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Walker Crips profits wiped out as regulation and Brexit bites

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Walker Crips profits wiped out as regulation and Brexit bites

Walker Crips profit dropped dramatically in the first half on a combination of regulatory and Brexit pressures. 

According to a filing late on Friday afternoon, pretax profit fell by 91% to £53,000 in the six months to the end of September. Underlying profit before one-off costs stood at £0.3 million.

Chairman David Gelber (pictured) noted trading activity in the opening weeks of the new financial year had been quiet, a trend which continued in difficult conditions during the run up to the Brexit vote on 23 June.

Significant investment in its compliance functions to meet growing regulatory demands was another major factor behind the profit decline.

This included the hire of former Nutmeg compliance head Guy Jackson. 

‘We have continued our strategy of building the systems and controls to deliver higher client service levels and regulatory standards,’ Gelber told the market.

‘[Accordingly] whilst always seeking to control expense, we have incurred increasing related costs in our drive for growth, with its focus on premium service and integrity in all that we do for clients.  Specifically we have invested significantly in compliance resources and client-facing systems and will continue to do so.’

Administrative expenses rose by £0.5 million to £8.9 million, with a significant proportion derived from a combination of one-off employment costs and growth-related development costs.

‘The board has not taken the decision to incur these costs lightly and tight control of costs will receive continued management focus and scrutiny given the substantial regulatory changes ahead,' Gelber added. 

Revenue decreased by 1% to £13.2 over the period, with income from both its traditional investment management business and structured investments desk lower than forecast. The group said trading volumes slowed significantly leading up to, and following, the result of the EU Referendum.

It noted that since the Brexit vote revenue streams have increased considerably as the improvement in investor sentiment gathers pace.

Overall assets under management and administration rose 23% to £4.8 billion, with discretionary and advisory assets rising 29% to £2.7 billion.

The group maintained its dividend at 0.58p

York boss retires

The firm accompanied the trading update with news its York head David Hetherington is to retire. 

Hetherington began his financial services career in 1982 as a consultant with Denison Investments. In 1998 he was appointed managing director of the London York Group, which was acquired by Walker Crips in 2005.

‘On behalf of the board, I would like to thank David for his significant contribution to the Group and I wish him all the best in the future,’ Gelber said. 

Nigel Skelton who has been with the company for over 23 years and is co-head of private clients, will take charge of Walker Crips York wealth arm in the interim. 

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