TIDMWCW
RNS Number : 2768X
Walker Crips Group plc
23 November 2017
23(rd) November 2017
Walker Crips Group plc
Results for the six months ended 30 September 2017
Strong Investment Management performance contributes to
increase
in revenue and profit before tax
Walker Crips Group plc ("Walker Crips", the "Company" or the
"Group"), is a long-established business delivering investment
management, stockbroking and wealth management services to UK
retail and intermediary clients. Its strategic ambition is to embed
technology in everything it does in its transition to becoming a
truly technology driven financial services group to complement the
constant drive to enhance its customers' experience, broaden
product offerings, empower its staff and pursue business
efficiencies.
HIGHLIGHTS
-- Group revenues increased by 16.7% to GBP15.4 million (2016: GBP13.2 million)
-- Underlying operating profit, before tax and exceptional items
increased by 62.8% to GBP394,000 (2016: GBP242,000)
-- Reported pre-tax profit increased to GBP0.5 million (2016: GBP0.05 million)
-- Discretionary and advisory assets under management and assets
under administration have increased since 31 March 2017, to GBP5.3
billion (30 Sep 2016: GBP4.8 billion; 31 Mar 2017: GBP5.2
billion)
-- Non-broking income as a percentage of total income remained steady at 62% (2016: 61%)
-- Interim dividend unchanged at 0.58 pence per share (2016: 0.58 pence per share)
David Gelber, Chairman, Walker Crips, says:
"I am very pleased to report on an encouraging period for the
Group where our focus on the delivery of quality personal
investment advice and strong investment management capability has
helped the Group increase AUMA, revenue and profit.
"We remain in a sound financial position and have continued to
trade profitably since the Period end. We remain cautious about the
short-term outlook, due to ongoing political and market uncertainty
but believe that in this climate the quality of the advice and
support we provide our customers will continue to prove
important."
For further information, please contact:
Walker Crips Group plc Tel: +44 (0)20 3100 8000
Bridgette Campbell, Media
Relations
Four Broadgate Tel: +44 (0)20 3697 4200
Roland Cross
walkercrips@fourbroadgate.com
Cantor Fitzgerald Europe Tel: +44 (0)20 7894 7000
Marc Milmo/Will Goode
Further information on Walker Crips Group is available on the
Company's website: www.wcgplc.co.uk
Chairman's Statement
Introduction
I am very pleased to report on an encouraging period for the
Group where our focus on the delivery of quality personal
investment advice and strong investment management capability has
helped the Group increase AUMA, revenue and profit.
In the Group's year-end statement, we reported that trading
activity in the opening weeks of the new financial year had been
encouraging and this trend has continued during a period of mixed
sentiment when the FTSE100 reached record highs against a backdrop
of ongoing uncertainty surrounding the terms for the United
Kingdom's exit from the EU and continuing sterling weakness.
As part of our stated strategy for growth, we have recently
widened our existing focus on expansion through acquisition of
investment advisers, establishing innovative high margin
alternative investment products and by planning the accelerated use
of technology to drive transformational and diversified growth of
the Group's products and services. As we take steps to embed these
initiatives, it is heartening to report a rise in profit before tax
for the period when compared to the same period last year,
increasing from GBP0.05 million to GBP0.5 million. Certain material
non-recurring charges and credits totalling GBP109,000 have been
incurred in the period and accordingly, so as not to distort these
results, these have been disclosed separately in the income
statement to leave an adjusted profit before tax and exceptional
items of GBP394,000 (2016: GBP242,000), an increase of 62.8%.
Revenue in the period increased by 16.7% to GBP15.4million
underpinned by a small increase in AUMA, from 31 March 2017, to
GBP5.3 billion (30 Sep 2016: GBP4.8 billion; 31 March 2017: GBP5.2
billion). The Board has continued to concentrate on carefully
managing the increase in costs related to growth and development
combined with a tight control of other operating expenses including
those incurred in complying with the substantial regulatory changes
under MiFID II. The resulting net surplus of higher revenue over
increased costs has laid the foundation for the improved operating
profit before tax and exceptional items for the period.
We are very encouraged that certain long-term aims are being
achieved, in particular the 25.9% growth in Discretionary and
Advisory Assets under Management over the last 12 months as we
continue our dialogue with new advisers with high quality business
to join us. The ongoing expansion of our client base has naturally
slowed since our last year end as we have continued to adjust our
personnel and systems in line with the excellent growth in numbers
of clients, investment managers and advisers, and assets under
management. We have also continued to invest in the development of
systems and controls to meet the more demanding regulatory changes
and upgraded client service levels. In December we will move into
our new head office, offering a more efficient and modern space in
the heart of the financial centre of London.
Trading
Revenues improved across all business units and sub-divisions
over the six months, despite challenging trading conditions in
markets and uncertainty in investor sentiment, resulting in an
increase in Revenue of 16.7% to GBP15.4 million for the first half
of our current year. Income from both traditional investment
management business and from our York-based wealth management arm
was higher than initially budgeted.
Non-broking income as a proportion of total income increased
marginally to 62% (2016: 61%) as the emphasis of our client base to
transfer to discretionary or portfolio-managed mandates, with fee
based revenue, continues.
After payment of the final dividend in relation to the previous
year end, at the Period end, the Group had net assets of GBP21.9
million (31 March 2017: GBP21.8 million) including net cash of
GBP5.9 million (31 March 2017: GBP7.7 million), a solid financial
position upon which to embark on a renewed strategy which embraces
culture and technology more inclusively than ever before.
Operations
Investment Management
Revenues from the Investment Management division increased by
17.4% during the period to GBP14.2 million (2016: GBP12.1 million),
with strong increases in portfolio management fee revenues. The
strength of our investment division lies in the experience and
quality of our investment advisers who provide bespoke
discretionary and advisory management services where profit
increased by a very strong 47.8% compared to the prior period.
The Structured Investments division delivered a strong set of
results for the period as the range of products on offer increased
to meet demand from intermediaries and their clients.
Wealth Management
Under new management teams, the combined financial planning and
pension divisions for the first six months of the year have seen
increases in both AUMA and Revenue. Total AUMA has increased by
GBP18m, since 31 March 2017, to GBP532m and turnover has increased
by 7% compared to the half year ending 30 September 2016.
Our Wealth Management operation is now beginning to see the
benefit of taking a long-term strategy to increase recurring
revenue fees. Initial fees have also seen an increase in the first
six months of the year as a result of a drive to engage with new
clients and reviewing the existing client base. Further investment
has been made in research capabilities/staff, updating systems,
increased digital as well as traditional marketing initiatives
attracting new advisers. The Pensions sub-division has also seen an
increase in revenue and, with significant investment planned for
its administrative systems later this year, there is scope for
further growth.
Dividend
Your Board is pleased to be reporting an increase in
profitability for this half year, albeit against low comparative
amounts for the prior year. Taking into account the expenditure
required for relocation costs and new technology initiatives,
within a regulatory capital framework requiring substantial
headroom at all times, the Board has decided to maintain the
interim dividend at 0.58 pence per share (2016: 0.58 pence per
share) to be paid on 22 December 2017 to those shareholders on the
register at the close of business on 8 December 2017. As long as
the improved profitability is sustained, as in previous years, the
intention of the Board will be to consider positively an increase
in the final dividend when the annual results are published. In
line with its existing dividend policy, the Board will have in mind
fair returns for shareholders, as well as implementation of the
general group strategy, at the same time noting that previous
dividend levels have often been maintained when trading results
have been disappointing, when considering future levels of
dividends.
Directors, Account Executives and Staff
I would like to thank all my fellow directors, investment
managers and advisers and members of staff for their continued
support and hard work during a period in which much has been
achieved and many developments accomplished ahead of the changing
regulatory challenges to come in the second half year and in
particular the implementation of the Market in Financial
Instruments Directive, MiFID II, on or before 3 January 2018.
Board Appointments
We are pleased to report that, in the first few weeks since Sean
Lam succeeded Rodney Fitzgerald as Group Chief Executive Officer on
6 September 2017, he has re-emphasised the Group's commitment to
continue growing our core investment management business, providing
a premium service to our clients. The Board has approved his
3-pronged strategy for the Group, to continue focusing on
investment management and alternative investments with a new
emphasis on the utilisation and supply of technology services to
enhance our product offering. It is our vision to transform
ourselves into a technology driven financial services company.
Outlook
We remain in a very sound financial position and have continued
to trade profitably since the Period end. We remain cautious about
the short-term outlook, due to ongoing political and market
uncertainty but believe that in this climate the quality of the
advice and support we provide our customers will continue to prove
important.
David Gelber
Chairman
23 November 2017
Walker Crips Group plc
Walker Crips Group plc
Condensed Consolidated Income Statement
For the six months ended
30 September 2017
Unaudited Unaudited Audited
Notes Six months Six months Year to
to to
30 September 30 September 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Revenue 2 15,357 13,187 29,215
Commission payable (5,637) (4,233) (10,009)
Share of after tax profit
of joint venture 2 5 12
Administrative expenses
- other (9,328) (8,717) (18,076)
Administrative expenses
- exceptional item 109 (203) (360)
--------------------------- ----- ------------- ------------- ---------
Total administrative
expenses (9,219) (8,920) (18,436)
Operating profit 503 39 782
--------------------------- ----- ------------- ------------- ---------
Analysed as:
Operating profit before
tax and exceptional items 394 242 1,142
Administrative expenses
- exceptional items 6 109 (203) (360)
--------------------------- ----- ------------- ------------- ---------
Operating profit 503 39 782
Investment revenues 29 15 24
Finance costs - (1) (2)
--------------------------- ----- ------------- ------------- ---------
Profit before tax 532 53 804
Taxation (102) (11) (196)
--------------------------- ----- ------------- ------------- ---------
Profit for the period
attributable to equity
holders of the Company 430 42 608
--------------------------- ----- ------------- ------------- ---------
Earnings per share 3
Basic 1.03p 0.11p 1.56p
Diluted 1.02p 0.11p 1.56p
Walker Crips Group plc
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2017
Unaudited Unaudited Audited
Six months Six months Year to
to to
30 September 30 September 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Profit for the period 430 42 608
---------------------------- ------------- ------------- ---------
Total comprehensive income
for the period
attributable to equity
holders of the company 430 42 608
---------------------------- ------------- ------------- ---------
Walker Crips Group plc
Condensed Consolidated Statement of Financial Position
As at 30 September 2017
Unaudited Restated(1) Audited
Unaudited
30 September 30 September 31 March
2017 2016 2017
Notes GBP'000 GBP'000 GBP'000
Non-current Assets
Goodwill 4,388 4,388 4,388
Other intangible
assets 8,064 8,313 8,294
Property, plant and
equipment 984 791 836
Investment in joint
ventures 42 33 40
Available-for-sale
investments 7 231 57 68
---------------------------- ------ ------------- ------------- ---------
13,709 13,582 13,626
Current Assets
Trade and other receivables 56,498 30,274 52,179
Financial assets
held for trading 7 1,265 968 1,086
Cash and cash equivalents 5,989 5,972 7,729
---------------------------- ------ ------------- ------------- ---------
63,752 37,214 60,994
---------------------------- ------ ------------- ------------- ---------
Total assets 77,461 50,796 74,620
---------------------------- ------ ------------- ------------- ---------
Current liabilities
Trade and other payables (54,176) (26,702)(1) (51,402)
Current tax liabilities (476) (264) (1) (288)
Deferred tax liabilities (217) (375) (1) (308)
Bank Overdrafts (117) (123) (35)
Shares to be issued
- deferred consideration (230) (1,131) (366)
---------------------------- ------ ------------- ------------- ---------
(28,595)
(55,216) (1) (52,399)
---------------------------- ------ ------------- ------------- ---------
Net current assets 8,536 8,619(1) 8,595
---------------------------- ------ ------------- ------------- ---------
Long-term liabilities
Deferred cash consideration (372) (1,786) (372)
Shares to be issued - (158) -
Dilapidation provision - (132) -
---------------------------- ------ ------------- ------------- ---------
(372) (2,076) (372)
---------------------------- ------ ------------- ------------- ---------
Net assets 21,873 20,125(1) 21,849
---------------------------- ------ ------------- ------------- ---------
Equity
Share capital 8 2,849 2,605 2,826
Share premium account 3,615 2,336 3,502
Own shares (312) (312) (312)
Retained earnings 11,053 10,828(1) 11,165
Other reserves 4,668 4,668 4,668
---------------------------- ------ ------------- ------------- ---------
Equity attributable
to equity holders
of the company 21,873 20,125(1) 21,849
---------------------------- ------ ------------- ------------- ---------
(1) Amounts have been restated and are explained further in Note
9
Walker Crips Group plc
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 September 2017
Unaudited Unaudited Audited
Six months Six months Year to
to to
30 September 30 September 31 March
2017 2016 2017
GBP'000 GBP'000 GBP'000
Operating activities
Cash generated/(used) by
operations 128 (168) 2,883
Tax paid - - (229)
Net cash generated/(used)
by operating activities 128 (168) 2,654
--------------------- --------------------- ---------
Investing activities
Purchase of property, plant
and equipment (394) (160) (499)
Net (purchase)/sale of investments
held for trading (179) 269 151
Purchase of available for
sale investments (163) - -
Consideration paid on acquisition
of client lists (101) (199) (498)
Deferred consideration paid
on acquisition of subsidiary (600) (600) (600)
Dividends received 4 2 4
Interest received 25 13 20
Net cash used by investing
activities (1,408) (675) (1,422)
--------------------- --------------------- ---------
Financing activities
Dividends paid (542) (487) (716)
Interest paid - (1) (2)
Net cash used by financing
activities (542) (488) (718)
--------------------- --------------------- ---------
Net (decrease)/ increase
in cash and cash equivalents (1,822) (1,331) 514
Net cash and cash equivalents
at the beginning of the
period 7,694 7,180 7,180
Net Cash and cash equivalents
at the end of the period 5,872 5,849 7,694
Cash and cash equivalents 5,989 5,972 7,729
Bank overdrafts (117) (123) (35)
--------------------- --------------------- ---------
5,872 5,849 7,694
--------------------- --------------------- ---------
Walker Crips Group
plc
Condensed Consolidated
Statement of Changes
in Equity
For the six months
ended 30 September
2017 (GBP000's)
Called Share Own Capital Other Retained Total
up premium shares Redemption earnings Equity
share held
capital
Restated(1) equity
as at 31 March 2016 2,595 2,279 (312) 111 4,557 11,273 20,503
------------------------------- -------- -------- ------- ----------- ----- --------- -------
Total comprehensive
income for period - - - - - 42 42
------------------------------- -------- -------- ------- ----------- ----- --------- -------
Contributions by
and distributions
to owners
Dividends paid - - - - - (487) (487)
Issue of shares on
acquisition of intangibles
and as deferred consideration 10 57 - - - - 67
Total contributions
by and distributions
to owners 10 57 - - - (487) (420)
------------------------------- -------- -------- ------- ----------- ----- --------- -------
Restated(1) equity
as at 30 September
2016 2,605 2,336 (312) 111 4,557 10,828 20,125
Total comprehensive
income for period - - - - - 566 566
------------------------------- -------- -------- ------- ----------- ----- --------- -------
Contributions by
and distributions
to owners
Dividends paid - - - - - (229) (229)
Issue of shares on
acquisition of intangibles
and as deferred consideration 221 1,166 - - - - 1,387
------------------------------- -------- -------- ------- ----------- ----- --------- -------
Total contributions
by and distributions
to owners 221 1,166 - - - (229) 1,158
------------------------------- -------- -------- ------- ----------- ----- --------- -------
Equity as at 31 March
2017 2,826 3,502 (312) 111 4,557 11,165 21,849
------------------------------- -------- -------- ------- ----------- ----- --------- -------
Total comprehensive
income for period - - - - - 430 430
------------------------------- -------- -------- ------- ----------- ----- --------- -------
Contributions by
and distributions
to owners
Dividends paid - - - - - (542) (542)
Issue of shares on
acquisition of intangibles
and as deferred consideration 23 113 - - - - 136
Total contributions
by and distributions
to owners 23 113 - - - (542) (406)
------------------------------- -------- -------- ------- ----------- ----- --------- -------
Equity as at 30 September
2017 2,849 3,615 (312) 111 4,557 11,053 21,873
------------------------------- -------- -------- ------- ----------- ----- --------- -------
(1) Equity as at 31 March 2016, restated Note 9
Walker Crips Group plc
Notes to the condensed consolidated financial statements
For the six months ended 30 September 2017
1. 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 EU (IFRS). These condensed financial statements are
presented in accordance with IAS 34 Interim Financial
Reporting.
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 2017.
The condensed consolidated financial statements should be read
in conjunction with the Group's audited financial statements for
the year ended 31 March 2017. 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 2017 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.
Significant accounting policies
Going Concern
As both the net asset base and cash position remain healthy, the
directors are satisfied that the Group has sufficient resources to
continue in operation for the foreseeable future, a period of not
less than 12 months from the date of this report. Accordingly, they
also conclude in accordance with guidance from the Financial
Reporting Council, that the use of the going concern basis for the
preparation of the financial statements continues to be
appropriate.
Interests in joint ventures
The Group's share of the assets, liabilities, income and
expenses of jointly controlled entities are accounted for in the
consolidated financial statements under the equity method.
Income from the sale or use of the Group's share of the output
of jointly controlled assets, and its share of the joint venture
expenses, are recognised when it is probable that the economic
benefits associated with the transactions will flow to/from the
Group and their amount can be measured accurately.
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 would include:
1. profits or losses on disposal, closure or impairment of
assets or businesses;
2. corporate transaction and restructuring costs;
3. changes in the fair value of contingent 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
Goodwill
Goodwill arising on consolidation represents the excess of the
cost of acquisition over the Group's interest in the fair value of
the identifiable assets and liabilities of a subsidiary or jointly
controlled entity at the date of acquisition. Goodwill is initially
recognised as an asset at cost and reviewed for impairment at least
annually. Any impairment is recognised immediately in the income
statement and is not subsequently reversed in future periods.
Revenue recognition
Revenue is measured at a fair value of the consideration or
receivable and represents gross commissions, interest receivable
and fees in the course of ordinary investment business, net of
discounts, VAT and sales related taxes. Gross commissions on
stockbroking activities are recognised on those transactions whose
bargain date falls within the financial year. Interest is
recognised as it accrues in respect of the financial management
year. Fees earned from managing various types of client portfolios,
in the Investment Management division, are accrued evenly over the
period to which they relate.
Fees in respect of financial services activities in the Wealth
Management division are accrued evenly over the period to which
they relate. Fees earned from structured investments are recognised
on the date the underlying security of the structured investment is
traded. Dividend income is recognised when received.
Operating expenses and other charges are provided for in full up
to the statement of financial position date on an accruals
basis.
Intangible assets
At each period end 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.
Investments
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 investment within the timeframe
established by the market concerned, and are initially measured at
cost, including transaction costs, or at fair value, depending on
the nature of the instrument held.
The Group's policy is to de-recognise financial assets when it
is deemed that substantially all the risks and rewards of ownership
have been transferred. The Group also de-recognises a financial
asset when the contractual rights to the cash flows from the
financial asset expire. Where the Group neither transfers nor
retains substantially all the risks and rewards of ownership, the
Group will de-recognise the financial asset where it is deemed that
the Group has not retained control of the financial asset.
Investments are classified as either held-for-trading or
available-for-sale, and are measured at subsequent reporting dates
at fair value. Where securities are held for trading purposes,
gains and losses arising from changes in fair value for the period
are recognised through the income statement. Depending on the
nature of the instrument held, gains and losses arising from
changes in fair value of available-for-sale investments are
recognised in other comprehensive income, until the security is
de-recognised, disposed of or is determined to be impaired, at
which time the cumulative gain or loss previously recognised in
equity is included in the net profit or loss for the period.
Deferred tax
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 profits, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that is probable
that taxable profits will be available against which deductible
temporary differences can be utilised.
Principal risks and uncertainties
Under the Financial Conduct Authority's Disclosure and
Transparency Rules, the Directors are required to identify those
material risks to which the company is exposed and take appropriate
steps to mitigate those risks. The principal risks and
uncertainties faced by the Group are discussed in detail in the
Annual Report for the year ended 31 March 2017.
Related party transactions
No transactions took place in the period that would materially
or significantly affect the financial position or performance of
the group.
Standards and interpretations affecting the reported results or
the financial position
In the current period, no standards or interpretations, new or
revised, have been adopted that have had a significant impact on
the amounts reported in the financial statements.
Future new standards and interpretations
A number of new standards and amendments to standards and
interpretations are effective for annual periods beginning after 1
April 2017 and have not been applied in preparing these
consolidated financial statements. None of these are expected to
have a significant effect on the consolidated financial statements
of the Group except for IFRS 9 'Financial Instruments', IFRS 15
'Revenue from Contracts with Customers' and IFRS 16 'Leases'. The
effective dates of IFRS 9, IFRS 15 and IFRS 16 are not until 2018,
2018 and 2019 respectively; the Group has decided not to implement
these standards early.
IFRS 9 'Financial Instruments'
IFRS 9 is effective for periods commencing on or after 1 January
2018. The standard was endorsed by the EU during 2016. The Group
has not adopted this standard early.
IFRS 9 changes the classification and measurement of financial
assets and the timing and extent of credit provisioning. Although
the Group has not quantified the impact of adopting the standard,
it has conducted a preliminary assessment of the potential impact,
based on the profile of its financial instruments as at the balance
sheet date.
Classification of financial assets
The basis classification for financial assets under IFRS 9 is
different from that under IAS 39. Financial assets will be
classified into one of three categories: amortised cost, fair value
through profit or loss (FVTPL) or fair value through other
comprehensive income (FVOCI). The held to maturity, loans and
receivables and available-for-sale categories available under IAS
39 have been removed. In addition, transfers between categories are
different under IFRS 9.
The Group does not expect the new classification bases to have a
material impact on its financial assets. Those currently carried at
amortised cost will continue to be classifies as such.
Classification of financial liabilities
The basis of classification for financial liabilities under IFRS
9 remains unchanged from that under IAS 39. The two categories are
amortised cost or FVTPL (either designated as such, or held for
trading).
The Group does not currently designate any liabilities as fair
value through profit or loss and does not anticipate doing so.
Therefore, under IFRS 9, the Group expects to classify all
financial liabilities as amortised cost, with no material impact on
measurement.
IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 is effective for periods commencing on or after 1
January 2018. The standard was endorsed by the EU during 2016. The
Group has not adopted this standard early.
IFRS 15 changes how and when revenue is recognised from
contracts with customers. Although the Group has not quantified the
impact of adopting the standard, it has conducted a preliminary
assessment of the potential impact, based on its existing revenue
streams.
Net fee and commission income
The Group charges initial fees in relation to certain business
activities. Under IFRS 15, the Group will be required to make an
assessment as to whether the work performed to earn such fees
constitutes the transfer of services and therefore fulfils any
performance obligation(s). If so, then these fees can be recognised
when charged, if not then the fees can only be recognised in the
period the services are provided.
The Group is currently assessing its contracts with clients,
under existing revenue streams.
The Group does not expect this change to result in a material
impact on the consolidated financial statements.
Client relationship intangibles
Where payments are made to new investment managers to secure
investment management contracts, such costs are capitalised and
amortised, where they are separable, reliably measurable and
expected to be recovered, under IAS 18.
IFRS 15 reinforces this view, stating that incremental costs of
obtaining any contract with a customer shall be capitalised if the
entity expects to recover those costs.
The Group is currently assessing its contracts with certain
investment managers.
Therefore, the Group does not believe the adoption of IFRS 15
will materially change the way it accounts for client relationship
intangibles.
Transition
The Group plans to adopt IFRS 15 in its consolidated financial
statements for the year ending March 2019 using the retrospective
approach.
IFRS 16 'Leases'
IFRS 16 is effective for periods commencing on or after 1
January 2019. The standard has not yet been endorsed by the EU and
the Group does not plan to adopt this standard early.
IFRS 16 eliminates the classification of leases as either
operating leases or financial leases. The Group will be required to
recognise all leased with a term of more than 12 months as a
right-of-use lease asset on its balance sheet; the Group will also
recognise a financial liability representing its obligation to make
future lease payments.
Although the Group has not quantified the impact of adopting the
standard, it is currently conducting an initial assessment of the
potential impact, based on its existing lease contracts.
Transition
Definition of a lease
On a transition to IFRS 16, the Group can choose whether to
-- apply the new definition of a lease to all its contracts;
or
-- apply a practical expedient approach and retain previous
assessments of contracts which contain a lease obligation.
The Group intends to apply the practical expedient.
Retrospective approach
As a lessee, the Group can either apply the standard using
a:
-- retrospective approach; or
-- modified retrospective approach with optional practical
expedients.
The Group is assessing the impact of both approaches in relation
to its existing lease contracts.
Potential impact
The Group's total assets and total liabilities will be increased
by the recognition of lease assets and liabilities. The lease
assets will be depreciated over the shorter of the expected life of
the asset and the lease term. The lease liability will be reduced
by lease payments, offset by the unwinding of the liability over
the lease term.
On the Group's statement of comprehensive income, the profile of
lease costs will be front-loaded, at least individually, as the
interest charge is higher in the early years of a lease term as the
discount rate unwinds.
The total cost of the lease over the lease term is expected to
be unchanged.
In addition to the above impacts, recognition of lease assets
will increase the Group's regulatory capital requirement.
2. Segmental analysis
Investment Wealth Total
Management Management
Revenue (GBP'000)
6m to 30 September
2017 14,188 1,169 15,357
------------ ------------- ----------
6m to 30 September
2016 12,102 1,085 13,187
------------ ------------- ----------
Year to 31 March
2017 26,989 2,226 29,215
------------ ------------- ----------
Unallocated Operating
Result (GBP'000) Costs Profit
6m to 30 September
2017 1,147 119 (763) 503
------------ ------------- ------------ ----------
6m to 30 September
2016 776 36 (773) 39
------------ ------------- ------------ ----------
Year to 31 March
2017 2,420 72 (1,710) 782
------------ ------------- ------------ ----------
3. Earnings per share
The calculation of basic earnings per share for continuing
operations is based on the post-tax profit for the period of
GBP430,000 (2016: GBP42,000) and on 41,901,666 (2016: 38,304,050)
ordinary shares of 6 2/3p, being the weighted average number of
ordinary shares in issue during the period.
The calculation of diluted earnings per share is based on
42,262,768 (2016: 38,304,050) ordinary shares, being the weighted
average number of ordinary shares in issue during the period
adjusted for dilutive potential ordinary shares, potentially
issuable to the sellers of Barker Poland Asset Management (BPAM) in
order to satisfy the Group's obligation in connection with the
payment of year three deferred consideration.
4. Dividends
The interim dividend of 0.58 pence per share (2016: 0.58 pence)
is payable on 22 December 2017 to shareholders on the register at
the close of business on 8 December 2017. The interim dividend has
not been included as a liability in this interim report.
5. Total Income (GBP'000)
Six months Six months Year Ended
Ended Ended 31 March
30 September 30 September 2017
2017 2016
Revenue 15,357 13,187 29,215
Net Investment revenues 29 14 22
-------------- -------------- -----------
15,386 13,201 29,237
-------------- -------------- -----------
The Group's income can also be categorised as follows for the
purpose of measuring a Key Performance Indicator, non-broking
income to total income.
Six months % Six months % Year %
Income (GBP'000) Ended Ended Ended
30 September 30 September 31 March
2017 2016 2017
Broking 5,809 38 5,174 39 11,194 38
Non-Broking 9,577 62 8,027 61 18,043 62
-------------- ---- -------------- ---- ---------- ----
15,386 100 13,201 100 29,237 100
-------------- ---- -------------- ---- ---------- ----
6. Administrative expenses-exceptional items (GBP'000)
As a result of their materiality, the Directors 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 Ended 31 March
30 September 30 September 2017
2017 2016
Property relocation 67 - -
expenses
Non-recurring rebate (66) - -
Change of VAT partial (110) - -
exemption special method
Exceptional employment
related costs - 203 418
Costs incurred on suitability
project - - (58)
-------------- -------------- -----------
(109) 203 360
-------------- -------------- -----------
During the period to 30 September 2017, the Group incurred
material costs of GBP117,000 under its existing lease related to
the planned relocation of the head office to new premises in
December 2017 and which have been partially offset by an unusually
high service charge rebate of GBP50,000. An additional one-off
refund of GBP66,000 was received for incorrect custody charges
incurred in prior years as well as a significant annual credit
relating to the Group's agreement with HMRC to a revised input VAT
recovery method (partial exemption special method).
7. Investments
Available-for-sale investments
UCIS Life Policy Debt
investments investments investments Total
GBP'000 GBP'000 GBP'000 GBP'000
Fair value
At 1 April 2016 57 - - 57
Additions in the period - - - -
Disposals in the year - - - -
Recognised in comprehensive income - - - -
----------------------------------- ------------ ------------ ------------ --------
At 30 September 2016 57 - - 57
Additions in the period - 11 - 11
Disposals in the period - - - -
Recognised in comprehensive income - - - -
At 31 March 2017 57 11 - 68
Additions in the year 13 - 150 163
Disposals in the year - - - -
Recognised in comprehensive income - - - -
----------------------------------- ------------ ------------ ------------ --------
At 30 September 2017 70 11 150 231
The Group's unregulated collective investment scheme (UCIS)
investments are held in relation to a number of customer
complaints. The fair value is based upon the market price as at 30
September 2017. During the period to 30 September 2017 there were
GBP13,000 of additional units purchased.
The Group's life policy investments are held in relation to a
number of customer complaints. The fair value is based upon the
life company's forecast terminal value.
Debt Instruments comprises the firm's investments in the junior
debt of Topaz STL, a special purpose vehicle (SPV) which advances
short term loans to property investors. During the period to 30
September 2017 investments of GBP150,000 were made.
7. Investments (continued)
Trading investments
As at 30 As at 30 As at As at 30 6 Months
September September 31 March September to 30 September
2017 2016 2017 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ---------- ---------- --------- ---------- ----------------
Trading investments
Fair value 1,265 968 1,086 968 1,793
--------------------- ---------- ---------- --------- ---------- ----------------
Trading investments represent investments in equity securities
and bonds 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.
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 available-for-sale investments fall within this category.
Further IFRS 13 disclosures have not been presented here as the
balance of Level 3 assets represents 0.298% (2016: 0.112%) of total
assets.
The following tables analyse within the fair value hierarchy the
Group's Investments measured at fair value.
At 30 September 2017 Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------------ ---------- ---------- ---------- --------------
Financial assets held at fair value through profit and loss 1,265 _ _ 1,265
Financial assets held at fair value through comprehensive income _ _ 231 231
------------------------------------------------------------------ ---------- ---------- ---------- --------------
At 30 September 2016 Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------------ ---------- ---------- ---------- --------------
Financial assets held at fair value through profit and loss 968 _ _ 968
Financial assets held at fair value through comprehensive income _ _ 57 57
------------------------------------------------------------------ ---------- ---------- ---------- --------------
At 31 March 2017 Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------------ ---------- ---------- ---------- --------------
Financial assets held at fair value through profit and loss 1,086 _ _ 1,086
------------------------------------------------------------------ ---------- ---------- ---------- --------------
Financial assets held at fair value through comprehensive income _ _ 68 68
------------------------------------------------------------------ ---------- ---------- ---------- --------------
8. Issue of share capital
During the period to 30 September 2017, 173,161 new Ordinary
Shares were issued and allotted to the sellers of Barker Poland
Asset Management (BPAM) in order to satisfy the Group's obligation
in connection with the payment of year two deferred consideration.
The BPAM business has met the targets required to trigger a payment
by the Group of the full amount of the second of 3 potential
payments.
During the period to 30 September 2017, 178,574 new Ordinary
Shares were issued and allotted to fulfil contractual obligations
of employees of the Group.
9. Prior Year Adjustment
An adjustment has been made to retained earnings brought forward
at 1 April 2016, as shown in the Consolidated statement of changes
in equity, to reflect unused holiday entitlement costs of
GBP148,000 at 31 March 2016 together with the tax impact of
GBP29,000. This has had the effect of increasing trade and other
payables by GBP148,000, reducing tax liabilities by GBP29,000 and
reducing retained earnings by GBP119,000 as at 31 March 2016 and 30
September 2016.
10. Contingent liability
During the year to 31 March 2017, two Group companies, Walker
Crips Group plc (WCG) and Walker Crips Stockbrokers Limited (WCSB),
received draft proceedings in respect of a potential claim, from a
former listed corporate client of Keith Bayley Rogers & Co
(KBR), a former subsidiary of the Group. The corporate client
alleges that its former Executive Chairman and his associates
misappropriated assets of GBP5.6m from it between 2010 and 2014 and
used these assets to purchase and sell shares in the client through
the brokerage of WCG, WCSB and KBR. The client asserts that WCG and
WCSB acted dishonestly to assist the Chairman to perpetrate the
alleged fraud and was party to an unlawful means conspiracy to
cause it loss. It is also claimed that WCG, WCSB are vicariously
liable for any wrongdoing on the part of KBR. The potential quantum
of the claim is in excess of GBP1m.
The claims are strenuously denied by the Directors and the
Directors consider the claim to be without any merit, as supported
by a legal opinion obtained by WCG and WCSB, which advises that the
claims are 'weak'. A detailed response denying liability for the
claims was submitted to the client's representatives in December
2016. The Directors have heard nothing further from the former KBR
client since then.
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
23 November 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFFRLELFFID
(END) Dow Jones Newswires
November 23, 2017 02:00 ET (07:00 GMT)
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