Walker Crips H1 2025: deeper losses, goodwill write‑off and a bid on the table
Walker Crips Group has delivered a tough interim set, with losses widening as the firm completes its back-office migration and absorbs regulatory costs. The headline alongside the numbers is the recommended cash offer from PhillipCapital UK Ltd at 14 pence per share, valuing the Group at £5.6 million and representing an 87% premium to the pre-announcement close.
Here is what stood out, what drove the decline, and how the takeover shapes the risk-reward for shareholders.
First‑half 2025 results at a glance
Revenue fell and losses widened, driven by a goodwill impairment and lower interest retention. Adjusting out the impairment, the underlying performance still shows a meaningful operating loss.
| Metric | H1 2025 | H1 2024 |
|---|---|---|
| Total revenue | £14.6 million | £15.8 million |
| Gross profit | £12.1 million | £13.1 million |
| Operating loss | £6.9 million | £1.7 million |
| Adjusted operating loss | £2.512 million | £1.682 million |
| Loss before tax | £6.97 million | £1.45 million |
| Adjusted loss before tax | £2.582 million | £1.452 million |
| Loss for the period | £6.324 million | £1.089 million |
| Basic EPS | (14.85)p | (2.56)p |
| Cash and cash equivalents | £9.0 million | £12.8 million |
| AUM | £3.0 billion | £2.7 billion (31 March 2025) |
| AUMA | £4.9 billion | £4.6 billion (31 March 2025) |
| Interim dividend | Not declared | Not declared |
What drove the slump in revenue and profit
- Macro backdrop: higher-for-longer rates, sticky inflation and softer activity weighed on client activity and fee generation.
- Model B transition drag: the move of trading, settlement and custody to BNY Pershing completed at end-June 2025. Management time shifted to the migration, which hit growth execution and revenue in-period.
- Deliberate reduction in interest retention: Walker Crips shared more deposit interest with clients, cutting “managed interest retention” income.
- Structured products lull: fees were weaker in H1 amid market uncertainty, though management says activity has picked up as investors turn to defensive structures.
- Regulatory and CASS costs: elevated spend on client asset control (CASS) and regulatory enhancements continued to bite, although some of last year’s one-offs dropped out, helping operating costs edge down 0.7%.
Goodwill impairment explains the gap between reported and adjusted
The Group recorded a £4.388 million impairment of goodwill, taking the goodwill balance to £nil. This non-cash charge reflects the indicative market capitalisation implied by the recommended offer being below the Group’s net asset value. Strip that out, and adjusted loss before tax is £2.582 million. The impairment does not affect regulatory capital or cash today, but it does underline the reset in expected equity value.
Cash, capital and going concern: the moving parts
Cash and cash equivalents were £9.0 million at period end, including £2.5 million drawn under the £5.0 million working capital facility from Phillip Brokerage. Operating cash outflow was £5.73 million, and lease-related cash payments totalled £850,000 in the half. Net assets fell to £12.4 million.
The going concern statement is straightforward but sober. Base-case forecasts support going concern, yet stress scenarios indicate potential breaches of minimum regulatory capital ratios next year. Management calls those scenarios remote, citing planned cost actions, possible asset disposals, and the availability of the loan facility. It is a reminder that execution in H2 and into 2026 matters.
AUM growth is the bright spot
Despite softer revenue, AUM rose 9.3% since March to £3.0 billion and AUMA rose 5.3% to £4.9 billion. That is encouraging for fee resilience into H2, provided client activity stabilises and the revenue mix (interest, structured products, dealing commissions) normalises. Investment Management revenue was £12.5 million, Financial Planning £2.1 million, and SaaS £6,000.
Recommended PhillipCapital offer at 14p – what it means for holders
On 24 November 2025, the Independent Directors agreed terms on a recommended cash offer at 14 pence per share, valuing the Group at £5.6 million – an 87% premium to the prior 7.5 pence close. Further details sit in the 24 November announcement. The Board is not proposing an interim dividend.
In practical terms, the investment case shifts from turnaround potential to deal dynamics. If the acquisition completes, the return path is essentially 14 pence. If it does not, the shares would likely revert to fundamentals, which currently include ongoing losses, regulatory overhangs and cost-cutting still to deliver benefits.
Subsidiaries and operational updates worth noting
- Financial Planning has returned to profitability after five years of reorganisation and is positioned to grow.
- Barker Poland Asset Management LLP continues to contribute positively.
- The Pensions business is holding its ground in a difficult SIPP and SSAS market.
- The Group expects to recognise £1.8 million of insurance recoverability related to a previous-year suitability redress, once the FCA approves the redress methodology – expected by year end. Not yet recognised in these results.
Risks and watch‑list for H2 2025
- FCA approval of redress methodology and timing of the £1.8 million insurance recovery – not yet in the numbers.
- Client redress provision stands at £1.191 million at 30 September 2025 after £745,000 utilisation in the half. Resolution and cash timing remain uncertain.
- Contingent liabilities: a legacy systems issue on equalisation/accumulation unit statements is under investigation, with conclusion expected within six months. An Employment Tribunal claim continues, with trial likely in 2027.
- Execution of cost cuts and tariff reviews flagged to start delivering from 2026.
- Structured product activity – management says it is picking up, but market conditions will dictate fee recovery.
My view: a reset story with a live take‑out
This is a challenging print. Revenue down 7.3%, an adjusted loss before tax of £2.582 million, and a sizeable operating cash outflow illustrate a business mid-transition, not yet through to the other side. The non-cash goodwill impairment is an accounting reflection of the offer price – and makes the statutory loss look worse – but it is still a reset signal.
On the positive side, AUM growth to £3.0 billion, Financial Planning moving into profit, and the completed custody migration should help the operational base. The potential £1.8 million insurance recovery is also a near-term cushion once approved.
For shareholders, the recommended 14 pence offer now dominates the narrative. If you believe the deal will complete, the share price should anchor to that level. If you are wary on completion, weigh the downside: continued losses, capital sensitivity under stress, and the need for 2026 cost actions to land. Either way, this update reads like the end of one chapter and, via the bid, the likely start of another.
