TIDMCNKS
RNS Number : 7401Z
Cenkos Securities PLC
22 September 2015
UNAUDITED INTERIM FINANCIAL RESULTS FOR THE SIX MONTH PERIOD
ENDED 30 JUNE 2015
Cenkos Securities plc (the "Company" or "Cenkos") together with
its subsidiaries (the "Group") is an independent, specialist
institutional securities group, focused on small and mid-cap
companies and investment funds. The Company's principal activity is
institutional stockbroking.
Cenkos' shares are admitted to trading on the AIM Market of the
London Stock Exchange ("LSE"). The Company is authorised and
regulated by the Financial Conduct Authority ("FCA") and is a
member of the LSE.
Financial highlights 30-Jun-15 30-Jun-14
------------------------------------- ------ ---------- ----------
GBP53.1 GBP65.2
Revenue - 19% m m
GBP18.6 GBP23.5
Profit before tax - 21% m m
GBP48.2 GBP43.2
Cash + 12% m m
Basic earnings per share - 16% 26.1 p 31.2 p
Interim dividend per share declared 0% 7.0 p 7.0 p
Commenting on the interim results, Chief Executive Officer Jim
Durkin noted:
"Our successful strategy of being a leading UK institutional
broker to growth companies and investment funds has led to us being
profitable in every year since our formation in 2005. This approach
continues to bear fruit and I am pleased to report a strong
performance for the first six months of 2015, with profits before
tax of GBP18.6 million.
Given the overall results, the Board has declared an interim
dividend of 7p per share, in line with what was paid last year. The
Board plans to launch a tender offer as soon as is practicable to
return GBP8.0 million of surplus capital to shareholders.
We have made a good start to the second half of the year. There
continues to be institutional demand to fund high quality companies
and ideas. Since July we have been engaged in relation to a number
of significant fundraisings and our current pipeline is
encouraging."
For further information contact:
Jim Durkin +44 20 7397 8900
Chief Executive Officer
Cenkos Securities plc
Dr Azhic Basirov / David Jones / Ben Jeynes +44 20 7131 4000
Nominated Adviser
Smith & Williamson Corporate Finance Limited
David Rydell / Duncan Mayall / James Newman +44 20 3772 2500
Bell Pottinger
Interim Management Report
Review of performance
Overall performance
I am pleased to report that we delivered GBP18.6 million of
pre-tax profits in the six months ending 30 June 2015. We
demonstrated again, as in H1 2014, the strength of our equity
placing capabilities. In both periods we have completed an
individual fundraise in excess of GBP1 billion, as well as raising
a further GBP1 billion in aggregate for other clients in H1 2015.
Indeed, we have now raised in excess of GBP13.6 billion for our
clients - mainly acting as sole broker - over our 10 year
history.
We had our best ever financial performance in H1 2014 with both
a large transaction and number of other significant fundraisings.
When compared to this, H1 2015's revenues fell 19% on the back of
lower fundraising and a lower level of activity on the AIM market.
This was also reflected in lower performance-related pay. Profit
before tax was GBP18.6 million (H1 2014: GBP23.5 million) and basic
earnings per share fell by 16% to 26.1p (H1 2014: 31.2p).
Notwithstanding the above, it is worth noting that the profit
before tax achieved in the six month period under review exceeds
the profit before tax recorded in full year 2013 (GBP10.7 million)
and full year 2012 (GBP7.0 million) - a reflection of the Company's
continued development over the last few years.
Revenues
Revenue for the period decreased by 19% to GBP53.1 million (H1
2014: GBP65.2 million). In H1 2015 we raised GBP2,020 million for
our clients (H1 2014: GBP2,209 million), including GBP1,029 million
for BCA Marketplace plc. The fall reflects quieter equity markets -
including AIM - than those experienced in H1 2014. Against the
backdrop of the UK election and wider European macro-economic
uncertainty, total funds raised by AIM companies fell by 25%, when
compared to H1 2014, to GBP2,763 million in H1 2015 (source: LSE
AIM factsheet June 2015). Despite the fall in our revenues when
compared to H1 2014, the results are nonetheless still very
encouraging and include revenues in excess of the GBP51.4 million
of revenues delivered in all of 2013.
We remain ranked as one of the leading brokers in London for
growth companies, as demonstrated by Adviser Rankings Limited's
July 2015 'AIM Adviser Rankings Guide' where we were ranked top
Nominated Adviser for 'FTSE AIM 100 clients' by number of clients
and second in terms of both 'Nominated Adviser' and 'Stockbroker'
for all AIM clients by number of clients. We were also ranked top
'Nominated Adviser' for 'Oil and Gas' and 'Consumer Services' by
number of AIM clients, third for 'Technology' companies by number
of AIM clients and number one Nominated Adviser for 'Financials'
and 'Industrials' by AIM client market capitalisation. The size of
our corporate client base (Nominated Adviser / broker / financial
adviser appointments) remained broadly flat at 125.
We make markets in the securities of all the companies where we
have a broking relationship to support the other services we
provide to our clients. We actively provide liquidity to the market
and facilitate institutional business in both small and large cap
equities. Our trading desks now make markets in the shares of 342
(H1 2014: 340) companies and investment funds.
Costs
Costs fell 17% to GBP34.6 million in the period, primarily due
to lower performance-related pay on the back of lower levels of
activity. Additionally, we have continued to invest in the business
and to hire new staff. We also incurred a cost of GBP2.1 million
(H1 2014: GBP1.8 million) due to staff bonuses resulting from the
Compensatory Award Phantom Dividend Plan 2009 (the "CAP"). Payments
under this scheme are triggered only by the payment of a dividend
to ordinary shareholders. A CAP cost was incurred during the period
as a result of the 10p final dividend for 2014 paid in H1 2015.
This compares to a H1 2014 CAP cost incurred in respect of an 8.5p
2013 final dividend, albeit in respect of 9% fewer CAP options (as
holders of CAP options were also invited to participate in our
January 2015 share buy-back).
Profit and earnings per share
Profit before tax decreased by 21% to GBP18.6 million (H1 2014:
GBP23.5 million) and profit after tax decreased by 22% to GBP14.6
million (H1 2014: GBP18.8 million). Our basic earnings per share
("EPS") fell by a less than proportional 16% to 26.1p as a result
of the buy-back and subsequent cancellation of 9% of our ordinary
shares in January 2015.
Statement of consolidated financial position and cash flow
At 30 June 2015, our net trading investments were GBP6.5
million, and cash held was GBP48.2 million (H1 2013: GBP43.2
million). During the six months to 30 June 2015 there was a net
increase in cash and cash equivalents of GBP15.3 million. This is
largely due to the cash inflow from the Company's profitable
trading in H1 2015 and lower net trading positions, offset partly
by the payment of accrued bonuses in respect of 2014, the 2014
final dividend of 10p per share, the GBP10.8 million share buy-back
carried out in January 2015 and corporation tax payments.
Dividend and capital levels
We aim to retain sufficient capital and reserves to meet our
regulatory capital and cash requirements after taking account of
the likely future working capital needs and potential growth
requirements.
In December 2014 a Tender Offer was launched to purchase up to
5.7 million ordinary shares in Cenkos (9% of the then issued share
capital). The Tender Offer subsequently returned GBP10.8 million of
surplus capital to shareholders when the offer closed in January
2015, and as part of the same offer process we also cancelled 9% of
the CAP options in issue at that time.
Since our flotation on AIM in October 2006, we have paid out
101.5p in dividends (prior to the 7p proposed interim dividend for
2015) and bought back 15.0 million shares at a cost of GBP17.3
million for cancellation (including the GBP10.8 million Tender
Offer completed in January 2015), thereby increasing the Company's
prospective earnings per share. We have therefore returned GBP86.2
million of cash to shareholders, equivalent to 128p per share
(before 2015's interim dividend) since our flotation in 2006.
The Board proposes an interim dividend of 7p per share, in line
with last year's interim dividend of 7p per share. The payment of
this interim dividend will trigger payments to staff under the CAP
of GBP1.0 million in H2 2015 (H2 2014: GBP1.1 million). The
dividend will be paid on 5 November 2015 to all shareholders on the
register at 9 October 2015. In line with existing shareholder
authorisation, given our strong results in H1 2015 and prospects
for the rest of the year, the Board plans to launch a further
tender offer as soon as is practicable to return GBP8.0 million of
surplus capital to shareholders.
People
The continued professionalism of our employees has enabled us to
achieve the robust performance for the period. We continue to look
to recruit staff who are attracted by our culture and business
model, and we increased our overall headcount by six staff in H2
2014 and four in H1 2015. We continue to look to attract
experienced staff who can help grow our business.
Principal risks and uncertainties
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The principal risks and uncertainties that Cenkos currently
faces, and how these are managed, have not materially changed from
those outlined in the Strategic Report section of our 2014 Annual
Report, namely the health of UK equity markets as well as
reputational, operational, regulatory, conduct and market risk.
Aside from the health of UK equity markets, the key changes that
may impact Cenkos' risk profile over the next six months - and how
they are being managed - relate to:
-- The pace of change in the regulatory environment - we
continue to focus heavily on our regulatory risks to ensure the
appropriate systems and controls, reporting, capital and liquidity
requirements, resources, conduct and culture are all in place to
meet the ongoing obligations of an FCA regulated (IFPRU Investment)
firm; and
-- Ensuring that we continue to retain and attract high quality staff.
Outlook
We have made a good start to the second half of the year. There
continues to be institutional demand to fund high quality
companies. Since July we have been engaged in a number of
significant fundraisings and our current pipeline is
encouraging.
Jim Durkin
Chief Executive Officer
21 September 2015
Responsibility statement
We confirm that to the best of our knowledge:
a) The condensed set of financial statements, prepared in
accordance with the applicable set of accounting standards, give a
true and fair view of the assets, liabilities, financial position
and profit of Cenkos Securities plc and the undertakings included
in the consolidation taken as a whole as at 30 June 2015; and
b) The interim management report includes a fair review of the
development and performance of the business and the position of
Cenkos Securities plc and the undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that the Company faces.
Forward-looking statements
These financial statements contain forward-looking statements
with respect to the financial condition, results, operations and
businesses of Cenkos Securities plc. Although the Company believes
that the expectations reflected in these forward-looking statements
are reasonable, we can give no assurance that these expectations
will prove to have been correct. Such statements and forecasts
involve risk and uncertainty because they relate to events and
depend upon circumstances that will occur in the future. There are
a number of factors that could cause actual results or developments
to differ materially from those expressed or implied by
forward-looking statements and forecasts. Forward-looking
statements and forecasts are based on the Directors' current view
and information known to them at the date of this statement. The
Directors do not make any undertaking to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Condensed consolidated income statement
For the six months ended 30 June 2015
Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
Notes 30 June 30 June 31 December
2015 2014 2014
------------------------------------- ------ ----------- ----------- ------------
Continuing operations GBP 000's GBP 000's GBP 000's
------------------------------------- ------ ----------- ----------- ------------
Revenue 2 53,115 65,225 88,516
Administrative expenses (34,607) (41,757) (61,704)
--------------------------------------- ------ ----------- ----------- ------------
Operating profit 18,508 23,468 26,812
Investment income -
interest income 65 77 161
Interest expense (3) (1) (1)
Profit before tax from continuing
operations 18,570 23,544 26,972
Tax 3 (3,936) (4,751) (5,644)
Profit after tax 14,634 18,793 21,328
--------------------------------------- ------ ----------- ----------- ------------
Attributable to:
Equity holders of Cenkos Securities
plc 14,634 18,793 21,328
Basic earnings per share 5 26.1p 31.2p 35.2p
Diluted earnings per
share 5 24.1p 29.7p 32.0p
Condensed consolidated statement of comprehensive income
For the six months ended 30 June 2015
Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
GBP 000's GBP 000's GBP 000's
----------------------------------------- ----------- ----------- ------------
Profit 14,634 18,793 21,328
Amounts that will be recycled to income
statement in future periods
(Loss) / gain on available-for-sale
financial asset (2) - 132
Tax on available-for-sale
financial asset - - (28)
Other comprehensive income (2) - 104
Total comprehensive income 14,632 18,793 21,432
Attributable to:
Equity holders of Cenkos
Securities plc 14,632 18,793 21,432
Condensed consolidated statement of financial position
As at 30 June 2015
Unaudited Unaudited Audited
Notes 30 June 30 June 31 December
2015 2014 2014
GBP 000's GBP 000's GBP 000's
------------------------------- ------ ---------- ---------- ------------
Non-current assets
Property, plant and equipment 6 380 480 421
Deferred tax asset 11 2,151 2,794 2,042
2,531 3,274 2,463
Current assets
Trade and other receivables 7 37,103 47,777 19,717
Available-for-sale financial
assets 559 1,000 729
Other current financial
assets 8 10,844 29,876 10,014
Cash and cash equivalents 9 48,218 43,156 32,932
96,724 121,809 63,392
Total assets 99,255 125,083 65,855
Current liabilities
Trade and other payables 10 (55,224) (79,929) (23,583)
Other current financial
liabilities 8 (4,341) (3,915) (2,711)
(59,565) (83,844) (26,294)
Net current assets 37,159 37,965 37,098
Total liabilities (59,565) (83,844) (26,294)
Net assets 39,690 41,239 39,561
Equity
Share capital 12 599 635 637
Share premium 2,061 9 232
Capital redemption reserve 150 93 93
Own shares 13 (3,203) (3,228) (3,218)
Available-for-sale reserve 102 - 104
Retained earnings 39,981 43,730 41,713
Total equity 39,690 41,239 39,561
--------------------------------- ------ ---------- ---------- ------------
Condensed consolidated cash flow statement
For the six months ended 30 June 2015
Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
Notes 30 June 30 June 31 December
2015 2014 2014
GBP 000's GBP 000's GBP 000's
------------------------------------------- ------ ----------- ----------- ------------
Profit 14,634 18,793 21,328
(Loss) / gain on available-for-sale
financial assets through Other
Comprehensive Income (2) - 104
Adjustments for:
Net finance income (61) (76) (160)
Tax expense 3,936 4,751 5,644
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Tax expense arising on available-for-sale
asset - - 28
Depreciation of property, plant
and equipment 104 185 386
Shares and options received
in lieu of fees (1,232) (11,961) (3,443)
CAP options cancelled as part of
tender offer buy-back 12 (698) - -
Share-based payment expense 339 57 250
Operating cash flows before movements
in working capital 17,020 11,749 24,137
Decrease / (increase) in net
trading investments 2,204 (4,503) 5,976
Increase in trade and other
receivables (17,377) (28,436) (379)
Increase / (decrease) in trade
and other payables 30,849 41,131 (12,940)
Cash flow from operating activities 32,696 19,941 16,794
Interest paid (3) (1) (1)
Tax paid (2,837) (1,816) (4,815)
Net cash flow from operating
activities 29,856 18,124 11,978
Investing activities
Interest received 56 85 173
Purchase of property, plant
and equipment 6 (65) (277) (420)
Net cash flow used in investing
activities (9) (192) (247)
Financing activities
Dividends paid (5,656) (5,128) (9,386)
Proceeds from issue of
own shares 1,847 9 234
Transfer of shares by EBT to
employee share plans 15 - 10
Acquisition of own shares
for cancellation (10,767) - -
Net cash used in financing
activities (14,561) (5,119) (9,142)
Net increase in cash and
cash equivalents 15,286 12,813 2,589
Cash and cash equivalents at
beginning of period 32,932 30,343 30,343
Cash and cash equivalents at end
of period 9 48,218 43,156 32,932
--------------------------------------------- ------ ----------- ----------- ------------
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2015
Capital
Share Share redemption Own Available-for-sale Retained
Notes capital premium reserve shares reserve earnings Total
GBP GBP GBP GBP
GBP 000's 000's GBP 000's 000's GBP 000's 000's 000's
----------------------- -------------------- -------- ----------- -------- ------------------- --------- --------
Balance at 1 January
2014 635 - 93 (3,228) - 28,592 26,092
Profit - - - - - 18,793 18,793
Total comprehensive
income - - - - - 18,793 18,793
Shares issued in the
period - 9 - - - - 9
Credit to equity for
equity-settled
share-based
payments - - - - - 57 57
Deferred tax on share-based
payments - - - - - 1,416 1,416
Dividends paid - - - - - (5,128) (5,128)
Balance at 30 June
2014 635 9 93 (3,228) - 43,730 41,239
Profit - - - - - 2,535 2,535
Gain on
available-for-sale
financial assets net
of tax - - - - 104 - 104
----------------------- ------- ----------- -------- ----------- -------- ------------------- --------- --------
Total comprehensive
income - - - - 104 2,535 2,639
Shares issued in the
period 2 223 - - - - 225
Transfer of shares to employee
share plans - - - 10 - - 10
Credit to equity for
equity-settled
share-based
payments - - - - 193 193
Credit to equity for day 1
valuation of acquired share
options - - - - - 68 68
Deferred tax on share-based
payments - - - - - (598) (598)
Current tax on share-based
payments - - - - - 43 43
Dividends paid - - - - - (4,258) (4,258)
Balance at 31 December
2014 637 232 93 (3,218) 104 41,713 39,561
Retained profit - - - - - 14,634 14,634
Gain on available-for-sale
financial assets net of tax - - - - (2) - (2)
------------------------------------ ------- -------- ----------- -------- ------------------- --------- --------
Total comprehensive
income - - - - (2) 14,634 14,632
Shares issued in the
period 19 1,829 - - - - 1,848
Transfer of shares to
employee share plans - - - 15 - - 15
Acquisition of own
shares
for cancellation (57) - 57 - - (10,767) (10,767)
Charge to equity for
cancelled CAP options 12 - - - - - (698) (698)
Credit to equity for
equity-settled
share-based
payments - - - - - 339 339
Deferred tax on share-based
payments - - - - - 39 39
Current tax on share-based
payments - - - - - 377 377
Dividends paid - - - - - (5,656) (5,656)
Balance at 30 June
2015 599 2,061 150 (3,203) 102 39,981 39,690
----------------------- ------- ----------- -------- ----------- -------- ------------------- --------- --------
Notes to the condensed consolidated financial statements
1. Accounting policies
General information
The interim condensed consolidated financial statements of
Cenkos Securities plc. ("Cenkos" or the "Company" together with its
subsidiaries) for the six months ended 30 June 2015 are unaudited
and were approved by the Board of Directors for issue on 21
September 2015.
The Company is incorporated in the United Kingdom under the
Companies Act 2006 (company registration No. 05210733), and its
shares are publicly traded. The Company's principal activity is as
an institutional stockbroker to UK small and mid-cap companies and
investment funds. These financial statements are presented in
pounds sterling because that is the currency of the primary
economic environment in which the Company operates.
The preparation of financial statements in conformity with
generally accepted accounting principles requires the use of
estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results
ultimately may differ from those of estimates.
These financial statements have been prepared on the historical
cost basis, except for the revaluation of certain financial
instruments.
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Where appropriate prior year figures have been restated to
conform to the current year presentation.
Basis of accounting
The interim condensed consolidated financial statements for the
six months ended 30 June 2015 have been prepared in accordance with
International Accounting Standard ("IAS") 34 Interim Financial
Reporting. The interim condensed consolidated financial statements
do not include all the information and disclosures required in the
annual financial statements, and should be read in conjunction with
the Company's annual financial statements for the year ended 31
December 2014.
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Company's annual
financial statements for the year ended 31 December 2014, which are
prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union.
The financial information contained in these interim condensed
consolidated financial statements does not constitute the Company's
statutory accounts within the meaning of section 434 of the
Companies Act 2006. The comparative information contained in this
report for the year ended 31 December 2014 does not constitute the
statutory accounts for that financial period. Those accounts have
been reported on by the Company's auditors Ernst & Young LLP,
and delivered to the Registrar of Companies. The report of the
auditors was unqualified and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
Going concern
The Company's business activities, together with the factors
likely to affect its future development and performance, its
principal risks and uncertainties, the financial position of the
Company, its cash flows and liquidity position are set out in the
Strategic Report in the Company's Annual Report for the year ended
31 December 2014.
The Directors are satisfied that the Company 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, the Directors continue to adopt a going concern basis
in preparing the interim financial statements.
Adoption of new and revised standards
During the period, a number of amendments to IFRS became
effective and were adopted by the Company, none of which had a
material impact on the Company's net cash flows, financial
position, statement of comprehensive income or earnings per
share.
2. Business and geographical segments
Cenkos is managed as an integrated UK institutional stockbroking
business and although it has different revenue streams, the nature
of its activities is considered to be subject to similar economic
characteristics. The internal reports used by the Chief Executive
Officer for the purpose of monitoring performance and allocating
resources reflect that Cenkos is managed as a single business
unit.
Revenue is wholly attributable to the principal activity of the
Company and arises solely within the UK.
Major clients
In the six months ended 30 June 2015, one of Cenkos' clients
contributed more than 10% of Cenkos' total revenue. The amount was
GBP26.75 million (six months ended 30 June 2014: GBP31.50 million;
year ended 31 December 2014: GBP33.29 million).
3. Tax
Six months Six months
The tax charge comprises: ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
GBP 000's GBP 000's GBP 000's
------------------------------------------------- ----------- ----------- ------------
Current tax
United Kingdom corporation tax at 20.25% (2014:
21.50%) based on the profit for the period 4,006 5,105 5,813
Adjustment in respect of
prior period
United Kingdom corporation tax at
20.25% (2014: 21.50%) - - 31
Total current tax 4,006 5,105 5,844
Deferred tax
Credit on account of temporary
differences (70) (354) (173)
Deferred tax prior period
adjustment - - (27)
Total deferred tax (refer
to note 11) (70) (354) (200)
---------------------------------------------------- ----------- ----------- ------------
Total tax on profit on ordinary activities
from continuing operations 3,936 4,751 5,644
---------------------------------------------------- ----------- ----------- ------------
A reconciliation of the tax expense for the six months to June
2015 and the comparative periods and the accounting profit
multiplied by the standard rate of UK corporation tax of 20.25%
(2014: 21.50%) is set out below:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
GBP 000's GBP 000's GBP 000's
--------------------------------------------------- ----------- ----------- ------------
Profit before tax from continuing
operations 18,570 23,544 26,972
Tax on profit on ordinary activities at the
UK corporation tax rate of 20.25% (2014: 21.50%) 3,760 5,062 5,799
Tax effect of:
Non-deductible expenses for
tax purposes 78 43 152
Current year losses of non-trading overseas
subsidiary for which no deferred tax asset has
been recognised 27 - -
Share-based payments 70 (390) (336)
Deferred tax rate change
adjustment 1 36 25
Adjustment in respect of prior period
deferred tax - - (27)
Adjustment in respect of prior period
current tax - - 31
Tax expense for the period 3,936 4,751 5,644
------------------------------------------------------ ----------- ----------- ------------
In addition to the tax expense presented in the income
statement, the following amounts have been recognised directly in
equity:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
GBP 000's GBP 000's GBP 000's
--------------------------------------------------- ----------- ----------- ------------
Other Comprehensive Income
(OCI)
Current tax expense arising on available-for-sale
financial asset - - 28
Statement of Changes in
Equity (SOCIE)
Current tax credit arising on
share-based payments (377) - (43)
Deferred tax credit arising on
share-based payments (39) (1,416) (818)
Total income tax recognised directly
in equity (416) (1,416) (833)
---------------------------------------------------- ----------- ----------- ------------
4. Dividends
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
GBP 000's GBP 000's GBP 000's
------------------------------------------------- ----------- ----------- ------------
Amounts recognised as distributions to
equity holders in the period:
Final dividend for the year ended 31 December
2014 of 10.0p (2013: 8.5p) per share 5,656 5,128 5,128
Interim dividend for the period to 30 June 2014
of 7.0p (June 2013: 3.5p) per share - - 4,258
5,656 5,128 9,386
------------------------------------------------- ----------- ----------- ------------
The proposed interim dividend for 30 June 2015 of 7.0p (30 June 2014:
7.0p) per share was approved by the Board on 21 September 2015 and has
not been included as a liability as at 30 June 2015. The dividend will
be payable on 5 November 2015 to all shareholders on the register at 9
October 2015.
Under the Compensatory Award Plan ("CAP"), as described in the 2014 Annual
Report, the payment of a dividend to ordinary shareholders will trigger
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a cash payment to holders of options under the CAP. The payment of this
interim dividend will increase staff costs by GBP0.99 million in the second
half of 2015 (7.0p 2014 interim dividend increased staff costs by GBP1.11
million in the second half of 2014).
5. Earnings per share
The calculation of the basic and diluted earnings per share is based on
the following data:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2015 2014 2014
--------------------------------------------------- ----------- ----------- ------------
Basic earnings per share 26.1p 31.2p 35.2p
Diluted earnings per share 24.1p 29.7p 32.0p
Earnings for the purpose of basic and diluted earnings per share
The calculation of the basic and diluted earnings per
share is based on the following data:
GBP 000's GBP 000's GBP 000's
Earnings for the purpose of basic and diluted
earnings per share being net profit attributable
to equity holders of the parent 14,634 18,793 21,328
No. No. No.
--------------------------------------------------- ----------- ----------- ------------
Number of shares
Weighted average number of ordinary shares
for the purpose of basic earnings per share 56,046,643 60,327,458 60,530,876
Effect of dilutive potential
ordinary shares:
Share options 4,750,534 2,857,571 6,132,434
Weighted average number of ordinary shares
for the purpose of diluted earnings per
share 60,797,177 63,185,029 66,663,310
------------------------------------------------------ ----------- ----------- ------------
The Board has agreed to continue to fund the Company's Employee Benefit
Trust ("EBT") so that it can make market purchases in Cenkos Securities
plc shares as and when market conditions allow. During the period, no further
ordinary shares were purchased (2014: no further shares were purchased),
however 14,323 shares were transferred out of the EBT at average cost to
the Cenkos Securities plc Share Incentive Plan Trust to satisfy awards
under that scheme. As at 30 June 2015 the EBT held a total of 2,796,707
(30 June 2014: 3,158,477, 31 December 2014: 2,811,030) ordinary shares
at an aggregate consideration of GBP2.86 million (30 June 2014: GBP3.23
million, 31 December 2014: GBP2.87 million). These shares held by the EBT
have been excluded from the weighted average number of shares calculation
up to this date.
As at 30 June 2015 the Cenkos Securities plc Share Incentive Plan Trust
held a total of 338,174 (30 June 2014: nil, 31 December 2014: 338,174)
Free and Matching ordinary shares at an aggregate consideration of GBP0.35
million (30 June 2014: GBPnil, 31 December 2014: GBP0.35 million).
As at 30 June 2015, in total these trusts held 3,134,881 shares at an
aggregate consideration of GBP3.20 million, as shown in note 13.
6. Property, plant and equipment
During the period, the Company spent approximately GBP64,581 (30 June
2014: GBP276,565, 31 December 2014: GBP419,057) on property, plant and
equipment. This mostly related to the purchase of IT equipment and leasehold
improvements.
7. Trade and other receivables
30 June 30 June 31 December
2015 2014 2014
GBP 000's GBP 000's GBP 000's
-------------------------------- ---------- ---------- ------------
Current assets
Financial assets
Market and client receivables 34,794 45,607 17,512
Unpaid share capital and loans
due from staff 8 2 1
Accrued income 889 701 597
Other receivables 487 595 653
36,178 46,905 18,763
Non-financial assets
Prepayments 925 872 954
37,103 47,777 19,717
8. Other current financial assets and liabilities
30 June 30 June 31 December
2015 2014 2014
GBP 000's GBP 000's GBP 000's
----------------------------- ---------- ---------- ------------
Financial assets at FVTPL
Trading investments carried
at fair value 10,769 29,380 9,122
Derivative financial assets 75 496 892
10,844 29,876 10,014
Financial liabilities at
FVTPL
Contractual obligation
to acquire securities (4,341) (3,915) (2,711)
-------------------------------- ---------- ---------- ------------
9. Cash and cash equivalents
30 June 30 June 31 December
2015 2014 2014
GBP 000's GBP 000's GBP 000's
--------------------------- ---------- ---------- ------------
Cash and cash equivalents 48,218 43,156 32,932
------------------------------ ---------- ---------- ------------
10. Trade and other payables
30 June 30 June 31 December
2015 2014 2014
GBP 000's GBP 000's GBP 000's
------------------------------ ---------- ---------- ------------
Current liabilities
Financial liabilities
Trade creditors 24,337 40,822 7,909
Other creditors 630 494 309
24,967 41,316 8,218
------------------------------ ---------- ---------- ------------
Non-financial liabilities
Accruals and deferred income 26,634 33,508 12,533
Corporation tax payable 3,623 5,105 2,832
30,257 38,613 15,365
55,224 79,929 23,583
------------------------------ ---------- ---------- ------------
11. Deferred tax
Deferred tax arises on all taxable and deductible temporary differences
at the reporting date between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes. The following
are the deferred tax assets and liabilities recognised by the Group and
the Company and the movement thereon during the current and prior reporting
period:
Group and Company
temporary differences
Bonus Fixed Share
payments assets options Total
GBP 000's GBP 000's GBP 000's GBP 000's
--------------------------- --------------- --------------------- -------------------- ----------
At 31 December 2013 230 27 767 1,024
Origination and reversal
of temporary differences
(expenses) / credit (36) (1) 391 354
Deferred tax credit to
equity - - 1,416 1,416
----------------------------- --------------- --------------------- -------------------- ----------
At 30 June 2014 194 26 2,574 2,794
Origination and reversal
of temporary differences
credit / (expenses) 48 (20) (182) (154)
Deferred tax charge to
equity - - (598) (598)
At 31 December 2014 242 6 1,794 2,042
Origination and reversal
of temporary differences
credit / (expenses) 143 (11) (62) 70
Deferred tax credit to
equity - - 39 39
At 30 June 2015 384 (5) 1,772 2,151
----------------------------- --------------- --------------------- -------------------- ----------
Reductions in the UK corporation tax rate from 23% to 21%
(effective from 1 April 2014) and 20% (effective from 1 April 2015)
were substantially enacted on 2 July 2013. In the Budget on 8 July
2015, the Chancellor announced additional planned reductions to 18%
by 2020. This will reduce the Company's future current tax charge
accordingly.
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The Group has unutilised capital losses on which a deferred tax
asset has not been recognised as future utilisation of the losses
is dependent on future chargeable gains. The unrecognised deferred
tax asset in respect of capital losses carried forward is gross
GBP302,261 (net GBP60,452 at 20%).
The deferred tax balances at 30 June 2015 have been stated at
20% which is the rate substantially enacted at the reporting
date.
12. Share capital
The issued share capital as at 30 June 2015 amounted to
GBP598,767 (30 June 2014: GBP634,921, 31 December 2014:
GBP637,121).
1 January 2014 to 31 December 2014
Ordinary shares
Date of 1p each Event
------------------ --------------------- ------------------------------------------
exercise of 10,000 options in accordance
23 April 2014 10,000 were issued with the LTIP.
exercise of 25,000 options in accordance
03 July 2014 25,000 were issued with the LTIP.
exercise of 100,000 options in accordance
15 September 2014 100,000 were issued with the LTIP.
exercise of 20,000 options in accordance
02 October 2014 20,000 were issued with the LTIP.
exercise of 75,000 options in accordance
10 December 2014 75,000 were issued with the LTIP.
1 January 2015 to 30 June 2015
Ordinary shares
Date of 1p each Event
---------------- ------------------------- ------------------------------------------
tender offer to buy back shares (see
09 January 2015 5,727,340 were cancelled below)
exercise of 35,000 options in accordance
16 April 2015 35,000 were issued with the LTIP.
exercise of 200,000 options in accordance
21 April 2015 200,000 were issued with the LTIP.
exercise of 750,000 options in accordance
22 April 2015 750,000 were issued with the LTIP.
exercise of 190,000 options in accordance
24 April 2015 190,000 were issued with the LTIP.
exercise of 100,000 options in accordance
27 April 2015 100,000 were issued with the LTIP.
exercise of 100,000 options in accordance
28 April 2015 100,000 were issued with the LTIP.
exercise of 10,000 options in accordance
29 April 2015 10,000 were issued with the LTIP.
exercise of 150,000 options in accordance
11 May 2015 150,000 were issued with the LTIP.
exercise of 85,000 options in accordance
27 May 2015 85,000 were issued with the LTIP.
exercise of 10,000 options in accordance
01 June 2015 10,000 were issued with the LTIP.
exercise of 25,000 options in accordance
08 June 2015 25,000 were issued with the LTIP.
exercise of 140,000 options in accordance
11 June 2015 140,000 were issued with the LTIP.
exercise of 97,000 options in accordance
16 June 2015 97,000 were issued with the LTIP.
LTIP - Cenkos Long-Term Incentive Plan
In December 2014 a Tender Offer was launched to purchase up to
5.73 million ordinary shares in Cenkos (9% of the issued share
capital). The Tender Offer subsequently returned GBP10.77 million
of surplus capital to shareholders when the offer closed in January
2015. As part of the same offer process we also cancelled 956,073
of the CAP options and GBP0.70 million, equivalent to the notional
gain on those options, was paid to the option holders. At the
beginning of the year, there were 10.55 million options in issue
under the CAP agreement. At the 30 June 2015, subsequent to the
cancellation, 9.59 million remain.
13. Own shares
Own shares represent the cost of shares purchased by the Company's Employee
Benefit Trust ("EBT") and those transferred to the Cenkos Securities
plc Share Incentive Plan.
The EBT was established by the Company in 2009. It is funded by the
Company and has the authority to acquire Cenkos shares. During the period,
no further ordinary shares were purchased (2014: no further shares were
purchased), however 14,323 shares were transferred out of the EBT at
average cost to the Cenkos Securities plc Share Incentive Plan Trust
to satisfy awards under that scheme. As at 30 June 2015 the EBT held
a total of 2,796,707 (30 June 2014: 3,158,477, 31 December 2014: 2,811,030)
ordinary shares at an aggregate consideration of GBP2.86 million (30
June 2014: GBP3.23 million, 31 December 2014: GBP2.87 million).
As at 30 June 2015 the Cenkos Securities plc Share Incentive Plan Trust
held a total of 338,174 (30 June 2014: nil, 31 December 2014: 338,174)
Free and Matching ordinary shares at an aggregate consideration of GBP0.35
million (30 June 2014: GBPnil, 31 December 2014: GBP0.35 million).
These shares are held by the trusts and have been excluded from the
weighted average number of shares calculation up to the reporting date.
Six months ended Six months ended Year ended
30 June 2015 30 June 2014 31 December 2014
Shares held by EBT Number Number Number
of shares GBP 000's of shares GBP 000's of shares GBP 000's
------------------------------- ---------- ---------- ---------- ---------- ---------- ---------------
At 1 January 2,811,030 2,872 3,158,477 3,228 3,158,477 3,228
Acquired during the period - - - - - -
Transferred to Cenkos Securities
plc Share Incentive Plan
Free shares - - - - (166,706) (171)
Matching shares - - - - (171,468) (175)
Dividend reinvestment (14,323) (15) - - (9,273) (10)
At the period ended 2,796,707 2,857 3,158,477 3,228 2,811,030 2,872
------------------------------- ---------- ---------- ---------- ---------- ---------- ---------------
Free and Matching shares
held by Number Number Number
Cenkos Securities plc Share
Incentive Plan of shares GBP 000's of shares GBP 000's of shares GBP 000's
------------------------------- ---------- ---------- ---------- ---------- ---------- ---------------
At 1 January 338,174 346 - - - -
Transferred from the EBT
Free shares - - - - 166,706 171
Matching shares - - - - 171,468 175
At the period ended 338,174 346 - - 338,174 346
Own shares held at the period
ended 3,134,881 3,203 3,158,477 3,228 3,149,204 3,218
14. Financial instruments
Capital risk management
The Company manages capital to ensure that the Company and its
subsidiaries will be able to continue as a going concern while
aiming to maximise the return to shareholders. The capital
structure of the Company consists of equity attributable to equity
holders of the parent comprising issued capital, reserves and
retained earnings as disclosed in the condensed consolidated
statement of changes in equity. At present the Company has no
gearing and it is the responsibility of the Board to review the
Company's gearing levels on an on-going basis. As at 30 June 2015,
Cenkos Securities plc had a solvency ratio of 170% (30 June 2014:
145%, 31 December 2014: 234%).
Externally imposed capital requirement
The Company has to retain sufficient capital to satisfy the UK
Financial Conduct Authority's ("FCA") capital requirements. These
requirements vary from time to time depending on the business
conducted by the Company. The Company always retains a buffer above
the FCA minimum requirements and has complied with these
requirements during and subsequent to the period under review.
Significant accounting policies
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Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised in respect of each class of financial asset, financial
liability and equity instrument are disclosed in note 1 of the
Company's financial statements for the year ended 31 December
2014.
Categories of financial
instruments Carrying value
30 June 30 June 31 December
2015 2014 2014
GBP 000's GBP 000's GBP 000's
----------------------------------------------- ---------- ---------- ------------
Available-for-sale investments 559 1,000 729
Financial assets at fair value through
profit and loss (FVTPL)
Trading investments carried
at fair value 10,769 29,380 9,122
Derivative financial assets 75 496 892
Financial liabilities at fair value through
profit and loss (FVTPL)
Contractual obligations to acquire securities 4,341 3,915 2,711
Financial risk management objectives
The Chief Executive Officer and Finance Director monitor and
manage the financial risks relating to the operations of the
Company through internal risk reports which analyse exposures by
degree and magnitude of risks. These risks include market risk
(including price risk), credit risk and liquidity risk. Summaries
of these reports are reviewed by the Board.
Compliance with policies and exposure limits is reviewed by the
Chief Executive Officer and senior management on a continuous
basis. The Company does not enter into or trade financial
instruments, including derivative financial instruments, for
speculative purposes.
Interest rate risk management
The Company is exposed to interest rate risk because it has financial
instruments on its statement of financial position which are at both fixed
and floating interest rates. The risk is managed by the Company by maintaining
an appropriate mix between fixed and floating rate instruments.
The Company's exposures to interest rates on financial assets and financial
liabilities are detailed in the liquidity and interest rate risk table
section of this note.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure
to interest rates for both derivatives and non-derivative instruments
at the reporting date. For floating rate assets, the analysis is prepared
based on the average rate due on the asset or liability through the period.
A 25 basis points increase or decrease is used when reporting interest
rate risk internally to senior management and represents management's
assessment of a reasonably possible change in interest rates.
If interest rates had been 25 basis points higher / lower and all other
variables were held constant, the Company's:
-- profit for the period ended 30 June 2015 would increase / decrease
by GBP0.04 million (30 June 2014: increase / decrease by GBP0.04 million,
31 December 2014: increase / decrease by GBP0.10 million). This is mainly
attributable to the Company's exposure to interest rates on its variable
rate instruments; and
-- other comprehensive income for the period ended 30 June 2015 would
increase / decrease by GBP0.04 million (30 June 2014: increase/decrease
by GBP0.04 million, 31 December 2014: increase / decrease by GBP0.10 million).
Equity price risks
The Company is exposed to equity price risks arising from equity investments.
The financial instruments represent investments in listed equity securities
that present the Company with opportunity for return through dividend
income and trading gains. There are limits set for each financial instrument
to limit the concentration of risks.
Equity price sensitivity analysis
The sensitivity analysis below has been determined based on the exposure
to equity price risks at the reporting date and, in the opinion of senior
management, a material movement in equity prices. This is based on the
largest fall in the All Share AIM index in one day and over a two week
period. These parameters are also considered in the Company's Individual
Liquidity Adequacy Assessment (ILAA).
If equity prices had been 10% higher/lower:
-- Net profit for the 6 months ended 30 June 2014 would have been GBP0.64
million higher / lower (30 June 2014: GBP2.55 million higher / lower,
31 December 2014: GBP0.80 million higher / lower) due to a change in the
value of FVTPL held-for-trading investments.
The Company's exposure to equity price risk is closely managed. The Company
has built a framework of overall and individual stock limits and these
are actively monitored by the Chief Executive Officer and senior management
on a daily basis. This framework also limits the concentration of risks.
The Company's overall appetite for exposure to equity price risk is set
by the Board.
Foreign currency risk
The Company does not have any material dealings in foreign currency, as
the majority of transactions are in UK based equities and hence denominated
in sterling.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Company. These
parties may default on their obligations due to bankruptcy, lack of liquidity,
operational failure and other reasons. The exposure of the Company to
its counterparties is closely monitored and limits are set to minimise
the concentration of risks.
The vast majority of the Company's credit risk arises from the settlement
of security transactions. However, the settlement model primarily used
by the Company does not expose the Company to counterparty risk as a principal
to a trade. Rather, the Company's exposure lies solely with Pershing Securities
Limited ("Pershing"), a wholly owned subsidiary of the Bank of New York
Mellon Corporation, a AA- (2014: AA-) rated bank. In addition, in circumstances
in which the Company does act as principal when acting as a market maker,
the counterparty will normally be an FCA regulated market counterparty
rather than a corporate or individual trader. The Company does not have
any significant credit risk exposure to any single counterparty with the
exception of Pershing.
Cash resources also give rise to potential credit risk. The Company's
cash balances are held with HSBC Bank plc. ("HSBC", an AA- rated bank),
Royal Bank of Scotland plc (a BBB+ rated bank), Barclays Bank plc (an
A rated bank) and Pershing. The banks with which the Company deposits
money are reviewed at least annually by the Board and are required to
have at least an investment grade credit rating. To limit the concentration
risk in relation to cash deposits, the maximum amount which may be deposited
with any one financial institution is set at no more than 100% of the
Company's regulatory capital.
Trade receivables not related to the settlement of market transactions
consist almost entirely of outstanding corporate finance fees and retainers
and are spread across a wide range of industries. All new corporate finance
clients are subject to a review by the New Business Committee. This committee
considers, amongst other issues, the financial soundness of any client
taken on.
The carrying amount of financial assets recorded in the financial statements,
which is net of impairment losses, represents the Company's maximum exposure
to credit risk without taking account of the value of any collateral obtained.
The credit risk on liquid funds is limited because the counterparties
are banks with high credit ratings assigned by international credit rating
agencies.
The table below summarises the Company's exposure to credit risk by asset
class according to whether the exposure is collateralised or not.
Exposure to Credit Risk 30 June 30 June 31 December
2015 2014 2014
GBP 000's GBP 000's GBP 000's
Uncollateralis
Derivative financial assets ed 75 496 892
Uncollateralis
Market and client receivables ed 34,794 45,607 17,512
Unpaid share capital and loans
due from staff Uncollateralised 8 2 1
Uncollateralis
Accrued income ed 889 701 597
Uncollateralis
Other receivables ed 1,412 595 653
Uncollateralis
Cash and cash equivalents ed 48,218 43,156 32,932
---------------------------------- ---------------- ---------- ---------- ------------
85,396 90,557 52,587
--------------------------------------------------- ---------- ---------- ------------
The table below summarises the Company's exposure to credit risk by asset
class according to credit rating.
Exposure to Credit Risk 30 June 30 June 31 December
2015 2014 2014
GBP 000's GBP 000's GBP 000's
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------------------------------------ --------- ---------- ---------- ------------
Unrat
Derivative financial assets ed 75 496 892
Unrat
Market and client receivables ed 19,257 24,413 5,830
Market and client receivables AA- 14,019 14,915 6,235
Market and client receivables A 367 4,089 4,858
Market and client receivables A- - 2,190 -
Market and client receivables BBB 1,151 - 589
Unpaid share capital and loans due
from staff Unrated 8 2 1
Accrued income Unrated 889 701 597
Other receivables Unrated 1,412 595 653
Cash and cash equivalents AA- 6,979 37,739 22,438
Cash and cash equivalents A 41,239 5,417 10,494
-------------------------------------- ------- ---------- ---------- ------------
85,396 90,557 52,587
---------------------------------------------- ---------- ---------- ------------
Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board.
It has, however, delegated day-to-day management to the Chief Executive
Officer and the Finance Director. The Company has in place an appropriate
liquidity risk management framework for the management of its short, medium
and long-term funding and liquidity management requirements. The Company
manages liquidity risk by maintaining adequate reserves, banking facilities,
by continuously monitoring forecast and actual cash flows and matching
the maturity profiles of financial assets and liabilities. Given the nature
of the Company's business, the Company does not run any material liquidity
mismatches, financial liabilities are on the whole short-term and the
Company has sufficient liquid assets to cover all of these liabilities.
Liquidity and interest risk tables
The following tables detail the Company's remaining contractual maturity
for its financial assets and liabilities. The tables have been drawn up
based on the undiscounted cash flows of financial liabilities based on
the earliest date on which the Company is required to pay. The table includes
both interest and principal cash flows. The tables also detail the Company's
expected maturity for its financial assets. The tables below have been
drawn up based on the undiscounted contractual maturities of the financial
assets including interest that will be earned on those assets. No maturity
date has been listed where there is no contractual maturity for the financial
assets.
Liquidity and interest rate
table Weighted No More
average maturity Less than than
effective date 1 month 1 month Total
GBP
As at 30 June 2015 interest rates 000's GBP 000's GBP 000's GBP 000's
------------------------------ ------------------------------- --------- ---------- ---------- ----------
Available-for-sale financial Non-interest
assets bearing 559 - - 559
------------------------------ ------------------- ---------- --------- ---------- ---------- ----------
Non-interest
Financial assets at FVTPL bearing 10,769 - 75 10,844
Non-interest
Trade and other receivables bearing - 36,178 - 36,178
Financial liabilities at Non-interest
FVTPL bearing - (4,341) - (4,341)
Non-interest
Trade and other payables bearing - (24,967) - (24,967)
Variable
interest
Cash and cash equivalents rate instruments 0.60% - 20,777 - 20,777
Variable
interest
Cash and cash equivalents rate instruments 0.30% - 20,462 - 20,462
Variable
interest
Cash and cash equivalents rate instruments 0.25% - 6,979 - 6,979
------------------------------ ------------------- ---------- --------- ---------- ---------- ----------
10,769 55,088 75 65,932
Weighted No More
average maturity Less than than
effective date 1 month 1 month Total
GBP
As at 30 June 2014 interest rates 000's GBP 000's GBP 000's GBP 000's
------------------------------ ------------------------------- --------- ---------- ---------- ----------
Available-for-sale financial Non-interest
assets bearing 1,000 - - 1,000
------------------------------ ------------------- ---------- --------- ---------- ---------- ----------
Non-interest
Financial assets at FVTPL bearing 29,380 - 496 29,876
Non-interest
Trade and other receivables bearing - 46,905 - 46,905
Financial liabilities at Non-interest
FVTPL bearing - (3,915) - (3,915)
Non-interest
Trade and other payables bearing - (41,316) - (41,316)
Fixed
interest
Cash and cash equivalents rate instruments 0.60% - 5,330 - 5,330
Variable
interest
Cash and cash equivalents rate instruments 0.30% - 87 - 87
Variable
interest
Cash and cash equivalents rate instruments 0.25% - 37,739 - 37,739
------------------------------ ------------------- ---------- --------- ---------- ---------- ----------
29,380 44,830 496 74,706
Weighted No More
average maturity Less than than
effective date 1 month 1 month Total
GBP
As at 31 December 2014 interest rates 000's GBP 000's GBP 000's GBP 000's
------------------------------ ------------------------------- --------- ---------- ---------- ----------
Available-for-sale financial Non-interest
assets bearing 729 - - 729
------------------------------ ------------------- ---------- --------- ---------- ---------- ----------
Non-interest
Financial assets at FVTPL bearing 9,122 - 892 10,014
Non-interest
Trade and other receivables bearing - 18,763 - 18,763
Financial liabilities at Non-interest
FVTPL bearing - (2,711) - (2,711)
Non-interest
Trade and other payables bearing - (8,218) - (8,218)
Variable
interest
Cash and cash equivalents rate instruments 0.50% - 7,394 - 7,394
Variable
interest
Cash and cash equivalents rate instruments 0.30% - 3,099 - 3,099
Variable
interest
Cash and cash equivalents rate instruments 0.13% - 11,671 - 11,671
Variable
interest
Cash and cash equivalents rate instruments 0.25% - 10,768 - 10,768
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------------------------------ ------------------- ---------- --------- ---------- ---------- ----------
9,122 40,766 892 50,780
The carrying amounts of financial assets and financial liabilities recorded
at amortised cost in the financial statements approximate their fair values.
Fair value hierarchy
All financial instruments carried at fair value are categorised in three
categories, defined as follows:
Level 1 - Quoted market prices
Level 2 - Valuation techniques (market observable)
Level 3 - Valuation techniques (non-market observable)
The Company held the following financial instruments measured at fair
value:
Level Level Level
1 2 3 Total
As at 30 June 2015 GBP 000's GBP 000's GBP 000's GBP 000's
------------------------------------------ ---------- ---------- ---------- ----------
Available-for-sale financial assets - - 559 559
-------------------------------------------- ---------- ---------- ---------- ----------
Financial assets at FVTPL
Derivative financial assets - - 75 75
Trading investments carried at
fair value 10,769 - - 10,769
-------------------------------------------- ---------- ---------- ---------- ----------
10,769 - 75 10,844
10,769 - 634 11,403
Financial liabilities at FVTPL
Contractual obligation to acquire
securities 4,341 - - 4,341
There were no transfers between Level 1,
2 and 3 during the period.
Level Level Level
1 2 3 Total
As at 30 June 2014 GBP 000's GBP 000's GBP 000's GBP 000's
------------------------------------------ ---------- ---------- ---------- ----------
Available-for-sale financial assets - - 1,000 1,000
-------------------------------------------- ---------- ---------- ---------- ----------
Financial assets at FVTPL
Derivative financial assets - - 496 496
Trading investments carried at
fair value 29,380 - - 29,380
-------------------------------------------- ---------- ---------- ---------- ----------
29,380 - 496 29,876
29,380 - 1,496 30,876
------------------------------------------ ---------- ---------- ---------- ----------
Financial liabilities at FVTPL
Contractual obligation to acquire
securities 3,915 - - 3,915
There were no transfers between Level 1,
2 and 3 during the period.
Level
1 Level 2 Level 3 Total
GBP
As at 31 December 2014 000's GBP 000's GBP 000's GBP 000's
---------------------------------- -------- ------------- -------------- ----------
Available-for-sale financial
assets - - 729 729
------------------------------------ -------- ------------- -------------- ----------
Financial assets at FVTPL
Derivative financial
assets - - 892 892
Trading investments carried
at fair value 9,122 - - 9,122
------------------------------------ -------- ------------- -------------- ----------
9,122 - 892 10,014
---------------------------------- -------- ------------- -------------- ----------
9,122 - 1,621 10,743
---------------------------------- -------- ------------- -------------- ----------
Financial liabilities
at FVTPL
Contractual obligation
to acquire securities 2,711 - - 2,711
For assets and liabilities that are recognised in the financial statements
on a recurring basis, the Company determines whether transfers have occurred
between levels in the hierarchy by re-assessing categorisation (based
on the lower level input that is significant to the fair value measurement
as a whole) at the end of the reporting period.
There were no transfers between Level 1, 2 and 3
during the period.
Reconciliation of recurring fair value measurements categorised
within Level 3 of the fair value hierarchy
Unlisted Share options
securities and warrants Total
GBP 000's GBP 000's GBP 000's
---------------------------------- -------- ------------- -------------- ----------
Opening balance 1 January
2015 729 892 1,621
Share options and warrants
exercised - (768) (768)
Unlisted securities awarded 82 - 82
Impairment recognised
in income statement (250) (49) (299)
Net unrealised loss recognised
in equity (2) - (2)
------------------------------------ -------- ------------- -------------- ----------
Closing balance 30 June
2015 559 75 634
Level 3 financial instruments consist of derivative financial assets and
unlisted shares received in lieu of fees.
The unlisted equity shares are carried as available-for-sale financial
assets, classified as Level 3 within the fair value hierarchy. A number
of valuation techniques have been used to provide a range of possible
values for these shareholdings in accordance with the International Private
Equity and Venture Capital ("IPEV") valuation guidelines. The carrying
values have been adjusted to values within these ranges. There have been
no other factors brought to the Board's attention which would suggest
that there has been a further impairment.
The derivative financial assets are carried as financial assets at FVTPL
classified as Level 3 within the fair value hierarchy and comprise equity
options and warrants over listed securities.
Impact of reasonably possible alternative assumptions
The significant unobservable input used in the fair value
measurement of Cenkos holdings of share options and warrants is the
volatility measure. Significant increases (decreases) in the
volatility measure would result in a significantly higher (lower)
fair value measurement.
A sensitivity analysis based on a 10% increase / decrease in the
volatility measure used as an input in the valuation of the share
options and warrants shows the impact of such a movement would be
an increase of GBP46,407 / decrease of GBP38,008 respectively the
profit in the income statement.
Determination of fair value
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
Financial instruments measured at fair value on an ongoing basis
include trading assets and liabilities and financial investments
classified as available-for-sale.
Fair values are determined according to the following
hierarchy:
(a) Level 1 - Quoted market price
Financial instruments with quoted prices for identical
instruments in active markets.
(b) Level 2 - Valuation technique using observable inputs
Financial instruments with quoted prices for similar instruments
in active markets or quoted prices for identical or similar
instruments in inactive markets and financial instruments valued
using models where all significant inputs are observable.
(c) Level 3 - Valuation technique with significant
non-observable inputs.
Financial instruments valued using models where one or more
significant inputs are not observable. The best evidence of fair
value is a quoted price in an actively traded market. In the event
that the market for a financial instrument is not active, a
valuation technique is used. The majority of valuation techniques
employ only observable market data and so the reliability of the
fair value measurement is high. However, certain financial
instruments are valued on the basis of valuation techniques that
feature one or more significant market inputs that are "Not
observable". For these instruments, the fair value derived is more
judgemental. 'Not observable' in this context means that there are
few or no current market data available from which to determine the
level at which an arm's length transaction would be likely to
occur. It generally does not mean that there is absolutely no
market data available upon which to base a determination of fair
value (historical data may, for example, be used). Furthermore, the
assessment of hierarchy level is based on the lowest level of input
that is
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