12097 Fiske Annual R&A 2012 Cover_12097 Fiske Annual R&A 2012 Cover 24/08/2012 10:17 Page 1 Annual Report and Accounts For the year ended 31 May 2012 Job No.: 12097 Customer: Fiske plc Proof Event: 3 Project Title: Annual Report 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp1-15_12097 Fiske Annual R&A 2012 pp1-15 24/08/2012 10:18 Page 1 Contents Directors, Secretary and Advisers Directors’ Biographies Chairman’s Statement Corporate Governance Directors’ Report Directors’ Responsibilities Statement Independent Auditor’s Report to the Members of Fiske plc Consolidated Statement of Total Comprehensive Income Consolidated Statement of Financial Position Parent Company Statement of Financial Position Statement of Changes in Equity Group and Parent Company Cash Flow Statement Notes to the Accounts Notice of Annual General Meeting Notes to Notice of Annual General Meeting 2 3 4 5 6 9 10 11 12 13 14 15 16 35 37 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 FISKE plc Page 1 12097 Fiske Annual R&A 2012 pp1-15_12097 Fiske Annual R&A 2012 pp1-15 24/08/2012 10:18 Page 2 Directors, Secretary and Advisers DIRECTORS Clive Fiske Harrison Chairman and Chief Executive Officer Amanda Jane Andrews Finance Director James Philip Quibell Harrison Francis Gerard Luchini Compliance Director Alan Dennis Meech Dealing Director Stephen John Cockburn* Martin Henry Withers Perrin* *Non-Executive SOLICITORS Dechert LLP 160 Queen Victoria Street London EC4V 4QQ Travers Smith 10 Snow Hill London EC1A 2AL AUDITOR Deloitte LLP London BANKERS National Westminster Bank Plc City Markets Group 9th Floor 280 Bishopsgate London EC2M 4RB REGISTRARS Capita Registrars Limited The Registry 34 Beckenham Road Beckenham Kent BR3 4TU COMPANY SECRETARY Francis Gerard Luchini REGISTERED OFFICE 3rd Floor Salisbury House London Wall London EC2M 5QS REGISTERED NUMBER 2248663 NOMINATED ADVISER Grant Thornton UK LLP 30 Finsbury Square London EC2P 2YU BROKER Fiske plc Salisbury House London Wall London EC2M 5QS Page 2 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp1-15_12097 Fiske Annual R&A 2012 pp1-15 24/08/2012 10:18 Page 3 Directors’ Biographies Details of the Directors and their backgrounds are Alan Dennis Meech (aged 60) as follows: Dealing Director Alan Meech joined Fiske as a dealer in 1985 and became Director in charge of the dealing desk in May 1989. He was previously with J M Finn. His role at Fiske also includes responsibility for some areas of credit control and is a member of the Risk Management Committee. Stephen John Cockburn (aged 72) Non-Executive Stephen Cockburn joined the Board as a non-executive Director in September 1999. He was the Chairman and principal shareholder of Ionian Group Limited which was acquired by Fiske in June 2002. He is a member of the Remuneration and Nomination Committee. He is the Managing Director of The Investment Company Plc. Martin Henry Withers Perrin (aged 58) Non-Executive Martin Perrin joined the Board as a non-executive Director in November 2003. He is a chemist and a chartered accountant with wide experience of operations and finance in industry. He was a partner in Grahams Rintoul & Co, a fund management company, which was sold to Lazards where he gained further investment management and corporate finance experience. He is Chairman of the Audit Committee and the Risk Management Committee and is a member of the Remuneration and Nomination Committee. Clive Fiske Harrison (aged 72) Chairman and Chief Executive Officer Clive Harrison started his career with Panmure Gordon in 1961 and moved to Hodgson & Baker (subsequently renamed Sandleson & Co) in 1965. He founded Fiske & Co in 1973 and has been senior partner and latterly Chief Executive Officer since that time. He is responsible for the overall day-to-day management of the company. Amanda Jane Andrews (aged 41) Finance Director Amanda Andrews joined Fiske’s finance department in 1997 having previously worked at a money broking firm. She became the Financial Controller in 2001 being responsible for all financial matters. She was appointed to the Board as Finance Director in May 2007. James Philip Quibell Harrison (aged 39) James Harrison joined Fiske in 1996 in the private client investment department and now manages a substantial client portfolio. He was Company Secretary from 2001 to 2005 and he was appointed to the Board as an Executive Director in May 2007. Francis Gerard Luchini (aged 71) Compliance Director Gerard Luchini joined Fiske as Compliance Officer in July 1997 and became a Director in January 1998. He was formerly a Compliance Officer with the Royal Bank of Canada. He has responsibility for all compliance and regulatory matters at the firm. Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 FISKE plc Page 3 12097 Fiske Annual R&A 2012 pp1-15_12097 Fiske Annual R&A 2012 pp1-15 24/08/2012 10:18 Page 4 Chairman’s Statement By most criteria, the past financial year to 31 May We do not make revenue forecasts at Fiske, in our 2012 was disappointing. Our final profit figure was business we regard them as pure guesswork. We do derisory and will not cover our reduced dividend. It is forecast our costs and we are looking for a marginal true that we, like our peers, have experienced very reduction. Our balance sheet remains strong and our tough markets, but that is small consolation. In fact at clients’ portfolios are well positioned for troubled times our last Annual General Meeting I explained how ahead. Our Annual General Meeting will be held at our offices at Salisbury House at 12.30 p.m. on Wednesday, 26 September 2012 and we welcome shareholders to attend our meeting and to meet our directors and staff. Clive Fiske Harrison Chairman 24 August 2012 worried we were by the total failure of the European political leaders and central bankers to face up to the structural problems of the Eurozone and thus to dither and delay and allow the gravity of the problem to escalate. It is difficult to count the number of summits that have been held, the number of total solutions that have been announced and the number of failures achieved but at least they add up to the same number. My view remains that the question is when the Eurozone will break not if and how serious will be the ensuing crisis. It seems as if the final denouement is close but you can never be sure of the ability of the current political leaders to buy time and escalate the problem. Within Fiske we have continued closely to monitor our costs. Our headcount of business producers has increased whilst out support staff numbers have remained static. Within our balance sheet our one significant investment, Euroclear, has had a much better year and paid an increased dividend, but we retain the bulk of our assets in cash to facilitate our day-to-day business and that cash is held in a government controlled bank, the National Westminster Bank. In view of the lacklustre results we are reducing our second interim dividend from 2p to 1p. During the year there was a significant change in the ownership of the company. In April 2012, LongSand Limited, a company controlled by James Harrison, an executive director and my nephew, bought a 25% shareholding from interests and individuals associated with Stephen Cockburn, a non-executive director of the company who retains a shareholding of some 5%. The transaction in no way affected the holding of myself and my immediate family which remains at 35%. I welcome a younger element to the list of shareholders and his commitment to the company. Page 4 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp1-15_12097 Fiske Annual R&A 2012 pp1-15 24/08/2012 10:18 Page 5 Corporate Governance The Board has given consideration to the code provisions set out in Section 1 of the Combined Code on Corporate Governance issued by the Financial Reporting Council. Although AIM companies are not required to give Corporate Governance disclosure, the Directors have chosen to provide certain information which they believe will be helpful having regard to the scale and nature of the Group’s activities. Going Concern After making due and careful enquiry, the Directors have formed a judgement at the time of approving the financial statements, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason the Directors continue to adopt the going concern basis in preparing the financial statements as set out in note 1 to the accounts. Internal Control The Board of Directors recognises that it is responsible for the Group’s systems of internal control and for reviewing their effectiveness. Such systems, which include financial, operational and compliance controls and risk management, have been designed to provide reasonable, but not absolute, assurance against material misstatement or loss. They include: • the ongoing identification, evaluation and management of the significant risks faced by the Group; • regular consideration by the Board of actual financial results; • compliance with operating procedures and policies; • annual review of the Group’s insurance cover; • defined procedures for the appraisal and authorisation of capital expenditure and capital disposals; and • regular consideration of the Group’s liquidity position. When reviewing the effectiveness of the systems of internal control, the Board has regard to: • a quarterly report from the compliance Director covering FSA regulatory matters and conduct of business rules; • the level of customer complaints; • the prompt review of daily management reports including previous days’ bargains, unsettled trades and outstanding debtors; • the regular reconciliation of all bank accounts, internal accounts and stock positions; and • Management Committee meetings of executive Directors to identify any problems or new areas of risk. Remuneration and Nomination Committee The principal function of the Remuneration and Nomination Committee is to determine the policy on key executives’ remuneration in order to attract, retain and motivate high calibre individuals with a competitive remuneration package. The Committee consists of C F Harrison (Chairman), S J Cockburn and M H W Perrin. Remuneration for executives comprises basic salary, a performance-related bonus, share options and other benefits in kind. Full details of Directors’ remuneration and share options granted are given in the notes to the financial statements and the Directors’ Report. In addition, the Committee reviews the composition of the Board on an annual basis and is responsible to the Board for recommending all new Board appointments. Audit Committee The Audit Committee, comprising M H W Perrin (Chairman) and J P Q Harrison, meets at least twice a year. The committee reviews the Company’s external audit arrangements, including the cost-effectiveness of the audit and the independence and objectivity of the auditor. It also reviews the interim and full year financial statements prior to their submission to the Board, the application of the Group’s accounting policies, any changes to financial reporting requirements and such other related matters as the Board may direct. The external auditor and executive Directors may be invited to attend the meetings. Risk Management Committee The Risk Management Committee, comprising M H W Perrin (Chairman), A D Meech and J P Q Harrison, meets at least twice a year. The committee identifies and evaluates the key risk areas of the business and ensures those risks can be managed at a level acceptable to the Board. It makes recommendations to the Board in relation to capital adequacy matters. FISKE plc Page 5 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp1-15_12097 Fiske Annual R&A 2012 pp1-15 24/08/2012 10:18 Page 6 Directors’ Report The Directors present their report together with the audited financial statements for the year ended 31 May 2012. The Corporate Governance statement on page 5 forms part of this report. Activities and business review The principal activity of Fiske plc and its subsidiary undertakings (“the Group”) is the provision of financial intermediation which consists of private client and institutional stockbroking, investment management and the provision of corporate financial advice. Fiske plc (“the Company”) is the trading entity of the Group and is authorised and regulated by the Financial Services Authority and is a member of The London Stock Exchange. A review of the year is contained in the Chairman’s Statement on page 4. Results and dividends The results of the Group for the year are set out on page 11 and the Consolidated Statement of Financial Position on page 12. A first interim dividend of 2p was paid on 16 March 2012 (2011 – 2p) and a second interim dividend of 1p (2011 – 2p) will be paid on 19 October 2012 making the total in the year of 3p. The shares will be marked ex-dividend on the 26 September 2012 and the record date will be 28 September 2012. Net assets of the Group at 31 May 2012 were £4,401,000. Strategy and future developments The Group’s core strategy is to focus on delivering a high quality of service to clients. This entails giving both private and institutional clients a personalised service delivered by experienced individuals. The Board intends to maintain a strong balance sheet and a clear demarcation of corporate broking from other activities of the Group, to enable clear, unbiased advice to be given to clients. Looking forward, the Directors expect to continue to grow its asset management business. Risk management The Group is exposed to a number of business risks. The risk appetite of the Group is determined by the Board. Monitoring of risks applicable to the business is delegated to the Risk Committee whose principal function is to identify and evaluate the key risk areas of the business and ensure those risks can be managed at a level acceptable to the Board. In common with other businesses operating in a regulated financial services environment, and to a greater or lesser extent other business sectors, the Group has identified the following as the key risks and their mitigation: • Credit risk – Credit risk refers to the risk that a third party will default on its contractual obligations resulting in financial loss to the Group. Third party receivables consist of customer balances, spread across institutional and private clients. Ongoing credit evaluation is performed on the financial condition of accounts receivable. The Group does not have any significant credit risk exposure to any single third party or any group of third parties having similar characteristics. • Market risk – The Group is mainly exposed to market risk in respect of its trading as agent in equities and debt instruments with the volume of trading and thus transaction revenue retreating in market downturns. Market risk also gives rise to variations in asset values and thus management fees and variations in the value of investments held by Fiske, acting as principal. Variations in the value of investments held by Fiske, acting as principal, are primarily mitigated by limiting the quantum of capital committed to the market in this way. • Loss of staff – Staff are a key asset in the business and retaining the services of key staff is essential to ongoing revenue generation and development of the business. All Directors are shareholders in the business with longstanding commitment to its prosperity. • Operational risk – There is a whole range of operational risks including reputational risks and the Group seeks to mitigate operational risk to acceptable residual levels, in accordance with its risk appetite policy, by maintenance of its control environment, which is managed through the Group’s operational risk management framework. The Group’s controls include appropriate segregation of duties and supervision of employees; ensuring Page 6 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp1-15_12097 Fiske Annual R&A 2012 pp1-15 24/08/2012 10:18 Page 7 Directors’ Report continued the suitability and capability of the employees; relevant training programmes that enable employees to attain and maintain competence, and identifying risks that arise from inadequacies or failures in processes and systems. The Group has a business continuity and disaster recovery plan which provides, inter alia, back-up premises and back-office systems and which is regularly reviewed. The Basel Accord has been implemented in the European Union via the Capital Requirements Directive and the Company falls under the new ‘pillars’ framework. The Pillar 3 disclosures are published on the Company’s website (www.fiskeplc.com). Directors’ indemnities The Company has made qualifying third party indemnity provisions for the benefit of its Directors which were renewed during the year and remain in force at the date of this report. Directors’ interests – Shares The Directors who served during the year and to the date of this report and their beneficial interests, including those of their spouses, at the end of the year in the shares of the Company were as follows: A J Andrews S J Cockburn C F Harrison J P Q Harrison† F G Luchini A D Meech M H W Perrin Ordinary 25p shares at 31 May 2012 3,000 421,227 2,334,828 2,140,802 24,000 100,000 15,000 Ordinary 25p shares at 31 May 2011 3,000 843,672 2,334,828 7,000 24,000 100,000 15,000 † Including 2,133,802 shares held by LongSand Limited, a company controlled by JPQ Harrison. There have been no changes in the Directors’ shareholding since 31 May 2012. Directors’ interests – Share options Details of Directors’ options over ordinary shares are as follows: Number of options At start Expired of year during year during year during year Exercised Granted At end of year Exercise price Market price on date of exercise Date from which exercisable F G Luchini – Unapproved 75,000 – – – 75,000 28.75p – 01.01.05 The closing mid-market price of the Company’s ordinary 25p shares at 31 May 2012 was 68p (2011 – 66.5p). Major shareholdings Shareholders holding more than 3% of the shares of the Company at the date of this report were: C F Harrison J P Q Harrison S J Cockburn Mrs C M Short A R F Harrison B A F Harrison Ordinary shares 2,334,828 2,140,802 421,227 386,029 315,842 280,000 % 27.60 25.30 4.98 4.56 3.73 3.31 FISKE plc Page 7 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp1-15_12097 Fiske Annual R&A 2012 pp1-15 24/08/2012 10:18 Page 8 Directors’ Report continued Capital Structure Details of the authorised and issued share capital, together with details of the movements in the Company’s issued share capital during the year are shown in note 22. The holders of Ordinary Shares are entitled to receive notice of and to attend and vote at any General Meeting of the Company. Every member present at such a meeting shall, upon a show of hands, have one vote. Upon a poll, holders of all shares shall have one vote for every share held. All ordinary shares are entitled to participate in any distributions of the Company’s profits or assets. There are no restrictions on the transfer of the Company’s ordinary shares. Fiske plc’s ordinary 25p shares are traded solely on the AIM market. Supplier payment policy It is the Group’s policy to pay suppliers promptly on receipt of an accurate invoice. As at 31 May 2012 the number of creditor days in respect of trade creditors was 7 days (2011 – 7 days). Financial Instruments Details regarding the Group’s use of financial instruments and their associated risks are given in note 26 to the financial statements. Key Performance Indicators Over the financial year ended 31 May 2012 the Company’s ordinary 25p shares were unchanged in price. By way of comparison the FTSE AIM All-Share index fell by 22.5%. During the same period operating expenses as a percentage of total revenue rose from 85.0% to 99.9%. Disclosure of information to auditor Each of the persons who is a Director at the date of approval of this annual report confirms that: (i) (ii) so far as the Director is aware, there is no relevant audit information of which the Company’s auditor is unaware; and the Director has taken all the steps that he/she ought to have taken as a Director to make himself/herself aware of any relevant audit information and to establish that the Company’s auditor is aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of Section s418 of the Companies Act 2006. Auditor The Directors review the terms of reference for the auditor and obtain written confirmation that the firm has complied with its relevant ethical guidance on ensuring independence. Deloitte LLP provide audit services to the Company and Group as well as tax compliance and advisory services. The Board reviews the level of their fees to ensure they remain competitive and to ensure no conflicts of interest arise. Deloitte LLP has expressed a willingness to continue in office as auditor and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting. By Order of the Board F G Luchini Secretary 24 August 2012 Page 8 FISKE plc Salisbury House London Wall London EC2M 5QS Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp1-15_12097 Fiske Annual R&A 2012 pp1-15 24/08/2012 10:18 Page 9 Directors’ Responsibilities Statement The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and have also chosen to prepare the parent company financial statements under IFRSs as adopted by the EU. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, International Accounting Standard 1 requires that Directors: • properly select and apply accounting policies; • present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; • provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance; and • make an assessment of the company’s ability to continue as a going concern. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. By Order of the Board Chief Executive Officer C F Harrison 24 August 2012 Finance Director A J Andrews 24 August 2012 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 FISKE plc Page 9 12097 Fiske Annual R&A 2012 pp1-15_12097 Fiske Annual R&A 2012 pp1-15 24/08/2012 10:18 Page 10 Independent Auditor’s Report to the Members of Fiske plc We have audited the financial statements of Fiske plc for the year ended 31 May 2012 which comprise the Consolidated Statement of Total Comprehensive Income, the Consolidated and Parent Company Statements of Financial Position, the Group and Parent Company Statements of Changes in Equity, the Group and Parent Company Cash Flow Statements, and the related notes 1 to 27. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006. This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of Directors and Auditor As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the group’s and the parent company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion: • the financial statements give a true and fair view of the state of the group’s and the parent company’s affairs as at 31 May 2012 and of the group’s profit for the year then ended; • the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; • the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or • the parent company financial statements are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. Caroline Britton Senior Statutory Auditor for and on behalf of Deloitte LLP Chartered Accountants and Statutory Auditor London, United Kingdom 24 August 2012 Page 10 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp1-15_12097 Fiske Annual R&A 2012 pp1-15 24/08/2012 10:18 Page 11 Consolidated Statement of Total Comprehensive Income For the year ended 31 May 2012 CONTINUING OPERATIONS Fee and commission income Fee and commission expenses Net fee and commission income Other income TOTAL REVENUE Profit on disposal of available-for-sale investments Impairment on available-for-sale investments Profit on investments held for trading Operating expenses OPERATING PROFIT Investment revenue Finance income Finance costs PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION Taxation PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION OTHER COMPREHENSIVE INCOME Movement in unrealised appreciation of investments Notes 3 3 3 6 7 8 9 Deferred tax on movement in unrealised appreciation of investments NET OTHER COMPREHENSIVE INCOME TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO EQUITY SHAREHOLDERS EARNINGS PER ORDINARY SHARE BASIC DILUTED 11 11 2012 £’000 3,671 (865) 2,806 161 2,967 – – 24 (2,963) 28 34 26 (2) 86 (17) 69 (5) 23 18 87 0.8p 0.8p 2011 £’000 4,341 (1,027) 3,314 157 3,471 – – 5 (2,952) 524 29 25 (5) 573 (167) 406 5 21 26 432 4.8p 4.8p FISKE plc Page 11 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp1-15_12097 Fiske Annual R&A 2012 pp1-15 24/08/2012 10:18 Page 12 Consolidated Statement of Financial Position 31 May 2012 Company number 02248663 NON-CURRENT ASSETS Goodwill Other intangible assets Property, plant and equipment Available-for-sale investments TOTAL NON-CURRENT ASSETS CURRENT ASSETS Trade and other receivables Investments held for trading Cash and cash equivalents TOTAL CURRENT ASSETS CURRENT LIABILITIES Trade and other payables Current tax liabilities TOTAL CURRENT LIABILITIES NET CURRENT ASSETS NON-CURRENT LIABILITIES Deferred tax liabilities TOTAL NON-CURRENT LIABILITIES NET ASSETS EQUITY Share capital Share premium Revaluation reserve Retained earnings SHAREHOLDERS’ EQUITY Notes 12 13 14 16 17 18 19 20 21 22 2012 £’000 395 – 37 1,223 1,655 5,781 251 3,236 9,268 6,274 24 6,298 2,970 224 224 4,401 2,115 1,222 774 290 4,401 2011 £’000 395 – 57 1,228 1,680 11,747 284 3,458 15,489 12,119 145 12,264 3,225 253 253 4,652 2,115 1,222 756 559 4,652 These financial statements were approved by the Board of Directors and authorised for issue on 24 August 2012. Signed on behalf of the Board of Directors C F Harrison Chairman and Chief Executive Officer Page 12 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp1-15_12097 Fiske Annual R&A 2012 pp1-15 24/08/2012 10:18 Page 13 Parent Company Statement of Financial Position 31 May 2012 Company number 02248663 NON-CURRENT ASSETS Goodwill Other intangible assets Property, plant and equipment Investments in subsidiary undertakings Available-for-sale investments TOTAL NON-CURRENT ASSETS CURRENT ASSETS Trade and other receivables Investments held for trading Cash and cash equivalents TOTAL CURRENT ASSETS CURRENT LIABILITIES Trade and other payables Current tax liabilities TOTAL CURRENT LIABILITIES NET CURRENT ASSETS NON-CURRENT LIABILITIES Deferred tax liabilities TOTAL NON-CURRENT LIABILITIES NET ASSETS EQUITY Share capital Share premium Revaluation reserve Retained earnings SHAREHOLDERS’ EQUITY Notes 12 13 14 15 16 17 18 19 20 21 22 2012 £’000 230 – 37 165 1,223 1,655 5,781 251 3,236 9,268 6,274 24 6,298 2,970 224 224 4,401 2,115 1,222 774 290 4,401 2011 £’000 230 – 57 288 1,228 1,803 11,747 284 3,458 15,489 12,244 144 12,388 3,101 253 253 4,651 2,115 1,222 756 558 4,651 These financial statements were approved by the Board of Directors and authorised for issue on 24 August 2012. Signed on behalf of the Board of Directors C F Harrison Chairman and Chief Executive Officer Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 FISKE plc Page 13 12097 Fiske Annual R&A 2012 pp1-15_12097 Fiske Annual R&A 2012 pp1-15 24/08/2012 10:18 Page 14 Statement of Changes in Equity For the year ended 31 May 2012 Group Balance at 1 June 2010 Issue of share capital Revaluation of available-for-sale investments Deferred tax on revaluation of available-for-sale investments Profit for the financial year Dividends paid Balance at 1 June 2011 Issue of share capital Revaluation of available-for-sale investments Deferred tax on revaluation of available-for-sale investments Profit for the financial year Dividends paid Share capital £’000 Share Revaluation premium £’000 reserve £’000 Retained earnings £’000 Total £’000 2,109 1,216 730 490 4,545 6 – – – – 6 – – – – – 5 21 – – – – – 406 (337) 12 5 21 406 (337) 2,115 1,222 756 559 4,652 – – – – – – – – – – – (5) 23 – – – – – 69 – (5) 23 69 (338) (338) Balance at 31 May 2012 2,115 1,222 774 290 4,401 Parent Company Balance at 1 June 2010 Issue of share capital Revaluation of available-for-sale investments Deferred tax on revaluation of available-for-sale investments Profit for the financial year Dividends paid Balance at 1 June 2011 Issue of share capital Revaluation of available-for-sale investments Deferred tax on revaluation of available-for-sale investments Profit for the financial year Dividends paid Share capital £’000 Share Revaluation premium £’000 reserve £’000 Retained earnings £’000 Total £’000 2,109 1,216 730 436 4,491 6 – – – – 6 – – – – – 5 21 – – – – – 459 (337) 12 5 21 459 (337) 2,115 1,222 756 558 4,651 – – – – – – – – – – – (5) 23 – – – – – 70 – (5) 23 70 (338) (338) Balance at 31 May 2012 2,115 1,222 774 290 4,401 Page 14 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp1-15_12097 Fiske Annual R&A 2012 pp1-15 24/08/2012 10:18 Page 15 Group and Parent Company Cash Flow Statement For the year ended 31 May 2012 OPERATING PROFIT Profit on disposal of available-for-sale investments Depreciation of property, plant and equipment Decrease in investments held for trading Impairment of available-for-sale investments Increase/(decrease) in receivables (Decrease)/increase in payables Cash generated from/(used in) operations Tax paid NET CASH GENERATED FROM/(USED IN) OPERATING ACTIVITIES INVESTING ACTIVITIES Interest received Investment income received Interest paid Proceeds on disposal of available-for-sale investments Purchases of available-for-sale investments Purchases of property, plant and equipment Capital reduction in subsidiary NET CASH GENERATED FROM/(USED IN) INVESTING ACTIVITIES FINANCING ACTIVITIES 2012 2011 Group £’000 Company £’000 Group £’000 Company £’000 28 – 30 33 – 27 – 30 33 – 524 524 – 55 40 – – 55 40 – 5,966 5,966 (2,705) (2,705) (5,846) (5,969) 1,232 746 211 87 (143) (143) (854) (133) (1,340) (133) 68 (56) (987) (1,473) 26 34 (2) – – (10) – 26 35 (2) – – (10) 123 25 29 (5) 5 – (80) – 25 83 (5) 5 – (80) 432 48 172 (26) 460 Proceeds from issue of ordinary share capital – – 12 12 Dividends paid (338) (338) (337) (337) NET CASH USED IN FINANCING ACTIVITIES (338) (338) (325) (325) Net decrease in cash and cash equivalents (222) (222) (1,338) (1,338) Cash and cash equivalents at beginning of year 3,458 3,458 4,796 4,796 CASH AND CASH EQUIVALENTS AT END OF YEAR 3,236 3,236 3,458 3,458 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 FISKE plc Page 15 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 16 Notes to the Accounts For the year ended 31 May 2012 1. Accounting policies General information Fiske plc is a limited company incorporated in Great Britain and registered in England and Wales, company number 02248663. The address of its registered office and principal place of business are disclosed in the Company Information page of the Financial Statements. The principal activities of the Company are described in the Directors’ Report. Adoption of new and revised standards In the current year, the following new and revised Standards and Interpretations have been adopted and have affected the amounts reported in these financial statements. Standards not affecting the reported results nor the financial position: the following new and revised Standards and Interpretations have been adopted in the current year. Their adoption has not had any significant impact on the amounts reported in these financial statements but may impact the accounting for future transactions and arrangements. IAS 24 (2009) Related Party Disclosures The revised Standard has a new, clearer definition of a related party, with inconsistencies under the previous definition having been removed. Improvements to IFRSs 2011 Aside from those items already identified above, the amendments made to standards under the 2011 improvements to IFRSs have had no impact on the group. At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU): IFRS 7 (amended) IFRS 9 IFRS 10 IFRS 11 IFRS 12 IFRS 13 IAS 1 (amended) IAS 12 (amended) IAS 27 (revised) IAS 28 (revised) Disclosures – Transfers of Financial Assets Financial Instruments Consolidated Financial Statements Joint Arrangements Disclosure of Interests in Other Entities Fair Value Measurement Presentation of Items of Other Comprehensive Income Deferred Tax: Recovery of Underlying Assets Separate Financial Statements Investments in Associates and Joint Ventures The directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the Group in future periods, except as follows: • IFRS 9 will impact both the measurement and disclosures of Financial Instruments; • IFRS 12 will impact the disclosure of interests Fiske plc has in other entities; • IFRS 13 will impact the measurement of fair value for certain assets and liabilities as well as the associated disclosures; and • IAS 12 (amended) will impact the measurement of deferred tax on the group’s available for sale investments, by introducing the rebuttable presumption that the carrying amount will be recovered entirely through sale. Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been completed. Page 16 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 17 Notes to the Accounts continued 1. Accounting policies (continued) (a) Basis of preparation These financial statements have been prepared in accordance with the requirements of IFRS implemented by the Group for the year ended 31 May 2012 as adopted by the European Union and International Financial Reporting Interpretations Committee and with the Companies Act 2006. The Group financial statements have been prepared under the historical cost convention, with the exception of financial instruments, which are stated in accordance with IAS 39 Financial Instruments: recognition and measurement. The principal accounting policies are set out below. (b) Going concern basis The Group’s activities, together with the factors likely to affect its future development, performance and position are set out in the Directors’ Report on pages 6 to 8. It also includes the Group’s objectives, policies and processes for managing its business risk objectives, which includes its exposure to credit, market and operational risks. The Group continues to hold a substantial cash resource. After making enquiries, the Directors have formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason the Directors continue to adopt the going concern basis in preparing the financial statements. (c) Basis of consolidation The Group financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 May each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefit from its activities. The results of subsidiaries acquired during the year are included in the Consolidated Statement of Comprehensive Income from the effective date of acquisition as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. (d) Revenue recognition The Group follows the principles of IAS 18, ‘Revenue Recognition’, in determining appropriate revenue recognition policies. In principle, therefore, revenue is recognised to the extent that the economic benefits associated with the transaction will flow into the Group. • Commission: Commission income and expenses are recognised on a trade date basis. • Fees: Investment management, administration and corporate finance fees are recognised when earned with retainer fees being recognised over the length of time of the agreement. • Dividend income: Dividend income is recognised when the right to receive payment is established. (e) Segment reporting IFRS 8 requires that an entity disclose financial and descriptive information about its reportable segments, which are operating segments or aggregations of operating segments. Operating segments are identified on the basis of internal reports that are regularly reviewed by the Chief Executive Officer to allocate resources and to assess performance. Using the Group’s internal management reporting as a starting point the single reporting segment set out in note 3 has been identified. (f) Business combinations The acquisition of subsidiaries is accounted for using the purchase method. The cost of acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date. As permitted by IFRS 1, the Group has chosen not to restate, under IFRS, business combinations that took place prior to 1 June 2006 the date of transition to IFRS. FISKE plc Page 17 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 18 Notes to the Accounts continued 1. Accounting policies (continued) (g) Goodwill Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any impairment. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately and is not subsequently reversed. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently where there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying value of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying value of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period. On disposal of a subsidiary, associate or jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Goodwill arising on acquisitions before the date of transition to IFRSs has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date. (h) Property, plant and equipment All property, plant and equipment are shown at cost less subsequent depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of items. Depreciation is charged so as to write off the cost or valuation of assets over their useful economic lives, using the straight-line method, which is considered to be as follows: Office refurbishment Office furniture and fittings Computer equipment – – – 5 years 4 years 3 years The assets’ residual values and useful lives are reviewed, and if appropriate asset values are written down to their estimated recoverable amounts, at each balance sheet date. Gains and losses on disposals are determined by comparing proceeds with the carrying amounts, and are included in the income statement. (i) Impairment of intangible assets The Group’s policy is to amortise the intangible assets over the life of the contract. At each balance sheet date, the Group reviews the carrying amounts of its intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately. Page 18 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 19 Notes to the Accounts continued 1. Accounting policies (continued) (j) Available-for-sale investments Available-for-sale investments are recognised and derecognised on a trade date where a purchase or sale of an investment is effected under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at cost. At subsequent reporting dates, available-for-sale investments are measured at fair value. Gains or losses arising from changes in fair value are recognised directly in equity, until the security is disposed of or is determined to be impaired, at which time the cumulative gain or loss previously recognised in equity is included in the net profit or loss for the period. Impairment losses recognised in profit or loss are not subsequently reversed through profit or loss. The fair values of available-for-sale investments quoted in active markets are determined by reference to the current quoted bid price. Where independent market prices are not available, fair values may be determined using valuation techniques with reference to observable market data. (k) Trade and other receivables Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. (l) Investments held for trading Investments held for trading, which from time to time may include derivatives, including traded options and warrants traded on an exchange, are measured at market value. (m) Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to known amounts of cash and are subject to insignificant risk of changes in value. Such investments are normally those with original maturities of three months or less. (n) Client money The Company holds money on behalf of clients in accordance with the Client Money Rules of the Financial Services Authority. With the exception of money arising in the course of clients’ transactions, as disclosed in note 19, such monies and the corresponding liability to clients are not shown on the face of the balance sheet. The amount so held on behalf of clients at the year end is stated in note 25. (o) Trade and other payables Trade and other payables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. The Group accrues for all goods and services consumed but as yet unbilled at amounts representing management’s best estimate of fair value. (p) Equity instruments Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. (q) Dividends Equity dividends are recognised when paid. (r) Share-based payments Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 FISKE plc Page 19 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 20 Notes to the Accounts continued 1. Accounting policies (continued) (r) Share-based payments (continued) recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition. When the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the income statement over the remaining vesting period. Where equity instruments are granted to persons other than employees, the income statement is charged with the fair value of the goods and services received. There has been no material share options charge to the income statement to date and therefore no disclosure appears in these financial statements. (s) Taxation The tax expense represents the sum of the tax currently payable and the deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset where there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. (t) Foreign currencies The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the Group Financial Statements, the results and financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the Group Financial Statements. Page 20 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 21 Notes to the Accounts continued 1. Accounting policies (continued) (t) Foreign currencies (continued) In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical costs in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity. (u) Leases Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term. 2. Critical accounting judgements and key uncertainties of estimation uncertainty In the application of the Group’s accounting policies, which are described in note 1, the Directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period. Allowance for bad debts The Group makes provision for the element of fees which it believes will not be recovered from clients. This is based on past experience and detailed analysis of the outstanding fees position particularly with regard to the value of customers’ portfolios relative to the fees owed. Fair value of investments The Group currently holds an investment in Euroclear Plc, which is held as an available-for-sale financial asset and measured at fair value at the balance sheet date. The Euroclear Plc shares do not trade in an active market, and therefore fair value is calculated with reference to the most recently published Euroclear Plc financial statements, using a Directors’ valuation. Impairment The assets on the balance sheet are reviewed for any indications of impairment. This is done with reference to the recoverability and market value of the assets concerned but may involve an element of judgement or estimation in determining whether there are any indications of impairment and if so, the extent of any impairment loss. 3. Total revenue and segmental analysis IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their performance. In contrast, the predecessor Standard (IAS 14 Segment Reporting) required the Group to identify two sets of segments (business and geographical), using a risks and returns approach, with the Group’s system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments. Nevertheless, as a result, following the adoption of IFRS 8, the identification of the Group’s single reportable segment, being UK-based financial intermediation, has not changed. FISKE plc Page 21 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 22 Notes to the Accounts continued 3. Total revenue and segmental analysis (continued) Within this single reportable segment, total revenue comprises: Commission receivable Corporate finance and advisory fees Investment management fees Commission payable to associates Commission payable to third parties Other income 2012 £’000 3,155 12 504 3,671 (858) (7) (865) 2,806 161 2,967 2011 £’000 3,774 12 555 4,341 (1,015) (12) (1,027) 3,314 157 3,471 Substantially all revenue in the current and prior year is generated in the UK and derives solely from the provision of financial intermediation. 4. Staff remuneration and costs Remuneration policies are recommended to the Board by the Remuneration Committee. The Committee consists of C F Harrison (Chairman) and two non executive directors: S J Cockburn and M H W Perrin. Remuneration for executives comprises basic salary, a performance-related bonus, and other benefits in kind, and may include share options. This remuneration takes into account: • market rates; • the need to attract, retain and motivate high calibre individuals with a competitive remuneration package; • comparability across different functions within the firm; • loyalty and effort; and • effectiveness. The FSA’s Remuneration Code applies to certain of the firm’s staff. As set out in note 5 below Alan Meech, the Director in charge of the dealing desk, receives a commission element relating to fees earned by him and this is usually less than 33% of the total remuneration earned by him though it is not capped as such. All other Code Staff have salaries that are in the main fixed and any performance-related pay reflects a share of a bonus pool available to all employees. This bonus pool reflects the profitability of the firm in that year and is allotted according to merit. The average number of employees, including Directors, employed by the company within each category of persons, and their aggregate remuneration was: 2012 No. 8 9 7 2012 £’000 530 306 357 24 1,193 2011 No. 8 8 7 23 2011 £’000 533 310 350 1,193 Dealing and sales Settlement Administration Page 22 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 23 Notes to the Accounts continued 4. Staff remuneration and costs (continued) Employees’, including Directors’, costs comprise: Wages, salaries and other staff costs Bonus Social security costs 5. Directors (a) Directors’ emoluments comprise: Emoluments Highest paid Director’s remuneration: Emoluments 2012 £’000 1,241 5 155 1,401 2012 £’000 602 145 Information regarding Directors’ share options is shown under Directors’ Interests in the Directors’ Report. The emoluments of the Directors for the current and previous year are as follows: 31 May 2012 A J Andrews C F Harrison J P Q Harrison F G Luchini A D Meech S J Cockburn M H W Perrin Gross salary £’000 91 132 86 107 74 – – 490 Bonus paid from 2010/2011 £’000 6 4 6 4 2 – – 22 Fees £’000 Commission £’000 Benefits £’000 – – – – – 17 17 34 – – – – 40 – – 40 1 9 1 3 2 – – 16 2011 £’000 1,187 50 155 1,392 2011 £’000 573 132 Total £’000 98 145 93 114 118 17 17 602 Bonuses included in the table above were awarded in the prior year, to 31 May 2011 and were accrued for in that year, but paid in the year to 31 May 2012. 31 May 2011 A J Andrews C F Harrison J P Q Harrison F G Luchini A D Meech S J Cockburn M H W Perrin Gross salary £’000 85 125 80 103 71 – – 464 Bonus paid from 2009/2010 £’000 3 – 5 – – – – 8 Fees £’000 Commission £’000 Benefits £’000 – – – – – 16 16 32 – – – – 56 – – 56 1 7 1 2 2 – – 13 Total £’000 89 132 86 105 129 16 16 573 Bonuses included in the table above were awarded in the prior year, to 31 May 2010 and were accrued for in that year, but paid in the year to 31 May 2011. FISKE plc Page 23 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 24 Notes to the Accounts continued 5. Directors (continued) (b) Directors’ balances The Directors’ trading balances have been included within trade receivables and payables and Directors’ current account balances are included in other payables. 6. Operating profit The operating profit is arrived at after charging: Auditor’s remuneration: Fees payable to the Company’s auditor: – for the audit of the Company’s annual accounts – for the audit of the Company’s subsidiaries pursuant to legislation Non-audit fees: – Other services pursuant to legislation: Interim review – Tax services Net foreign exchange losses Depreciation of property, plant and equipment Operating lease rentals – Land and buildings – Other 2012 £’000 60 5 6 15 2 30 173 5 2011 £’000 56 5 6 7 4 55 213 5 The profit for the financial year dealt with in the financial statements of the parent Company was £70,000 (2011 – £459,000) before dividend. As permitted by Section 408 of the Companies Act 2006, no separate income statement is presented in respect of the parent Company. 7. Finance income Interest receivable: Banks 8. Finance costs Interest payable: Bank loans, overdrafts and other interest payable 2012 £’000 26 26 2012 £’000 2 2011 £’000 25 25 2011 £’000 5 Page 24 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 25 Notes to the Accounts continued 9. Tax Analysis of tax charge on ordinary activities: Current tax Current year Prior year adjustment Deferred tax Current year Prior year adjustment Total tax charge (to Statement of Comprehensive Income) Factors affecting the tax charge for the year 2012 £’000 26 (3) 23 (4) (2) 17 The standard rate of tax for the year, based on the United Kingdom standard rate of corporation tax, is 25.67% (2011 – 27.67%). The charge for the year can be reconciled to the profit per the Statement of Comprehensive Income as follows: Profit before tax Charge on profit on ordinary activities at standard rate Effect of: Expenses not deductible in determining taxable profit Non taxable income Double tax relief Amortisation of goodwill Small company relief Adjustment to tax charge in respect of prior years 10. Dividends paid Second interim dividend of 2p (October 2010 – 2p) paid in respect of prior year First interim dividend of 2p (March 2011 – 2p) Second interim dividend of 1p (October 2011 – 2p) to be paid 2012 £’000 86 22 14 (8) – – (6) (5) 17 2012 £’000 169 169 338 85 The second interim dividend will be paid to holders of 8,450,715 ordinary 25p shares. The Employee Share Option Scheme, which is controlled by Fiske plc held shares to the benefit of nominated employees, waived the entitlement to any dividend on its holding of 9,490 ordinary shares of 25p each (2011 – 9,490 ordinary shares of 25p each). 2011 £’000 146 10 156 11 – 167 2011 £’000 573 159 16 (5) – – (16) 13 167 2011 £’000 168 169 337 169 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 FISKE plc Page 25 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 26 Notes to the Accounts continued 11. Earnings per share Basic earnings per share has been calculated by dividing the profit on ordinary activities after taxation by the weighted average number of shares in issue during the year. Diluted earnings per share is basic earnings per share adjusted for the effect of conversion into fully paid shares of the weighted average number of share options during the year. 31 May 2012 Profit on ordinary activities after taxation Adjustment to reflect impact of dilutive share options Earnings Number of shares (000’s) Earnings per share (pence) 31 May 2011 Profit on ordinary activities after taxation Adjustment to reflect impact of dilutive share options Earnings Number of shares (000’s) Earnings per share (pence) Number of shares (000’s): Weighted average number of shares Dilutive effect of share option scheme 12. Goodwill Positive goodwill arising out of Fund management acquisitions Cost At 1 June 2010 Additions At 1 June 2011 Additions At 31 May 2012 Accumulated impairment losses At 1 June 2010 Impairment losses for the year At 1 June 2011 Impairment losses for the year At 31 May 2012 Carrying amount At 31 May 2012 At 1 June 2011 At 1 June 2010 Basic £’000 69 – 69 8,451 0.8 Basic £’000 406 – 406 8,431 4.8 Diluted Basic £’000 69 – 69 8,494 0.8 Diluted Basic £’000 406 – 406 8,474 4.8 31 May 2012 31 May 2011 8,451 43 8,494 Group £’000 1,311 – 1,311 – 1,311 916 – 916 – 916 395 395 395 8,431 43 8,474 Company £’000 1,146 – 1,146 – 1,146 916 – 916 – 916 230 230 230 Goodwill reflects cost, less any impairment provisions deemed appropriate. Further detail is set out in note 1 to the accounts. Goodwill is allocated to a cash generating unit (“CGU”), which is the Company itself and the recoverable amount of the CGU is determined by calculating the fair value less costs to sell. Page 26 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 27 Notes to the Accounts continued 13. Other intangible assets Group and Company Cost At 1 June 2010 At 1 June 2011 At 31 May 2012 Accumulated amortisation At 1 June 2010 Charge for the year At 1 June 2011 Charge for the year At 31 May 2012 Net book value At 31 May 2012 At 31 May 2011 At 31 May 2010 14. Property, plant and equipment Group and Company Cost At 1 June 2011 Additions Disposals At 1 June 2011 Additions Disposals At 31 May 2012 Accumulated depreciation At 1 June 2011 Charge for the year Disposals At 1 June 2011 Charge for the year Disposals At 31 May 2012 Net book value At 31 May 2012 At 31 May 2011 At 31 May 2010 Systems licence £’000 282 282 282 282 – 282 – 282 – – – Office furniture and equipment £’000 Computer equipment £’000 Office refurbishment £’000 75 21 – 96 2 – 98 74 6 – 80 6 – 86 12 16 1 72 59 – 131 8 (12) 127 62 28 – 90 24 (12) 102 25 41 10 175 – – 175 – – 175 154 21 – 175 – – 175 – – 21 Total £’000 282 282 282 282 – 282 – 282 – – – Total £’000 322 80 – 402 10 (12) 400 290 55 – 345 30 (12) 363 37 57 32 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 FISKE plc Page 27 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 28 Notes to the Accounts continued 15. Investment in subsidiary undertakings Company Cost at 1 June 2011 Reduction of capital by subsidiary, paid up to parent undertaking Additions Cost at 31 May 2012 2012 £’000 288 (123) – 165 2011 £’000 720 (432) – 288 The following are the principal subsidiaries of the Company at 31 May 2012 and at the date of these financial statements. Incorporated in the UK: Vor Financial Strategy Limited Ionian Group Limited Fiske Nominees Limited Class of shares Ordinary Ordinary Ordinary 16. Available-for-sale investments Group and Company Listed Unlisted Available-for-sale investments carried at fair value Proportion of Nominal value and voting rights held by parent company Nature of business 100% 100% 100% Investment consultants Intermediate holding company Nominee 2012 £’000 155 1,068 1,223 2011 £’000 160 1,068 1,228 The shares included above represent investments in equity securities. There has been no material movement in the fair value of the unlisted available-for-sale investments, held at 31 May 2012, since the prior year-end. These shares are not held for trading and are accordingly classified as available-for-sale. Page 28 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 29 Notes to the Accounts continued 17. Trade and other receivables Group and Company Counterparty debtors Trade receivables Other debtors Prepayments and accrued income Trade receivables 2012 £’000 672 4,644 5,316 17 448 5,781 2011 £’000 6,494 4,615 11,109 24 614 11,747 Included in the Group’s trade receivables balance are debtors with a carrying amount of £14,000 (2011 – £111,000) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable. Ageing of past due but not impaired trade receivables: 0 – 15 days 16 – 30 days 31 – 60 days Counterparty receivables 2012 £’000 14 – – 14 2011 £’000 110 – 1 111 Included in the Group’s counterparty receivables are debtors with a carrying amount of £43,000 (2011 – £2,000) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable. Ageing of past due but not impaired counterparty receivables: 0 – 30 days 31 – 60 days 18. Investments held for trading Group and Company Listed The shares included above represent investments in listed equity securities. 2012 £’000 43 – 43 2012 £’000 251 2011 £’000 2 – 2 2011 £’000 284 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 FISKE plc Page 29 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 30 Notes to the Accounts continued 19. Cash and cash equivalents Cash and cash equivalents includes £614,000 (2011 – £1,030,000) received in the course of settlement of client trades. This amount is held by the Company in trust on behalf of clients but may be utilised to complete settlement of outstanding trades. 20. Trade and other payables Counterparty creditors Trade payables Amount owed to group undertakings Sundry creditors and accruals 21. Deferred taxation Group and Company At 1 June 2011 Credit for the year Credit in respect of prior year Charge to Statement of Comprehensive Income – – in respect of current year in respect of change in corporation tax rate At 31 May 2012 Group £’000 4,654 1,219 5,873 – 401 2012 Company £’000 4,654 1,219 5,873 – 401 Group £’000 6,025 5,664 2011 Company £’000 6,026 5,664 11,689 11,690 – 430 124 430 6,274 6,274 12,119 12,244 Capital allowances £’000 Available- for-sale investments £’000 Other timing differences £’000 Deferred tax liability £’000 1 (1) (2) – – (2) 252 – – (3) (20) 229 – (3) – – – (3) 253 (4) (2) (3) (20) 224 Deferred tax assets and liabilities are recognised at a rate which is substantively enacted at the balance sheet date. The rate to be taken in this case is 24% as this subsequently enacted following Royal Assent in March 2012. On 17 July 2012, the Finance Bill 2012 received Royal Assent which set out that the UK mainstream corporation tax rate is to reduce to 23% from 1 April 2013. 22. Called up share capital Authorised: Ordinary shares of 25p Allotted and fully paid: Ordinary shares of 25p 2012 2011 No. of shares ’000 £’000 No. of shares ’000 £’000 12,000 3,000 12,000 3,000 8,460 2,115 8,460 2,115 Included within the allotted and fully paid share capital were 9,490 ordinary shares of 25p each (2011 – 9,490 ordinary shares of 25p each) held for the benefit of employees. At 31 May 2012 there were 75,000 outstanding options to subscribe for ordinary shares. Page 30 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 31 Notes to the Accounts continued 23. Contingent liabilities In the ordinary course of business, the Company has given letters of indemnity in respect of lost certified stock transfers and share certificates. While the contingent liability arising thereon is not quantifiable, it is not believed that any material liability will arise under these indemnities. 24. Financial commitments Operating leases At 31 May 2012 the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases which fall due as follows: In the next year In the second to fifth years inclusive Total commitment 2012 2011 Land and buildings £’000 177 457 634 Other £’000 5 17 22 Land and buildings £’000 199 713 912 Other £’000 5 22 27 In June 2010, the Company entered into a new lease over its premises at London Wall for a period of 10 years, with a five year break clause. 25. Clients’ money At 31 May 2012 amounts held by the Company on behalf of clients in accordance with the Client Money Rules of the Financial Services Authority amounted to £33,189,000 (2011 – £31,384,000). The Company has no beneficial interest in these amounts and accordingly they are not included in the balance sheet. Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 FISKE plc Page 31 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 32 Notes to the Accounts continued 26. Financial instruments Capital risk management The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stakeholders. The Group’s capital structure consists of equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings. The Group has no debt. Externally imposed capital requirement The Group is subject to the minimum capital requirements required by the Financial Services Authority (FSA), and has complied with those requirements throughout both financial periods. Capital adequacy and capital resources are monitored by the Group on the basis of the Capital Requirements Directive. The Group has a strong balance sheet, and has maintained regulatory capital at a level in excess of its regulatory requirement. The Group’s capital requirement is under continuous review as part of the Internal Capital Adequacy Assessment Process. Significant accounting policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis for 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 the accounting policies in note 1. Categories of financial instruments Group and Company Available-for-sale investments Loans and receivables – Trade and other receivables Loans and receivables – Cash and cash equivalents Investments held at fair value through profit and loss Financial liabilities at amortised cost – Trade and other payables 2012 £’000 1,223 5,781 3,236 251 6,274 2011 £’000 1,228 11,747 3,458 284 12,244 The carrying value of each class of financial asset denoted above approximates to its fair value. Fair value measurements recognised in the statement of financial position The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable: • Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities; • Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and • Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs). Page 32 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 33 Notes to the Accounts continued 26. Financial instruments (continued) Financial assets at FVTPL Derivative financial assets for trading Non-derivative financial assets for trading Available-for-sale financial assets Quoted equities Unquoted equities Total 2012 Level 1 £’000 Level 2 £’000 Level 3 £’000 – 251 155 – 406 – – – – – – – – 1,068 1,068 There were no transfers between levels during the year. Reconciliation of Level 3 fair value measurements of financial assets Available-for-sale financial assets Balance at 1 June 2011 Total gains or losses Balance at 31 May 2012 Unquoted equities £’000 1,068 – 1,068 Total £’000 – 251 155 1,068 1,474 Total £’000 1,068 – 1,068 There were no reclassifications during the year. There were no financial liabilities subsequently measured at fair value. The Group’s finance function monitors and manages the financial risks relating to the operations of the Group. The Group is exposed to market and other price risk, credit risk and to a very limited amount interest rate risk and liquidity risk. The Board of Directors monitors risks and implements policies to mitigate risk exposures. Credit risk Credit risk refers to the risk that a third party will default on its contractual obligations resulting in financial loss to the Group. Third party receivables consist of customers’ balances, spread across institutional and private clients. Ongoing credit evaluation is performed on the financial condition of accounts receivable. The Group does not have any significant credit risk exposure to any single third party or any group of third parties having similar characteristics. The credit risk on liquid funds is limited because the third parties are one of the UK big four clearing banks or a Dutch state-owned bank. Market risk The Group is mainly exposed to market risk in respect of its trading as agent in equities and debt instruments with the volume of trading and thus transaction revenue retreating in market downturns, and to variations in asset values and thus management fees. There has been no material change to the Group’s exposure to market risks or the manner in which it manages and measures the risks. Market risk also gives rise to variations in the value of investments held by Fiske, acting as principal. These are designated as available-for-sale and are mostly held for strategic rather than trading purposes and not actively traded. Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 FISKE plc Page 33 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 34 Notes to the Accounts continued 26. Financial instruments (continued) Interest rate risk management The Group has no borrowings and is therefore not exposed to interest rate risk in that respect. The Group’s exposure to interest rates on financial assets is detailed in the liquidity risk management section of this note. Liquidity risk management The Group manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. In respect of counterparty creditors and trade payables the amounts due are all payable between 0 and 15 days. Sensitivity analysis Equity The fair values of all available-for-sale investments and their exposure to equity price risks at the reporting date are based on the accounting policy in note 1(j). If equity prices had been 5% higher/lower the revaluation reserve would increase/decrease by £61,000 (2011 – increase/decrease by £61,000). In respect of investments held for trading purposes and their exposure to equity price risks at the reporting date, if equity prices had been 5% higher, net profit for the year ended 31 May 2012 would have been £13,000 higher (2011 – £14,000 higher) and vice versa if prices were lower. Cash The Group’s financial cash asset of £3,236,000 (2011 – £3,458,000) is held at a fixed interest rate and is available on demand. If prevailing interest rates during the year (approximately 0.5%) had been comparable with those prevailing in the prior year (approximately 0.5%), bank interest receivable of £26,000 (2011 – £25,000) would have been substantially unchanged. A further reduction in rates in the period would have had no material impact. 27. Related party transactions Transactions between the Company and its subsidiaries which are related parties have been eliminated on consolidation and are not disclosed in this note as they are not material. Directors’ transactions The Company paid fees amounting in total of £5,736 (2011 – £8,439) for services supplied by Fairfax Perrin Limited of which M.H.W.Perrin is a Director and holds an interest. The Group and Company received by way of a service fee £111,000 (2011 – £111,000) from The Investment Company Plc, a company of which S. J. Cockburn is a Director and holds an interest, in respect of administrative, accounting and clerical support and the supply of facilities on an arm’s length basis. Directors transact share-dealing business with the Company under normal customer business terms and in accordance with applicable laws and regulations. In the year to 31 May 2012, commission earned from this by the Company amounted to £5,246 (2011 – £5,388). During the year, the Directors each received dividends attributable to their respective shareholdings, as disclosed in the Directors’ Report, amounting to 4p (2011 – 4p) per ordinary share. Details of Directors’ interests in ordinary shares and in share options are as disclosed in the Directors’ Report, together with details of other significant holdings in the equity of the Company. The Company has no ultimate controlling party. Page 34 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 35 Notice of Annual General Meeting Notice is hereby given that the Annual General Meeting of Fiske plc will be held at Salisbury House, London Wall, London EC2M 5QS (entrance via Circus Place) on 26 September 2012 at 12.30 p.m. for the following purposes: Ordinary Business 1. To receive the Report of the Directors and Auditor and the Accounts for the year ended 31 May 2012. 2. To re-elect Clive Fiske Harrison as a Director of the company. 3. To re-elect Francis Gerard Luchini as a Director of the company. 4. To re-elect Stephen John Cockburn as a Director of the company. 5. To reappoint Deloitte LLP as auditor and to authorise the Board to fix their remuneration. Special Business To consider and, if thought fit, to pass the following Resolutions which will be proposed as to Resolution 6 as an ordinary Resolution and as to Resolutions 7 and 8 as special Resolutions: 6. THAT for the purposes of section 551 Companies Act 2006 (“2006 Act”) (and so that expressions used in this resolution shall bear the same meanings as in the said section 551): (a) the Directors be generally and unconditionally authorised to exercise all powers of the Company to allot shares and to grant such subscription and conversion rights as are contemplated by sections 551(1)(a) and (b) of the 2006 Act respectively up to a maximum nominal amount of £634,515 to such persons and at such times and on such terms as they think proper during the period expiring at the conclusion of the next Annual General Meeting of the Company (unless previously varied, revoked or renewed by the Company in general meeting); and (b) the Company shall be entitled to make, prior to the expiry of such authority, any offer or agreement which would or might require relevant securities to be allotted after the expiry of such authority and the Directors may allot any relevant securities pursuant to such offer or agreement as if such authority had not expired; and (c) all prior authorities to allot securities be revoked but without prejudice to the allotment of any securities already made or to be made pursuant to such authorities. 7. THAT: (a) the Company be and is hereby generally and unconditionally authorised for the purpose of section 701 of the Companies Act 2006 (the “2006 Act”) to make market purchases (within the meaning of section 693 of the 2006 Act) of ordinary shares of 25p each in the capital of the Company (“ordinary shares”) on such terms and in such manner as the Directors may from time to time determine provided that: (b) the maximum number of ordinary shares hereby authorised to be acquired is 846,020; (c) the minimum price which may be paid for an ordinary share is 25p; (d) the maximum price which may be paid for an ordinary share is an amount equal to 105% of the average of the middle market quotations for an ordinary share as derived from The London Stock Exchange Daily Official List for the five business days immediately preceding the day on which an ordinary share is contracted to be purchased; (e) unless previously revoked or varied, the authority hereby conferred shall expire at the close of the next Annual General Meeting of the Company or 18 months from the date on which this resolution is passed, whichever shall be the earlier; and (f) the Company may make a contract to purchase ordinary shares under the authority hereby conferred prior to the expiry of such authority, which contract will or may be executed wholly or partly after the expiry of such authority, and may purchase ordinary shares in pursuance of any such contract. FISKE plc Page 35 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 36 Notice of Annual General Meeting continued 8. THAT the Directors be granted power pursuant to Section 570 of the Companies Act 2006 to allot equity securities (within the meaning of section 560 of the 2006 Act) for cash, pursuant to the authority conferred on them to allot such shares or grant such rights by Resolution 4 contained in the Notice of the Annual General Meeting of the Company of which this Resolution forms part as if section 561(1) and sub sections (1)-(6) of section 562 of the 2006 Act did not apply to any such allotment, provided that the power conferred by this Resolution shall be limited to: (a) the allotment of equity securities in connection with an issue or offering in favour of holders of equity securities and any other persons entitled to participate in such issue or offering where the equity securities respectively attributable to the interests of such holders and persons are proportionate (as nearly as maybe) to the respective number of equity securities held or deemed to be held by them on the record date of such allotment, subject only to such exclusions or other arrangements as the Directors may consider necessary or expedient to deal with fractional entitlements or legal or practical problems under the laws or requirements of any recognised regulatory body or stock exchange in any territory; and (b) the allotment of equity securities up to an aggregate nominal value of £211,500; and (c) shall expire at the conclusion of the next Annual General Meeting of the Company or, if earlier,the date 15 months from the date of passing of this Resolution unless previously varied, revoked or renewed by the Company in general meeting provided that the Company may, before such expiry, make any offer or agreement which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities pursuant to any such offer or agreement as if the power hereby conferred had not expired; and (d) all prior powers granted under section 571 of the Companies Act 2006 be revoked provided that such revocation shall not have retrospective effect. By Order of the Board F G Luchini Secretary 24 August 2012 Registered office: Salisbury House London Wall London EC2M 5QS Page 36 FISKE plc Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 37 Notes to Notice of Annual General Meeting 1. A member entitled to attend and vote at the Meeting convened by the above notice may appoint a proxy to exercise all or any of his rights to attend, speak and vote at a meeting of the Company. A proxy need not be a member of the Company. A member may appoint more than one proxy in relation to the Meeting, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by that member. A form of proxy is enclosed. To be valid the enclosed form of proxy together with the power of attorney or other authority, if any, under which it is signed or a notarially certified or office copy thereof, must be delivered in accordance with instructions on it so as to be received by the Company’s registrars, Capita Registrars, Proxies, The Registry, 34 Beckenham Road, Beckenham BR3 4TU, not less than 48 hours before the time appointed for holding the Meeting or any adjournment thereof. Lodgement of a form of proxy will not prevent a member from attending and voting in person if so desired. 2. Copies of contracts of service between the non-executive directors and the Company will be available at the registered office of the company on any weekday prior to the meeting (weekends and public holidays excepted) during normal business hours. Copies of the above-mentioned documents will also be available on the date of the Annual General Meeting at the place of the meeting for 15 minutes prior to the meeting until its conclusion. 3. Pursuant to section 360B of the 2006 Act and regulation 41 of the Uncertificated Securities Regulations 2001, only shareholders registered in the register of members of the Company as at 48 hours before the time appointed for holding the Meeting shall be entitled to attend and vote at the Meeting in respect of the number of shares registered in their name at such time. If the Meeting is adjourned, the time by which a person must be entered on the register of members of the Company in order to have the right to attend and vote at the adjourned meeting is at 12.30 p.m. on the day preceding the date fixed for the adjourned meeting. Changes to the register of members after the relevant times shall be disregarded in determining the rights of any person to attend or vote at the Meeting. 4. In the case of joint holders, the vote of the senior who tenders a vote whether in person or by proxy will be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority will be determined by the order in which names stand in the register of members of the Company in respect of the relevant joint holding. 5. By attending the Meeting members agree to receive any communications made at the meeting. 6. In order to facilitate voting by corporate representatives at the Meeting, arrangements will be put in place at the Meeting so that (i) if a corporate shareholder has appointed the Chairman of the Meeting as its corporate representative to vote on a poll in accordance with the directions of all of the other corporate representatives for that shareholder at the Meeting, then on a poll those corporate representatives will give voting directions to the Chairman and the Chairman will vote (or withhold a vote) as corporate representative in accordance with those directions; and (ii) if more than one corporate representative for the same corporate shareholder attends the Meeting but the corporate shareholder has not appointed the Chairman of the Meeting as its corporate representative, a designated corporate representative will be nominated, from those corporate representatives who attend, who will vote on a poll and the other corporate representatives will give voting directions to that designated corporate representative. Corporate shareholders are referred to the guidance issued by the Institute of Chartered Secretaries and Administrators on proxies and corporate representatives (www.icsa.org.uk) for further details of the procedure. The guidance includes a sample form of appointment letter if the Chairman is being appointed as described in (i) above. Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 FISKE plc Page 37 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 38 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 39 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 pp16-40_12097 Fiske Annual R&A 2012 pp16-40 24/08/2012 10:18 Page 40 Printed by Park Communications 12097 Job No.: 12097 Customer: Fiske plc Proof Event: 4 Project Title: Annual Report and Accounts 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600 12097 Fiske Annual R&A 2012 Cover_12097 Fiske Annual R&A 2012 Cover 24/08/2012 10:17 Page 2 Job No.: 12097 Customer: Fiske plc Proof Event: 3 Project Title: Annual Report 2012 Park Communications Ltd Alpine Way London E6 6LA T: 020 7055 6500 F: 020 7055 6600