TIDMCNKS
RNS Number : 3823K
Cenkos Securities PLC
21 September 2016
Unaudited Interim Financial Results for the six month period
ended 30 June 2016
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.
Highlights 30-Jun-16 30-Jun-15
------------------------------------- ------ ---------- ----------
GBP15.3 GBP53.1
Revenue - 71% m m
GBP18.6
Profit before tax - 91% GBP1.7 m m
GBP20.1 GBP48.2
Cash - 58% m m
Basic earnings per share - 95% 1.2 p 26.1 p
Interim dividend per share declared - 86% 1.0 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 and this
continued into the first half of 2016 in spite of very difficult
market conditions which meant a number of significant fundraisings
slipped into the second half of 2016. Since formation in 2005 we
have raised in excess of GBP15 billion of equity capital for our
clients.
"We believe that, as one of the leading brokers in London for
growth companies, we are well-placed to benefit from improvements
in market conditions and have made a good start to the second half
of the year. There is institutional demand to fund high quality
companies and ideas and 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 despite a much reduced level of
revenue, we remained profitable and delivered GBP1.7 million of
pre-tax profits in the six months ending 30 June 2016. Against a
tough market environment, we continue to demonstrate the strength
of our equity placing capabilities and raised a total of GBP529m in
aggregate for our clients in H1 2016. Indeed, we have now raised in
excess of GBP15.1 billion of equity for clients - mainly acting as
sole broker - over our 11 year history.
H1 2015's results benefited from GBP26.7m of revenue from one
large fundraising transaction, which did not reoccur in H1 2016.
Excluding this, H1 2016's revenues fell 42% on the back of lower
fundraisings and a number of significant fundraisings slipping into
H2 2016. This was also reflected in lower performance-related pay.
Profit before tax was GBP1.7 million (H1 2015: GBP18.6 million) and
basic earnings per share fell to 1.2p (H1 2015: 26.1p).
Revenues
Revenue for the period decreased by 71% to GBP15.3 million (H1
2015: GBP53.1 million). In H1 2016 we raised GBP529 million for our
clients (H1 2015: GBP2,020 million - including GBP1,029 million for
BCA Marketplace plc). Excluding the impact of this large deal in
2015, the 42% fall in revenues reflects quieter equity markets -
including AIM - than those experienced in H1 2015. Against the
backdrop of the Brexit vote and wider European macro-economic
uncertainty, total funds raised by AIM companies fell by 30% to
GBP1,931 million in H1 2016, when compared to H1 2015 (source: LSE
AIM factsheet June 2016).
We remain ranked as one of the leading brokers in London for
growth companies, as demonstrated by Adviser Rankings Limited's
July 2016 'AIM Adviser Rankings Guide' where we were ranked number
2 Nominated Adviser by number of AIM clients and number 3 Nominated
Adviser by client market capitalisation. We were also ranked top
Nominated Adviser for 'Oil and Gas', top stockbroker (by client
market capitalisation) for 'Industrials', joint top stockbroker for
'Consumer Services' (by number of clients) and number 3 Nominated
Adviser for 'Technology' companies by number of AIM clients. The
size of our corporate client base (where the Company is retained as
Nominated Adviser / broker and / or financial adviser) fell
slightly to 119 at 30 June 2016 (H1 2015: 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 339
(H1 2015: 342) companies and investment funds. Importantly, we
maintained a top three market share in 70% of our clients' shares
and the top market share in 44%.
Costs
Costs fell 60% to GBP13.7 million in the period, primarily due
to lower performance-related pay on the back of lower levels of
revenue. Additionally, in August 2016 we were fined GBP530,500 by
the FCA for regulatory breaches following an investigation into the
Company's role as sponsor to Quindell plc ("Quindell") (now known
as Watchstone Group plc) in relation to Quindell's planned move
from AIM to the premium segment of the main market of the LSE in
June 2014 and into the Company's systems and controls in relation
to its sponsor services. We have accrued for this cost in these
results, and incurred costs in H1 2016 (and in prior years) to
address the issues raised by the FCA. The FCA's investigation of
the Company was concluded in August 2016, with the FCA
acknowledging the extensive remediation programme undertaken by the
Company in order to enhance and improve its systems and controls in
relation to its sponsor services. See note 16 to these results.
We also incurred an expense of GBP0.9 million (H1 2015: GBP2.1
million) due to staff costs 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 second interim and final dividend for 2015 totalling 7p paid
in H1 2016. This compares to a H1 2015 CAP cost incurred in respect
of a 10p 2014 final dividend.
We are pleased to report that we have now formally opened our
Singapore office - the Monetary Authority of Singapore approved
Cenkos Securities Asia Pte. Ltd's application for a Capital Markets
Services Licence on 27 June 2016. Our Singapore office will help
facilitate flows between Asia and the UK. In particular, we plan to
use this office to assist our clients in capital raising in the
region, to help Asian corporates raise capital and to help Asian
corporates sell or list their UK assets.
Profit and earnings per share
Profit before tax decreased by 91% to GBP1.7 million (H1 2015:
GBP18.6 million) and profit after tax decreased by 96% to GBP0.7
million (H1 2015: GBP14.6 million). Our basic earnings per share
("EPS") fell by 95% to 1.2p.
Statement of consolidated financial position and cash flow
At 30 June 2016, our net trading investments were GBP6.6 million
(H1 2015: GBP6.5 million), and cash held was GBP20.1 million (H1
2015: GBP48.2 million). During the six months to 30 June 2016 there
was a net decrease in cash and cash equivalents of GBP13.0 million.
This is largely due to the payment of accrued bonuses in respect of
2015, the 2015 second interim and 2015 final dividend (totalling 7p
per share) and corporation tax payments which were offset partly by
operating cash flow in H1 2016.
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.
Since our flotation on AIM in October 2006, we have paid out
115.5p in dividends (prior to the 1p proposed interim dividend for
2016) and bought back 19.5 million shares at a cost of GBP25.4
million for cancellation, thereby increasing the Group's
prospective earnings per share. We have therefore returned GBP102.3
million of cash to shareholders, equivalent to 154.8p per share
(before 2016's interim dividend) since our flotation in 2006.
The Board proposes an interim dividend of 1p per share
reflecting the earnings per share of H1 2016. The payment of this
interim dividend will trigger payments to staff under the CAP of
GBP0.1 million in H2 2016 (H2 2015: GBP1.0 million). The dividend
will be paid on 7 November 2016 to all shareholders on the register
at 7 October 2016.
On 28 April 2016 Cenkos announced that the trustees of the
Cenkos EBT had launched a share purchase plan to buy up to
GBP50,000 of Cenkos shares a month. 102,000 shares were purchased
in H1 2016 under this plan at a cost of GBP142,571. The increase in
the size of the Company's EBT reflects, in part, the potential
future demand for Cenkos' shares to satisfy share awards under the
Company's 2015 deferred bonus scheme.
People
We continue to look to recruit staff who are attracted by our
culture and business model, and are pleased that we now have five
highly experienced staff in our newly licensed Singapore office.
Since the beginning of the year up to the date of this report, we
have also recruited in the UK a deputy head of sponsor services, as
well as a number of analysts and sales executives.
Principal risks and uncertainties
Given the results of the Brexit referendum, there is increased
uncertainty in equity markets and we continue to monitor the
situation. Aside from this, 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 2015 Annual Report, namely the health of UK equity
markets as well as reputational, operational, regulatory, conduct
and market risk. Notwithstanding these, 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
is 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 pipeline for the rest of the year
is encouraging.
Jim Durkin
Chief Executive Officer
21 September 2016
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 2016; 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 Group 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 Group 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 2016
Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
Notes 30 June 30 June 31 December
2016 2015 2015
GBP 000's GBP 000's GBP 000's
----------------------------------------- ------ ----------- ----------- ------------
Continuing operations
Revenue 2 15,344 53,115 76,513
Administrative expenses (13,726) (34,607) (56,751)
Operating profit 1,618 18,508 19,762
Investment income - interest
income 32 65 138
Interest expense - (3) (4)
Profit before tax from continuing
operations 1,650 18,570 19,896
Tax 3 (997) (3,936) (4,525)
Profit after tax 653 14,634 15,371
Attributable to:
Equity holders of Cenkos Securities plc 653 14,634 15,371
Basic earnings per share 5 1.2p 26.1p 27.2p
Diluted earnings per
share 5 n/a 24.1p 26.8p
Condensed consolidated statement of comprehensive income
For the six months ended 30 June 2016
Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
GBP 000's GBP 000's GBP 000's
--------------------------------------------------- ----------- ----------- ------------
Profit 653 14,634 15,371
Amounts that will be recycled to income statement
in future periods
Gain / (loss) on available-for-sale
financial assets 38 (2) (2)
Tax on available-for-sale financial
assets (7) - -
Exchange differences on translation of
foreign operations 83 - -
Other comprehensive income 114 (2) (2)
Total comprehensive income 767 14,632 15,369
Attributable to:
Equity holders of Cenkos
Securities plc 767 14,632 15,369
Condensed consolidated statement of financial position
As at 30 June 2016
Unaudited Unaudited Audited
Notes 30 June 30 June 31 December
2016 2015 2015
GBP 000's GBP 000's GBP 000's
------------------------------- ------ ---------- ---------- ------------
Non-current assets
Property, plant and equipment 6 318 380 296
Deferred tax asset 11 383 2,151 1,330
701 2,531 1,626
Current assets
Trade and other receivables 7 26,810 37,103 18,354
Available-for-sale financial
assets 447 559 559
Other current financial
assets 8 8,316 10,844 12,706
Cash and cash equivalents 9 20,067 48,218 33,106
55,640 96,724 64,725
Total assets 56,341 99,255 66,351
Current liabilities
Trade and other payables 10 (28,500) (55,224) (34,881)
Other current financial
liabilities 8 (1,715) (4,341) (2,551)
(30,215) (59,565) (37,432)
Net current assets 25,425 37,159 27,293
Non-current liabilities
Trade and other payables 10 (521) - (351)
Total liabilities (30,736) (59,565) (37,783)
Net assets 25,605 39,690 28,568
Equity
Share capital 12 567 599 567
Share premium 3,334 2,061 3,321
Capital redemption reserve 195 150 195
Own shares 13 (3,280) (3,203) (3,193)
Available-for-sale reserve 133 102 102
Foreign currency translation
reserve 83 - -
Retained earnings 24,573 39,981 27,576
Total equity 25,605 39,690 28,568
Condensed consolidated cash flow statement
For the six months ended 30 June 2016
Unaudited Unaudited Audited
Six months Six months
ended ended Year ended
Notes 30 June 30 June 31 December
2016 2015 2015
GBP 000's GBP 000's GBP 000's
-------------------------------------------------- ------ ----------- ----------- ------------
Profit after tax 653 14,634 15,371
Adjustments for:
Net finance income (32) (61) (134)
Tax expense 997 3,936 4,525
Depreciation of property, plant
and equipment 84 104 241
Gain / (loss) on available-for-sale
financial assets 31 (2) (2)
Exchange differences on translation of
foreign operations 80 - -
Shares and options received in
lieu of fees - (1,232) (4,967)
Transfer of shares from SIP to
employees 18 - -
Share-based payment expense 316 339 502
Operating cash flows before movements in working
capital 2,147 17,718 15,536
Decrease in net trading investments 3,666 2,204 2,285
(Increase) / decrease in trade
and other receivables (8,459) (17,377) 1,367
(Decrease) / increase in trade
and other payables (4,475) 30,849 12,538
Net cash flow from operating activities before
interest and tax paid (7,121) 33,394 31,726
Interest paid - (3) (4)
Tax paid (1,939) (2,837) (5,049)
Net cash flow from operating activities (9,060) 30,554 26,673
Investing activities
Interest received 35 56 133
Purchase of property, plant and
equipment 6 (103) (65) (174)
Reclassification of stamp
duty - - 58
Net cash (outflow) / inflow from
investing activities (68) (9) 17
Financing activities
Dividends paid (3,819) (5,656) (9,740)
Proceeds from issue of
own shares - 1,847 3,099
Proceeds from sale of own shares to employee
share plans 51 15 47
Acquisition of own shares
by EBT (143) - -
Acquisition of own shares for
cancellation - (10,767) (18,777)
Acquisition of CAP options cancelled
as part of tender offer buy-back - (698) (1,145)
Net cash used in financing activities (3,911) (15,259) (26,516)
Net (decrease) / increase in cash and cash equivalents (13,039) 15,286 174
Cash and cash equivalents at beginning of period 33,106 32,932 32,932
Cash and cash equivalents at end of period 9 20,067 48,218 33,106
Condensed consolidated statement of changes in equity
For the six months ended 30 June 2016
Foreign
Capital currency
Share Share redemption Own Available-for-sale translation Retained
capital premium reserve shares reserve reserve earnings Total
GBP GBP GBP GBP GBP
000's 000's GBP 000's 000's GBP 000's GBP 000's 000's 000's
-------------------- -------- -------- ----------- -------- ------------------- ------------ --------- ---------
Balance at 1
January 2015 637 232 93 (3,218) 104 - 41,713 39,561
Profit - - - - - - 14,634 14,634
Loss 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 - - - - - - (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
Profit - - - - - - 737 737
-------- -------- ----------- -------- ------------------- ------------ --------- ---------
Total comprehensive
income - - - - - - 737 737
Shares issued in
the period 13 1,238 - - - - - 1,251
Transfer of shares
to employee share
plans - 22 - 10 - - - 32
Acquisition of own
shares for
cancellation (45) - 45 - - - (8,010) (8,010)
Charge to equity
for cancelled CAP
options - - - - - - (447) (447)
Credit to equity
for equity-settled
share-based
payments - - - - - 163 163
Deferred tax on
share-based
payments - - - - - - (942) (942)
Current tax on
share-based
payments - - - - - - 178 178
Dividends paid - - - - - - (4,084) (4,084)
Balance at 31
December 2015 567 3,321 195 (3,193) 102 - 27,576 28,568
Foreign
Capital Currency
Share Share redemption Own Available-for-sale Translation Retained
capital premium reserve shares reserve Reserve earnings Total
GBP GBP GBP GBP GBP
000's 000's GBP 000's 000's GBP 000's GBP 000's 000's 000's
-------------------- -------- -------- ----------- -------- ------------------- ------------ --------- ---------
Balance at 1
January 2016 567 3,321 195 (3,193) 102 - 27,576 28,568
Retained profit - - - - - - 653 653
Gain on
available-for-sale
financial
assets net of tax - - - - 31 - - 31
Exchange
differences on
translation of
foreign operations - - - - - 83 - 83
-------------------- -------- -------- ----------- -------- ------------------- ------------ --------- ---------
Total comprehensive
income - - - - 31 83 653 767
Transfer of shares
to employee share
plans - 13 - 38 - - - 51
Transfer of shares
to employees - - - 18 - - (18) -
Acquisition of own
shares - - - (143) - - - (143)
Credit to equity
for equity-settled
share-based
payments - - - - - - 334 334
Deferred tax on
share-based
payments - - - - - - (153) (153)
Dividends paid - - - - - - (3,819) (3,819)
Balance at 30 June
2016 567 3,334 195 (3,280) 133 83 24,573 25,605
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 2016 are unaudited
and were approved by the Board of Directors for issue on 21
September 2016.
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
international financial reporting standards 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.
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 2016 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 Group's annual financial statements for the year ended 31
December 2015.
The accounting policies adopted in the preparation of the
interim condensed consolidated financial statements are consistent
with those followed in the preparation of the Group's annual
financial statements for the year ended 31 December 2015, 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 Group'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 2015 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 Group'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
Group, its cash flows and liquidity position are set out in the
Strategic Report in the Group's Annual Report for the year ended 31
December 2015.
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, 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 Group, none of which had a
material impact on the Group'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 2016, one of Cenkos' clients
contributed more than 10% of Cenkos' total revenue. The amount was
GBP2.69 million (six months ended 30 June 2015: GBP26.75 million;
year ended 31 December 2015: GBP26.75 million).
Six months Six months
Revenue streams ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
GBP 000's GBP 000's GBP 000's
-------------------------------------------- ----------- ----------- ------------
Corporate finance and
placing fees 9,675 43,075 60,069
Corporate broking, market-making, research
and commission revenue 5,669 10,040 16,444
15,344 53,115 76,513
3. Tax
Six months Six months
The tax charge comprises: ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
GBP 000's GBP 000's GBP 000's
------------------------------------------------------ ----------- ----------- ------------
Current tax
United Kingdom corporation tax at 20% (2015: 20.25%)
based on the profit for the period 203 4,006 4,639
Adjustment in respect
of prior period
United Kingdom corporation tax
at 20% (2015: 20.25%) - - 76
Total current tax 203 4,006 4,715
Deferred tax
Charge / (credit) on account
of temporary differences 794 (70) (112)
Deferred tax prior period
adjustment - - (78)
Total deferred tax (refer
to note 11) 794 (70) (190)
Total tax on profit on ordinary activities
from continuing operations 997 3,936 4,525
The tax charge for the period differs from that resulting from applying
the standard rate of UK corporation tax of 20% (2015: 20.25%) to the profit
before tax for the reasons set out in the following reconciliation:
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
GBP 000's GBP 000's GBP 000's
--------------------------------------------------- ----------- ----------- ------------
Profit before tax from continuing operations 1,650 18,570 19,896
Tax on profit on ordinary activities at the
UK corporation tax rate of 20% (2015: 20.25%) 330 3,760 4,029
Tax effect of:
Non-deductible expenses for tax purposes 152 78 139
Current year losses of overseas subsidiary for
which no deferred tax asset has been recognised 54 27 73
Share-based payments 503 70 166
Deferred tax rate change adjustment (42) 1 120
Adjustment in respect of prior period
deferred tax - - (78)
Adjustment in respect of prior period
current tax - - 76
Tax expense for the period 997 3,936 4,525
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
2016 2015 2015
GBP 000's GBP 000's GBP 000's
--------------------------------------------------- ----------- ----------- ------------
Other Comprehensive Income (OCI)
Current tax expense arising on available-for-sale
financial asset 7 - -
Statement of Changes in Equity (SOCIE)
Current tax credit arising on share-based
payments - (377) (555)
Deferred tax charge / (credit) arising
on share-based payments 153 (39) 903
Total income tax recognised directly in
equity 160 (416) 348
4. Dividends
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
GBP 000's GBP 000's GBP 000's
-------------------------------------------------------- ----------- ----------- ------------
Amounts recognised as distributions to
equity holders in the period:
Second interim dividend for the year ended 31 December
2015 of 6.0p (2014: nil) per share 3,269 - -
Final dividend for the year ended 31 December 2015
of 1.0p (2014: 10p) per share 550 5,656 5,656
Interim dividend for the period to 30 June 2015
of 7.0p (June 2014: 7.0p) per share - - 4,084
3,819 5,656 9,740
The proposed interim dividend for 30 June 2016 of 1.0p (30 June 2015: 7.0p)
per share was approved by the Board on 21 September 2016 and has not been
included as a liability as at 30 June 2016. The dividend will be payable
on 7 November 2016 to all shareholders on the register at 7 October 2016.
Under the Compensatory Award Plan ("CAP"), as described in the 2015 Annual
Report, the payment of a dividend to ordinary shareholders will trigger
a cash payment to holders of options under the CAP. The payment of this
interim dividend will increase staff costs by GBP0.12 million in the second
half of 2016 (7.0p 2015 interim dividend increased staff costs by GBP0.99
million in the second half of 2015).
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
2016 2015 2015
--------------------------------------------------- ------------ ----------- ------------
Basic earnings per share 1.2p 26.1p 27.2p
Diluted earnings per
share n/a 24.1p 26.8p
For the period ended 30 June 2016, the share options were antidilutive due
to the interaction of the dividends paid in the period and the share price.
Earnings
GBP 000's GBP 000's GBP 000's
Earnings for the purpose of basic earnings
per share being net profit attributable to
equity holders of the parent 653 14,634 15,371
Effect of dilutive potential
ordinary shares:
Share options 111 496 498
Earnings for the purpose of
diluted earnings per share 764 15,130 15,869
No. No. No.
--------------------------------------------------- ------------ ----------- ------------
Number of shares
Weighted average number of ordinary shares
for the purpose of basic earnings per share 54,421,225 56,046,643 56,512,222
Effect of dilutive potential
ordinary shares:
Share options 1,538,733 4,750,534 2,804,098
Weighted average number of ordinary shares
for the purpose of diluted earnings per share 55,959,958 60,797,177 59,316,320
------------------------------------------------------
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, 102,000
shares were purchased at an aggregate consideration of GBP0.14 million (2015:
no further shares were purchased). In addition, 608,430 shares (30 June
2015: 14,323 shares, 31 December 2015: 25,400 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 and dividends earned which
were reinvested by employees in further shares. As at 30 June 2016 the EBT
held a total of 2,279,200 (30 June 2015: 2,796,707, 31 December 2015: 2,785,630)
ordinary shares at an aggregate consideration of GBP2.37 million (30 June
2015: GBP2.86 million, 31 December 2015: GBP2.85 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 2016 the Cenkos Securities plc Share Incentive Plan Trust
held a total of 892,166 (30 June 2015: 338,174, 31 December 2015: 338,174)
Free and Matching ordinary shares at an aggregate consideration of GBP0.91
million (30 June 2015: GBP0.35 million, 31 December 2015: GBP0.35 million).
As at 30 June 2016, in total these trusts held 3,171,366 (30 June 2015:
3,134,881 shares, 31 December 2015: 3,123,804 shares) at an aggregate consideration
of GBP3.28 million (30 June 2015: GBP3.20 million, 31 December 2015: GBP3.20
million) as shown in note 13.
6. Property, plant and equipment
During the period, the Group spent approximately GBP102,864 (30 June 2015:
GBP64,581, 31 December 2015: GBP174,249) on property, plant and equipment.
This mostly related to the purchase of IT equipment.
7. Trade and other receivables
30 June 30 June 31 December
2016 2015 2015
GBP 000's GBP 000's GBP 000's
------------------------------- ---------- ---------- ------------
Current assets
Financial assets
Market and client receivables 23,833 34,794 15,458
Loans due from staff 50 8 6
Accrued income 1,093 889 1,435
Other receivables 816 487 707
25,792 36,178 17,606
Non-financial assets
Prepayments 1,018 925 748
26,810 37,103 18,354
As at 30 June 2016 the ageing analysis of trade
and other receivables is as follows:
Neither Past due but not impaired
past due 30-60 61-90
Total nor impaired < 30 days days days > 91 days
GBP
000's GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's
------------------ ------- -------------- ---------- ---------- ---------- ----------
30 June 2016 26,810 24,971 1,199 388 88 164
30 June 2015 37,103 31,215 4,062 1,384 216 225
31 December 2015 18,354 15,627 2,657 61 6 3
8. Other current financial assets and liabilities
30 June 30 June 31 December
2016 2015 2015
GBP 000's GBP 000's GBP 000's
--------------------------------------------- ---------- ---------- ------------
Financial assets at FVTPL
Trading investments carried at fair value 8,223 10,769 12,604
Derivative financial assets - share options
and warrants 93 75 102
8,316 10,844 12,706
Financial liabilities
at FVTPL
Contractual obligation to acquire
securities (1,715) (4,341) (2,551)
Gains / losses from financial assets and liabilities at FVTPL
are included within 'Revenue' in the Condensed Consolidated Income
Statement.
9. Cash and cash equivalents
30 June 30 June 31 December
2016 2015 2015
GBP 000's GBP 000's GBP 000's
--------------------------- ---------- ---------- ------------
Cash and cash equivalents 20,067 48,218 33,106
10. Trade and other payables
30 June 30 June 31 December
2016 2015 2015
GBP 000's GBP 000's GBP 000's
--------------------------- ---------- ---------- ------------
Current liabilities
Financial liabilities
Trade creditors 19,317 24,337 9,727
Other creditors 335 630 867
19,652 24,967 10,594
Non-financial liabilities
Accruals and deferred
income 8,642 26,634 22,345
Corporation tax payable 206 3,623 1,942
8,848 30,257 24,287
28,500 55,224 34,881
Non-current liabilities
Non-financial liabilities
Cash-settled deferred
bonus scheme 521 - 351
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
periods.
Group and Company
temporary differences
Property,
Bonus payments plant Share-based
deferred and equipment payments Total
GBP
GBP 000's GBP 000's GBP 000's 000's
------------------------------------------- --------------- -------------- ------------ -------
At 31 December 2014 242 6 1,794 2,042
Reversal and origination of temporary
differences credit / (expense) 143 (11) (62) 70
Deferred tax credit to
equity - - 39 39
At 30 June 2015 385 (5) 1,771 2,151
Reversal and origination of temporary
differences credit / (expense) 198 13 (168) 43
Deferred tax prior year adjustment credit 78 - - 78
Deferred tax charge to
equity - - (942) (942)
At 31 December 2015 661 8 661 1,330
Origination of temporary differences
expense (198) (13) (584) (795)
Deferred tax charge to
equity 1 - (153) (152)
At 30 June 2016 464 (5) (76) 383
A 21% corporate tax rate came into effect from 1 April 2014 and fell to
20% with effect from 1 April 2015. In the Summer Budget 2015 the Government
announced a further reduction in the main rate of corporation tax to 19%
from 1 April 2017 and 18% from 1 April 2020. These changes were substantially
enacted on 18 November 2015.
This will reduce the Company's future current tax charge accordingly.
The deferred tax balances at 30 June 2016 have been stated at 19% as this
is the expected prevailing rate when the individual temporary differences
are expected to reverse.
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 GBP57,430 at
19%).
In addition, during the period, Cenkos Securities Asia Pte. Ltd. incurred
costs of GBP276,308 but has only just started to trade. A deferred tax asset
has not been recognised as future utilisation of the losses is dependent
on future taxable profits which are uncertain. The unrecognised deferred
tax asset in respect of the overseas subsidiary's trading losses carried
forward is gross GBP851,875 (net GBP144,819 at 17%).
12. Share capital
The issued share capital as at 30 June 2016 amounted to GBP566,948 (30
June 2015: GBP598,767, 31 December 2015: GBP566,948).
1 January 2015 to 31 December 2015
Ordinary shares Event
Date of 1p each
---------------------------------------------------- ----------------------- ---------------------------------------
09 January 2015 5,727,340 were tender offer to buy back shares
cancelled
16 April 2015 35,000 were issued exercise of 35,000 LTIP options
21 April 2015 200,000 were issued exercise of 200,000 LTIP options
22 April 2015 750,000 were issued exercise of 750,000 LTIP options
24 April 2015 190,000 were issued exercise of 190,000 LTIP options
27 April 2015 100,000 were issued exercise of 100,000 LTIP options
28 April 2015 100,000 were issued exercise of 100,000 LTIP options
29 April 2015 10,000 were issued exercise of 10,000 LTIP options
11 May 2015 150,000 were issued exercise of 150,000 LTIP options
27 May 2015 85,000 were issued exercise of 85,000 LTIP options
01 June 2015 10,000 were issued exercise of 10,000 LTIP options
08 June 2015 25,000 were issued exercise of 25,000 LTIP options
11 June 2015 140,000 were issued exercise of 140,000 LTIP options
16 June 2015 97,000 were issued exercise of 97,000 LTIP
options
95,000 were issued exercise of 95,000 LTIP
02 July 2015 options
25,000 were issued exercise of 25,000 LTIP
16 July 2015 options
25,000 were issued exercise of 25,000 LTIP
17 August 2015 options
100,000 were issued exercise of 100,000 LTIP
21 September 2015 options
515,000 were issued exercise of 515,000 LTIP
22 September 2015 options
25,000 were issued exercise of 25,000 LTIP
24 September 2015 options
450,000 were issued exercise of 450,000 LTIP
29 September 2015 options
33,000 were issued exercise of 33,000 LTIP
30 September 2015 options
4,450,000 were tender offer to buy back
29 November 2015 cancelled the shares
1 January 2016 to 30
June 2016
There were no shares issued or cancelled
during the period.
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 ("SIP").
The EBT was established by the Company in 2009. It is funded by the Company
and has the authority to acquire Cenkos Securities plc shares. During the
period, 102,000 shares were purchased at an aggregate consideration of
GBP0.14 million (2015: no further shares were purchased). In addition,
608,430 shares (30 June 2015: 14,323 shares, 31 December 2015: 25,400 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 and
dividends earned which were reinvested by employees in further shares.
As at 30 June 2016 the EBT held a total of 2,279,200 (30 June 2015: 2,796,707,
31 December 2015: 2,785,630) ordinary shares at an aggregate consideration
of GBP2.37 million (30 June 2015: GBP2.86 million, 31 December 2015: GBP2.85
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 2016 the Cenkos Securities plc Share Incentive Plan Trust
held a total of 892,166 (30 June 2015: 338,174, 31 December 2015: 338,174)
Free and Matching ordinary shares at an aggregate consideration of GBP0.91
million (30 June 2015: GBP0.35 million, 31 December 2015: GBP0.35 million).
As at 30 June 2016, in total these trusts held 3,171,366 (30 June 2015:
3,134,881 shares, 31 December 2015: 3,123,804 shares) at an aggregate consideration
of GBP3.28 million (30 June 2015: GBP3.20 million, 31 December 2015: GBP3.20
million).
Six months ended Six months ended Year ended
30 June 2016 30 June 2015 31 December 2015
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 2,785,630 2,847 2,811,030 2,872 2,811,030 2,872
Acquired during the period 102,000 143 - - - -
Transferred to Cenkos Securities plc Share
Incentive Plan
Free shares (292,160) (298) - - - -
Matching shares (279,590) (285) - - - -
Dividend reinvestment (36,680) (38) (14,323) (15) (25,400) (25)
At the period ended 2,279,200 2,369 2,796,707 2,857 2,785,630 2,847
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 338,174 346 338,174 346 338,174 346
Transferred from the EBT
Free shares 292,160 298 - - - -
Matching shares 279,590 285 - - - -
Shares transferred to employees (17,758) (18) - - - -
At the period ended 892,166 911 338,174 346 338,174 346
Own shares held at the
period ended 3,171,366 3,280 3,134,881 3,203 3,123,804 3,193
14. Financial instruments
Risk management objectives
For further information relating to the principal risks faced by
the Group and how it mitigates and manages this exposure please
refer to the Strategic Report in the 2015 Annual Report.
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.
As at 30 June 2016, Cenkos Securities plc had a solvency ratio
of 172% (30 June 2015: 170%, 31 December 2015: 208%).
Significant accounting policies
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
Group's financial statements for the year ended 31 December
2015.
The carrying amounts of financial assets and financial liabilities recorded
at amortised cost in the financial statements approximate their fair values.
For further information concerning the Group's financial assets and liabilities
please refer to notes 7, 8 and 10.
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 Group held the following financial instruments measured at fair value:
Level Level Level
1 2 3 Total
GBP GBP GBP GBP
As at 30 June 2016 000's 000's 000's 000's
---------------------------------------------------- -------- -------- ------- -------
Available-for-sale financial assets - - 447 447
------------------------------------------------------ -------- -------- ------- -------
Financial assets at FVTPL
Derivative financial assets - - 93 93
Trading investments carried at fair value 8,223 - - 8,223
----------------------------------------------------- -------- -------- ------- -------
8,223 - 93 8,316
8,223 - 540 8,763
Financial liabilities at FVTPL
Contractual obligation to acquire securities 1,715 - - 1,715
There were no transfers between Level 1, 2 and
3 during the period.
Level Level Level
1 2 3 Total
GBP GBP GBP GBP
As at 30 June 2015 000's 000's 000's 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 1 2 Level 3 Total
GBP
As at 31 December 2015 GBP 000's GBP 000's GBP 000's 000's
------------------------------------------------- ------------- ------------ -------------- -------
Available-for-sale financial
assets - - 559 559
--------------------------------------------------- ------------- ------------ -------------- -------
Financial assets at FVTPL
Derivative financial
assets - - 102 102
Trading investments carried at
fair value 12,604 - - 12,604
-------------------------------------------------- ------------- ------------ -------------- -------
12,604 - 102 12,706
12,604 - 661 13,265
Financial liabilities
at FVTPL
Contractual obligation to acquire
securities 2,551 - - 2,551
For assets and liabilities that are recognised in the financial statements
on a recurring basis, the Group 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
GBP 000's GBP 000's 000's
------------------------------------------------- ------------- ------------ -------------- -------
Opening balance 1 January
2016 559 102 661
Share options and warrants exercised - -
Impairment recognised in income statement (150) (9) (159)
Net unrealised gain recognised in statement of comprehensive
income 38 - 38
Closing balance 30 June
2016 447 93 540
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 / decrease of
GBP0.01 million respectively of the profit shown in the income statement.
A sensitivity analysis based on a 10% increase / decrease in the share
prices used as an input in the valuation of the unlisted securities shows
the impact of such a movement would be an increase / decrease of GBP0.04
million respectively of the statement of comprehensive income.
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 significant to the fair value of the financial instrument.
The valuation models used where quoted market prices are not available
incorporate certain assumptions that the Group anticipates would be used
by a third party market participant to establish fair value.
Fair value
at 30
June 2016 Valuation technique Unobservable input Range
GBP 000's
Share options and warrants 93 Monte Carlo simulation Volatility 54-151%
IPEV valuation Price of recent
Unlisted securities 447 guidelines transactions *
540
-------------------
* A meaningful range cannot be provided as there are a number of unlisted
securities included within available-for-sale financial instruments.
15. Related party transactions
Transactions with related parties are made at arm's length.
Transactions or balances between the Company and its subsidiaries,
which are related parties, have been eliminated on consolidation
and, in accordance with IAS 24, are not disclosed in this note. The
Board includes all employees considered to be key management
personnel.
30 June 30 June 31 December
2016 2015 2015
Amounts owed by related
parties GBP 000's GBP 000's GBP 000's
------------------------------------------- ------------ ------------ --------------
Cenkos Securities Employee Benefit
Trust ("CSEBT") 3,279 3,203 3,192
Cenkos Securities Asia
Pte. Ltd. 958 140 395
Cenkos Nominee UK Limited 275 184 242
The compensation of the key management personnel of the Group (including
the Directors) and their interests in the shares and options over the shares
of Cenkos Securities plc were as follows:
Six months ended Year ended
30 June 30 June 31 December
2016 2015 2015
GBP 000's GBP 000's GBP 000's
------------------------------------------- ------------ ------------ --------------
Aggregate emoluments 543 3,764 6,931
During 2014, in order to comply with the Pensions Act, Cenkos was required
to enrol all qualifying employees in a pension scheme. Under the scheme,
qualifying employees are required to contribute a percentage of their relevant
earnings. The Company also contributes 1% of relevant earnings. During
the period to 30 June 2016, Cenkos made payments totalling GBP91 (30 June
2015: GBP182, 31 December 2015: GBP366) in respect of one Director who
is a member of this scheme.
Related party interests in ordinary shares
of Cenkos Securities plc
30 June 30 June 31 December
2016 2015 2015
------------------------- ----------- ----------- ------------ ----------- ----------- ------------
Number of shares 14,865,194 13,351,413 14,669,737
Percentage interest 26% 22% 26%
The related party interests in ordinary shares of Cenkos Securities plc
include the following interest held in the SIP scheme:
Number of shares held subject
to forfeiture conditions Number of shares held
30 June 30 June 31 December 30 June 30 June 31 December
2016 2015 2015 2016 2015 2015
No. No. No. No. No. No.
------------------------- ----------- ----------- ------------ ----------- ----------- ------------
Related party interest
in SIP 50,688 19,440 19,440 68,875 26,286 27,156
Related party interests
in share options Earliest Latest 30 June 30 June 31 December
Grant exercise exercise 2016 2015 2015
date date date No. No. No.
------------------------- ----------- ----------- ------------ ----------- ----------- ------------
LTIP (Exercise price -
GBP1.00) 02/04/2012 02/04/2015 02/10/2015 - 1,000,000 -
CAP (Exercise price -
GBP1.69) 01/10/2009 01/10/2009 30/09/2019 178,710 178,710 178,710
SAYE Scheme (Exercise
price - GBP1.73) 15/07/2014 01/08/2017 28/02/2018 52,080 52,080 52,080
16. Events after the reporting period
On 9 August 2016 the Company announced that it had entered into
a full and final settlement with the FCA, which included a
financial penalty of GBP530,500. This was the result of an FCA
investigation into the Company's role as sponsor to Quindell plc
("Quindell") (now known as Watchstone Group plc) in relation to
Quindell's planned move from AIM to the premium segment of the main
market of the LSE in June 2014 and into the Company's systems and
controls in relation to its provision of sponsor services. This
fine has been accrued for in full prior to the period end date.
There has also been a significant amount of associated remediation
and investigation costs which have been expensed as incurred in
current and prior years. These costs have been included within
'administrative expenses' in our Condensed Consolidated Income
Statement. Since 2014, the Company has developed and implemented an
extensive remediation programme to enhance and improve its systems
and controls in relation to its sponsor services, including steps
taken in consultation with the UK Listing Authority (UKLA). The FCA
has acknowledged the extensive remediation programme which the
Company has undertaken in order to enhance and improve its systems
and controls in relation to its sponsor services. This continued
investment in the business has ensured we now have more robust
systems and controls in this and related areas. Whilst the Company
remains in active dialogue with its insurers over the issue, as the
Company has yet to receive any insurance recoveries associated with
the costs of the investigation, no recoveries have been accrued at
this stage pending confirmation from the insurers of the final
amounts due.
Aside from this, there were no material events to report on that
occurred between 30 June 2016 and the date at which the Directors
signed this Interim Report.
17. Contingent liabilities
From time to time the Group may become subject to various
litigation, regulatory or employment related claims. The Directors
have considered any current matters pending against the Group and,
based on the evidence, concluded that the outcome of these will be
resolved with no material impact on the Group's financial position
or results of operations.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SEFESSFMSEEU
(END) Dow Jones Newswires
September 21, 2016 02:01 ET (06:01 GMT)
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