TIDMWCW

RNS Number : 7575G

Walker Crips Group plc

27 November 2020

The following amendment has been made to the 'Half-year Report' announcement released on 27 November 2020 at 7:00am under RNS No. 6929G.

In the 'Headlines' section of the report, the 'GBP' sign has been removed from the interim dividend figure to read 0.15 pence per share.

All other details remain unchanged.

The full amended text is shown below.

27 November 2020

Walker Crips Group plc

("Walker Crips", the "Company" or the "Group"),

Results for the six months ended 30 September 2020

HEADLINES

 
      *   Total revenue for the 6-month period down 7.9% to GBP14.35 million 
           (2019: GBP15.58 million) 
      *   Loss before tax of GBP451,000 (2019: profit before tax of GBP620,000) 
      *   Operating loss before exceptional items of GBP272,000 (2019: 
           operating profit before exceptional items of GBP408,000)* 
      *   Operating loss including exceptional item of GBP374,000 (2019: 
           operating profit including exceptional items of GBP617,000) 
      *   IAS 17 consistent EBITDA of GBP380,000 (2019: GBP987,000)* 
      *   Underlying cash generated by operations of GBP170,000 (2019: 
           GBP745,000)* 
      *   Assets under Management and Administration GBP4.8 billion (2019: 
           GBP5.1 billion) 
      *   All Government support received as a result of COVID-19 voluntarily 
           repaid 
      *   Interim dividend of 0.15 pence per share (2019: interim dividend 
           of 0.60 pence per share) 
 

Martin Wright, Chairman of Walker Crips Group plc, says:

"The onset of the COVID-19 pandemic in the first quarter of the year has taken all businesses into uncharted waters. At the time, no one could forecast with any degree of accuracy its effect. The significant impact the pandemic has had and continues to have on businesses and the wider socio-economic landscape has yet to be fully understood.

However, contrary to our worst fears, investor confidence and the financial services market remain resilient. Revenues since 30 September 2020 have also benefited from the rise in markets following the announcements regarding COVID-19 vaccines.

Notwithstanding reported headline losses, the Group continues to generate positive EBITDA(*) and underlying operating cash(*) , which enable continued support of our revenue and growth initiatives. However, this does not alleviate the imperative to focus on improved operating efficiencies and cost elimination. In this regard we are developing plans to simplify the Group structure by reducing the number of regulated entities and streamlining the management structure."

* See note 18 for the reconciliation of alternative performance measures ('APMs') to IFRS reported results

For further information, please contact:

 
 Walker Crips Group plc                 Tel: +44 (0)20 3100 8000 
  Ronan Gelling, Media Relations 
 
   Four Communications                    Tel: +44 (0)20 3697 4200 
   Mark Knight 
   walkercrips@fourcommunications.com 
 
   N+1 Singer                             Tel: +44 (0)20 7496 3000 
   Will Goode / George Tzimas 
 

Further information on Walker Crips Group is available on the Company's website: www.walkercrips.co.uk

Chairman's Statement

Introduction

The onset of the COVID-19 pandemic in the first quarter of the year has taken all businesses into uncharted waters. At the time, no one could forecast with any degree of accuracy its effect and the significant impact the pandemic has had and continues to have on businesses and the wider socio-economic landscape has yet to be fully understood. The Group's executive management reacted rapidly and decisively to the situation. The Group, with its robust IT infrastructure, moved to remote working with relative ease on 12 March, eleven days before the national lockdown, providing continuity of service for our clients and safety and protection for staff. Since then, the Group has continued to operate efficiently, following all Government advice. In navigating these difficult times, your Group, led by its executives, has shown true resilience. I congratulate our staff and our investment managers for making this possible.

The pandemic shows no sign of abating, but, contrary to our worst fears, investor confidence and the financial services market remain resilient. That being said, as highlighted in our 2020 Annual Report and Accounts, the cut in the Bank of England base rate from 0.75% to 0.10% in response to the COVID-19 pandemic has had a significant impact on interest margins on managed deposits. The cut has resulted in the Group earning less interest income from its centralised treasury function and, as a result of this and other pandemic factors, the Group is reporting an operating loss for the period, which I explain further below.

We remain confident in our three-pronged strategy of growing our core business, seeking opportunities in our alternative business activities and commercialising our technological capabilities.

We are pleased with the recent advances in our drive for growth in our Wealth Management division, with the hiring of new advisers and the acquisition of a client book with funds under management since 30 September 2020. Fully supported by the new back office system implemented last year, we will maintain this course for controlled growth while always maintaining focus on our clients' best interests.

Notwithstanding reported headline losses, the Group continues to generate positive EBITDA(*) and underlying operating cash(*) , which enable continued support of our revenue and growth initiatives. However, this does not alleviate the imperative to focus on improved operating efficiencies and cost elimination. In this regard, we are developing plans to simplify the Group through reducing the number of regulated entities and streamlining the management structure.

The Group remains in a sound financial position and we continue to take steps to address the impact of COVID-19. We are optimistic about the opportunities before us but remain cautious given the continued impact of the pandemic and the ongoing uncertainty regarding the UK's exit from the European Union.

We hold steadfastly to our purpose of making investment rewarding for our clients, our shareholders and our staff, and giving our customers a fair deal. We support our investment managers and our staff by being a technology driven financial services company.

As we completed and reported on our March 2020 year-end, we were faced with significant uncertainty, the prospect of substantial revenue declines and potentially aggressive cost reduction action. We sought always to support our people, including the use of the Government's furlough scheme. Further, we made the considered, but nevertheless difficult, decision to preserve cash by not paying a final dividend. In the event, markets recovered sooner than we anticipated and the Group has benefitted from a period of higher trading commissions.

Accordingly, decisions have been taken to repay all Government support received and pay an interim dividend. Although we are pleased to announce these decisions, we emphasise the outlook remains uncertain. The Board continues to monitor the situation in view of the current uncertainties but remains confident in the medium and long-term prospects for the business. Revenues since 30 September 2020 have also benefited from the rise in markets following the announcements regarding COVID-19 vaccines.

Trading update

Despite financial markets falling sharply at the start of the year as a direct result of the pandemic, the Group has reported an operating income of GBP14.35 million for the six-month period to September 2020, 7.9% below same period last year (30 September 2019: GBP15.58 million). Broking income in the period was encouragingly up 5.3% to GBP4 million (30 September 2019: GBP3.8 million), highlighting market volatility and a degree of investor confidence. Non-broking income as a proportion to broking income fell by 4% to 72%, with the loss of treasury interest income and lower management fee income in the period. Management fee income, being a product of asset values, was down given the fall in financial markets.

Income from the investor immigration division fell in the period reflecting a reduced number of high net worth applicants seeking UK settlement due to the global pandemic restricting international travel and migration. Structured investment activity and income was also lower.

Administrative expenses in the period, excluding exceptional expenses, fell 3.5% to GBP10.12 million (30 September 2019: GBP10.49 million), but much of the cost savings and efficiencies gained in the first half were absorbed by the increase in the FSCS levy adding an additional GBP0.2m to the Group's cost base.

Overall the Group reported an operating loss for the period, including redundancy costs, of GBP374,000 (30 September 2019: operating profit GBP617,000). Excluding the redundancy costs, which are reported separately as an exceptional item, the operating loss for the period was GBP272,000 (30 September 2019: operating profit before exceptional items was GBP408,000). Reported EBITDA(*) and underlying cash(*) generated remain positive.

We continue to focus on cost control measures, are renegotiating supply contracts and have implemented an intensive de-papering and paperless exercise. The Directors across all entities took a voluntary temporary salary reduction of 20% in the first three months of the financial year. In addition, the success and efficiency with which our staff have adapted to working remotely have changed the way we work and we are therefore also reviewing our future physical office requirements.

Total Assets under Management and Administration, after taking a fall in March 2020, have recovered to GBP4.8 billion. This is up 11.6% from March 2020 (31 March 2020: GBP4.3 billion).

The Group balance sheet and capital base, although reduced by the reported loss, remain sufficiently robust to support our growth strategy and the payment of a small interim dividend. As at the reporting date, the Group recorded net assets of GBP22.3 million (30 September 2019: net assets of GBP22.7 million; 31 March 2020: net assets of GBP22.6 million) and cash surplus of GBP7.73 million after adjusting for the GBP76,000 furlough grant repaid post period end (30 September 2019: GBP7.55 million; 31 March 2020: GBP8.61 million). The Group capital surplus remains above 200%.

Investment Management

The Group's Investment Management division returned an operating profit of GBP285,000 for the six-month period compared to GBP1,161,000 in the previous year. The loss of income was primarily caused by lower interest income, management fees and structured investment income, offset by higher trading commissions and arbitrage income.

The Investment Management division proudly launched its in-house Model Portfolio Service in the period and is looking forward to marketing its service and performance to both existing and new clients.

Since the reporting date, two advisers have decided to leave the Group on amicable terms, which will result in the transfer of GBP46.8 million of Assets Under Management and Administration. The transfer of clients and their assets will take place later this year. The future impact on the Group's performance to be a reduction in net income before operating costs of circa GBP70,000.

Wealth Management

The division reported an operating loss of GBP17,000 (30 September 2019: operating profit GBP56,000) and is focused on improving results through recruiting new advisors, acquiring books of clients with funds under management and achieving cost savings, fully supported by the new back office system implemented last year.

Technology Services

EnOC Technologies Limited, the Group's new technology subsidiary, reported a loss of GBP78,000. The Group believes that its continued investment in technology is crucial to providing innovative and effective services to our clients, investment managers and staff.

The three-year project to commercialise our technology has begun. Since launching the EnOC Pro Platform in December 2019 with the Senior Managers & Certification Regime (SM&CR) system, a leading European systems provider in the private wealth space has signed up to adopt the system as part of its service offering to its clients. www.enoc.pro has also been collaborating on system development initiatives with counterparties in Singapore, Hong Kong and Malaysia as EnOC reaches out far beyond the boundaries of the Group.

Group Strategy

The Board continues to pursue a strategy of expansion by the recruitment of Investment and Wealth Management advisers and teams, and the acquisition of books of clients with funds under management. The Directors continue to monitor the cost base and look to take advantage of the more streamlined and flexible working environment as we adapt to the new normal working life.

Dividends

The Board did not take the decision in March to withdraw the final dividend lightly. Now that the Board has a greater visibility on the impact of the pandemic, we have approved an interim dividend of 0.15 pence per share (2019: 0.60 pence per share) payable on 23 December 2020 to those shareholders on the register at the close of business on 11 December 2020. Our aim is always to reward shareholders for their continued support. The Board will continue to monitor the Group's progress in terms of the commitments made by executives and the ongoing global pandemic, and will set the final dividend based on performance, capital headroom, market outlook and short-term and long-term cash flow considerations.

Our Community

We believe that in challenging times, it is important that we continue to support our chosen charities. In addition to financial support, we try to do more by using our technology for good, engaging in technology philanthropy, and using technology as a catalyst to boost their efforts, working with them to design, deploy and maintain those systems.

Our partner charity's mission, www.twiningenterprise.org.uk, is to combat mental health stigma and to assist people who are struggling with mental health issues around work and whose goal is to ensure that everyone with a mental health issue can find employment and cope with the challenges of working life, to support employers and raise awareness around mental health in general, and to reduce stigma and discrimination. A mission whose work is especially crucial, as highlighted during this pandemic.

We urge you to join us by signing on to support Twining in their mission, staying informed of their latest news and activities, and support them financially by going to www.enoc.pro/community.

Directors, Account Executives and Staff

This is my first Chairman's report. It gives me little pleasure to report losses, but I will happily admit that I am relieved that the impact of the unprecedented situation has not been more severe. Specifically, I would like to thank my fellow Directors, our investment managers and advisers and all members of staff for their continued commitment to the highest levels of client service, support and diligence during this exceptional period of global turmoil. One would hope that this is a once in a lifetime experience and I am very proud of the way our team reacted.

I would also like to take this opportunity to express my thanks, both personally and on behalf of the Group and its shareholders, to my colleague and our former Chairman David Gelber for his invaluable stewardship of the Group since 2007, a period during which we have seen a multitude of changes. He will be a hard act to follow. As we noted, he kindly agreed in the circumstances to continue as a Non-executive Director for an additional 12 months.

Outlook

No doubt we have a difficult year ahead. There is an ongoing global pandemic, the terms on which the UK plans to leave the EU have yet to be concluded and there is global political unrest. Despite this, I and the Board remain cautiously optimistic and excited about the future prospects of the Group. Led by the executives, your Group has begun new changes to consolidate and streamline its operations. Once achieved, the breadth of our service offering coupled with staff and account executives working together will provide the Group with the platform on which to emerge from this challenging period stronger and from there to grow and secure our long-term goals.

Martin Wright

Chairman

27 November 2020

Walker Crips Group plc

* See note 18 for the reconciliation of alternative performance measures ('APMs') to IFRS reported results

Condensed Consolidated Income Statement

For the six months ended 30 September 2020

 
                                                               Unaudited          Unaudited            Audited 
                                                               September          September              March 
                                                                    2020               2019               2020 
                                               Notes             GBP'000            GBP'000            GBP'000 
-------------------------------------------   ------  ------------------  -----------------  ----------------- 
                                                  4, 
 Revenue                                           7              14,350             15,581             31,422 
 Commission and fees paid                          8             (4,543)            (4,686)            (9,771) 
 Share of after-tax profit / (loss) 
  of associate or joint venture                    9                  38                  -               (11) 
--------------------------------------------  ------  ------------------  -----------------  ----------------- 
 Gross profit                                                      9,845             10,895             21,640 
 
 
 Administrative expenses                                        (10,117)           (10,487)           (20,923) 
 Exceptional items                                10               (102)                209                375 
--------------------------------------------  ------  ------------------  -----------------  ----------------- 
 Operating (loss) / profit                         4               (374)                617              1,092 
 
 Investment revenue                                                    2                 94                 76 
 Finance costs                                                      (79)               (91)              (205) 
--------------------------------------------  ------  ------------------  -----------------  ----------------- 
 (Loss) / profit before tax                                        (451)                620                963 
 Taxation                                                             85              (118)              (245) 
 (Loss) / profit for the period attributable 
  to equity holders of the Parent Company                          (366)                502                718 
--------------------------------------------  ------  ------------------  -----------------  ----------------- 
 
 
 Earnings per share 
-------------------------------------------   ------  ------------------  -----------------  ----------------- 
 Basic                                             5             (0.86)p              1.18p              1.69p 
 Diluted                                           5             (0.86)p              1.18p              1.69p 
--------------------------------------------  ------  ------------------  -----------------  ----------------- 
 

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 September 2020

 
                                                                   Unaudited    Unaudited          Audited 
                                                                   September    September            March 
                                                                        2020         2019             2020 
                                                                     GBP'000      GBP'000          GBP'000 
                                                                 -----------  -----------  --------------- 
 (Loss) / profit for the period                                        (366)          502              718 
---------------------------------------------------------------  -----------  -----------  --------------- 
 Total comprehensive (loss) / income for the period 
  attributable to equity holders of the Parent 
  Company                                                              (366)          502              718 
---------------------------------------------------------------  -----------  -----------  --------------- 
 
 

Condensed Consolidated Statement of Financial Position

As at 30 September 2020

 
                                                                 Unaudited           Unaudited           Audited 
                                                                 September           September             March 
                                                                      2020                2019              2020 
 
                                               Notes               GBP'000             GBP'000           GBP'000 
--------------------------------------------  ------  --------------------  ------------------  ---------------- 
 Non-current assets 
 Goodwill                                                            4,388               4,413             4,388 
 Other intangible assets                                             6,397               7,036             6,701 
 Property, plant and equipment                                       2,076               2,010             2,330 
 Right of Use Asset                                                  4,049               5,048             4,362 
 Investment in Associate and Joint Venture         9                     4                   -                 - 
 Investments - fair value through profit or 
  loss                                            12                    50                  51                51 
                                                                    16,964              18,558            17,832 
--------------------------------------------  ------  --------------------  ------------------  ---------------- 
 Current assets 
 Trade and other receivables                                        17,985              23,823            24,515 
 Investments - fair value through profit or 
  loss                                            13                   958                 963               638 
 Cash and cash equivalents                                           7,831               7,552             8,609 
                                                                    26,774              32,338            33,762 
--------------------------------------------  ------  --------------------  ------------------  ---------------- 
 Total assets                                                       43,738              50,896            51,594 
--------------------------------------------  ------  --------------------  ------------------  ---------------- 
 
 Current liabilities 
 Trade and other payables                                         (15,753)            (21,921)          (22,750) 
 Current tax liabilities                                             (337)               (314)             (424) 
 Deferred tax liabilities                                            (225)               (303)             (335) 
 Bank overdrafts                                                      (24)                 (3)                 - 
 Provisions                                                          (183)               (183)             (178) 
 Lease liabilities                                                 (1,131)             (1,067)             (969) 
--------------------------------------------  ------  --------------------  ------------------  ---------------- 
                                                                  (17,653)            (23,791)          (24,656) 
--------------------------------------------  ------  --------------------  ------------------  ---------------- 
 Net current assets                                                  9,121               8,547             9,106 
--------------------------------------------  ------  --------------------  ------------------  ---------------- 
 
 Long-term liabilities 
 Deferred cash consideration                                          (15)                (47)              (15) 
 Lease liabilities                                                 (3,133)             (3,833)           (3,620) 
 Dilapidation provision                                              (659)               (542)             (659) 
--------------------------------------------  ------  --------------------  ------------------  ---------------- 
                                                                   (3,807)             (4,422)           (4,294) 
--------------------------------------------  ------  --------------------  ------------------  ---------------- 
 Net assets                                                         22,278              22,683            22,644 
--------------------------------------------  ------  --------------------  ------------------  ---------------- 
 
 Equity 
 Share capital                                                       2,888               2,888             2,888 
 Share premium account                                               3,763               3,763             3,763 
 Own shares                                                          (312)               (312)             (312) 
 Retained earnings                                                  11,216              11,621            11,582 
 Other reserves                                                      4,723               4,723             4,723 
 Equity attributable to equity holders of the Parent 
  Company                                                           22,278              22,683            22,644 
----------------------------------------------------  --------------------  ------------------  ---------------- 
 

Condensed Consolidated Statement of Cash Flows

For the six months ended 30 September 2020

 
                                                         Unaudited                 Unaudited                   Audited 
                                                         September                 September                     March 
                                                              2020                      2019                      2020 
                                Notes                      GBP'000                   GBP'000                   GBP'000 
-----------------------------  ------  ---------------------------  ------------------------  ------------------------ 
 Operating activities 
 Cash generated by operations      15                            5                     1,463                     3,483 
 Tax (paid) / received                                       (109)                         -                        18 
-----------------------------  ------  ---------------------------  ------------------------  ------------------------ 
 Net cash (used) / generated 
  by operating activities                                    (104)                     1,463                     3,501 
-----------------------------  ------  ---------------------------  ------------------------  ------------------------ 
 Investing activities 
 Purchase of property, plant 
  and equipment                                               (46)                     (193)                     (321) 
 (Purchase) / sale of 
  investments held for 
  trading                                                    (200)                       140                       101 
 Consideration paid on 
  acquisition of client lists                                    -                      (53)                      (21) 
 Consideration paid on 
  acquisition of subsidiary 
  net of cash acquired                                           -                        21                       (1) 
 Dividends received                                              -                        10                        17 
 Dividends received from                                        34                         -                         - 
 associate investment 
 Interest received                                               2                        73                        48 
-----------------------------  ------  ---------------------------  ------------------------  ------------------------ 
 Net cash used by investing 
  activities                                                 (210)                       (2)                     (177) 
-----------------------------  ------  ---------------------------  ------------------------  ------------------------ 
 Financing activities 
 Dividends paid                                                  -                     (141)                     (396) 
 Interest paid                                                 (9)                      (10)                       (7) 
 Government grant received                                      76                         -                         - 
 (#) 
 Repayment of lease 
  liabilities *                                              (485)                     (469)                     (944) 
 Repayment of lease interest 
  *                                                           (70)                      (81)                     (157) 
-----------------------------  ------  ---------------------------  ------------------------  ------------------------ 
 Net cash used by financing 
  activities                                                 (488)                     (701)                   (1,504) 
-----------------------------  ------  ---------------------------  ------------------------  ------------------------ 
 Net (decrease) / increase in 
  cash and cash equivalents                                  (802)                       760                     1,820 
 Net cash and cash 
  equivalents at beginning of 
  period                                                     8,609                     6,789                     6,789 
-----------------------------  ------  ---------------------------  ------------------------  ------------------------ 
 Net cash and cash 
  equivalents at end of 
  period                                                     7,807                     7,549                     8,609 
-----------------------------  ------  ---------------------------  ------------------------  ------------------------ 
 Cash and cash equivalents                                   7,831                     7,552                     8,609 
 Bank overdrafts                                              (24)                       (3)                         - 
-----------------------------  ------  ---------------------------  ------------------------  ------------------------ 
                                                             7,807                     7,549                     8,609 
-----------------------------  ------  ---------------------------  ------------------------  ------------------------ 
 

# Grant received of GBP76,000 under the Government backed Coronavirus Job Retention Scheme. Subsequent to the period end, the Directors have repaid the grant to HMRC in full (see note 2).

*Total IFRS 16 lease liability payments GBP555,000 (30 September 2019: GBP550,000 and 31 March 2020: GBP1,101,000).

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 September 2020

 
                                                                                 Own 
                                 Share          Share premium                 shares                                                                                       Total 
                               capital                account                   held     Capital redemption                  Other      Retained earnings                 equity 
                               GBP'000                GBP'000                GBP'000                GBP'000                GBP'000                GBP'000                GBP'000 
---------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  --------------------- 
 Equity as at 
  31 March 2019                  2,888                  3,763                  (312)                    111                  4,612                 10,659                 21,721 
---------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  --------------------- 
 Total 
  comprehensive 
  income for 
  the period                         -                      -                      -                      -                      -                    502                    502 
---------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  --------------------- 
 Contributions 
 by and 
 distributions 
 to owners 
 Dividends paid                      -                      -                      -                      -                      -                  (141)                  (141) 
 Effect of 
  adoption of 
  IFRS 16                            -                      -                      -                      -                      -                    601                    601 
 Total 
  contributions 
  by and 
  distributions 
  to owners                          -                      -                      -                      -                      -                    460                    460 
---------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  --------------------- 
 Equity as at 
  30 September 
  2019                           2,888                  3,763                  (312)                    111                  4,612                 11,621                 22,683 
---------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  --------------------- 
 Total 
  comprehensive 
  income for 
  the period                         -                      -                      -                      -                      -                    216                    216 
---------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  --------------------- 
 Contributions 
 by and 
 distributions 
 to owners 
 Dividends paid                      -                      -                      -                      -                      -                  (255)                  (255) 
 Total 
  contributions 
  by and 
  distributions 
  to owners                          -                      -                      -                      -                      -                  (255)                  (255) 
---------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  --------------------- 
 Equity as at 
  31 March 2020                  2,888                  3,763                  (312)                    111                  4,612                 11,582                 22,644 
---------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  --------------------- 
 Total 
  comprehensive 
  loss for the 
  period                             -                      -                      -                      -                      -                  (366)                  (366) 
---------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  --------------------- 
 Contributions 
 by and 
 distributions 
 to owners 
 Dividends paid                      -                      -                      -                      -                      -                      -                      - 
 Total                               -                      -                      -                      -                      -                      -                      - 
 contributions 
 by and 
 distributions 
 to owners 
---------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  --------------------- 
 Equity as at 
  30 September 
  2020                           2,888                  3,763                  (312)                    111                  4,612                 11,216                 22,278 
---------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  ---------------------  --------------------- 
 

Notes to the condensed consolidated financial statements

For the six months ended 30 September 2020

1. General information

Walker Crips Group plc ('the Company') is the Parent Company of the Walker Crips group of companies ('the Group'). The Company is a public limited company incorporated in England and Wales under the Companies Act 2006. The Company's registered office is at Old Change House, 128 Queen Victoria Street, London EC4V 4BJ.

2. Basis of preparation and significant accounting policies

Basis of preparation

The Group's consolidated financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). These condensed financial statements are presented in accordance with IAS 34 Interim Financial Reporting. They do not include all disclosures that would otherwise be required in a complete set of financial statements, however, selected explanatory notes are included for events and transactions that are significant to an understanding of the Group's financial position and performance.

The condensed consolidated financial statements should be read in conjunction with the Group's audited financial statements for the year ended 31 March 2020. The interim financial information is unaudited and does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.

The Group's financial statements for the year ended 31 March 2020 have been reported on by the auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not draw attention to any matters by way of emphasis. They also did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The interim financial information has neither been audited nor reviewed pursuant to guidance issued by the Audit Procedures Board.

The condensed consolidated financial statements have been prepared on the basis of the accounting policies and methods of computation set out in the Group's consolidated financial statements for the year ended 31 March 2020.

The interim condensed consolidated financial statements are presented in GBP sterling (GBP) and are rounded to the nearest thousand, unless stated otherwise.

The Directors have considered the guidance of the UK Financial Reporting Council and events relating to the spread of coronavirus (COVID-19) in preparing these interim condensed consolidated financial statements.

Going Concern

The Directors are satisfied that the Group has sufficient resources to continue in operation for a period of at least twelve months from the date of this report. Accordingly, the Directors continue to adopt the going concern basis in preparing the condensed consolidated financial statements.

As at 30 September 2020, the Group had net assets of GBP22.3m (31 March 2020: GBP22.6m), net current assets of GBP9.1m (31 March 2020: GBP9.1m) and net cash and cash equivalents of GBP7.73 million after adjusting for the GBP76,000 furlough grant repaid post period end (31 March 2020: GBP8.61 million). The Group reported an operating loss of GBP374,000 for the period to 30 September 2020, inclusive of an exceptional cost of GBP102,000 (31 March 2020: operating profit of GBP1,092,000, inclusive of exceptional income of GBP375,000), and cash generated by operating activities of GBP5,000 (31 March 2020: cash generated by operating activities of GBP3,483,000).

The Directors consider the going concern basis to be appropriate following their assessment of the Group's financial position and its ability to meet its obligations as and when they fall due. In making the going concern assessment, the Directors have taken into account the following:

   -     The capital structure and liquid resources of the Group; 
   -     Actual trading in the six-month period to 30 September 2020; 

- Its base case and stressed cash flow forecasts over the financial reporting periods ending 31 March 2021 and 31 March 2022;

- Stress tests carried out, including reversed stress test scenarios to assess the Group's ability to withstand significant market-wide events; and

- The principal risks facing the Group, including the potential financial and operational impact of COVID-19, and its systems of risk management and internal control.

Key assumptions that the Directors have made in preparing the base case cash flow forecasts are that:

- Revenues reflect the impact of (i) continued low base rates of 10 basis points on income for managing client deposits and (ii) lower fee income expectation as a result of the lower UK equity market index levels. Overall revenue growth expectation for future years set conservatively at 2% to 3.3%; and

- Base case costs reflect only the actions Management has taken to date in response to the impact of COVID-19 on the business for the remainder of the present reporting year, with any further cost savings delayed until the year to 31 March 2022.

Key stress scenarios that the Directors have considered include:

- A 'bear stress scenario' representing a further 10% fall in income compared to the base case scenario in reporting periods ending 31 March 2021 and 31 March 2022;

- A 'severe stress scenario' representing a 20% fall in commission income and 15% fall in fee income compared to the base case for each forecast period; and

   -     Both stress scenarios assume no mitigating actions. 

Our reverse stress testing further indicates that revenues would have to decline by 26% and 31% respectively over the next 12 months compared to base case to reach our liquidity and pillar 1 regulatory capital ratio thresholds. These reverse stresses make no allowance for any mitigating actions available to the Group and the Directors consider them to be remote scenarios.

Actual trading for the six months to 30 September 2020 was ahead of the base case scenario noted above. Although COVID-19 developments are fluid, the Directors believe that the stress conditions assessed demonstrate the Group's financial resilience and operating flexibility. At the report date, the Directors were not aware of any material uncertainties that would cast doubt over the Group's ability to continue as a going concern.

Government grant

The Group, initially having taken advantage of the Government backed Coronavirus Job Retention Scheme (CJRS), post period-end decided to repay the grant in full. The Directors took this decision following a review of work activities undertaken by furloughed staff, which resulted in some positions being made redundant, and as such believe it is correct to repay the grant. The reported loss therefore does not include the grant. The initial cash receipt is recognised in the statement of cash flows as a financing activity and the repayment liability is recorded in the statement of financial position.

Taxation

The tax credit in the income statement represents the sum of the tax currently receivable and deferred tax.

The tax currently receivable is based on the taxable loss for the period. Taxable loss differs from net loss as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of financial position date. The amount of taxable loss in the current period has been estimated.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable loss or profits will be available against which deductible temporary differences can be utilised.

The statement of financial position shows overall payable balances for tax liability and deferred tax liability despite an estimated receivable recognised in the six-month period to 30 September 2020. This is due to the impact of the income statement tax credit reducing the balance of the respective liabilities.

The carrying amount of deferred tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised based on tax rates that have been enacted or substantively enacted by the statement of financial position date. Deferred tax is charged or credited directly to the income statement, except when it relates to items charged or credited to 'Other comprehensive income' in which case the deferred tax is also dealt with in other comprehensive income.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to do so and presented as a net number on the face of the statement of financial position.

Use of estimates and judgements

Estimates and judgements used in the preparation of these interim condensed consolidated financial statements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable.

There have been no material revisions to the nature and amounts of estimates of numbers reported in prior periods. The effects of COVID-19 have not made any significant changes to various methodologies adopted by the Group in assessing judgments and estimates made in the preparation of these interim Condensed Consolidated Financial Statements.

Key sources of estimates and judgements that have a significant impact on the carrying values of assets and liabilities are discussed below:

   -     Impairment of goodwill 

The Group tests annually whether goodwill allocated to each of the cash generating units have suffered any impairment. Impairment tests are carried out more frequently if there are events or changes in circumstances that indicate that the carrying amount of the asset may exceed the recoverable amount.

Determining whether goodwill is impaired requires an estimation of the fair value less costs to sell and the value-in-use of the cash-generating units to which goodwill has been allocated. The fair value less costs to sell involves estimation of values based on the application of earnings multiples and comparison to similar transactions. The value-in-use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and apply a discount rate in order to calculate present value. The assumptions and inputs involve judgements and create estimation uncertainty.

The last annual test was performed for the year ending 31 March 2020. The carrying amount of goodwill at the statement of financial position date was GBP4.4 million (31 March 2020: GBP4.4 million).

   -     Other intangible assets 

Acquired client lists are capitalised based on current fair values. When the Group purchases client relationships from other corporate entities, a judgement is made as to whether the transaction should be accounted for as a business combination or a separate purchase of intangible assets. In making this judgement, the Group assesses the acquiree against the definition of a business combination in IFRS 3. Payments to newly recruited Investment Managers are capitalised when they are judged to be made for the acquisition of client relationship intangibles. The useful lives are estimated by assessing the historic rates of client retention, the ages and succession plans of the Investment Managers who manage the clients and the contractual incentives of the Investment Managers. The Directors conduct a review of indicators of impairment and also consider a life of up to twenty years to be both appropriate and in line with industry peers.

The Group reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

No intangible asset acquisitions were made in the period to 30 September 2020.

   -     IFRS 16 "Leases" 

IFRS 16 requires certain judgements and estimates to be made and those significant judgements are explained below:

- Following a review of all leases, the Group has opted to use single discount rates for leases with reasonably similar characteristics. The discount rates used have had an impact on the right-of-use assets values, lease liabilities on initial recognition and lease finance costs included within the income statement and statement of financial position.

- IFRS 16 defines a lease term as the non-cancellable period of a lease, together with the options to extend or terminate a lease, if the lessee is reasonably certain to exercise the lease options available at the time of reporting. Where a lease includes the option for the Group to extend the lease term, the Group has exercised the judgement, based on current information, that such leases will be extended to the full length available, and this is included in the calculation of the value of the right of use assets and lease liabilities on initial recognition and valuation at the reporting date.

Impact of accounting standards to be applied in future periods

There are a number of standards and interpretations which have been issued by the International

Accounting Standards Board that are effective for periods beginning subsequent to 31 December

2020 that the Group has decided not to adopt early. The Group does not believe these standards and interpretations will have a material impact on the financial statements once adopted.

Significant events and transactions

The World Health Organisation declared COVID-19 a global health emergency on 30 January 2020. In response and in light of the expected economic downturn due to the COVID-19 pandemic, the Bank of England (BoE) reduced the base rate from 0.75% to 0.25% on 11 March 2020 and again to 0.1% on 19 March 2020. The cuts in base rate, as noted in Group's Annual Reports and Accounts, is expected to result in GBP1.5 million less annual income receivable by the Group. For the six-month period to 30 September 2020, the impact of changes in the base rate resulted in GBP785,000 less income being recorded compared to the prior period. In turn, this has contributed to the drop in the proportion of non-broking income to total income (Note 7).

In the 6 months to 30 September 2020 the Group reported management fee income that is GBP516,000 lower than the prior year comparable period. The fall in fee income, as anticipated, was partly caused by the previously noted exit of several investment managers in 2019 and partly by the drop in global financial market indices, resulting in lower assets under management values and therefore lower management fees.

The volatility in the financial markets also played a part in boosting our broking income by GBP173,000 compared to the prior period as clients engaged in increased trading activity.

3. Changes in significant accounting policies

The accounting policies applied in these interim Condensed Consolidated Financial Statements are consistent with those applied in the Group's Consolidated Financial Statements as at and for the year ended 31 March 2020.

4. Revenue and segmental analysis

For segmental reporting purposes, the Group currently has three operating segments:

   -     Investment Management, being portfolio-based transaction execution and investment advice; 
   -     Wealth Management, being financial planning and pension advice; and 

- Software as a Service (SaaS), comprising provision of regulatory and admin software to regulated companies.

Walker Crips Investment Management's activities focus predominantly on investment management of various types of portfolios and asset classes.

Walker Crips Wealth Management provides advisory and administrative services to clients in relation to their financial planning, life insurance, inheritance tax and pension arrangements.

EnOC Technologies Limited (SaaS) provides the regulatory and admin software, software as a service, to regulated companies including all WCG's regulated entities. Fees payable by subsidiary companies to EnOC Technologies Limited have been eliminated on consolidation.

These activities are the basis on which the Group reports its primary segment information. Unallocated corporate expenses are disclosed separately. Revenues between Group entities and reportable segments are excluded from the below analysis.

 
                  Investment Management              Wealth Management                           SaaS                                                   Total 
                                GBP'000                        GBP'000                        GBP'000                                                 GBP'000 
-----------  --------------------------  -----------------------------  -----------------------------  --------------------------  -------------------------- 
 6 months 
  to 30 
  September 
  2020                           13,542                            806                              2                                                  14,350 
-----------  --------------------------  -----------------------------  -----------------------------  --------------------------  -------------------------- 
 6 months 
  to 30 
  September 
  2019                           14,515                          1,066                              -                                                  15,581 
-----------  --------------------------  -----------------------------  -----------------------------  --------------------------  -------------------------- 
 Year to 31 
  March 
  2020                           29,562                          1,859                              1                                                  31,422 
-----------  --------------------------  -----------------------------  -----------------------------  --------------------------  -------------------------- 
 
 
 
 Operating                                                                                                            Unallocated                   Operating 
 (loss) /                                                                                                                   Costs             (Loss) / profit 
 profit 
                                GBP'000                        GBP'000                        GBP'000                     GBP'000                     GBP'000 
-----------  --------------------------  -----------------------------  -----------------------------  --------------------------  -------------------------- 
 6 months 
  to 30 
  September 
  2020                              285                           (17)                           (78)                       (564)                       (374) 
-----------  --------------------------  -----------------------------  -----------------------------  --------------------------  -------------------------- 
 6 months 
  to 30 
  September 
  2019                            1,161                             56                              -                       (600)                         617 
-----------  --------------------------  -----------------------------  -----------------------------  --------------------------  -------------------------- 
 Year to 31 
  March 
  2020                            2,034                             42                           (29)                       (955)                       1,092 
-----------  --------------------------  -----------------------------  -----------------------------  --------------------------  -------------------------- 
 

5. Earnings per share

The calculation of basic earnings per share for continuing operations is based on the post-tax loss for the period of GBP366,000 (2019: post-tax profit of GBP502,000) and on 42,577,328 (2019: 42,577,328) ordinary shares of 6 2/3p, being the weighted average number of ordinary shares in issue during the period. There is no dilution applicable to the current period.

6. Dividends

The interim dividend of 0.15 pence per share (2019: 0.60 pence per share) is payable on 23 December 2020 to shareholders on the register at the close of business on 11 December 2020. The associated ex-dividend date is 10 December 2020. The interim dividend has not been included as a liability in this interim report.

7. Total income

 
                                          Six months   Six months 
                                            ended 30     ended 30     Year end 
                                           September    September     31 March 
                                                2020         2019         2020 
                                             GBP'000      GBP'000      GBP'000 
---------------------------------------  -----------  -----------  ----------- 
 Revenue from contracts with customers        13,360       13,975       28,835 
 Other revenue                                   990        1,606        2,587 
---------------------------------------  -----------  -----------  ----------- 
                                              14,350       15,581       31,422 
---------------------------------------  -----------  -----------  ----------- 
 Investment revenues                               2           94           76 
---------------------------------------  -----------  -----------  ----------- 
                                              14,352       15,675       31,498 
---------------------------------------  -----------  -----------  ----------- 
 

The Group's income can also be categorised as follows for the purpose of measuring a Key Performance Indicator; the ratio of non-broking income to total income.

 
                Six months ended         Six months ended         Year ended 
                    30 September             30 September           31 March 
                            2020     %               2019     %         2020     % 
 Income                  GBP'000                  GBP'000            GBP'000 
               -----------------  ----  -----------------  ----  -----------  ---- 
 
 Broking                   3,984    28              3,780    24        8,095    26 
 Non-Broking              10,368    72             11,895    76       23,403    74 
                          14,352   100             15,675   100       31,498   100 
               -----------------  ----  -----------------  ----  -----------  ---- 
 
 

8. Commission payable

Commissions and fees paid comprises:

 
                                  Six months   Six months 
                                    ended 30     ended 30     Year end 
                                   September    September     31 March 
                                        2020         2019         2020 
                                     GBP'000      GBP'000      GBP'000 
-------------------------------  -----------  -----------  ----------- 
 
 To authorised external agents            36           34           65 
 To approved persons                   4,507        4,652        9,706 
-------------------------------  -----------  -----------  ----------- 
                                       4,543        4,686        9,771 
-------------------------------  -----------  -----------  ----------- 
 

9. Investment in associate and joint venture

 
                                           September                           September                                  March 
                                                2020                                2019                                   2020 
                                             GBP'000                             GBP'000                                GBP'000 
-----------   --------------------------------------  ----------------------------------  ------------------------------------- 
 
 Brought 
  forward                                          -                                  44                                     44 
 Additions                                         -                                   -                                      - 
 Disposals                                         -                                (33)                                   (33) 
 Share of 
  after tax 
  profits / 
  (losses)                                        38                                (11)                                   (11) 
 Dividends                                      (34)                                   -                                      - 
------------  --------------------------------------  ----------------------------------  ------------------------------------- 
 Carried 
  forward                                          4                                   -                                      - 
------------  --------------------------------------  ----------------------------------  ------------------------------------- 
 

Associate

The Group has a 33% (2019: nil) interest in its associate, Walker Crips Property Income Limited ("WCPIL"), a company incorporated and operating in the United Kingdom. The brought forward value of the Group's share of net assets in WCPIL was GBP1. The Board of WCPIL submitted management accounts to 30 September 2020 reporting a profit of GBP115,000 from which a dividend of GBP34,000 was paid in the period.

Joint venture

As reported in the 2020 Annual Report and Accounts, the Group acquired the remaining interest in the former joint venture, JWPCreers Wealth Management Limited, which is now a 100% owned subsidiary and has changed its name to Walker Crips Ventures Limited.

   10.    Exceptional items 

As a result of their materiality, the Directors have decided to disclose certain amounts separately in order to present results which are not distorted by significant non-recurring events.

 
                                            Six months                      Six months                      Year ended 
                                              ended 30                        ended 30                        31 March 
                                             September                       September                            2020 
                                                  2020                            2019 
                                               GBP'000                         GBP'000                         GBP'000 
----------------------  ------------------------------  ------------------------------  ------------------------------ 
 Changes in the value 
  of deferred 
  consideration                                      -                               -                             166 
 Insurance recovery of 
  historical claim 
  against the Group                                  -                             209                             209 
 Redundancies                                    (102)                               -                               - 
                                                 (102)                             209                             375 
----------------------  ------------------------------  ------------------------------  ------------------------------ 
 

During the period to 30 September 2020, the Group as part of the restructuring programme made certain positions redundant. The cost of the redundancy exercise is classified as exceptional due to its nature and materiality.

In the period to 31 March 2020, the Group, following arbitration proceedings, received GBP209,000 in respect of a disputed historic insurance claim that was expensed in prior periods. In addition, cash consideration payable for acquired client relationships was re-assessed based on actual values and an exceptional credit recorded being the reversal of an over-estimation of GBP166,000.

   11.    Tax 

Tax is charged at 19% for the six months ended 30 September 2020 (30 September 2019: 19%) representing the best estimate of the average annual effective tax rate expected to apply for the full year, applied to the pre-tax income of the six-month period.

   12.    Non-current investments - fair value through profit or loss 
 
                                          Investments at 
                                      fair value through 
                                          profit or loss                       Total 
                                                 GBP'000                     GBP'000 
 
 At 30 September 2019                                 51                          51 
-------------------------  -----------------------------  -------------------------- 
 Disposals in the period                               -                           - 
 At 31 March 2020                                     51                          51 
-------------------------  -----------------------------  -------------------------- 
 Disposals in the period                             (1)                         (1) 
 At 30 September 2020                                 50                          50 
-------------------------  -----------------------------  -------------------------- 
 
 

Investments at fair value through profit or loss

The Group's non-current investments comprise unregulated collective investment scheme (UCIS) investments (GBP40,000) and a life policy investment (GBP10,000).

The UCIS fair values are based upon the reported unit price as at 30 September 2020.

The fair value of the Group's life policy investment is based upon the life company's forecast terminal value.

   13.    Current investments 
 
                                                             As at            As at                  As at 
                                                      30 September     30 September               31 March 
                                                              2020             2019                   2020 
                                                           GBP'000          GBP'000                GBP'000 
-------------------------------------------------  ---------------  ---------------  --------------------- 
 Trading investments 
 Investments - fair value through profit or loss               958              963                    638 
-------------------------------------------------  ---------------  ---------------  --------------------- 
 

Trading investments represent securities and collectives held in support of Group's structured investment and arbitrage activities. The fair values of these securities are based on quoted market prices.

   14.      Fair values 

The following provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. The trading investments fall within this category;

- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). The Group does not hold financial instruments in this category; and

- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). The Group's Investments held in non-current assets fall within this category.

Further IFRS 13 disclosures have not been presented here as the balance represents 2.305% (2019: 1.892%) of total assets.

The following tables analyse within the fair value hierarchy to the Group's Investments measured at fair value.

 
                                                 Level 1                          Level 3                        Total 
                                                 GBP'000                          GBP'000                      GBP'000 
------------------------  ------------------------------  -------------------------------  --------------------------- 
 At 30 September 2020 
 Financial assets held 
  at fair value through 
  profit and loss                                    958                               50                        1,008 
------------------------  ------------------------------  -------------------------------  --------------------------- 
                                                     958                               50                        1,008 
------------------------  ------------------------------  -------------------------------  --------------------------- 
 
 At 30 September 2019 
 Financial assets held 
  at fair value through 
  profit and loss                                    963                               51                        1,014 
------------------------  ------------------------------  -------------------------------  --------------------------- 
                                                     963                               51                        1,014 
------------------------  ------------------------------  -------------------------------  --------------------------- 
 
 At 31 March 2020 
 Financial assets held 
  at fair value through 
  profit and loss                                    638                               51                          689 
------------------------  ------------------------------  -------------------------------  --------------------------- 
                                                     638                               51                          689 
------------------------  ------------------------------  -------------------------------  --------------------------- 
 

There have been no transfers of financial instruments between levels during the period.

Level 1 investments comprise the Group's principal proprietary holdings of listed investments, which are valued at the prices prevailing on the respective relevant stock exchanges at the period end.

Level 3 investments represent the fair value of UCIS and Life Policy investments, which have fair values determined by reference to prices supplied from the administrator and provider respectively.

In all cases, the unrealised gains or losses in the investments are recognised within revenue on the income statement.

   15.      Cash generated from operations 
 
                                                 Unaudited                       Unaudited                 Audited 
                                                 September                       September                   March 
                                                      2020                            2019                    2020 
                                                   GBP'000                         GBP'000                 GBP'000 
 
 
 Operating (loss) / 
  profit for the 
  period                                             (374)                             617                   1,092 
 Adjustments for: 
 Amortisation of 
  intangibles                                          304                             279                     609 
 Changes in the fair 
  value of deferred 
  consideration                                          -                               -                   (166) 
 Net change in fair 
  value of financial 
  instruments 
  at fair value 
  through profit or 
  loss                                               (120)                            (71)                     367 
 Share of 
  associate/joint 
  venture 
  (profit) / loss                                     (38)                               -                      11 
 Depreciation of 
  property, plant and 
  equipment                                            300                             267                     590 
 Depreciation of 
  right-of-use assets                                  475                             453                     867 
 Decrease in debtors 
  *                                                  6,533                          11,736                  11,044 
 (Decrease) in 
  creditors *                                      (7,075)                        (11,777)                (10,884) 
 
 Change in working 
 capital as a 
 result 
 of net of effects 
 of acquiring a 
 subsidiary and 
 disposal of joint 
 venture: 
 Derecognition of 
  joint venture asset 
  now fully acquired                                     -                            (44)                    (44) 
 Trade and other 
  payables                                               -                             (6)                    (12) 
 Trade and other 
  receivables                                            -                               9                       9 
 
 Net generated by 
  operations                                             5                           1,463                   3,483 
---------------------  -----------------------------------  ------------------------------  ---------------------- 
 

*GBP542,000 cash outflow from working capital movement (30 September 2019: GBP41,000 outflow; 31 March 2020: GBP160,000 inflow).

   16.    Contingent liability 

Occasionally the Group receives complaints that are considered without merit, but the final outcome sometimes falls outside the Group's control. Where such claims are not covered by the Group's indemnity insurance, for example due to an excess or coverage dispute, a contingent liability arises. However, where in the view of the Directors a negative outcome is considered to be remote no disclosure has been made in these financial statements.

   17.    Subsequent events 

Since the reporting date, two advisers have decided to leave the Group on amicable terms, which will result in the transfer of GBP46.8 million of Assets Under Management and Administration. The transfer of clients and their assets will take place later this year. The future impact on the Group's performance to be a reduction in net income before operating costs of circa GBP70,000.

   18.    Alternative performance measures ('APMs') 

As explained in the 2020 Annual Report and Accounts, the Group reports APMs to facilitate readers' understanding of business performance. The tables below provide full reconciliations of the APMs to IFRS reported results

 
 Reconciliation of operating (loss) / profit to operating (loss) / profit before exceptional 
  items 
 
                                                         Unaudited                 Unaudited                   Audited 
                                                         September                 September                     March 
                                                              2020                      2019                      2020 
                                                            GBP000                    GBP000                    GBP000 
----------------------------------------  ------------------------  ------------------------  ------------------------ 
 Operating (loss) / profit                                   (374)                       617                     1,092 
 Exceptional items (Note 10)                                   102                     (209)                     (375) 
 Operating (loss) / profit before tax 
  and exceptional items                                      (272)                       408                       717 
----------------------------------------  ------------------------  ------------------------  ------------------------ 
 
 IAS 17 consistent EBITDA 
                                                         Unaudited                 Unaudited                   Audited 
                                                         September                 September                     March 
                                                              2020                      2019                      2020 
                                                            GBP000                    GBP000                    GBP000 
----------------------------------------  ------------------------  ------------------------  ------------------------ 
 Operating (loss) / profit before tax 
  and exceptional items                                      (272)                       408                       717 
 Amortisation / depreciation (Note 15)                         604                       546                     1,199 
 RoUA* depreciation charge (Note 15)                           475                       453                       867 
 IAS 17 operating lease charge                               (427)                     (420)                     (855) 
 IAS 17 consistent EBITDA                                      380                       987                     1,928 
----------------------------------------  ------------------------  ------------------------  ------------------------ 
 * Right-of-use assets 
 
 Underlying cash generated by operations 
                                                         Unaudited                 Unaudited                   Audited 
                                                         September                 September                     March 
                                                              2020                      2019                      2020 
                                                            GBP000                    GBP000                    GBP000 
----------------------------------------  ------------------------  ------------------------  ------------------------ 
 Cash generated by operations                                    5                     1,463                     3,483 
 Working capital movement *                                    618                        41                     (160) 
 Lease liability payments under IFRS16 
  (see Statement of Cash Flows)                              (555)                     (550)                   (1,101) 
 Exceptional items (Note 10)                                   102                     (209)                     (375) 
 Underlying cash generated by operations                       170                       745                     1,847 
----------------------------------------  ------------------------  ------------------------  ------------------------ 
 
 

* Working capital movement of GBP542,000 per Note 15 further adjusted to eliminate the impact of the furlough grant repaid post period end

Directors' Responsibility Statement

The Directors confirm that to the best of their knowledge:

(a) The condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU;

(b) The half yearly report from the Chairman (constituting the interim management report) includes a fair review of the information required by DTR 4.2.7R; and

(c) The half yearly report from the Chairman includes a fair review of the information required by DTR 4.2.8R as far as applicable.

On Behalf of the Board

Sean Lam

Chief Executive Officer

27 November 2020

Walker Crips Group plc

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November 27, 2020 04:34 ET (09:34 GMT)

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