new customers. Our Barker Poland Asset
Management division continues to generate steady revenues for the
Group. The Financial Planning and the Pensions divisions are
working together to expand our service offerings to ensure we are
anticipating and responding to our customers' needs.
Our teams continue to provide excellent service and support to
our customers, and I thank our people and customers for their
commitment to Walker Crips.
Corporate responsibility
If we want our children to see tomorrow, like we saw yesterday,
then let's not destroy today. We must safeguard our planet for our
children, and for our children's children. I wish to reiterate my
message from last year, that we can all do our part in reducing our
carbon footprint:
REFUSE - Avoid buying harmful, wasteful or non-recyclable
products, e.g. unnecessary product packaging and single-use
plastics. Don't need, don't buy. Less painful on the pocket
too.
REDUCE - Reduce the use of harmful, wasteful, and non-recyclable
products so that fewer of them end up in landfill. Use the minimum
required to avoid unnecessary waste. For example, don't need, don't
print. Reduce single-use plastics, plastic packaging, and Styrofoam
cups.
REUSE - Get rid of the "buy and throw-away" mindset. Use what
you have as often, and for as long, as you can.
REPAIR - Try to repair things before tossing them out.
REPURPOSE - If something is no longer useful for its original
purpose, think creatively of ways it can be broken down and
reconstituted as something else. I am a big fan of upcycling!
ROT - Compost if you can, try not to let your trash end up in
landfill.
RECYCLE - Make recycling your last step, after going through all
the R's above.
We must purposefully and actively practise the seven "R"s at
home and in the office, so that they become automatic and
habitual.
We are committed to sustainability and environmental
responsibility because we recognise the urgent need to address
climate change and mitigate our environmental impact. We also
believe that our commitment to sustainable practices will also
present us with opportunities for innovation and cost
efficiencies.
Mental health charity
As a Group, we continue to support twiningenterprise.org.uk, the
mental health charity. In addition to financial support, we also
try to use our technology for good, through technology
philanthropy. If you wish to find out more, or want to support
Twining financially, please visit walkercrips.co.uk/community.
Conclusion
We shall continue to make investment rewarding for our
customers, our shareholders and our staff, and to give our
customers a fair deal. And we support our investment advisers and
our staff by being a technology-driven financial services company
and providing a safe and enjoyable place to work and be part of. We
are optimistic about the future because we believe that we have the
right strategies, the right talent, and the right mindset to
overcome the challenges and create opportunities. We remain
committed to delivering sustainable growth, creating value for our
stakeholders, and making a positive impact on society.
Sean Lam
Chief Executive Officer
31 July 2023
Finance Director's review
"A challenging year but we maintain our focus on the key drivers
of revenue generation, cost management, cash conversion, and
operational and financial resilience, including important
investments in our people and technology."
Sanath Dandeniya
Finance Director
Financial performance
The year to March 2023 was challenging, with the post-pandemic
market recovery dampened by uncertain UK political and other world
events, including the impact of higher inflation and interest
rates, and the continuing war in Ukraine. These are reflected in
our results. Market pressures depressed trading commissions and
management fees, and inflationary pressures together with continued
investment in strengthening our regulatory and compliance functions
are increasing our cost base. These impacts were partially
mitigated by significantly improved margins on administering
clients trading cash balances in the rising interest rate
environment, and the continued strong performance of our structured
products business leading to an overall improvement in the reported
gross margin.
As referenced in the Chairman's statement, we have also incurred
material exceptional charges, one of which has led to us present
restated comparative results, and I comment on these in more detail
later in this report.
The outcome is that although reporting an improved Group profit
before tax of GBP632,000 (2022: GBP206,000 - as restated), when
adjusted for exceptional items, there has been a marked year on
year reduction in reported pre-tax, pre-exceptional profits of
GBP1,186,000 (2022: GBP1,761,000). Further explanation of these
headline results is provided below.
Against this background, Management continues to focus on
revenue generation, cost management, cash conversion, and
operational and financial resilience. However, like others, we
continue to face significant upward cost pressures, particularly
regarding workforce remuneration. In a tight and competitive labour
market we are seeing increased mobility and naturally must compete
in retaining and attracting key talent and supporting our most
value-adding people in response to the cost-of-living challenges
they face. Investment in our people is therefore a positive and
important step in ensuring Walker Crips remains an attractive place
to be. Further, our focus on strengthened regulatory compliance,
including implementation of the MIFIDPRU remuneration requirements,
together with the Board's conscious de-risking decision that has
led to a cessation of certain services, has meant we have recently
parted company with a number of our associates, with its consequent
impact on future revenues. We remain positive and committed to our
strategy with a number of key initiatives expected to bear fruit in
the coming year.
Total revenue
Total revenue decreased by 3.7% to GBP31.6 million (2022:
GBP32.8 million). Revenue generation, whilst one of our key
objectives, has been stifled by the political and macro-economic
environment and its impact on market confidence. In terms of how
this affects our business, there are two key impacts. One is that
our management fees are based upon market values therefore the
reduction in the overall value of the market will have a
proportionate effect on our asset-based fee income. And secondly,
the market uncertainty leading to lower trading volumes and
proportionally reducing our commission income. A segmented analysis
of revenues is provided in notes 5 and 6
Assets under management and administration fell by 8.2% to GBP5
billion and, in turn, management fee income saw a fall of 8.3% to
GBP17.7 million, down GBP1.6 million from last year. Overall
commission income saw a decrease of 25.9% to GBP6 million, down
GBP2.1 million from last year. The shortfall in fee and commission
income was partly offset by our Structured Investment business,
which continues to perform well with income increasing by 11.4%
from the previous year to GBP3.9m and, on the back of increased
interest rates, higher revenues on managing clients' trading cash
funds which contributed an additional GBP2.5m. Our arbitrage
dealing desk also made a positive but lower contribution of
GBP97,000 (2022: GBP419,000) as profitability was impacted by mark
to market unrealised losses on certain positions, within risk
limits, spanning the year-end. Our Tier1 business, which is now
closed for new investors, recorded a 20% fall in income to
GBP778,000 (2022: GBP979,000) and this trend is expected to
continue as the business line is wound down.
Barker Poland Asset Management continued to be a valuable
contributor, having a relatively stable year although fee income
still fell by 4.6% to GBP2.2 million (2022: GBP2.3 million)
compared to last year. Our Financial Planning division continued to
grow revenues and its client base from the continued recruitment
drive reported last year. This division saw overall income up by
5.1% from last year to GBP1.9 million (2022: GBP1.8 million) and
income growth has continued post year end.
As a result of changes in revenue lines, and more specifically
the drop in transaction volumes impacting trading commission,
coupled with higher revenues on managing clients' trading cash
balances, broking income fell to 18.9% of revenues, from 24.5% in
2022. Our gross operating margin also increased to 76.6% from 72.5%
in 2022, demonstrating the benefits of the continued trend away
from self-employed to employed investment professionals which is
key, albeit longer term, transition as part of Management's plans
to improve margins. Consistent with these trends and initiatives,
the commission and fees 'paid away' decreased by 20.3% from last
year, but partially offset by higher salaries and staff related
costs. Adjusting for the positive impact of increased revenues on
managing clients' trading cash balances, our reported gross margin
has improved to 74.2% (2022: 71.6%).
As noted above, we recently parted company with five
self-employed investment managers. The impact on the reported
results for the year was to record an exceptional charge of
GBP423,000 reflecting the write down of attributable intangible
asset balances (see note 10), and the estimated reduction the
projected reported gross margin for the coming year is GBP0.9
million. The full impact of this is factored into our going concern
and cash forecasting models.
Expenses
Administrative expenses, excluding exceptional items, salaries,
depreciation and amortisation, increased by 3.5% in the year, with
a general increase in a number of areas offset by favourable spend
variances on trade settlement, irrecoverable VAT, and FCA fees and
levies. Salary costs, owing to a combination of investment in
advisors, upskilling and pay rises, saw an increase of 7.8%, and
the current cost of living crisis triggered by the rising inflation
will see this increase further next year. The Board is fully
committed to retaining and supporting our loyal and committed
workforce and this is reflected in salary increases awarded for the
coming year.
Given trends in workforce mobility, Management reviewed the
useful economic life of intangible assets linked to self-employed
investment managers. Based upon updated experience and review of
the contractual arrangements in place the estimated useful lives
were shortened which resulted in GBP133,000 of additional
amortisation expensed in the year, which is not treated as an
exceptional item. Management will keep trends in workforce mobility
and its impact on the amortisation of intangible assets under
review.
The Group is again reporting operating exceptional costs this
year totalling GBP554,000 (2022: GBP1,658,000 - as restated),
noting they relate to two matters quite distinct to those reported
in the prior year (see note 10). First, as explained in the
Chairman's Report, a system and monitoring issue relating to stamp
duty reserve tax ("SDRT") was recently discovered which, following
initial investigation, was voluntarily disclosed to HMRC.
Communications with HMRC and our work to quantify the obligation
continue, but we presently estimate the cost of repayment,
potential penalties, and related costs to be GBP878,000. The second
exceptional item is the write down of the remaining unamortised
intangible asset in respect of departing self-employed associates
which amounted to GBP423,000. Due to the materiality of the SDRT
obligation and the fact that it arose over a number of years, we
have concluded that prior-year reported results should be restated
to correct this fundamental error and more accurately reflect
associated costs. Accordingly, charges of GBP131,000 and GBP118,000
have now been recorded as exceptional items in the current and
prior year respectively, with the balance of the provision
reflected as a reduction in the previously reported 31 March 2021
reserves. The matter has only recently been identified and so the
provision remains our current best estimate, to be adjusted as the
matter, including discussions with HMRC, is finalised. As work to
quantify the cost remains ongoing, we have addressed our present
understanding of the estimation uncertainty by including an
allowance for an 80% deterioration in the estimated cost in our
going concern and viability stress testing. The actions we are
taking to address the weaknesses in the control environment are
explained in the Chairman's Statement.
Regarding exceptional items, we have now settled the material
redress obligation we reported last year.
Cash management
The Group remains cash generative and recorded a cash inflow
from operations of GBP3.5 million (2022: GBP4.2 million), generally
reflecting the poorer trading conditions experienced this year.
However, the underlying cash generated from operations, principally
reflecting the impact of lease liability payments, non-cyclical
working capital movements and cash flows from exceptional items
(see adjacent reconciliation) showed a significant year-on-year
improvement to GBP3.4 million (2022: GBP1.2 million - as restated)
Underlying cash generation was greatly helped by the renegotiation
of our London office lease, which included a new rent-free period
that reduced lease payments by GBP561,000 compared to the previous
year, and GBP922,000 in cash generated from our proprietary trading
activity, which saw our investments on the statement of financial
position also reduce to GBP1,276,000 (2022: GBP1,647,000).
After deducting cash deployed in investing activities and
dividends paid, cash and cash equivalents increased to GBP13.1
million at year-end (2022: GBP11.1 million) As noted previously,
since year end we have settled the redress obligations reported in
the previous year, at a net of insurance cash outlay of GBP0.7
million.
Financial result and alternative performance measures
The Group reported operating profit and profit before tax for
the year of GBP625,000 and GBP632,000, respectively (2022:
GBP208,000 and GBP206,000 - as restated, respectively).
Adjusting for exceptional items (see adjacent reconciliations
and further detail in note 10), the Group's operating profit and
profit before tax for the year are GBP1.18 million and GBP1.19
million respectively (2022: GBP1.87 million and GBP1.76 million,
respectively). The Group's adjusted EBITDA (being EBITDA adjusted
for exceptional items - see adjacent reconciliation) is GBP3.3
million (2022: GBP3.9 million), a decrease of 16.7%.
Explanations for the reported results have been provided earlier
and, notwithstanding the lower reported pre-exceptional operating
profitability consistent with market and inflationary pressures,
and the SDRT obligation, Management are pleased with the Group's
financial resilience which allows it to remain focused on the
Group's strategic priorities as further explained in the Chairman's
and CEO's respective reports.
Total Assets Under Management and Administration ("AUMA")
averaged GBP5.1 billion during the year (2022: GBP5.6 billion). The
drop in AUMA values is caused by a combination of stagnant market,
clients withdrawing funds for alternative deployment, and some
attrition in the client base. Discretionary and Advisory Assets
Under Management fell by 13.9% year on year to GBP3.1 billion
(2022: GBP3.6 billion).
2022
2023 (restated)
Reconciliation of operating profit/(loss)
to operating profit before exceptional
items GBP'000 GBP'000
Operating profit/(loss) 625 208 *
---------- -------------
1,658
Operating exceptional items (note 10) 554 *
---------- -------------
Operating profit before exceptional
items 1,179 1,866
---------- -------------
2022
2023 (restated)
Reconciliation of profit/(loss) before
tax to profit before tax and total exceptional
items GBP'000 GBP'000
Profit/(loss) before tax 632 206 *
---------- -------------
1,555
Total exceptional items (note 10) 554 *
---------- -------------
Profit before tax and exceptional items 1,186 1,761
---------- -------------
2022
2023 (restated)
Adjusted EBITDA GBP'000 GBP'000
Operating profit/(loss) 625 208 *
---------- -------------
1,658
Operating exceptional items (note 10) 554 *
---------- -------------
Amortisation/depreciation (note 31) 1,299 1,165
---------- -------------
Right-of-use assets depreciation charge
(note 31) 771 873
---------- -------------
Adjusted EBITDA 3,249 3,904
---------- -------------
2022
2023 (restated)
Underlying cash generated from operations GBP'000 GBP'000
Net cash inflow from operations 4,285 4,217
---------- -------------
(2,374)
Working capital (note 31) (590) *
---------- -------------
Lease liability payments under IFRS 16
(note 31) (332) (1,052)
---------- -------------
Cash outflow on operating exceptional
items (note 10) - 435
---------- -------------
Underlying cash generated in the period 3,363 1,226
---------- -------------
* The restatement of the 2022 figures are explained in note
38
Divisional performance
The Investment Management division, including exceptional costs,
delivered an operating profit of GBP1.55 million for the year,
compared to GBP1.04 million (as restated) in the previous year.
Adjusting for exceptional items, the division reported an operating
profit of GBP2.12 million (2022: GBP2.7 million - as restated). The
division was adversely affected by the lower fee and commission
income generated in the year, partially offset by higher retained
margin on the administration of clients' trading cash balances, and
inflationary cost pressures. On a positive note, notwithstanding
the impact of parting company with certain self-employed
associates, the division continues to focus on growing its client
and income base and since year end has made two new key business
development hires with benefits expected to emerge in the next
financial year. The Structured Investments business, having
delivered two very successful years, is expected to continue to
grow and generate income and margins for the division. The impact
of the Consumer Duty regulation, with the Group standardising its
charges across all similar client groups, on a standalone basis, is
expected to be an overall net positive.
On 1 April, the Investment Management division transferred
internally generated intellectual property in relation to a
proprietary web-based software system to its subsidiary EnOC
Technologies Limited ("EnOC"). The transfer allows EnOC staff to
take on the costs and obligations of developing and maintaining the
system and package it to be marketed both within the Group for its
continued use, as well as marketing it externally. The move does
not impact the Investment Management division's functionality as
EnOC will continue to support the division and its growth plans.
Reflecting the change, there will be an impact on future internal
recharges between EnOC and the division.
The Financial Planning division continued to increase its
adviser base with several key hires in the year and more in the
pipeline. The division saw a 5.1% increase in total revenue, but
presently reports a loss reflecting the continued investment in the
new financial planners and advisers and time for the client base to
build up.
Our tech arm, EnOC, reported an operating loss of GBP128,000
(2022: GBP102,000). EnOC's tech capabilities are integral to the
Group's operational efficiencies, deploying cloud solutions to the
business and we continue to invest in its capabilities and
prospects.
Capital resources, liquidity and regulatory capital
The Group's capital structure, consisting solely of equity
capital, provides a stable platform to support the Group's
strategic plan and initiatives. At year end, net assets are GBP21.2
million (2022: GBP21.4 million - as restated; 2021: GBP21.7 million
- as restated), reflecting a net decrease of GBP0.2 million (2022:
reduction of GBP0.3 million - as restated, due to the reported
profit after tax, less dividends paid. Liquidity remains strong
with cash and cash equivalents increasing over the year to GBP13.1
million (2022: GBP11.1 million). Regulatory capital at year end,
including audited reserves for the year, is GBP12.4 million (2022:
GBP11.5 million - as restated), comfortably in excess of the
Group's capital requirements for both Pillar 1 and Pillar 2, as
shown in the tables below.
2022
2023 (restated)
Regulatory own funds and own funds requirements GBP'000 GBP'000
Own funds
---------- -------------
Share capital 2,888 2,888
---------- -------------
Share premium 3,763 3,763
---------- -------------
Retained earnings 10,104 * 10,303
---------- -------------
Other reserves 4,723 4,723
---------- -------------
Less:
---------- -------------
Own shares held (312) (312)
---------- -------------
Regulatory adjustments (8,678) (9,804)
---------- -------------
Total own funds 12,488 11,561
---------- -------------
Total own funds requirement (4,854) (4,676)
---------- -------------
Regulatory capital surplus 7,634 6,885
---------- -------------
Cover on own funds as a % 257.3% 247.3%
---------- -------------
Pillar 2 requirement (7,227) (7,014)
---------- -------------
Regulatory capital surplus 5,261 4,547
---------- -------------
Cover on own funds as a % 172.8% 164.8%
---------- -------------
* The restatement of the 2022 figures is explained in note
38
Dividends
In view of the Group's financial performance, capital and
liquidity position, the Board recommends a final dividend of 0.25
pence per share to be paid on 6 October 2023 for those members on
the shareholders' register on 22 September 2023, the ex-dividend
date being 21 September 2023. Including the interim dividend of
0.25 pence per share (2022: 0.30 pence per share), the total
dividend paid and proposed in respect of the year is 0.50 pence per
share (2022: 1.50 pence per share).
Sanath Dandeniya
Finance Director
31 July 2023
Consolidated income statement
year ended 31 March 2023
Note 2023 As restated
GBP'000 2022
GBP'000
Revenue 5 31,612 32,820
----- --------- ------------
Commissions and fees paid 7 (7,264) (9,110)
----- --------- ------------
Share of associate after tax profit 8 - 57
----- --------- ------------
Gross profit 24,348 23,767
----- --------- ------------
Administrative expenses 9 (23,169) (21,901)
----- --------- ------------
(1,658)
Exceptional items 10 (554) *
----- --------- ------------
Operating profit 625 208
----- --------- ------------
Investment revenue 11 95 9
----- --------- ------------
Finance costs 12 (88) (114)
----- --------- ------------
Exceptional item - Profit on disposal
of associate investment 10 - 103
----- --------- ------------
Profit before tax 632 206
----- --------- ------------
Taxation 14 (214) (151)
----- --------- ------------
Profit for the year attributable to
equity holders of the Parent Company 418 55
----- --------- ------------
Earnings per share
----- --------- ------------
Basic and diluted 16 0.98p 0.13p *
----- --------- ------------
* The restatement of the 2022 figures is explained in note
38
The following Accounting Policies and Notes form part of these
financial statements.
Consolidated statement of comprehensive income
year ended 31 March 2023
2023 As restated
GBP'000 2022
GBP'000
Profit for the year 418 55 *
---------- ------------
Total comprehensive income for the year attributable
to equity holders of the Parent Company 418 55 *
---------- ------------
* The restatement of the 2022 figures are explained in note
38.
The following Accounting Policies and Notes form part of these
financial statements.
Consolidated statement of financial position
as at 31 March 2023
Note 2023 As restated As restated
GBP'000 2022 2021
GBP'000 GBP'000
Non-current assets
----- ---------- ------------ ------------
Goodwill 17 4,388 4,388 4,388
----- ---------- ------------ ------------
Other intangible assets 18 4,648 5,752 6,566
----- ---------- ------------ ------------
Property, plant and equipment 19 989 1,169 1,477
----- ---------- ------------ ------------
Right-of-use asset 20 2,340 2,597 3,612
----- ---------- ------------ ------------
Investment in associate - - 2
----- ---------- ------------ ------------
Investments - fair value through profit
or loss - - 37
----- ---------- ------------ ------------
Total non-current assets 12,365 13,906 16,082
----- ---------- ------------ ------------
Current assets
----- ---------- ------------ ------------
Trade and other receivables 22 36,301 50,003 49,098
----- ---------- ------------ ------------
Investments - fair value through profit
or loss 21 1,276 1,647 920
----- ---------- ------------ ------------
Cash and cash equivalents 23 13,138 11,113 8,855
----- ---------- ------------ ------------
Total current assets 50,715 62,763 58,873
----- ---------- ------------ ------------
Total assets 63,080 76,669 74,955
----- ---------- ------------ ------------
Current liabilities
----- ---------- ------------ ------------
Trade and other payables 26 (36,849) (49,625) (47,395)
----- ---------- ------------ ------------
Current tax liabilities (269) (132) (123)
----- ---------- ------------ ------------
Deferred tax liabilities 24 (371) (414) (400)
----- ---------- ------------ ------------
(1,884)
Provisions 27 (878) * (834)*
----- ---------- ------------ ------------
Lease liabilities 28 (341) (245) (946)
----- ---------- ------------ ------------
Deferred cash consideration 36 (94) (89) -
----- ---------- ------------ ------------
Total current liabilities (38,802) (52,389) (49,698)
----- ---------- ------------ ------------
Net current assets 11,913 10,437 9,175
----- ---------- ------------ ------------
Long-term liabilities
----- ---------- ------------ ------------
Deferred cash consideration 36 (71) (29) (33)
----- ---------- ------------ ------------
Lease liabilities 28 (2,389) (2,300) (2,856)
----- ---------- ------------ ------------
Provision 27 (652) (586) (675)
----- ---------- ------------ ------------
Total non-current liabilities (3,112) (2,915) (3,564)
----- ---------- ------------ ------------
Net assets 21,166 21,365 21,693
----- ---------- ------------ ------------
Equity
----- ---------- ------------ ------------
Share capital 29 2,888 2,888 2,888
----- ---------- ------------ ------------
Share premium account 29 3,763 3,763 3,763
----- ---------- ------------ ------------
Own shares 30 (312) (312) (312)
----- ---------- ------------ ------------
Retained earnings 30 10,104 10,303* 10,631*
----- ---------- ------------ ------------
Other reserves 30 4,723 4,723 4,723
----- ---------- ------------ ------------
Equity attributable to equity holders
of the Parent Company 21,166 21,365 21,693
----- ---------- ------------ ------------
* The restatement of the 2022 figures is explained in note
38
The following Accounting Policies and Notes form part of these
financial statements.
The financial statements of Walker Crips Group plc (Company
registration no. 01432059) were approved by the Board of Directors
and authorised for issue on 31 July 2023.
Signed on behalf of the Board of Directors
Sanath Dandeniya FCCA
Director
31 July 2023
Consolidated statement of cash flows
year ended 31 March 2023
Note 2023 2022
GBP'000 GBP'000
Operating activities
----- --------- ---------
Cash generated from operations 31 3,539 4,217
----- --------- ---------
Tax paid (120 ) (120)
----- --------- ---------
Net cash generated from operating
activities 3,419 4,097
----- --------- ---------
Investing activities
----- --------- ---------
Purchase of property, plant and equipment (150) (119)
----- --------- ---------
Purchase of investments held for trading (205) (342)
----- --------- ---------
Consideration paid on acquisition
of intangibles (183) (93)
----- --------- ---------
Consideration paid on acquisition - -
of client lists
----- --------- ---------
Consideration received on sale of
associate - 105
----- --------- ---------
Dividends received 11 47 9
----- --------- ---------
Dividends received from associate
investment 8 - 57
----- --------- ---------
Interest received 11 48 -
----- --------- ---------
Net cash used in investing activities (443) (383)
----- --------- ---------
Financing activities
----- --------- ---------
Dividends paid 15 (617) (383)
----- --------- ---------
Interest paid 12 (2) (21)
----- --------- ---------
Repayment of lease liabilities ** (246) (959)
----- --------- ---------
Repayment of lease interest ** (86) (93)
----- --------- ---------
Net cash used in financing activities (951) (1,456)
----- --------- ---------
Net increase in cash and cash equivalents 2,025 2,258
----- --------- ---------
Net cash and cash equivalents at
beginning of period 11,113 8,855
----- --------- ---------
Net cash and cash equivalents at
end of period 13,138 11,113
----- --------- ---------
** Total repayment of lease liabilities under IFRS 16 in the
period was GBP332,000 (2022: GBP1,052,000)
The following Accounting Policies and Notes form part of these
financial statements.
Consolidated statement of changes in equity
year ended 31 March 2023
Share Share Own Capital Other Retained Total
capital premium shares redemption GBP'000 earnings equity
GBP'000 account held GBP'000 GBP'000 GBP'000
GBP'000 GBP'000
Equity as at 31 March 11,110
2020 2,888 3,763 (312) 111 4,612 * 22,172
---------- --------- --------- ------------ --------- ---------- ---------
Comprehensive loss
for the year - as (415)
restated * (415)
---------- --------- --------- ------------ --------- ---------- ---------
Total comprehensive
loss for the year (415)
- as restated * (415)
---------- --------- --------- ------------ --------- ---------- ---------
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 10,631 21,693
---------- --------- --------- ------------ --------- ---------- ---------
Comprehensive income
for the year - as
restated - - - - - 55 * 55
---------- --------- --------- ------------ --------- ---------- ---------
Total comprehensive
income for the year
- as restated - - - - - 55 * 55
---------- --------- --------- ------------ --------- ---------- ---------
Contributions by
and distributions
to owners
---------- --------- --------- ------------ --------- ---------- ---------
Dividends paid - - - - - (383) (383)
---------- --------- --------- ------------ --------- ---------- ---------
Total contributions
by and distributions
to owners - - - - - (383) (383)
---------- --------- --------- ------------ --------- ---------- ---------
Equity as at 31 March
2022 2,888 3,763 (312) 111 4,612 10,303 21,365
---------- --------- --------- ------------ --------- ---------- ---------
Comprehensive income
for the year - - - - - 418 418
---------- --------- --------- ------------ --------- ---------- ---------
Total comprehensive
income for the year - - - - - 418 418
---------- --------- --------- ------------ --------- ---------- ---------
Contributions by
and distributions
to owners
---------- --------- --------- ------------ --------- ---------- ---------
Dividends paid - - - - - (617) (617)
---------- --------- --------- ------------ --------- ---------- ---------
Total contributions
by and distributions
to owners - - - - - (617) (617)
---------- --------- --------- ------------ --------- ---------- ---------
Equity as at 31 March
2023 2,888 3,763 (312) 111 4,612 10,104 21,166
---------- --------- --------- ------------ --------- ---------- ---------
* The restatement of the 2022 and 2021 figures are explained in
note 38
The following Accounting Policies and Notes form part of these
financial statements.
Notes to the accounts
year ended 31 March 2023
1. General information
Walker Crips Group plc ("the Company") is the Parent Company of
the Walker Crips group of companies ("the Company"). The Company is
a public limited company incorporated in the United Kingdom under
the Companies Act 2006 and listed on the London Stock Exchange. The
Group is registered in England and Wales. The address of the
registered office is Old Change House, 128 Queen Victoria Street,
London EC4V 4BJ.
The significant accounting policies have been disclosed below.
The accounting policies for the Group and the Company are
consistent unless otherwise stated.
2. Basis of preparation
The consolidated financial statements have been prepared in
accordance with UK-adopted international accounting standards in
conformity with the requirements of the Companies Act 2006.
The principal accounting policies adopted in the preparation of
the consolidated financial statements are set out in note 3. The
policies have been consistently applied to all the years presented,
unless otherwise stated.
The Group financial statements are presented earlier in this
announcement.
The consolidated financial statements are presented in GBP
Sterling (GBP). Amounts shown are rounded to the nearest thousand,
unless stated otherwise.
The consolidated financial statements have been prepared on the
historical cost basis, except for certain financial instruments
that are measured at fair value, and are presented in Pounds
Sterling, which is the currency of the primary economic environment
in which the Group operates. The principal accounting policies
adopted are set out below and have been applied consistently to all
periods presented in the consolidated financial statements.
The preparation of financial statements requires the use of
certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Group's
accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the consolidated financial statements, are
disclosed in note 4.
As explained in note 38, the Group has identified an obligation
in respect of stamp duty reserve tax which has arisen over a number
of years and was not identified due to a procedures and controls
failure. In view of the significance of this amount, prior year
results have been restated to correct this error.
There are a number of standards, amendments to standards, and
interpretations which have been issued by the IASB that are
effective in future accounting periods that the Group has decided
not to adopt early.
The following amendments are effective for the period beginning
on or after 1 January 2023:
-- Disclosure of Accounting Policies (Amendments to IAS 1 and
IFRS Practice Statement 2);
-- Definition of Accounting Estimates (Amendments to IAS 8);
and
-- Deferred Tax Related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12).
The following amendments are effective for the period beginning
on or after 1 January 2024:
-- IFRS 16 Leases (Amendment - Liability in a Sale and
Leaseback)
-- IAS 1 Presentation of Financial Statements (Amendment -
Classification of Liabilities as Current or Non-current)
-- IAS 1 Presentation of Financial Statements (Amendment -
Non-current Liabilities with Covenants)
The Group is currently assessing the impact of these new
accounting standards and amendments. The Group does not believe
that the amendments to IAS 1 will have a significant impact on the
classification of its liabilities, as it does not have convertible
debt instruments.
The Group does not expect any other standards issued by the
IASB, but not yet effective, to have a material impact on the
Group.
Going concern
The financial statements of the Group have been prepared on a
going concern basis. At 31 March 2023, the Group had net assets of
GBP21.2 million (2022: GBP21.4 million - as restated), net current
assets of GBP11.9 million (2022: GBP10.4 million - as restated) and
cash and cash equivalents of GBP13.1 million (2022: GBP11.1
million). The Group reported an operating profit of GBP625,000 for
the year ended 31 March 2023 (2022: GBP208,000 - as restated),
inclusive of operating exceptional expense of GBP554,000 (2022:
GBP1,658,000 - as restated), and net cash inflows from operating
activities of GBP3.4 million (2022: GBP4.1 million).
The Directors consider the going concern basis to be appropriate
following their assessment of the Group's financial position and
its ability to meet its obligations as and when they fall due. In
making the going concern assessment the Directors have
considered:
-- The Group's three-year base case projections based on current
strategy, trading performance, expected future profitability,
liquidity, capital solvency and dividend policy.
-- The outcome of stress scenarios applied to the Group's base
case projections prior to deployment of management actions.
-- The principal risks facing the Group and its systems of risk
management and internal control.
-- The Group's ability to generate positive operating cash flow
during the year to 31 March 2023 and projected future cash
flows.
Key assumptions that the Directors have made in preparing the
base case projections are:
-- Management fees and trading commissions growth of 2% having
adjusted for expected client attrition in respect of the recent
self-employed investment manager departures (see Finance Director's
review)
-- UK base rates increasing to 6% over the remainder of 2023 and
then reducing over the next 24 months to 3%.
-- Inflation embedded into the first year based on known salary
awards and latest experience, then running at 5% thereafter.
Key stress scenarios that the Directors have then considered
include:
-- A "bear stress scenario": representing a 10% reduction in
management fees and trading commissions, with the consequent
reduction in revenue sharing based costs, compared to the base case
in the reporting periods ending 31 March 2025 and 31 March
2026.
-- A "severe stress scenario": representing a 15% fall in
management fees and trading commissions and UK base rates 1%
(absolute) lower compared to the base case in the reporting periods
ending 31 March 2025 and 31 March 2026, together with an 80%
deterioration in the SDRT obligation provision with an estimated
expectation to settled in December 2023.
Liquidity and regulatory capital resource requirements exceed
the minimum thresholds in both the base case and bear scenarios. In
the severe stress scenario, although the Group has positive
liquidity throughout the period, the negative impact on our
prudential capital ratio is such that it is projected to fall below
the regulatory requirement in June 2025. Were the interest rate
stress also to be applied to the bear scenario a regulatory capital
shortfall is projected to occur in September 2025. The Directors
consider these scenarios to be remote in view of the prudence built
into the base case projections and that further mitigations
available to the Directors are not reflected therein. Such
mitigating actions within Management's control include reduction in
proprietary risk positions, delayed capital expenditure, further
reductions in discretionary spend, not paying planned dividends and
reductions in employee headcount. Other mitigating actions may
include disposal of businesses, stronger cost reductions and
potential to seek shareholder support.
Based on the assessment of the Group's financial position and
its ability to meet its obligations as and when they fall due, the
Directors do not consider there are material uncertainties that
cast significant doubt on the Group's ability to continue as a
going concern in the twelve-month period from the date of approval
of the Annual Report and Accounts. However, set out in note 38 are
the uncertainties related to the provision made to settle unpaid
stamp duty.
Standards and interpretations affecting the reported results or
the financial position
The accounting standards adopted are consistent with those of
the previous financial year. Amendments to existing IFRS standards
did not have a material impact on the Group's Consolidated Income
Statement or the Statement of Financial Position.
The Group does not expect standards yet to be adopted by the UK
endorsement body ("UKEB") to have a material impact in future
years.
3. Significant accounting policies
Basis of consolidation
The Group financial statements consolidate the financial
statements of the Group and companies controlled by the Group (its
subsidiaries) made up to 31 March each year. The Group controls an
entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect
those returns through its powers to direct relevant activities of
the entity. Subsidiaries are fully consolidated from the date on
which control is obtained and no longer consolidated from the date
that control ceases; their results are in the consolidated
financial statements up to the date that control ceases.
Entities where the interest is 49% or less are assessed for
potential treatment as a Group company against the control tests
outlined in IFRS 10, being power over the investee, exposure or
rights to variable returns and power over the investee to affect
the amount of investors' returns. At the reporting date there were
no entities where the Group had an interest below 49%.
All intercompany balances, income and expenses are eliminated on
consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the
acquisition method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets
given, liabilities incurred or assumed, and equity instruments
issued by the Group in exchange for control of the acquiree. The
acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3
Business Combinations are recognised at their fair value at the
acquisition date.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the
acquisition date carrying value of the acquirer's previously held
equity interest in the acquiree is re-measured to fair value at the
acquisition date; any gains or losses arising from such
remeasurement are recognised in profit or loss.
Contingent consideration is classified either as equity or as a
financial liability. Amounts classified as a financial liability
are subsequently remeasured to fair value, with changes in fair
value recognised in profit or loss.
Interests in associate
An associate is an entity in which the Group has significant
influence, but not control or joint control. The Group uses the
equity method of accounting by which the equity investment is
initially recorded at cost and subsequently adjusted to reflect the
investor's share of the net assets of the associate.
The Group has no associate investments. The Group's 33%
associate investment in Walker Crips Property Income Limited
("WCPIL") was disposed of in the previous year (see note 8).
Intangible assets
(a) Goodwill
Goodwill arises on the acquisition of subsidiaries and
represents the excess of the consideration transferred, the amount
of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the
acquiree over the fair value of the identifiable net assets
acquired. If the total of consideration transferred,
non-controlling interest recognised and previously held interest
measured at fair value is less than the fair value of the net
assets of the subsidiary acquired, in the case of a bargain
purchase, the difference is recognised directly in the income
statement.
Goodwill is initially recognised as an asset at cost and is
subsequently measured at cost less any accumulated impairment
losses. Goodwill is not amortised but is reviewed for impairment at
least annually. Any impairment is recognised immediately in profit
or loss and is not subsequently reversed in future periods.
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to each of the cash generating
units ("CGUs"), or groups of CGUs, that is expected to benefit from
the synergies of the combination. Each unit or group of units to
which the goodwill is allocated represents the lowest level within
the entity at which the goodwill is monitored for internal
management purposes. Goodwill is monitored at the operating segment
level.
Goodwill impairment reviews are undertaken annually or more
frequently if events or changes in circumstances indicate a
potential impairment. The carrying value of the CGU containing the
goodwill is compared to the recoverable amount, which is the higher
of value-in-use and the fair value less costs of disposal. Any
impairment is recognised immediately as an expense and is not
subsequently reversed.
(b) Client lists
Client lists are recognised when it is probable that future
economic benefits will flow to the Group and the cost of the asset
can be measured reliably whilst the risk and rewards have also
transferred into the Group's ownership.
Intangible assets classified as client lists are recognised when
acquired as part of a business combination, when separate payments
are made to acquire clients' assets by adding teams of investment
managers, or when acquiring the ownership of client relationships
from retiring in-house self-employed investment managers.
Some client list acquisitions are linked to business combination
acquisitions such as those related to the historical acquisition of
Barker Poland Asset Management LLP and others are related to the
purchase of client lists related to individual investment manager
or investment management team recruitment-related costs.
The cost of acquired client lists and businesses generating
revenue from clients and investment managers are capitalised. These
costs are amortised on a straight-line basis over their expected
useful lives of three to twenty years at inception. The
amortisation period and amortisation method for intangible assets
are reviewed at least each financial year end. All intangible
assets have a finite useful life.
In the current financial year, the estimated useful economic
lives of all client lists associated with self-employed investment
managers were revised so that no client list was amortised for
periods longer than six years from 1 April 2022.
Amortisation of intangible fixed assets is included within
administrative expenses in the consolidated income statement.
At each statement of financial position date, the Group reviews
the carrying amounts of its intangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
(c) Software licences
Computer software which is not an integral part of the related
hardware is recognised as an intangible asset when the Group is
expected to benefit from future use of the software and the costs
are reliably measured and amortised using the straight-line method
over a useful life of up to five years.
Impairment of non-financial assets
Intangible assets that have an indefinite useful life or
intangible assets not ready to use are not subject to amortisation
and are tested annually for impairment. Assets that are subject to
amortisation are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by
which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less
costs of disposal and value-in-use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there
are largely independent cash inflows (cash-generating units). Prior
impairments of non-financial assets (other than goodwill) are
reviewed for possible reversal at each reporting date.
Own shares held
Own shares consist of treasury shares which are recognised at
cost as a deduction from equity shareholders' funds. Subsequent
consideration received for the sale of treasury shares is also
recognised in equity with any difference being taken to retained
earnings. No gain or loss is recognised on sale of treasury
shares.
Revenues recognised under IFRS 15
Revenue from contracts with customers:
-- Gross commissions on stockbroking activities are recognised
on those transactions whose trade date falls within the financial
year, with the execution of the trade being the performance
obligation at that point in time.
-- In Walker Crips Investment Management fees earned from
managing various types of client portfolios are accrued daily over
the period to which they relate with the performance obligation
fulfilled over the same period.
-- Fees in respect of financial services activities of Walker
Crips Financial Planning are accrued evenly over the period to
which they relate with the performance obligation fulfilled over
the same period.
-- Fees earned from structured investments are recognised on the
date the underlying security of the structured investment is traded
and settled, with the execution of the trade being the performance
obligation at that point in time.
-- Fees earned from software offering, Software as a Service
("SaaS"), are accrued evenly over the period to which they relate
with the performance obligation fulfilled over the same period.
Other incomes:
-- Interest is recognised as it accrues in respect of the financial year.
-- Dividend income is recognised when:
o The Group's right to receive payment of dividends is
established;
o When it is probable that economic benefits associated with the
dividend will flow to the Group;
o The amount of the dividend can be reliably measured; and
-- Gains or losses arising on disposal of trading book
instruments and changes in fair value of securities held for
trading purposes are both recognised in profit and loss.
The Group does not have any long-term contract assets in
relation to customers of any fixed and/or considerable lengths of
time which require the recognition of financing costs or incomes in
relation to them.
Operating expenses
Operating expenses and other charges are provided for in full up
to the statement of financial position date on an accruals
basis.
Exceptional items
To assist in understanding its underlying performance, the Group
identifies certain items of pre-tax income and expenditure and
discloses them separately in the Consolidated income statement.
Such items include:
1. profits or losses on disposal or closure of businesses;
2. corporate transaction and restructuring costs;
3. changes in the fair value of contingent non-cash consideration; and
4. non-recurring items considered individually for
classification as exceptional by virtue of their nature or
size.
The separate disclosure of these items allows a clearer
understanding of the Group's trading performance on a consistent
and comparable basis, together with an understanding of the effect
of non-recurring or large individual transactions upon the overall
profitability of the Group. The exceptional items arising in the
current period are explained in note 10.
Deferred income
Income received from clients in respect of future periods to the
transaction or reporting date are classified as deferred income
within creditors until such time as value has been received by the
client.
Foreign currencies
The individual financial statements of each of the Group's
companies are presented in Pounds Sterling, which is the functional
currency of the Group and the presentation currency of the
consolidated financial statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At each
statement of financial position date, monetary assets and
liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the balance sheet date.
Exchange differences arising on the settlement of monetary items,
and on the retranslation of monetary items, are included in the
consolidated income statement for the period.
Where consideration is received in advance of revenue being
recognised, the date of the transaction reflects the date the
consideration is received.
Property, plant and equipment
Fixtures and equipment are stated at historical cost less
accumulated depreciation and provision for any impairment.
Depreciation is charged so as to write-off the cost or valuation of
assets over their estimated useful lives using the straight-line
method on the following bases:
Computer hardware 33 (1) /(3) % per annum on cost
Computer software between 20% and 33 (1) /(3) % per annum on cost
Leasehold improvements over the term of the lease
Furniture and equipment 33 (1) /(3) % per annum on cost
Right-of-use assets held under contractual arrangements are
depreciated over the lengths of their respective contractual terms,
as prescribed under IFRS 16.
The gain or loss on the disposal or retirement of an asset is
determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in income. The
residual values and estimated useful life of items within property,
plant and equipment are reviewed at least at each financial year
end. Any shortfalls in carrying value are impaired immediately
through profit or loss.
Taxation
The tax expense for the period comprises current and deferred
tax.
Tax is recognised in the income statement, except to the extent
that it relates to items recognised directly in equity. In this
case the tax is also recognised directly in other comprehensive
income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Company's subsidiaries
and associates operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to
interpretation. It establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the liability method,
on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated
financial statements. However, the deferred tax is not accounted
for if it arises from initial recognition of an asset or liability
in a transaction other than a business combination that, at the
time of the transaction, affects neither accounting nor taxable
profit or loss. Deferred income tax is determined using tax rates
(and laws) that have been enacted, or substantially enacted, by the
end of the reporting period and are expected to apply when the
related deferred income tax asset is realised, or the deferred
income tax liability is settled.
Deferred income tax assets are recognised only to the extent
that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax liabilities are provided on taxable
temporary differences arising from investments in subsidiaries,
associates and joint arrangements, except for deferred income tax
liability where the timing of the reversal of the temporary
difference is controlled by the Group and it is probable that the
temporary difference will not reverse in the foreseeable future.
Generally, the Group is unable to control the reversal of the
temporary difference for associates, unless there is an agreement
in place that gives the Group the ability to control the reversal
of the temporary difference not recognised.
Deferred income tax assets are recognised on deductible
temporary differences arising from investments in subsidiaries,
associates and joint arrangements only to the extent that it is
probable the temporary difference will reverse in the future and
there is sufficient taxable profit available against which the
temporary difference can be utilised.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities, and when the deferred income tax assets
and liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
Financial assets and liabilities
Financial assets and liabilities are recognised in the
Consolidated Statement of Financial Position when the Group becomes
a party to the contractual provisions of the instrument.
At initial recognition, the Group measures a financial asset or
financial liability at its fair value plus or minus transaction
costs. Transaction costs of financial assets and financial
liabilities carried at fair value through profit or loss ("FVTPL")
are expensed in the income statement. Immediately after initial
recognition, an expected credit loss allowance ("ECL") is
recognised for financial assets measured at amortised cost, which
results in an accounting loss being recognised in profit or loss
when an asset is newly originated.
The Group does not use hedge accounting.
a) Financial assets
Classification and subsequent measurement
The Group classifies its financial assets in the following
measurement categories:
-- Fair value through profit or loss ("FVTPL");
-- Fair value through other comprehensive income ("FVTOCI"); or
-- Amortised cost.
Financial assets are classified as current or non-current
depending on the contractual timing for recovery of the asset. The
classification depends on the purpose for which the financial
assets were acquired. Management determines the classification of
its financial assets at initial recognition.
(i) Debt instruments
Classification and subsequent measurement of debt instruments
depend on:
-- the Group's business model for managing the asset; and
-- the cash flow characteristics of the asset.
Business model: The business model reflects how the Group
manages the assets in order to generate cash flows. That is,
whether the Group's objective is solely to collect the contractual
cash flows from the assets, to collect both the contractual cash
flows and cash flows arising from the sale of assets, or solely or
mainly to collect cash flows arising from the sale of assets.
Factors considered by the Group include past experience on how the
contractual cash flows for these assets were collected, how the
assets' performance is evaluated, and how risks are assessed and
managed.
Cash flow characteristics of the asset: Where the business model
is to hold assets to collect contractual cash flows, the Group
assesses whether the financial instruments' contractual cash flows
represent solely payments of principal and interest ("the SPPI
test"). In making this assessment, the Group considers whether the
contractual cash flows are consistent with a basic lending
instrument.
Based on these factors, the Group classifies its debt
instruments into one of two measurement categories:
Amortised cost: Assets that are held for collection of
contractual cash flows where those cash flows represent solely
payments of principal and interest ("SPPI"), and that are not
designated at FVTPL, are measured at amortised cost. Amortised cost
is the amount at which the financial asset is measured at initial
recognition minus the principal repayments, plus or minus the
cumulative amortisation, using the effective interest rate method,
of any difference between that initial amount and the maturity
amount, adjusted by any ECL recognised. The effective interest rate
is the rate that discounts estimated future cash payments or
receipts through the expected life of the financial asset to the
gross carrying amount. Interest income from these financial assets
is included within investment revenues using the effective interest
rate method.
Fair value through profit or loss ("FVTPL"): Assets that do not
meet the criteria for amortised cost or fair value through other
comprehensive income ("FVTOCI") are measured at fair value through
profit or loss.
Reclassification
The Group reclassifies debt instruments when and only when its
business model for managing those assets changes. The
reclassification takes place from the start of the first reporting
period following the change.
Impairment
The Group assesses on a forward-looking basis the expected
credit loss ("ECL") associated with its debt instruments held at
amortised cost. The Group recognises a loss allowance for such
losses at each reporting date. On initial recognition, the Group
recognises a 12-month ECL. At the reporting date, if there has been
a significant increase in credit risk, the loss allowance is
revised to the lifetime expected credit loss.
The measurement of ECL reflects:
-- an unbiased and probability weighted amount that is
determined by evaluating a range of possible outcomes;
-- the time value of money; and
-- reasonable and supportable information that is available
without undue cost or effort at the reporting date about past
events, current conditions and forecasts of future economic
conditions.
The Group adopts the simplified approach to trade receivables
and contract assets, which allows entities to recognise lifetime
expected losses on all assets, without the need to identify
significant increases in credit risk (i.e. no distinction is needed
between 12-month and lifetime expected credit losses).
(ii) Equity instruments
Investments are recognised and derecognised on a trade date
basis where a purchase or sale of an investment is under a contract
whose terms require delivery of the instrument within the timeframe
established by the market concerned, and are initially measured at
fair value.
The Group subsequently measures all equity investments at fair
value through profit and loss. Changes in the fair value of
financial assets at FVTPL are recognised in revenue within the
Consolidated Income Statement.
(iii) Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that
are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value. Bank
overdrafts are shown within current liabilities in the statement of
financial position.
Derecognition
Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or have been
transferred and the Group has transferred substantially all the
risks and rewards of ownership.
b) Financial liabilities
Classification and subsequent measurement
Financial liabilities are classified and subsequently measured
at amortised cost.
Financial liabilities are derecognised when they are
extinguished.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all of
its liabilities.
Trade payables
Trade payables are classified at amortised cost. Due to their
short-term nature, their carrying amount is considered to be the
same as their fair value.
Bank overdrafts
Interest-bearing bank overdrafts are initially measured at fair
value and shown within current liabilities. Finance charges are
accounted for on an accrual basis in profit or loss using the
effective interest rate method and are added to the carrying amount
of the instrument to the extent that they are not settled in the
period in which they arise.
Equity instruments
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Where any Group company purchases the Company's equity share
capital (treasury shares), the consideration paid, including any
directly attributable incremental costs (net of income taxes) is
deducted from equity attributable to the Company's equity holders,
until the shares are cancelled or reissued. Where such shares are
subsequently reissued, any consideration received, net of any
directly attributable incremental transaction costs and the related
income tax effects, is included in equity attributable to the
Company's equity holders.
Share Incentive Plan ("SIP")
The Group has an incentive policy to encourage all members of
staff to participate in the ownership and future prosperity of the
Group. All employees can participate in the SIP following three
months of service. Employees may contribute a maximum of 10% of
their gross salary in regular monthly payments (being not less than
GBP10 and not greater than GBP150) to acquire Ordinary Shares in
the Parent Company (Partnership Shares). Partnership Shares are
acquired monthly.
The matching option was reinstated to one-to-one from 1 April
2023 from the previous one-half for every Partnership Share
purchased. All shares awarded under this scheme have been purchased
in the market by the Trustees of the SIP.
Provisions
Provisions for environmental restoration, restructuring costs
and legal claims are recognised when the Group has a present legal
or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle
the obligation, and the amount has been reliably estimated.
Restructuring provisions comprise lease termination penalties and
employee termination payments. Provisions are not recognised for
future operating losses.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation, using a pre-tax
rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the
provision due to the passage of time is recognised as an interest
expense.
Long-term liabilities - deferred cash and shares
consideration
Amounts payable to personnel under recruitment contracts in
respect of the client relationships, which transfer to the Group,
are treated as long-term liabilities if the due date for payment of
cash consideration is beyond the period of one year after the
year-end date. The value of shares in all cases is derived by a
formula based on the value of client assets received in conjunction
with the prevailing share price at the date of issue which in turn
determines the number of shares issuable.
Pension costs
The Group contributes to defined contribution personal pension
schemes for selected employees. For defined contribution schemes,
the Group pays contributions to publicly or privately administered
pension insurance plans on a mandatory, contractual or voluntary
basis. The Group has no further payment obligations once the
contributions have been paid. The contributions are recognised as
employee benefit expenses when they are due. Prepaid contributions
are recognised as an asset to the extent that a cash refund or a
reduction in the future payments is available. The contribution
rate is based on annual salary and the amount is charged to the
income statement on an accrual basis.
Dividends paid
Equity dividends are recognised when they become legally
payable. Dividend distribution to the Company's shareholders is
recognised as a liability in the Group's financial statements in
the period in which the dividends are approved by the Company's
shareholders. There is no requirement to pay dividends unless
approved by the shareholders by way of written resolution where
there is sufficient cash to meet current liabilities, and without
detriment of any financial covenants, if applicable.
Leases
The Group leases various offices, software and equipment that
are recognised under IFRS 16. The Group's lease contracts are
typically made for fixed periods of 2 to 10 years and extension and
termination options enabling maximise operational flexibility are
included in a number of property and software leases across the
Group.
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for:
-- Leases of low value assets; and
-- Leases with a duration of 12 months or less.
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 months or less. Low-value assets comprise IT
equipment and small items of office furniture.
Leases are recognised as a right-of-use asset and a
corresponding liability at the date at which the leased asset is
available for use by the Group. Each lease payment is allocated
between the liability and finance cost. The finance cost is charged
to profit or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability
for each period. The right-of-use assets are depreciated over the
shorter of the asset's useful life and the lease term on a
straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
-- variable lease payments that are based on an index or a rate;
-- amounts expected to be payable by the lessee under residual value guarantees;
-- the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option; and
-- payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases held by the Group, the
lessee's incremental borrowing rate is used.
To determine the incremental borrowing rate, the Group:
-- where possible, uses recent third-party financing received by
the individual lessee as a starting point, adjust to reflect
changes in financing conditions since third-party financing was
received;
-- uses a build-up approach that starts with a risk-free
interest rate adjusted for credit risk for leases held by the
Group, which does not have recent third-party financing; and
-- make adjustments specific to the lease, for example term, country, currency and security.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit and loss over the lease
period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability;
-- any lease payments made at or before the commencement date
less any lease incentives received;
-- any initial direct costs; and
-- restoration costs.
Right-of-use assets are depreciated over the shorter of the
lease term and the useful economic life of the underlying asset on
a straight-line basis.
The Group does not have any leasing activities acting as a
lessor.
Earnings per share
Basic earnings per share is calculated by dividing:
-- the profit attributable to owners of the Company, excluding
any costs of servicing equity other than ordinary shares;
-- by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary
shares issued during the year and excluding treasury shares (note
16).
There are currently no obligations present that could have a
dilutive effect on ordinary shares.
Share-based payments
Share-based payments are remuneration payments to selected
employees that take the form of an award of shares in Walker Crips
Group plc. Employees are not able to exercise such awards in full
until a period of two to five years, based on the terms of each
individual award (the vesting period).
Equity-settled share-based payments to employees are measured at
fair value of the equity instruments at the date of grant. The fair
value excludes the effect of non-market-based vesting conditions.
Details regarding the determination of the fair value of
equity-settled share-based transactions are set out in note 37.
As the share-based payment awards are for fully paid free
shares, fair value is measured as the market value of the shares at
each grant date.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group's estimate of the
number of shares that will eventually vest. At each reporting date,
the Group revises its estimate of the shares expected to vest as a
result of the effect of non-market based vesting conditions. The
impact of the revision of the original estimates, if any, is
recognised in the Income Statement such that the cumulative expense
reflects the revised estimate.
4. Key sources of estimation uncertainty and judgements
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are discussed below.
Impairment of goodwill - estimation and judgement
Determining whether goodwill is impaired requires an estimation
of the fair value less costs to sell and the value-in-use of the
cash-generating units to which goodwill has been allocated. The
fair value less costs to sell involves estimation of values based
on the application of earnings multiples and comparison to similar
transactions. The value-in-use calculation requires the entity to
estimate the future cash flows expected to arise from the
cash-generating unit and apply a discount rate in order to
calculate present value. The assumptions used and inputs involve
judgements and create estimation uncertainty. These assumptions
have been stress-tested as described in note 17. The carrying
amount of goodwill at the balance sheet date was GBP4.4 million
(2022: GBP4.4 million) as shown in note 17.
Other intangible assets - judgement
Acquired client lists are capitalised based on current fair
values. During the year, two intangible asset client lists were
purchased by subsidiary Walker Crips Investment Management Limited.
When the Group purchases client relationships from other corporate
entities, a judgement is made as to whether the transaction should
be accounted for as a business combination, or a separate purchase
of intangible assets. In making this judgement, the Group assesses
the acquiree against the definition of a business combination in
IFRS 3. Payments to newly recruited investment managers are
capitalised when they are judged to be made for the acquisition of
client relationship intangibles. The useful lives are estimated by
assessing the historic rates of client retention, the ages and
succession plans of the investment managers who manage the clients
and the contractual incentives of the investment managers.
Key assumptions in this regard consist of the following:
1. The continuing going concern of the Company;
2. Life expectancy of clients based on the Office for National
Statistics;
3. Succession plans in place for staff and investment
managers;
4. Amounts of AUMA are consistent on average;
5. A growth rate of client list AUMA of a conservative 2%;
and
6. A discount rate of 12%.
Provisions - estimation and judgement
Provisions are recognised when the Group has a present
obligation as a result of a past event, and it is probable that the
Group will be required to settle that obligation. Provisions are
measured at the Directors' best estimate of the expenditure
required to settle the obligation at the statement of financial
position date, and are discounted to present value where the effect
is material.
IFRS 16 "Leases" - estimation and judgement
IFRS 16 requires certain judgements and estimates to be made and
those significant judgements are explained below.
The Group has opted to use single discount rates for leases with
reasonably similar characteristics. The discount rates used have
had an impact on the right-of-use assets' values, lease liabilities
on initial recognition and lease finance costs included within the
income statement.
Where a lease includes the option for the Group to extend the
lease term, the Group has exercised the judgement, based on current
information, that such leases will be extended to the full length
available, and this is included in the calculation of the value of
the right-of-use assets and lease liabilities on initial
recognition and valuation at the reporting date.
Provision for dilapidations - estimation and judgement
The Group has made provisions for dilapidations under six leases
for its offices. The Group did not enter into any new property
leases in the period but allowed the lapse of two existing lease
agreements. The amounts of the provisions are, where possible,
estimated using quotes from professional building contractors. The
property, plant and equipment elements of the dilapidations are
depreciated over the terms of their respective leases. The
obligations in relation to dilapidations are inflated using an
estimated rate of inflation and discounted using appropriate gilt
rates to present value. The change in liability attributable to
inflation and discounting is recognised in interest expense.
Provision for stamp duty liability - estimation and
judgement
The Group has identified an obligation in respect of stamp duty
reserve tax which has arisen over a number of years and was not
identified due to a procedures and controls failure. In view of the
significance of this amount, prior year results have been restated
(see note 10, 27 and 38).
5. Revenue
An analysis of the Group's revenue is as follows:
2023 2022
Broking Non- Total Broking Non- Total
income broking GBP'000 income broking GBP'000
GBP'000 income GBP'000 income
GBP'000 GBP'000
--------- --------- --------- --------- --------- ---------
Stockbroking commission 6,008 - 6,008 8,044 - 8,044
--------- --------- --------- --------- --------- ---------
Fees and other revenue
* - 23,665 23,665 - 22,931 22,931
--------- --------- --------- --------- --------- ---------
Investment Management 6,008 23,665 29,673 8,044 22,931 30,975
--------- --------- --------- --------- --------- ---------
Wealth Management,
Financial Planning &
Pensions - 1,939 1,939 15 1,830 1,845
--------- --------- --------- --------- --------- ---------
Revenue 6,008 25,604 31,612 8,059 24,761 32,820
--------- --------- --------- --------- --------- ---------
Investment revenue (see
note 11) - 95 95 - 9 9
--------- --------- --------- --------- --------- ---------
Total income 6,008 25,699 31,707 8,059 24,770 32,829
--------- --------- --------- --------- --------- ---------
% of total income 18.9% 81.1% 100.0% 24.5% 75.5% 100.0%
--------- --------- --------- --------- --------- ---------
* Includes GBP3.2 million (2022: 0.8 million) of interest income
from managing client trading cash funds.
Timing of revenue recognition
The following table presents operating income analysed by the
timing of revenue recognition of the operating segment providing
the service:
2023 Investment Financial SaaS Consolidated
Management Planning GBP'000 year ended
GBP'000 & Wealth 31 March
Management 2023
GBP'000 GBP'000
Revenue from contracts with
customers
------------ ------------ --------- -------------
Products and services transferred
at a point in time 10,104 272 16 10,392
------------ ------------ --------- -------------
Products and services transferred
over time 16,295 1,666 - 17,961
------------ ------------ --------- -------------
Other revenue
------------ ------------ --------- -------------
Products and services transferred
at a point in time 75 1 - 76
------------ ------------ --------- -------------
Products and services transferred
over time 3,183 - - 3,183
------------ ------------ --------- -------------
29,657 1,939 16 31,612
------------ ------------ --------- -------------
2022 Investment Financial Consolidated
Management Planning year ended
GBP'000 & Wealth SaaS 31 March
Management GBP'000 2022
GBP'000 GBP'000
Revenue from contracts with
customers
------------ ------------ ---------- -------------
Products and services transferred
at a point in time 11,894 260 38 12,192
------------ ------------ ---------- -------------
Products and services transferred
over time 17,917 1,585 - 19,502
------------ ------------ ---------- -------------
Other revenue
------------ ------------ ---------- -------------
Products and services transferred
at a point in time 404 - - 404
------------ ------------ ---------- -------------
Products and services transferred
over time 722 - - 722
------------ ------------ ---------- -------------
30,937 1,845 38 32,820
------------ ------------ ---------- -------------
6. Segmental analysis
For segmental reporting purposes, the Group currently has three
operating segments; Investment Management, being portfolio-based
transaction execution and investment advice; Financial Planning,
being financial planning, wealth management and pensions
administration; and Software as a Service ("SaaS") comprising
provision of regulatory and admin software and bespoke cloud
software to companies. Unallocated corporate expenses, assets and
liabilities are not considered to be allocatable accurately, or
fairly, under any known basis of allocation and are therefore
disclosed separately.
Walker Crips Investment Management's activities focus
predominantly on investment management of various types of
portfolios and asset classes.
Walker Crips Financial Planning provides advisory and
administrative services to clients in relation to their wealth
management, financial planning, life insurance, inheritance tax and
pension arrangements.
EnOC Technologies Limited ("EnOC") provides the regulatory and
admin software, Software as a Service ("SaaS"), to their business
partners, including all WCG's regulated entities. Fees payable by
subsidiary companies to EnOC have been eliminated on consolidation
and are excluded from segmental analysis.
Revenues between Group entities, and in turn reportable
segments, are excluded from the segmental analysis presented
below.
The Group does not derive any revenue from geographical regions
outside of the United Kingdom.
Investment Financial SaaS Consolidated
2023 Management Planning GBP'000 year ended
GBP'000 & Wealth 31 March
Management 2023
GBP'000 GBP'000
Revenue
------------ ------------ --------- -------------
Revenue from contracts with
customers 26,399 1,938 16 28,353
------------ ------------ --------- -------------
Other revenue 3,258 1 - 3,259
------------ ------------ --------- -------------
Total revenue 29,657 1,939 16 31,612
------------ ------------ --------- -------------
Results
------------ ------------ --------- -------------
Segment result 1,553 (310) (128) 1,115
------------ ------------ --------- -------------
Unallocated corporate expenses (490)
------------ ------------ --------- -------------
625
------------ ------------ --------- -------------
Investment revenue 95
------------ ------------ --------- -------------
Finance costs (88)
------------ ------------ --------- -------------
Profit before tax 632
------------ ------------ --------- -------------
Tax (214)
------------ ------------ --------- -------------
Profit after tax 418
------------ ------------ --------- -------------
Investment Financial SaaS Consolidated
2023 Management Planning GBP'000 year ended
GBP'000 & Wealth 31 March
Management 2023
GBP'000 GBP'000
Other information
------------ ------------ --------- -------------
Capital additions 368 10 - 378
------------ ------------ --------- -------------
Depreciation 273 58 - 331
------------ ------------ --------- -------------
Statement of financial positions
------------ ------------ --------- -------------
Assets
------------ ------------ --------- -------------
Segment assets 57,255 1,163 406 58,824
------------ ------------ --------- -------------
Unallocated corporate assets 4,256
------------ ------------ --------- -------------
Consolidated total assets 63,080
------------ ------------ --------- -------------
Liabilities
------------ ------------ --------- -------------
Segment liabilities 39,546 247 329 40,122
------------ ------------ --------- -------------
Unallocated corporate liabilities 1,792
------------ ------------ --------- -------------
Consolidated total liabilities 41,914
------------ ------------ --------- -------------
Investment Financial SaaS Consolidated
2022 - as restated Management Planning GBP'000 year ended
GBP'000 & Wealth 31 March
Management 2022
GBP'000 GBP'000
Revenue
------------ ------------ --------- -------------
Revenue from contracts with
customers 29,811 1,845 38 31,694
------------ ------------ --------- -------------
Other revenue 1,126 - - 1,126
------------ ------------ --------- -------------
Total revenue 30,937 1,845 38 32,820
------------ ------------ --------- -------------
Results
------------ ------------ --------- -------------
Segment result 1,042 * (258) (102) 682
------------ ------------ --------- -------------
Unallocated corporate expenses (474)
------------ ------------ --------- -------------
208
------------ ------------ --------- -------------
Investment revenue 9
------------ ------------ --------- -------------
Finance costs (114)
------------ ------------ --------- -------------
Profit on disposal of associate
investment 103
------------ ------------ --------- -------------
Profit before tax 206
------------ ------------ --------- -------------
Tax (151)
------------ ------------ --------- -------------
Profit after tax 55
------------ ------------ --------- -------------
Investment Financial SaaS Consolidated
2022 - as restated Management Planning GBP'000 year ended
GBP'000 & Wealth 31 March
Management 2022
GBP'000 GBP'000
Other information
------------ ------------ --------- -------------
Capital additions 466 5 - 471
------------ ------------ --------- -------------
Depreciation 260 43 - 303
------------ ------------ --------- -------------
Statement of financial positions
------------ ------------ --------- -------------
Assets
------------ ------------ --------- -------------
Segment assets 71,823 1,180 ** 393 ** 73,397
------------ ------------ --------- -------------
Unallocated corporate assets 3,272
------------ ------------ --------- -------------
Consolidated total assets 76,669
------------ ------------ --------- -------------
Liabilities
------------ ------------ --------- -------------
Segment liabilities 52,936 * 248 ** 240 ** 53,424
------------ ------------ --------- -------------
Unallocated corporate liabilities 1,880
------------ ------------ --------- -------------
Consolidated total liabilities 55,304
------------ ------------ --------- -------------
* The restatement of the 2022 figures is explained in note
38
** The prior year disclosed amounts for these segments have been
corrected. The correction is a disclosure matter only, and is not
an adjustment that relates to an accounting error affecting the
income statement or balance sheet in the prior year of the Group or
any of its subsidiaries.
7. Commissions and fees paid
Commissions and fees paid comprises:
2023 2022
GBP'000 GBP'000
To authorised external agents 3 61
--------- ---------
To self-employed certified persons 7,261 9,049
--------- ---------
7,264 9,110
--------- ---------
8. Investment in associate
2023 2022
GBP'000 GBP'000
Brought forward - 2
---------- ---------
Share of after-tax profit - 57
---------- ---------
Dividends - (57)
---------- ---------
Disposals - (2)
---------- ---------
Carried forward - -
---------- ---------
The Group disposed of its 33.33% interest in its associate,
Walker Crips Property Income Limited ("WCPIL"), in the prior
year.
9. Profit for the year
Profit for the year on continuing operations has been arrived at
after charging:
2023 2022
GBP'000 GBP'000
Depreciation of property, plant and equipment (see
note 19) 331 303
--------- ---------
Depreciation of right-of-use assets (see note 20) 771 873
--------- ---------
Amortisation of intangibles (see note 18) 970 862
--------- ---------
Staff costs (see note 13) 14,475 13,862
--------- ---------
Recharge of staff costs (248 ) (725)
--------- ---------
Settlement costs 994 1,143
--------- ---------
Communications 1,387 1,260
--------- ---------
Computer expenses 831 790
--------- ---------
Other expenses 3,442 3,305
--------- ---------
Auditor's remuneration 216 223
--------- ---------
23,169 21,901
--------- ---------
A more detailed analysis of auditor's remuneration is provided
below:
2023 2023 2022 2022
GBP'000 % GBP'000 %
Audit services
---------- ------ --------- -----
Fees payable to the Company's
auditor for the audit of its
annual accounts 84 39 51 23
---------- ------ --------- -----
The audit of the Company's subsidiaries
pursuant to legislation - current
year 119 55 119 53
---------- ------ --------- -----
Non-audit services
---------- ------ --------- -----
FCA client assets reporting 13 6 13 6
---------- ------ --------- -----
AAF Review - - 40 18
---------- ------ --------- -----
216 100 223 100
---------- ------ --------- -----
10. Exceptional items
Certain amounts are disclosed separately in order to present
results which are not distorted by significant items of income and
expenditure due to their nature and materiality.
2023 As restated
GBP'000 2022
GBP'000
Exceptional items included within operating
profit
--------- ------------
Restructuring, redundancy and other costs - 516
--------- ------------
Net compensation income - (221)
--------- ------------
Financial crime control framework review
and remediation - 595
--------- ------------
Client redress and associated costs - 650
--------- ------------
Change in fair value of deferred consideration - -
--------- ------------
SDRT liability to HMRC 131 118 *
--------- ------------
Accelerated amortisation 423 -
--------- ------------
Operating exceptional items 554 1,658
--------- ------------
Other
--------- ------------
Profit on disposal of associate investment - (103)
--------- ------------
Total exceptional items 554 1,555
--------- ------------
In the current year, the following items have been classified as
exceptional items due to their materiality and non-recurring
nature. These are:
a) SDRT liability to HMRC resulting from a system monitoring
error where stamp duty was omitted from client contracts. A
voluntary disclosure to HMRC will be made and we presently estimate
the cost of repayment, potential penalties, and related costs, net
of tax, to be GBP878,000. This has been allocated to the years
ending 31 March 2023, 31 March 2022 and prior period. As the error
spans several and is regarded as fundamental, prior reported
results have been restated. Further details of the provision and
estimation uncertainty are included further in note 27. Customers
were not adversely impacted by this error.
b) As explained in the Chairman's Statement and the Finance
Director's Report, during the year, a number of self-employed
investment managers with intangible assets linked to client lists
advised their intention to leave the Group which resulted in the
Group changing the useful economic life of each asset to align with
the revised expected timeline of future benefits. This resulted in
an additional GBP423,000 of amortisation expensed in the current
year.
In the prior year, the Group classified costs relating to
restructuring, redundancy, enhancing the Group's financial crime
framework, customer redress and related costs as exceptional items.
Compensation income received under a confidential settlement
agreement and the proceeds from the disposal of the Group's 33.33%
interest in its former associate, Walker Crips Property Income
Limited, were also classified as exceptional items.
* The restatement of the 2022 figures are explained in note
38
11. Investment revenue
Investment revenue comprises:
2023 2022
GBP'000 GBP'000
Interest on bank deposits 48 -
--------- ---------
Dividends from equity investment 47 9
--------- ---------
95 9
--------- ---------
12. Finance costs
Finance costs comprises:
2023 2022
GBP'000 GBP'000
Interest on lease liabilities (86) (93)
--------- ---------
Interest on dilapidation provisions 3 (11)
--------- ---------
Interest on overdue liabilities (5) (10)
--------- ---------
(88) (114)
--------- ---------
13. Staff costs
Particulars of employee costs (including Directors) are as shown
below:
2023 2022
GBP'000 GBP'000
Wages and salaries 11,943 11,561
--------- ---------
Social security costs 1,262 1,197
--------- ---------
Share incentive plan 60 57
--------- ---------
Other employment costs 1,210 1,047
--------- ---------
14,475 13,862
--------- ---------
Staff costs do not include commissions payable mainly to
self-employed account executives, as these costs are included in
total commissions payable to self-employed certified persons
disclosed in note 7. At the end of the year there were 32 certified
self-employed account executives (2022: 39).
The average number of staff employed during the year was:
2023 2022
Number Number
Executive Directors 2 2
-------- --------
Certification and approved staff 49 54
-------- --------
Other staff 155 152
-------- --------
206 208
-------- --------
The table incorporates the new staff classification under Senior
Managers and Certification Regime ("SM&CR").
14. Taxation
The tax charge is based on the profit for the year of continuing
operations and comprises:
2023 2022
GBP'000 GBP'000
UK corporation tax at 19% (2022: 19%) 228 131
--------- ---------
Prior year adjustments (7) (66)
--------- ---------
Origination and reversal of timing differences
during the current period (46) 86
--------- ---------
175 151
--------- ---------
Corporation tax is calculated at 19% (2022: 19%) of the
estimated assessable profit for the year.
The charge for the year can be reconciled to the profit per the
income statement as follows:
2023 As restated
GBP'000 2022
GBP'000
Profit before tax 632 206 *
--------- ------------
Tax on profit on ordinary activities at the
standard rate UK corporation tax rate of 19%
(2022: 19%) 120 39 *
--------- ------------
Effects of:
--------- ------------
Tax rate changes for deferred tax (8) 108
--------- ------------
Expenses not deductible for tax purposes 64 21
--------- ------------
Prior year adjustment (14) (66)
--------- ------------
Fixed asset differences 65 26
--------- ------------
Other (13) 23 *
--------- ------------
214 151
--------- ------------
Current tax has been provided at the rate of 19%. Deferred tax
has been provided at 25% (2022: 25%).
The exceptional charge of GBP554,000 (2022: GBP1,555,000 - as
restated), disclosed separately on the consolidated income
statement, is tax deductible to the value of GBP105,000 (2022:
GBP296,000 - as restated) of corporation tax. Classifying these
credits/costs as exceptional has no effect on the tax
liability.
In the Spring Budget 2021, the Government announced that from 1
April 2023 the UK corporation tax rate will increase from 19% to
25%. This will have a consequential effect on the Group's future
tax charge.
* The restatement of the 2022 figures is explained in note 38.
The above reconciliation has been updated to present the
reconciling items between 19% of profit before tax to the actual
tax charge, based on the prior year adjustment.
15. Dividends
When determining the level of proposed dividend in any year a
number of factors are taken into account including levels of
profitability, future cash commitments, investment needs,
shareholder expectations and prudent buffers for maintaining an
adequate regulatory capital surplus. Amounts recognised as
distributions to equity holders in the period:
2023 2022
GBP'000 GBP'000
Final dividend for the year ended 31 March 2022
of 1.20p (2021: 0.60p) per share 511 255
--------- ---------
Interim dividend for the year ended 31 March 2023
of 0.25p (2021: 0.30p) per share 106 128
--------- ---------
617 383
--------- ---------
Proposed final dividend for the year ended 31 March
2023 of 0.25p (2022: 1.20p) per share 106 511
--------- ---------
The proposed final dividends are subject to approval by
shareholders at the Annual General Meeting and have not been
included as liabilities in these financial statements.
16. Earnings per share
The calculation of basic earnings per share for continuing
operations is based on the post-tax profit for the financial year
of GBP418,000 (2022: GBP55,000 - as restated) and divided by
42,577,328 (2022: 42,577,328) Ordinary Shares of 6(2) /(3) pence,
being the weighted average number of Ordinary Shares in issue
during the year.
No dilution to earnings per share in the current year or in the
prior year.
The calculation of the basic earnings per share is based on the
following data:
As restated
2023 2022
GBP'000 GBP'000
Earnings for the purpose of basic earnings
per share
---------- ------------
being net profit attributable to equity holders
of the Parent Company 418 55 *
---------- ------------
* The restatement of the 2022 figures are explained in note
38
Number of shares
2023 2022
Number Number
Weighted average number of Ordinary Shares for
the purposes of basic earnings per share 42,577,328 42,577,328
----------- -----------
This produced basic earnings per share of 0.98 pence (2022: 0.13
pence - as restated).
17. Goodwill
GBP'000
Cost
--------
At 1 April 2021 7,056
--------
At 1 April 2022 7,056
--------
At 31 March 2023 7,056
--------
Accumulated impairment
--------
At 1 April 2021 2,668
--------
At 1 April 2022 2,668
--------
Impaired during the year -
--------
At 31 March 2023 2,668
--------
Carrying amount
--------
At 31 March 2023 4,388
--------
At 31 March 2022 4,388
--------
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash-generating units ("CGUs") that are
expected to benefit from that business combination or intangible
asset. The carrying amount of goodwill has been allocated as
follows:
2023 2022
GBP'000 GBP'000
London York Fund Managers Limited CGU ("London
York") 2,901 2,901
--------- ---------
Barker Poland Asset Management LLP CGU ("BPAM") 1,487 1,487
--------- ---------
4,388 4,388
--------- ---------
The recoverable amounts of the CGUs have been determined based
upon value-in-use calculations for the London York CGU and fair
value, less costs of disposal for the BPAM CGU.
The London York computation was based on discounted five-year
cash flow projections and terminal values. The key assumptions for
these calculations are a pre-tax discount rate of 12%, terminal
growth rates of 2% and the expected changes to revenues and costs
during the five-year projection period based on discussions with
senior management, past experience, future expectations in light of
anticipated market and economic conditions, comparisons with our
peers and widely available economic and market forecasts. The
pre-tax discount rate is determined by management based on current
market assessments of the time value of money and risks specific to
the London York CGU. The base value-in-use cash flows were stress
tested for an increase in discount rates to 16% and a 20% fall in
net inflows resulting in no impairment.
The discount rate would need to increase above 17% for the
London York CGU value-in-use to equal the respective carrying
values. Revenues would need to fall by 37.4% per annum in present
value terms for the London York CGU value-in-use to equal the
respective carrying values.
The BPAM CGU recoverable amount was assessed, in accordance with
IAS 36, by adopting the higher method of the fair value less cost
of disposal to determine the recoverable amount (as opposed to the
lower value-in-use). The recoverable amount at the year-end
calculated for the BPAM CGU, determined by the fair value less cost
of disposal, exceeded that produced by the value-in-use
calculation. The fair value less cost of disposal amounted to GBP10
million (2022: GBP7.8 million) with headroom, after selling costs,
of GBP6.7 million (2022: GBP4.2 million) after applying price
earnings multiples based on the average of the Group's and its
peers' published results. Accordingly, this measurement is
classified as fair value hierarchy Level 3 having used valuation
techniques not based on directly observable market data. A 27%
decrease in BPAM's profit after tax across five years would result
in reducing the headroom to a negligible value.
18. Other intangible assets
Software Client Total
licences lists GBP'000
GBP'000 GBP'000
Cost
---------- --------- ---------
At 1 April 2021 2,883 10,665 13,548
---------- --------- ---------
Reclassification of assets relating to
IFRS 16 (45) - (45)
---------- --------- ---------
Additions in the year 61 32 93
---------- --------- ---------
At 1 April 2022 2,899 10,697 13,596
---------- --------- ---------
Reclassification of assets relating to
IFRS 16 (22) - (22)
---------- --------- ---------
Additions in the year 45 266 311
---------- --------- ---------
At 31 March 2023 2,922 10,963 13,885
---------- --------- ---------
Amortisation
---------- --------- ---------
At 1 April 2021 2,459 4,523 6,982
---------- --------- ---------
Charge for the year 185 677 862
---------- --------- ---------
At 1 April 2022 2,644 5,200 7,844
---------- --------- ---------
Charge for the year 137 833 970
---------- --------- ---------
Charge for the year - exceptional cost
(note 10) - 423 423
---------- --------- ---------
At 31 March 2023 2,781 6,456 9,237
---------- --------- ---------
Carrying amount
---------- --------- ---------
At 31 March 2023 141 4,507 4,648
---------- --------- ---------
At 31 March 2022 255 5,497 5,752
---------- --------- ---------
The intangible assets are amortised over their estimated useful
lives in order to determine amortisation rates. "Client lists" are
assessed on an asset-by-asset basis and are amortised over periods
of three to twenty years and "Software licences" are amortised over
five years. During the year an exercise was undertaken which
resulted in modifications to the estimated useful lives of certain
client assets associated with self-employed investment managers.
The result of this exercise is an increased amortisation charge of
GBP423,000 compared to the prior year.
There are no indications that the value attributable to client
lists or software licences should be further impaired.
19. Property, plant and equipment
Owned fixed assets Leasehold Computer Computer Total
improvement, software hardware GBP'000
furniture GBP'000 GBP'000
and
equipment
GBP'000
Cost
-------------- ---------- ---------- ---------
1 April 2021 2,766 - 1,582 4,348
-------------- ---------- ---------- ---------
Reclassification of assets * (73) - - (73)
-------------- ---------- ---------- ---------
Dilapidation asset reassessment (50) - - (50)
-------------- ---------- ---------- ---------
Additions in the year 110 - 8 118
-------------- ---------- ---------- ---------
At 1 April 2022 2,753 - 1,590 4,343
-------------- ---------- ---------- ---------
Additions in the year 99 - 52 151
-------------- ---------- ---------- ---------
At 31 March 2023 2,852 - 1,642 4,494
-------------- ---------- ---------- ---------
Accumulated depreciation
-------------- ---------- ---------- ---------
1 April 2021 1,380 - 1,491 2,871
-------------- ---------- ---------- ---------
Charge for the year 253 - 50 303
-------------- ---------- ---------- ---------
1 April 2022 1,633 - 1,541 3,174
-------------- ---------- ---------- ---------
Charge for the year 297 - 34 331
-------------- ---------- ---------- ---------
At 31 March 2023 1,930 - 1,575 3,505
-------------- ---------- ---------- ---------
Carrying amount
-------------- ---------- ---------- ---------
At 31 March 2023 922 - 67 989
-------------- ---------- ---------- ---------
At 31 March 2022 1,120 - 49 1,169
-------------- ---------- ---------- ---------
* Adjustments were made in the prior year to reclassify assets
more appropriately between asset classes. The net impact of these
adjustments in asset costs and accumulated depreciation was nil and
did not require changes or corrections to depreciation policy.
20. Right-of-use assets
Computer Computer
Offices software hardware Total
-------- --------- --------- --------
GBP'000 GBP'000 GBP'000 GBP'000
-------- --------- --------- --------
Cost
-------- --------- --------- --------
1 April 2022 4,304 899 95 5,298
-------- --------- --------- --------
Additions 346 168 - 514
-------- --------- --------- --------
At 31 March 2023 4,650 1,067 95 5,812
-------- --------- --------- --------
Accumulated depreciation
-------- --------- --------- --------
1 April 2022 1,968 673 60 2,701
-------- --------- --------- --------
Charge for the year 518 233 20 771
-------- --------- --------- --------
At 31 March 2023 2,486 906 80 3,472
-------- --------- --------- --------
Carrying amount
-------- --------- --------- --------
At 31 March 2023 2,164 161 15 2,340
-------- --------- --------- --------
At 31 March 2022 2,336 226 35 2,597
-------- --------- --------- --------
21. Investments - fair value through profit or loss
Non-current asset investments
The Group did not hold any non-current asset investments at the
reporting date.
Current asset investments
As at As at
31 March 31 March
2023 2022
GBP'000 GBP'000
Trading investments
---------- ----------
Investments - fair value through profit or loss 1,276 1,647
---------- ----------
Financial assets at fair value through profit or loss represent
investments in equity securities and collectives that present the
Group with opportunity for return through dividend income, interest
and trading gains. The fair values of these securities are based on
quoted market prices and the Group is able to liquidate these
assets at short notice.
The following provides an analysis of financial instruments that
are measured after initial recognition at fair value, grouped into
Levels 1 to 3 based on the degree to which the fair value is
observable:
Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities. The Group's financial assets held at fair value
through profit and loss under current assets fall within this
category;
Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices). The Group does
not hold financial instruments in this category; and
Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are
not based on observable market data (unobservable inputs). The
Group's financial assets held at fair value through profit and loss
under non-current assets fall within this category.
Level Level 2 Level 3 Total
1 GBP'000 GBP'000 GBP'000
GBP'000
At 31 March 2023
--------- --------- --------- ---------
Financial assets held at fair
value through profit and loss 1,276 - - 1,276
--------- --------- --------- ---------
At 31 March 2022
--------- --------- --------- ---------
Financial assets held at fair
value through profit and loss 1,647 - - 1,647
--------- --------- --------- ---------
Further IFRS 13 disclosures have not been presented here as the
balance represents 2.022% (2022: 2.148%) of total assets. There
were no transfers of investments between any of the levels of
hierarchy during the year.
22. Trade and other receivables
2023 2022
GBP'000 GBP'000
Amounts falling due within one year:
--------- ---------
Due from clients, brokers and recognised stock
exchanges at amortised cost 28,554 42,898
--------- ---------
Other debtors at amortised cost 2,148 1,522
--------- ---------
Prepayments and accrued income 5,599 5,583
--------- ---------
36,301 50,003
--------- ---------
23. Cash and cash equivalents
2023 2022
GBP'000 GBP'000
Cash deposits held at bank, repayable on demand
without penalty 13,138 11,113
--------- ---------
13,138 11,113
--------- ---------
Cash and cash equivalents do not include deposits of client
monies placed by the Group with banks and building societies in
segregated client bank accounts (free money and settlement
accounts). All such deposits are designated by the banks and
building societies as clients' funds and are not available to
satisfy any liabilities of the Group.
The amount of such net deposits which are not included in the
consolidated statement of financial position at 31 March 2023 was
GBP267,258,000 (2022: GBP314,424,000).
The credit quality of banks holding the Group's cash at 31 March
2023 is analysed below with reference to credit ratings awarded by
Fitch.
2023 2022
GBP'000 GBP'000
A+ 5,400 7,837
--------- ---------
AA- 7,738 2,959
--------- ---------
A- - 45
--------- ---------
Unrated or held in cash - 272
--------- ---------
13,138 11,113
--------- ---------
24. Deferred tax liability
Capital Short-term Total
allowances temporary GBP'000
GBP'000 differences
and other
GBP'000
At 1 April 2021 (124) (276) (400)
------------ ------------- ---------
Use of loss brought forward 119 (170) (51)
------------ ------------- ---------
Debit to the income statement - 37 37
------------ ------------- ---------
At 1 April 2022 (5) (409) (414)
------------ ------------- ---------
Use of loss brought forward - 2 2
------------ ------------- ---------
Debit to the income statement - 41 41
------------ ------------- ---------
At 31 March 2023 (5) (366) (371)
------------ ------------- ---------
Deferred income tax assets are recognised for tax loss carried
forward to the extent that the realisation of the related tax
benefit through future taxable profits is probable. The Group did
not recognise deferred income tax assets of GBP12,362 (2022:
GBP152) in respect of losses amounting to GBP65,063 (2022: GBP800)
that can be carried forward against future taxable income. Losses
amounting to GBPnil (2022: GBPnil) and GBPnil (2022: GBPnil) expire
in 2023 and 2024, respectively.
25. Financial instruments and risk profile
Financial risk management
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Group's Risk function. The Board receives period reports from the
Group Risk Team through which it reviews the effectiveness of the
processes put in place and the appropriateness of the objectives
and policies it sets. The Group's internal auditors also review the
risk management policies and processes and report their findings to
the Audit Committee.
Procedures and controls are in place to identify, assess and
ultimately control the financial risks faced by the Group arising
from its use of financial instruments. Steps are taken to mitigate
identified risks with established and effective procedures and
controls, operating systems, management information and training of
staff.
The Group's risk appetite, along with the procedures and
controls mentioned above, are laid out in the Group's Internal
capital adequacy and risk assessment (ICARA).
The overall risk appetite for the Group is considered by
Management to be low, despite operating in a marketplace where
financial risk is inherent in investment management and financial
services.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. The Group considers its
financial risks arising from its use of financial instruments to
fall into three main categories:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
Financial risk management is a central part of the Group's
strategic management which recognises that an effective risk
management programme can increase a business's chances of success
and reduce the possibility of failure. Continual assessment,
monitoring and updating of procedures and benchmarks are all
essential parts of the Group's risk management strategy.
(i) Credit risk management practices
The Group's credit risk is the risk of loss through default by a
counterparty and, accordingly, the Group's definition of default is
primarily attributable to its trade receivables or pledged
collateral which is the risk that a client, market counterparty or
recognised stock exchange will be unable to pay amounts to settle a
trade in full when due. Other credit risks, such as free delivery
of securities or cash, are not deemed to be significant.
Significant changes in the economy or a particular sector could
result in losses that are different from those that the Group has
provided for at the year-end date.
All financial assets at the year-end were assessed for credit
impairment and no material amounts have arisen having evaluated the
age of overdue debtors, the quality of recourse to third parties
and the availability of mitigation through the disposal of liquid
collateral in the form of marketable securities. The Group's
write-off policy is driven by the historic dearth of instances
where material irrecoverable losses have been incurred. Where the
avenues of recourse and mitigation outlined above have not been
successful, the outstanding balance, or residual balance if sale
proceeds do not fully cover an exposure, will be written off.
The Board is responsible for oversight of the Group's credit
risk. The Group accepts a limited exposure to credit risk but aims
to mitigate and minimise the risk through various methods. There is
no material concentrated credit risk as the exposures are spread
across a substantial number of clients and counterparties.
Trade receivables (includes settlement balances)
Settlement risk arises in any situation where a payment of cash
or transfer of a security is made in the expectation of a
corresponding delivery of a security or receipt of cash. Settlement
balances arise with clients, market counterparties and recognised
stock exchanges.
In the vast majority of cases, control of the stock purchased
will remain with the Group until client monetary balances are fully
settled.
Where there is an absence of securities collateral, clients are
usually required to hold sufficient funds in their managed deposit
account prior to the trade being conducted. Holding significant
amounts of client money helps the Group to manage credit risks
arising with clients. Many of our clients also hold significant
amounts of stock and other securities in our nominee subsidiary
company, providing additional security should a specific
transaction fail to be settled and the proceeds of such securities
disposed of can be used to settle all outstanding obligations.
In addition, the client side of settlement balances are normally
fully guaranteed by our commission-sharing certified persons who
conduct transactions and manage the relationships with our mutual
clients.
Exposures to market counterparties also arise in the settlement
of trades or when collateral is placed with them to cover open
trading positions. Market counterparties are usually other
FCA-regulated firms and are considered creditworthy, some reliance
being placed on the fact that other regulated firms would be
required to meet the stringent capital adequacy requirements of the
FCA.
Maximum exposure to credit risk:
2023 2022
GBP'000 GBP'000
Cash 13,138 11,113
--------- ---------
Trade receivables 28,554 42,898
--------- ---------
Other debtors 2,148 1,522
--------- ---------
Accrued interest income 591 108
--------- ---------
44,431 55,641
--------- ---------
An ageing analysis of the Group's financial assets is presented
in the following table:
Current 0-1 2-3 Over Carrying
At 31 March 2023 GBP'000 month months 3 value
GBP'000 GBP'000 months GBP'000
GBP'000
Trade receivables 27,910 555 58 31 28,554
--------- --------- --------- --------- ---------
Cash and cash equivalent 13,138 - - - 13,138
--------- --------- --------- --------- ---------
Other debtors 2,141 2 - 5 2,148
--------- --------- --------- --------- ---------
Accrued interest income 591 - - - 591
--------- --------- --------- --------- ---------
43,780 557 58 36 44,431
--------- --------- --------- --------- ---------
Expected credit loss
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses using a lifetime expected credit loss
provision for trade receivables and contract assets. To measure
expected credit losses on a collective basis, trade receivables and
contract assets are grouped based on similar credit risk and
ageing. The contract assets have similar risk characteristics to
the trade receivables for similar types of contracts.
The Group undertakes a daily assessment of credit risk which
includes monitoring of client and counterparty exposure and credit
limits. New clients are individually assessed for their
creditworthiness using external ratings where available and all
institutional relationships are monitored at regular intervals.
As at 31 March 2023, the Directors of the Company reviewed and
assessed the Group's existing assets for impairment using the IFRS
9 simplified approach to measuring expected credit losses using a
lifetime expected credit loss provision for trade receivables and
contract assets and no additional impairments have been recognised
on application and no material defaults are anticipated within the
next 12 months.
Concentration of credit risk
In addition, daily risk management procedures to actively
monitor disproportionately large trades by a customer or market
counterparty are in place. The financial standing, pattern of
trading, type and size of security or instrument traded are amongst
the factors taken into consideration.
(ii) Liquidity risk
Liquidity risk arises from the Group's management of working
capital and the finance charges and principal repayments on its
debt instruments. It is the risk that the Group will encounter
difficulty in meeting its financial obligations as they fall due.
The Group's policy is to maintain sufficient cash to allow it to
meet its liabilities when they become due.
Historically, sufficient underlying cash has been prevalent in
the business for many years as the Group is normally
cash-generative. The risk of unexpected large cash outflows could
arise where significant amounts are being settled daily of which
only a fraction forms the commission earned by the Group. This
could be due to clients settling late or bad deliveries to the
market or CREST, also resulting in a payment delay from the market
side. The Group also commits in advance to product providers to
purchase future structured product issues at the future market
price. The Group then markets such products in advance of the
issue, which under normal business conditions means there is
limited liquidity and market risk at the time of product
launch.
The Group's policy with regard to liquidity risk is to carefully
monitor balance sheet structure and borrowing limits,
including:
-- monitoring of cash positions on a daily basis;
-- exercising strict control over the timely settlement of trade debtors; and
-- exercising strict control over the timely settlement of market debtors and creditors.
The Group holds its cash and cash equivalents spread across a
number of highly rated financial institutions. All cash and cash
equivalents are short-term highly liquid investments that are
readily convertible to known amounts of cash without penalty.
The Group and its subsidiaries Walker Crips Investment
Management Limited and Barker Poland Asset Management LLP are in
scope of the FCA's basic liquid assets requirements and these are
monitored by management on a daily basis.
The table below analyses the Group's cash outflow based on the
remaining period to the contractual maturity date.
2023 Less than Total
1 year GBP'000
GBP'000
Trade and other payables 36,849 36,849
---------- ---------
36,849 36,849
---------- ---------
2022
---------- ---------
Trade and other payables - as restated 49,625 * 49,625 *
---------- ---------
49,625 * 49,625 *
---------- ---------
* The restatement of the 2022 figures is explained in note
38
As at 31 March 2023 the Group had commitments in respect of
future structured product issues of GBP10 million.
(iii) Market risk
Market risk is the risk that changes in market prices such as
foreign exchange rates or equity prices, on financial assets and
liabilities will affect the Group's results. They relate to price
risk on fair value through profit or loss trading investments and
are subject to ongoing monitoring.
Fair value of financial instruments
The fair values of the Group's financial assets and liabilities
are not materially different from their carrying values as they are
valued at their realisable values. The Group's financial assets
that are classed as current asset and non-current asset investments
(fair value through profit or loss) have been revalued at 31 March
2023 using closing market prices.
A 10% fall in the value of trading financial instruments would,
in isolation, result in a pre-tax decrease to net assets of
GBP127,600 (2022: GBP164,700). A 10% rise would have an equal and
opposite effect.
The impact of foreign exchange and interest rate risk is not
material and is therefore not presented.
26. Trade and other payables
2023 2022
GBP'000 GBP'000
Amounts owed to clients, brokers and recognised
stock exchanges 28,012 42,325
--------- ---------
Other creditors 4,028 2,537
--------- ---------
Contract liability 9 14
--------- ---------
Accrued expenses 4,800 4,749
--------- ---------
36,849 49,625
--------- ---------
Trade creditors and accruals comprise amounts outstanding for
investment-related transactions, to customers or counterparties,
and ongoing costs. The average credit period taken for purchases in
relation to costs is 11 days (2022: 15 days). The Directors
consider that the carrying amount of trade payables approximates to
their fair value.
27. Provisions
Provisions included in other current liabilities and long-term
liabilities are made up as follows:
Professional Client Dilapidations Stamp
fees payments GBP'000 Duty liability Total
GBP'000 GBP'000 and related GBP'000
costs
GBP'000
Provisions falling due within
one year
------------- ---------- -------------- ---------------- ----------
At 1 April 2020 - 178 - 472 * 650
------------- ---------- -------------- ---------------- ----------
Additions - 55 - 157 * 212
------------- ---------- -------------- ---------------- ----------
Utilisation of provisions - (28) - - (28)
------------- ---------- -------------- ---------------- ----------
At 1 April 2021 - 205 - 629 834
------------- ---------- -------------- ---------------- ----------
Additions 595 650 16 118 * 1,379
------------- ---------- -------------- ---------------- ----------
Dilapidation provision transferred
from more than one year - - 16 - 16
------------- ---------- -------------- ---------------- ----------
Utilisation of provisions (140) (205) - - (345)
------------- ---------- -------------- ---------------- ----------
At 1 April 2022 455 650 32 747 1,884
------------- ---------- -------------- ---------------- ----------
Additions - 96 - 131 227
------------- ---------- -------------- ---------------- ----------
Reclassification to trade
and other payables (90) (746) - - (836)
------------- ---------- -------------- ---------------- ----------
Release of provisions (20) (20)
------------- ---------- -------------- ---------------- ----------
Utilisation of provisions (345) - (32) - (377)
------------- ---------- -------------- ---------------- ----------
- - - 878 878
------------- ---------- -------------- ---------------- ----------
Provisions falling due after
one year
------------- ---------- -------------- ---------------- ----------
At 1 April 2020 - - 659 - 659
------------- ---------- -------------- ---------------- ----------
Additions - - 16 - 16
------------- ---------- -------------- ---------------- ----------
At 1 April 2021 - - 675 - 675
------------- ---------- -------------- ---------------- ----------
Dilapidation provision transferred
to less than one year - - (16) - (16)
------------- ---------- -------------- ---------------- ----------
Utilisation of provisions - - (77) - (77)
------------- ---------- -------------- ---------------- ----------
Interest - - 4 - 4
------------- ---------- -------------- ---------------- ----------
At 1 April 2022 - - 586 - 586
------------- ---------- -------------- ---------------- ----------
Additions - - 61 - 61
------------- ---------- -------------- ---------------- ----------
Dilapidation provision transferred - - - - -
to less than one year
------------- ---------- -------------- ---------------- ----------
Utilisation of provisions - - - - -
------------- ---------- -------------- ---------------- ----------
Interest - - 5 - 5
------------- ---------- -------------- ---------------- ----------
- - 652 - 652
------------- ---------- -------------- ---------------- ----------
Total as at 31 March 2023 - - 652 878 1530
------------- ---------- -------------- ---------------- ----------
The Group, based on revised estimates, made an additional
provision of GBP66,000 (including interest) for dilapidations in
connection with acquired leasehold premises (2022: total additional
provision of GBP16,000). These costs are expected to arise at the
end of each respective lease.
The Group had five leased properties, all of which had
contractual dilapidation requirements. The dilapidation provisions
in relation to these leases range from net present values as at the
year-end of GBP12,000 to GBP557,000 per lease.
As explained in the Chairman's Statement and Finance Director's
Report, the Group identified a control failing which has resulted
in a liability to HMRC in respect of stamp duty reserve tax. The
matter has been voluntarily disclosed to HMRC. The scale of the
matter only became apparent subsequent to the year end and the
exercise to fully quantify the liability remains ongoing.
Management have therefore estimated the liability based upon
preliminary review of historic transactions records, categorisation
of transactions as subject to stamp duty reserve tax or not and
sample checks of transactions within those categories. Assumptions
have also been applied regarding potential penalties, interest and
costs to complete the exercise. Management has sought independent
professional advice in respect of these matters. Estimation
uncertainty therefore exists in respect of these assumptions and
early stage of the work, and until full sample checks are complete
and discussions concluded with HMRC. Whilst it is therefore not
possible to conclude on the exact range of estimation uncertainty
error, a deterioration in the provision of 80% has been included in
the going concern and viability stress tests pending full
resolution of the matter
Provisions made at year end 31 March 2022 and adjustments in the
current year in relation to customer redress (client payments) and
associated costs were transferred to trade and other payables as
the outcome of both are nearing completion and there is certainty
over the cost outlay. The customer redress obligations were settled
in full post year end.
* The restatement of the 2022 figures are explained in note
38
28. Lease liabilities
Lease liabilities Offices Computer Computer Total
GBP'000 software hardware GBP'000
GBP'000 GBP'000
At 1 April 2022 2,337 173 35 2,545
--------- ---------- ---------- ---------
Additions 345 168 - 513
--------- ---------- ---------- ---------
Lease reassessments - - - -
--------- ---------- ---------- ---------
Interest 80 5 1 86
--------- ---------- ---------- ---------
Lease payments (200) (198) (16) (414)
--------- ---------- ---------- ---------
At 31 March 2023 2,562 148 20 2,730
--------- ---------- ---------- ---------
Lease liabilities profile (statement of financial 2023 2022
position) GBP'000 GBP'000
Amounts due within one year 341 245
--------- ---------
Amounts due after more than one year 2,389 2,300
--------- ---------
2,730 2,545
--------- ---------
Undiscounted lease maturity analysis 2023 2022
GBP'000 GBP'000
Within one year 426 340
--------- ---------
Between one and two years 958 491
--------- ---------
Between two and five years 1,549 2,058
--------- ---------
Over five years - 54
--------- ---------
Total undiscounted lease liabilities 2,933 2,943
--------- ---------
29. Called-up share capital
2023 2022
GBP'000 GBP'000
Called-up, allotted and fully paid
--------- ---------
43,327,328 (2021: 43,327,328) Ordinary Shares of
6(2) /(3) p each 2,888 2,888
--------- ---------
The Group's Articles were amended in 2010 since when there has
been no authorised share capital. Shareholders have no restrictions
on their holdings except for certain investment managers who were
awarded shares in the Group soon after joining as part of the
consideration for their client relationships. These holdings cannot
be sold for a period of four to six years from commencement
date.
The following movements in share capital occurred during the
year:
Number Share Share Total
of capital premium GBP'000
shares GBP'000 GBP'000
At 1 April 2022 43,327,328 2,888 3,763 6,651
----------- --------- --------- ---------
At 31 March 2023 43,327,328 2,888 3,763 6,651
----------- --------- --------- ---------
The Group's capital is defined for accounting purposes as total
equity. As at 31 March 2023, this totalled GBP21,166,000 (2022:
GBP21,365,000 - as restated; 2021: GBP21,693,000 - as
restated).
The Group's objectives when managing capital are to:
-- safeguard the Group's ability to continue as a going concern
so that it can continue to provide returns for shareholders and
benefits for other stakeholders;
-- maintain a strong capital base to support the development of the business;
-- optimise the distribution of capital across the Group's
subsidiaries, reflecting the requirements of each company;
-- strive to make capital freely transferable across the Group where possible; and
-- comply with regulatory requirements at all times.
The Group has been assessed as constituting a MIFIDPRU
Investment Firm group and has been classified as a non-small
non-interconnected (non-SNI) Investment Firm group and performs an
Internal Capital Adequacy and Risk Assessment process (ICARA),
which is presented to the FCA on request.
The Group's capital, for accounting purposes, is defined as the
total of share capital, share premium, retained earnings and other
reserves. Total capital at 31 March 2023 was GBP21.2 million (2022:
GBP21.4 million - as restated). Regulatory capital is derived from
the Group's Internal Capital Adequacy and Risk Assessment
("ICARA"), which is a requirement of the Investment Firm Prudential
Regime ('IFPR'). The ICARA draws on the Group's risk management
process that is embedded within all areas of the Group. The Group's
objectives when managing capital are to comply with the capital
requirements set by the Financial Conduct Authority, to safeguard
the Group's ability to continue as a going concern.
Capital adequacy and the use of regulatory capital are monitored
daily by the Group's management. In addition to a variety of stress
tests performed as part of the ICARA process, and daily reporting
in respect of treasury activity, capital levels are monitored and
forecast to ensure that dividends and investment requirements are
managed and appropriate buffers are held against potential adverse
business conditions.
Regulatory capital
No breaches were reported to the FCA during the financial years
ended 31 March 2023 and 2022.
Treasury shares
The Group holds 750,000 of its own shares, purchased for total
cash consideration of GBP312,000. In line with the principles of
IAS 32 these treasury shares have been deducted from equity (note
30). No gain or loss has been recognised in the income statement in
relation to these shares.
30. Reserves
Apart from share capital and share premium, the Group holds
reserves at 31 March 2023 under the following categories:
Own shares held (GBP312,000) (2022:
(GBP312,000)) * the negative balance of the Group's own shares, which
have been bought back and held in treasury.
Retained earnings GBP10,104,000 (2022:
GBP10,303,000 - as * the net cumulative earnings of the Group, which have
restated; 2021: GBP10,631,000 not been paid out as dividends, are retained to be
- as restated) reinvested in our core, or developing, companies.
------------------------------- -----------------------------------------------------------------
Other reserves GBP4,723,000 (2022:
GBP4,723,000) * the cumulative premium on the issue of shares as
deferred consideration for corporate acquisitions
GBP4,612,000 (2022: GBP4,612,000) and
non-distributable reserve into which amounts are
transferred following the redemption or purchase of
the Group's own shares.
------------------------------- -----------------------------------------------------------------
31. Cash generated from operations
2023 Restated
GBP'000 2022
GBP'000
Operating profit for the year 625 208 *
---------- ---------
Adjustments for:
---------- ---------
Amortisation of intangibles 1,393 862
---------- ---------
Changes in the fair value of deferred - -
consideration
---------- ---------
Net change in fair value of financial
instruments at fair value through profit
or loss**** 575 (347)
---------- ---------
Share of associate after tax result - (57)
---------- ---------
Depreciation of property, plant and
equipment 331 303
---------- ---------
Depreciation of right-of-use assets** 771 873
---------- ---------
Decrease / (increase) in debtors*** 13,662 (915)
---------- ---------
(Decrease) / Increase in creditors*** (13,818)* 3,290*
---------- ---------
Net cash inflow 3,539 4,217
---------- ---------
* The restatement of the 2022 figures is explained in note
38
** Lease liability payments associated with RoU assets were
GBP332,000 (2022: GBP1,052,000).
*** Cash outflow from working capital movement of GBP156,000
(2022: GBP2,375,000 inflow - as restated)
**** Revaluation loss/(profit) on proprietary positions.
32. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of GBPnil
(2022: GBPnil) contracted but not provided for and GBPnil (2022:
GBPnil) capital commitments authorised but not contracted for.
33. Related parties
Directors and their close family members have dealt on standard
commercial terms with the Group. The commission and fees earned by
the Group included in revenue through such dealings is as
follows:
2023 2022
GBP'000 GBP'000
Commission and fees received from Directors and
their close family members 20 15
--------- ---------
Other related parties include Charles Russell Speechlys, of
which Martin Wright, Chairman, is a Partner. Charles Russell
Speechlys provides certain legal services to the Group on normal
commercial terms and the amount paid and expensed during the year
(including the fees paid to the firm for Mr. Wright's services as
Director) was GBP280,000 (2022: GBP268,000).
Fees of GBP9,000 (2022: GBP30,000) were received by EnOC
Technologies Ltd from CyberQuote Pte Ltd (a company, where Hua Min
Lim is a shareholder) for the service provided on normal commercial
terms.
Commission of GBP7,043 (2022: GBP4,245) was earned by the Group
from Phillip Securities (HK) Limited (a Phillip Brokerage Pte
Limited company, where Hua Min Lim is a shareholder) having dealt
on standard commercial terms. Additionally, some custody services
are provided by Phillip Securities Pte Ltd (in Singapore, where Hua
Min Lim is a Director), again all on standard commercial terms,
both these items being included in revenue. Transactions between
the Group and its subsidiaries, which are related parties, have
been eliminated on consolidation and are accordingly not disclosed.
Remuneration of the Directors who are the key Management personnel
of the Group is disclosed in the table below.
2023 2022
GBP'000 GBP'000
Key management personnel compensation
--------- ---------
Short-term employee benefits 459 458
--------- ---------
Post-employment benefits 32 33
--------- ---------
Share-based payment - -
--------- ---------
491 491
--------- ---------
34. Contingent liabilities
In 2021 a former associate brought a claim against Walker Crips
Investment Management Limited in the Employment Tribunal. A hearing
of a preliminary issue took place in 2022 and the Tribunal found in
favour of the company. The former associate appealed that decision
and in 2023, whilst many of the appeal grounds were not upheld,
certain points were referred back to the Employment Tribunal to
reconsider. The company does not consider that the claims are
justified and intends to continue to defend them robustly.
From time to time, the Group receives complaints or undertakes
past business reviews, the outcomes of which remain uncertain
and/or cannot be reliably quantified based upon information
available and circumstances falling outside the Group's control.
Accordingly, contingent liabilities arise, the ultimate impact of
which may also depend upon availability of recoveries under the
Group's indemnity insurance and other contractual arrangements.
Other than any cases where a financial obligation is deemed to be
probable and thus provision is made, the Directors presently
consider a negative outcome to be remote. As a result, no further
disclosure has been made in these financial statements. Provisions
made remain subject to estimation uncertainty, which may result in
material variations in such estimates as matters are finalised.
35. Subsequent events
There are no material events arising after 31 March 2023, which
have an impact on these financial statements.
36. Deferred cash consideration
2023 2022
GBP'000 GBP'000
Due within one year
--------- ---------
Amounts due to personnel under recruitment contracts/acquisition
agreements 94 89
--------- ---------
Due after one year
--------- ---------
Amounts due to personnel under recruitment contracts/acquisition
agreements 71 29
--------- ---------
These amounts are based on fixed contractual terms and the fair
value of the liability approximates carrying value, due to the
consistency of the prevailing market rate of interest when compared
to the inception of liability.
37. Share-based payments
The Group recognised total expenses in the year of GBPnil (2022:
GBP19,431) related to equity-settled share-based payment
transactions.
No award was made in the financial year and prior year award was
forfeited due to termination of employment.
Share Incentive Plan ("SIP")
Employees who have been employed for longer than three months
and are subject to PAYE are invited to join the SIP. Employees may
use funds from their gross monthly salary (being not less than
GBP10 and not greater than GBP150) to purchase ordinary shares in
the Group ("Partnership Shares"). In the current year, for every
Partnership Share purchased, the employee received matching shares
at a rate of 50%. The matching option was increased to 100% on 1
April 2023 and will remain at this rate to 31 March 2024. Employees
are offered an annual opportunity to top up contributions to the
maximum annual limit of GBP1,800 (or 10% of salary, if lower). All
shares to date awarded under this scheme have been purchased in the
market at the prevailing share price on a monthly basis.
38. Prior period adjustments
During the year, the Group discovered errors in how it accounted
for Stamp Duty Reserve Tax ("SDRT") on certain transactions
undertaken on behalf of clients. Following the discovery of this
error, the Group undertook an investigation of the various
transactions impacted by the error. This investigation is ongoing,
but based on the latest available information, management's current
estimate of the liability due and payable by the Group is
GBP878,000, including professional support costs. This amount also
includes an estimate of interest and penalties that HMRC may charge
on any amounts due and is net of taxation.
The error has been corrected by restating each of the affected
financial statement line items for the prior periods.
As the investigation is ongoing, there remains uncertainty
surrounding both the quantum of the liability in respect of the
SDRT due, as well as the interest and penalties that HMRC may
charge.
The amounts of the error for the current year and the two
preceding financial years ending 31 March on the following
bases:
Current Prior year Prior year 2020 and
year 2023 2022 2021 prior
GBP GBP GBP GBP
SDRT liability to HMRC (see
notes 10 and 28) 131,000 118,000 157,000 472,000
----------- ----------- ----------- ---------
The provision arising in respect of 2022 has been accounted for
as a prior year adjustment and increases the exceptional costs as
previously reported in that year by GBP118,000 to GBP1,658,000,
with a similar reduction in that year's previously reported profit
and total comprehensive income for the year to GBP55,000.
The cumulative provision arising before 1st April 2020 of
GBP472,000 has been treated as a prior period reduction in
previously reported reserves as at 31 March 2020, and together with
GBP157,000 in 2021 and GBP118,000 attributable to 2022, a reduction
of the previously reported reserves as at 31 March 2022 is shown in
the table below.
In the financial highlights, the restated operating loss for the
year ended 31 March 2021 of GBP0.14 million is disclosed. This
represents the previously reported operating profit of GBP22,000
reduced by the estimated SDRT provision of GBP157,000 relating
specifically to that year.
Consolidated statement 2021 Change Restated 2022 Restated
of financial position GBP'000 GBP'000 2021 GBP'000 Change 2022
extract GBP'000 GBP'000 GBP'000
---------
Provisions (205) (629) (834) (1,137) (747) (1,884)
--------- --------- --------- --------- ---------- ---------
Net assets 22,322 (629) 21,693 22,112 (747) 21,365
--------- --------- --------- --------- ---------- ---------
Retained earnings 11,260 (629) 10,631 11,050 (747) 10,303
--------- --------- --------- --------- ---------- ---------
Total equity 22,322 (629) 21,693 22,112 (747) 21,365
--------- --------- --------- --------- ---------- ---------
Company balance sheet
as at 31 March 2023
Note 2023 2022
GBP'000 GBP'000
Non-current assets
----- --------- ---------
Investments measured at cost less impairment 42 21,907 21,757
----- --------- ---------
21,907 21,757
----- --------- ---------
Current assets
----- --------- ---------
Trade and other receivables 43 801 758
----- --------- ---------
Deferred tax asset 44 1 -
----- --------- ---------
Cash and cash equivalents 95 335
----- --------- ---------
897 1,093
----- --------- ---------
Total assets 22,804 22,850
----- --------- ---------
Current liabilities
----- --------- ---------
Trade and other payables 45 (3,889) (3,407)
----- --------- ---------
(3,889) (3,407)
----- --------- ---------
Net current assets/(liabilities) (2,992) (2,314)
----- --------- ---------
Net assets 18,915 19,443
----- --------- ---------
Equity
----- --------- ---------
Share capital 47 2,888 2,888
----- --------- ---------
Share premium account 47 3,763 3,763
----- --------- ---------
Own shares 47 (312) (312)
----- --------- ---------
Retained earnings 47 7,853 8,381
----- --------- ---------
Other reserves 47 4,723 4,723
----- --------- ---------
Equity attributable to equity holders
of the Company 18,915 19,443
----- --------- ---------
As permitted by section 408 of the Companies Act 2006 the Parent
Company has elected not to present its own profit and loss account
for the year. Walker Crips Group plc reported an after-tax profit
for the financial year of GBP89,000 (2022: after-tax profit of
GBP285,000).
The financial statements of Walker Crips Group plc (Company
registration no. 01432059) were approved by the Board of Directors
and authorised for issue on 31 July 2023.
Signed on behalf of the Board of Directors:
Sanath Dandeniya FCCA
Director
Company statement of changes in equity
year ended 31 March 2023
Called Share Own Other Retained Total
up premium shares GBP'000 earnings equity
share account held GBP'000 GBP'000
capital GBP'000 GBP'000
GBP'000
Equity as at 31 March 2021 2,888 3,763 (312) 4,723 8,479 19,541
--------- --------- --------- --------- ---------- ---------
Total comprehensive income
for the period - - - - 285 285
--------- --------- --------- --------- ---------- ---------
Contributions by and distributions
to owners
--------- --------- --------- --------- ---------- ---------
Dividends paid - - - - (383) (383)
--------- --------- --------- --------- ---------- ---------
Total contributions by and
distributions to owners - - - - (383) (383)
--------- --------- --------- --------- ---------- ---------
Equity as at 31 March 2022 2,888 3,763 (312) 4,723 8,381 19,443
--------- --------- --------- --------- ---------- ---------
Total comprehensive income
for the period - - - - 89 89
--------- --------- --------- --------- ---------- ---------
Contributions by and distributions
to owners
--------- --------- --------- --------- ---------- ---------
Dividends paid - - - - (617) (617)
--------- --------- --------- --------- ---------- ---------
Total contributions by and
distributions to owners - - - - (617) (617)
--------- --------- --------- --------- ---------- ---------
Equity as at 31 March 2023 2,888 3,763 (312) 4,723 7,853 18,915
--------- --------- --------- --------- ---------- ---------
The following Accounting Policies and Notes form part of these
financial statements.
Notes to the Company accounts
year ended 31 March 2023
39. Significant accounting policies
The separate financial statements of Walker Crips Group plc, the
Parent Company, are presented as required by the Companies Act
2006.
The financial statements have been prepared under the historical
cost convention except for the modification to a fair value basis
for certain financial instruments as specified in the accounting
policies below, and in accordance with Financial Reporting Standard
(FRS 102), the Financial Reporting Standard applicable in the UK
and the Republic of Ireland, and the Companies Act 2006.
The preparation of financial statements in compliance with FRS
102 requires the use of certain critical accounting estimates. It
also requires Management to exercise judgement in applying the
Parent Company's accounting policies (see note 40).
The financial statements are presented in the currency of the
primary activities of the Parent Company (its functional currency).
For the purpose of the financial statements, the results and
financial position are presented in GBP Sterling (GBP). The
principal accounting policies have been summarised below. They have
all been applied consistently throughout the year and the preceding
year.
The Parent Company has chosen to adopt the disclosure exemption
in relation to the preparation of a cash flow statement under FRS
102.
Going concern
After conducting enquiries, the Directors believe that the
Parent Company has adequate resources to continue in existence for
the foreseeable future. Accordingly, they continue to adopt the
going concern basis in preparing the financial statements. The
Parent Company's business activities, together with the factors
likely to affect its future development, performance and position,
have been assessed.
Property, plant and equipment
Fixtures and equipment are stated at historical cost less
accumulated depreciation and provision for any impairment.
Depreciation is charged so as to write-off the cost or valuation of
assets over their estimated useful lives using the straight-line
method on the following bases:
Computer hardware 33(1) /(3) % per annum on cost
Computer software between 20% and 33(1) /(3) % per annum on cost
Leasehold improvements over the term of the lease
Furniture and equipment 33(1) /(3) % per annum on cost
The gain or loss on the disposal or retirement of an asset is
determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in income. The
residual values and estimated useful life of items within property,
plant and equipment are reviewed at least at each financial year
end. Any shortfalls in carrying value are impaired immediately
through profit or loss.
Impairment of non-financial assets
At each reporting date, the Parent Company reviews the carrying
amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an
impairment loss. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). If there is an
indication of possible impairment, the recoverable amount of any
affected asset (or group of related assets) is estimated and
compared with its carrying amount. If the estimated recoverable
amount is lower, the carrying amount is reduced to its estimated
recoverable amount, and an impairment loss is recognised
immediately in profit or loss.
Taxation
The tax expense represents the sum of the tax currently payable
and any deferred tax.
Current tax, including UK corporation tax and foreign tax, is
provided at amounts expected to be paid or recovered using the tax
rates and laws that have been enacted or substantively enacted by
the balance sheet date. Current tax charges arising on the
realisation of revaluation gains recognised in the statement of
comprehensive income are also recorded in this statement.
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the balance sheet date
where transactions or events that result in an obligation to pay
more tax in the future or a right to pay less tax in the future
have occurred at the balance sheet date.
A deferred tax asset is regarded as recoverable and therefore
recognised only when, on the basis of all available evidence, it
can be regarded as probable that there will be suitable taxable
profits from which the future reversal of the underlying timing
differences can be deducted. Deferred tax assets and liabilities
are not discounted.
Own shares held
Own shares consist of treasury shares which are recognised at
cost as a deduction from equity shareholders' funds. Subsequent
consideration received for the sale of treasury shares is also
recognised in equity with any difference being taken to retained
earnings. No gain or loss is recognised on sale of treasury
shares.
Financial instruments
Financial assets and financial liabilities are recognised in the
balance sheet when the Parent Company becomes a party to the
contractual provisions of the instrument. Section 11 of FRS 102 has
been applied in classifying financial instruments depending on the
nature of the instrument held.
Revenue
Income consists of profits distribution from Barker Poland Asset
Management LLP, interest received or accrued over time and dividend
income recorded when received.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less, where
appropriate, provisions for impairment.
Debtors
Other debtors are classified as basic financial instruments and
measured at initial recognition at transaction price. Debtors are
subsequently measured at amortised cost using the effective
interest rate method. A provision is established when there is
objective evidence that the Group will not be able to collect all
amounts due.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand
deposits, together with other short-term highly liquid investments,
which are readily convertible to a known amount of cash and are
subject to an insignificant risk of changes in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Parent Company after
deducting all of its liabilities. Equity instruments issued by the
Parent Company are recorded at the proceeds received, net of direct
issue costs.
Leases
Rentals under operating leases are charged on a straight-line
basis over the lease term even if the payments are not made on such
a basis. Benefits received as an incentive to enter into an
operating lease are also spread on a straight-line basis over the
lease term.
40. Key sources of estimation uncertainty and judgements
The preparation of financial statements in conformity with
generally accepted accounting practice requires Management to make
estimates and judgements that affect the reported amounts of assets
and liabilities as well as the disclosure of contingent assets and
liabilities at the balance sheet date and the reported amounts of
revenues and expenses during the reporting period.
41. Profit for the year
Profit for the financial year of GBP89,000 (2022: profit of
GBP285,000) is after an amount of GBP23,000 (2022: GBP57,000)
related to the auditor's remuneration for audit services to the
Parent Company.
Particulars of employee costs (including Directors) are as shown
below. Employee costs during the year amounted to:
2023 2022
GBP'000 GBP'000
Employee costs during the year amounted to:
--------- ---------
Wages and salaries 186 175
--------- ---------
Social security costs 14 25
--------- ---------
Other costs 3 -
--------- ---------
203 200
--------- ---------
In the current year, employee costs include the costs of the
Non-Executive Directors and a proportion of Executive Directors.
The remaining Executive Directors' employee costs are borne by
Walker Crips Investment Management Limited.
The monthly average number of staff employed during the year
was:
2023 2022
Number Number
Executive Directors 2 2
-------- --------
Non-Executive Directors 4 4
-------- --------
6 6
-------- --------
42. Investments measured at cost less impairment
2023 2022
GBP'000 GBP'000
Subsidiary undertakings 21,907 21,757
--------- ---------
During the year, the Company made an investment of GBP150,000 in
Walker Crips Financial Planning Limited, an indirect 100% owned
subsidiary of the Group.
A complete list of subsidiary undertakings can be found in note
50.
43. Trade and other receivables
2023 2022
GBP'000 GBP'000
Amounts owed by Group undertakings 799 758
--------- ---------
Prepayments and accrued income - -
--------- ---------
Taxation and social security 2 -
--------- ---------
801 758
--------- ---------
A presentational change was made in this note to exclude the
deferred tax asset from this grouping and to present it in its own
line on the face of the statement of financial position.
44. Deferred taxation
2023 2022
GBP'000 GBP'000
At 1 April - 74
--------- ---------
Use of Group Relief (29) (14)
--------- ---------
Credit/(charge) to the income statement 30 (60)
--------- ---------
At 31 March 1 -
--------- ---------
Deferred tax has been provided at 25% (2022: 19%).
In the Spring Budget 2021, the Government announced that from 1
April 2023, the UK corporation tax rate will increase from 19% to
25%. This will have a consequential effect on the Company's future
tax charge.
45. Trade and other payables
2023 2022
GBP'000 GBP'000
Accruals and deferred income 99 61
--------- ---------
Amounts due to subsidiary undertakings 3,744 3,270
--------- ---------
Other creditors 46 76
--------- ---------
3,889 3,407
--------- ---------
46. Risk management policies
Procedures and controls are in place to identify, assess and
ultimately control the financial risks faced by the Parent Company
arising from its use of financial instruments. Steps are taken to
mitigate identified risks with established and effective procedures
and controls, efficient systems and the adequate training of
staff.
The Parent Company's risk appetite, along with the procedures
and controls mentioned above, are laid out in the Group's Internal
capital adequacy and risk assessment (ICARA).
The overall risk appetite for the Parent Company and for the
Group as a whole is considered by Management to be low, despite
operating in a marketplace where financial risk is inherent in the
core businesses of investment management and financial
services.
The Group considers its financial risks arising from its use of
financial instruments to fall into three main categories:
(i) credit risk;
(ii) liquidity risk; and
(iii) market risk.
Further information on the disclosures and policies carried out
by the Parent Company and the Group is given in note 25 of the
consolidated financial statements.
(i) Credit risk
Maximum exposure to credit risk:
2023 2022
GBP'000 GBP'000
Cash 95 335
--------- ---------
Other debtors 799 758
--------- ---------
As at 31 March 894 1,093
--------- ---------
The credit quality of banks holding the Company's cash at 31
March 2023 is analysed below with reference to credit ratings
awarded by Fitch.
2023 2022
GBP'000 GBP'000
A - -
--------- ---------
A+ 95 335
--------- ---------
AA- - -
--------- ---------
As at 31 March 95 335
--------- ---------
Analysis of other debtors due from financial institutions:
2023 2022
GBP'000 GBP'000
Neither past due, nor impaired 799 758
--------- ---------
Amounts past due, but not < 30 days - -
impaired
------------ --------- ---------
> 30 days - -
--------------------------------------------- --------- ---------
> 3 months - -
--------------------------------------------- --------- ---------
- -
--------------------------------------------- --------- ---------
(ii) Liquidity risk
The tables below analyse the Parent Company's future
undiscounted cash outflows based on the remaining period to the
contractual maturity date:
2023 2022
GBP'000 GBP'000
Creditors due within one year 3,889 3,407
--------- ---------
Creditors due after more than one year - -
--------- ---------
As at 31 March 3,889 3,407
--------- ---------
2023 2022
GBP'000 GBP'000
Within one year 3,889 3,407
--------- ---------
Within two to five years - -
--------- ---------
After more than five years - -
--------- ---------
As at 31 March 3,889 3,407
--------- ---------
The Company is in a net liability position, but this is
primarily driven by an intercompany creditor balance with its
subsidiary. This is deemed to not affect liquidity as the
subsidiary is 100% owned and controlled by the Company.
(iii) Market risk
Market risk is the risk that changes in market prices such as
foreign exchange rates or equity prices will affect the Group's
income.
These relate to price risk breached on available-for-sale and
trading investments and closely monitored using limits to prevent
significant losses.
Fair value of financial instruments
No financial instruments at fair value were held by the Parent
Company in the current or prior financial year.
47. Called-up share capital
2023 2022
GBP'000 GBP'000
Called-up, allotted and fully paid
--------- ---------
43,327,328 (2021: 43,327,328) Ordinary Shares of
6(2) /(3) p each 2,888 2,888
--------- ---------
No new shares were issued in the year to 31 March 2023 or the
prior year.
The Parent Company holds 750,000 of its own shares, purchased
for a total cash consideration of GBP312,000. In line with the
principles of FRS 102, section 11, these treasury shares have been
deducted from equity. No gain or loss has been recognised in the
profit and loss account in relation to these shares.
The following movements in share capital occurred during the
year:
Number Share Share Total
of shares capital premium GBP'000
GBP'000 GBP'000
At 1 April 2022 43,327,328 2,888 3,763 6,651
----------- --------- --------- ---------
At 31 March 2023 43,327,328 2,888 3,763 6,651
----------- --------- --------- ---------
Apart from share capital and share premium, the Parent Company
holds reserves at 31 March 2023 under the following categories:
Own shares held (GBP312,000) (2022:
(GBP312,000)) * the negative balance of the Parent Company's own
shares that have been bought back and held in
treasury.
Retained earnings GBP7,853,000 (2022:
GBP8,381,000) * the net cumulative earnings of the Parent Company,
which have not paid out as dividends, retained to be
reinvested in our core or new business.
-------------------- -----------------------------------------------------------------
Other reserves GBP4,723,000 (2022:
GBP4,723,000) * the cumulative premium on the issue of shares as
deferred consideration for corporate acquisitions
GBP4,612,000 (2022: GBP4,612,000) and
non-distributable reserve into which amounts are
transferred following the redemption or purchase of
the Group's own shares.
-------------------- -----------------------------------------------------------------
48. Financial commitments
Capital commitments
At the end of the year, there were capital commitments of GBPnil
(2022: GBPnil) contracted but not provided for and GBPnil (2022:
GBPnil) capital commitments authorised but not contracted for.
49. Related party transactions
Key Management are those persons having authority and
responsibility for planning, controlling and directing the
activities of the Parent Company and Group. In the opinion of the
Board, the Parent Company and Group's key Management are the
Directors of Walker Crips Group plc.
Total compensation to key management personnel is GBP491,000
(2022: GBP491,000).
50. Contingent liability
From time to time, the Company receives complaints or undertakes
past business reviews, the outcomes of which remain uncertain
and/or cannot be reliably quantified based upon information
available and circumstances falling outside the Company's control.
Accordingly contingent liabilities arise, the ultimate impact of
which may also depend upon availability of recoveries under the
Company's indemnity insurance and other contractual arrangements.
Other than the complaints deemed to be probable, the Directors
presently consider a negative outcome to be remote or a reliable
estimate of the amount of a possible obligation cannot be made. As
a result, no disclosure has been made in these financial
statements.
51. Subsequent events
There are no material events arising after 31 March 2023, which
have an impact on these financial statements.
52. Subsidiaries and associates
Principal place Principal activity Class and percentage
of business of shares held
Group
---------------- ---------------------- ---------------------
Trading subsidiaries
---------------- ---------------------- ---------------------
Walker Crips Investment United Kingdom Investment management Ordinary Shares
Management Limited(1) 100%
---------------- ---------------------- ---------------------
London York Fund United Kingdom Management services Ordinary Shares
Managers Limited(2) 100%
---------------- ---------------------- ---------------------
Walker Crips Financial United Kingdom Financial services Ordinary Shares
Planning Limited advice 100%
(formerly Walker
Crips Wealth Management
Limited)(2)
---------------- ---------------------- ---------------------
Ebor Trustees Limited(2) United Kingdom Pensions management Ordinary Shares
100%
---------------- ---------------------- ---------------------
EnOC Technologies United Kingdom Financial regulation Ordinary Shares
Limited(1) and other software 100%
---------------- ---------------------- ---------------------
Barker Poland Asset United Kingdom Investment management Membership 100%
Management LLP(1)
---------------- ---------------------- ---------------------
Non-trading subsidiaries
---------------- ---------------------- ---------------------
Walker Crips Financial United Kingdom Financial services Ordinary Shares
Services Limited(1) 100%
---------------- ---------------------- ---------------------
G & E Investment United Kingdom Holding company Ordinary Shares
Services Limited(2) 100%
---------------- ---------------------- ---------------------
Ebor Pensions Management United Kingdom Dormant company Ordinary Shares
Limited(2) 100%
---------------- ---------------------- ---------------------
Investorlink Limited(1) United Kingdom Agency stockbroking Ordinary Shares
100%
---------------- ---------------------- ---------------------
Walker Cambria Limited(1) United Kingdom Dormant company Ordinary Shares
100%
---------------- ---------------------- ---------------------
Walker Crips Trustees United Kingdom Dormant company Ordinary Shares
Limited(1) 100%
---------------- ---------------------- ---------------------
W.B. Nominees Limited(1) United Kingdom Nominee company Ordinary Shares
100%
---------------- ---------------------- ---------------------
WCWB (PEP) Nominees United Kingdom Nominee company Ordinary Shares
Limited(1) 100%
---------------- ---------------------- ---------------------
WCWB (ISA) Nominees United Kingdom Nominee company Ordinary Shares
Limited(1) 100%
---------------- ---------------------- ---------------------
WCWB Nominees Limited(1) United Kingdom Nominee company Ordinary Shares
100%
---------------- ---------------------- ---------------------
Walker Crips Consultants United Kingdom Dormant company Ordinary Shares
Limited(1) 100%
---------------- ---------------------- ---------------------
Walker Crips Ventures United Kingdom Financial services Ordinary Shares
Limited(1) advice 100%
---------------- ---------------------- ---------------------
The registered office for companies and associated undertakings
is:
1 Old Change House, 128 Queen Victoria Street, London, England, EC4V 4BJ.
2 Apollo House, Eboracum Way, York, England, YO31 7RE.
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END
FR FLFLDDAILVIV
(END) Dow Jones Newswires
July 31, 2023 13:25 ET (17:25 GMT)
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